Document:

Parker-Hannifin Change in Control Severance Plan

 

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.

-11-Parker Supplemental Executive Retirement Benefits

 

Exhibit (10)(i)* to Report

on Form 10-K for Fiscal

Year Ended June 30, 2001

by Parker-Hannifin Corporation

 

 

Parker-Hannifin Corporation Supplemental Executive Retirement

Benefits Program (August 15, 1996 Restatement)

 

 

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

   

Parker-Hannifin Corporation

 

Supplemental Executive

Retirement Benefits Program

  

TABLE OF CONTENTS

	Section 	 Page

	
	                   	Preamble 	 1

	
	   		
	1.
Definitions 
	 1

	
	   		
	2.
Participation 
	 6

	
		2.01        
Participants
	  6

	
		2.02        
Designation of Participants 
	 7

	
		2.03        
Continuation of Participation 
	 7

	
		2.04        
Effect of Voluntary Termination of Employment 
	 7

	
	  				 

	
	3.
Supplemental Retirement Benefits
	  7

	
		3.01        
Eligibility at or After Normal Retirement Date 
	 7

	
		3.02        
Eligibility Prior to Normal Retirement Date
	  7

	
		3.03        
Amount of Normal Retirement Supplemental Benefit 
	 7

	
		3.04        
Amount of Early Retirement Supplemental Benefit 
	 8

	
		3.05        
Gross-Up Payment
	  9

	
	   				 

	
	4.
Payment of Benefits
	  9

	
		4.01        
Commencement of Benefits
	  9

	
		4.02        
Payments Under Certain Situations
	  9

	
		               	(a)        	
Optional Methods of Payment
	  9

	
			(b)        	
Payment Upon a Change in Control 
	 9

	
			(c)        	
Election to Receive a Lump Sum Payment 
	 9

	
		4.03        
Determination of the Lump Sum Payment 
	 10

	
		4.04        
Certain Matters Following a Lump Sum Payment 
	 10

	
	   				 

	
	5.
Death Benefits 
	 11

	
		5.01        
Eligibility 
	 11

	
		5.02        
Benefit Amount 
	 11

	
		5.03        
Benefit Payments 
	 11

	
	   				 

	
	6.
Non-Competition 
	 12

	
		6.01        
Condition of Payment 
	 12

	
		6.02        
Competition
	 13

	
	    				 

	
	7.
General Provisions
	  13

	
		7.01        
Denial of Claims 
	 13

	
		7.02        
Claims Review Procedure 
	 13

	
		7.03        
ERISA Plan 
	 14

	
		7.04        
Trust 
	 14

	
		7.05        
Rights of Participants 
	 14

	

  

	                   	7.06        
Administration 
	 15

	
	 	7.07        
Program Non-Contractual 
	 15

	 
	 	7.08        
Non-Alienation of Retirement Rights or Benefits 
	 15

	 
	 	7.09        
Payment of Benefits to Others 
	 15

	 
	 	7.10        
Notices 
	 16

	 
	 	7.11        
Amendment, Modification, Termination
	 16

	 
	 	7.12        
Applicable Law
	  16

	 
	 	7.13        
Gender, Singular and Plural
	  16

	 
	 	7.14        
Headings 
	 17

	 

 

Parker-Hannifin Corporation

Supplemental Executive

Retirement Benefits Program

        WHEREAS, by instrument effective as of January 1, 1980, a supplemental executive retirement benefits program was established for the benefit of certain
employees of Parker-Hannifin Corporation and their beneficiaries; and

        WHEREAS, said Program was amended and restated from time to time; and

        WHEREAS, it is desired to restate the terms, provisions, and conditions of said Program;

        NOW, THEREFORE, effective as of August 15, 1996, said Program is hereby amended and restated in its entirety to provide as hereinafter set forth.

1. Definitions

        Except as otherwise required by the context, the terms used in this Program shall have the meaning hereinafter set forth.

        (a)        Actuarial Equivalent or Actuarially Equivalent: An amount that is the actuarial equivalent of a value
using the actuarial assumptions specified for such purpose under the Retirement Plan.

        (b)        Board: The Board of Directors of the Company

        (c)        Change in Control: Any one or more of the following occurrences:

        (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) as pertains 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 (A) 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 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 the
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

2

        (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 Program 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 Program,
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.

        (d)       Change in Control Lump Sum Payment: The lump sum payment made upon a Change in Control as calculated under
Section 4.03(a).

        (e)        Change in Control Severance Agreement: The agreement between an Eligible Executive and the Company that
provides for certain benefits if the Eligible Executive's employment terminates following a Change in Control; provided, that in the case of a former Participant who is receiving benefits under the Program, Change in Control Severance Agreement
shall mean the change in control severance agreement that was in effect between the Participant and the Company at the time of his retirement.

        (f)        Code: The Internal Revenue Code of 1986, as amended, or any successor statute.

        (g)       Committee: The Compensation and Management Development Committee of the Board.

        (h)       Company: Parker-Hannifin Corporation, an Ohio corporation, its corporate successors, and the surviving
corporation resulting from any merger of Parker-Hannifin Corporation with any other corporation or corporations.

        (i)        Contingent Annuitant: The person designated by a Participant as a contingent annuitant as provided in
the Retirement Plan.

3

       (j)       Controlled Group:       The Company, its Subsidiaries or any entity that owns,
directly or indirectly, 50% or more of the total combined voting power of the Company's then outstanding securities eligible to vote for the election of the Board of Directors of the Company.

       (k)      Disability:       Disability that entitles a Participant to benefits under the
Company's long-term disability program.

4

       (l)       Highest Average Three-Year Compensation: One-third of the aggregate amount of compensation paid to a Participant from the Controlled Group during the three calendar years of the Participant's employment which were the three highest
years of annual compensation, including base salary, bonuses payable under the Company's Return on Net Assets Plan (RONA) and Target Incentive Program, any amounts which would otherwise be paid as compensation during a calendar year but which are
deferred by a Participant pursuant to any qualified or nonqualified deferred compensation program sponsored by the Controlled Group, and any amounts that would otherwise be paid as compensation during a calendar year but which are deferred under
Section 125 of the Code, but excluding: (i) any deferred compensation received during any such year but credited under the Program to the Participant for a prior year; (ii) any income realized due to the exercise of stock options or stock
appreciation rights; (iii) any payments, in cash, deferred or otherwise, payable to the Participant under the Company's Long-Term Incentive Plan, under any extraordinary bonus arrangements, under any severance agreement (other than as may be
required under Section 4.03(a)), or as an executive perquisite; and (iv) such items as fringe benefits includible in income as compensation for federal tax purposes, moving and educational reimbursement expenses, overseas allowances received by
the Participant from the Controlled Group, and any other irregular payments.

       (m)     Life Expectancy: The expected remaining lifetime (to the nearest integer) based on the Mortality Table and the age at the
nearest birthday of the Participant or Recipient at the date the Lump Sum Payment or Change in Control Lump Sum Payment is made (unless otherwise specified herein). If a joint and contingent survivor annuity has been elected, then Life Expectancy
shall reflect the joint Life Expectancy of the Participant or Recipient and Contingent Annuitant.

       (n)     Lump Sum Payment: The Lump Sum Payment provided in Section 4.02 of the Program with the amount determined as set forth in
Section 4.03.

       (o)     Mortality Table: Eighty percent (80%) of the 1983 Group Annuity Mortality factor (male only).

       (p)     Normal Retirement Date: The definition set forth in the Retirement Plan.

       (q)     Participant: An employee of the Company designated to participate in the Program pursuant to Article 2 of the Program,
while so employed; provided, however, that any employee of the Company who, as of the date of a Change in Control, has entered into a Change in Control Severance Agreement with the Company shall automatically be a Participant in the
Plan.

       (r)      Profit Sharing Account Balance: The definition set forth in the Retirement Plan.

       (s)     Program: The Supplemental Executive Retirement Benefits Program set forth herein.

5 

        (t)       Recipient: A retiree, Contingent
Annuitant, term certain beneficiary, or Surviving Spouse, who is currently receiving benefits or is entitled to receive benefits under the Program.

        (u)       Retirement Plan: The Parker-Hannifin Corporation Retirement Plan as in effect at the time any payment
becomes due under this Program.

        (v)       Service: Employment as an employee by any member of the Controlled Group, as well as employment by a
corporation, trade or business, that is now part of the Controlled Group at a time prior to its becoming part of the Controlled Group, but in such case only if and to the extent that the Committee shall so direct at any time prior to retirement. For
purposes of determining a Participant's eligibility to receive a benefit hereunder, Service shall include any additional years credited to a Participant under Section 4.03(a)(i)). 

        (w)       Specified Rate: The monthly average annual yield of 30-Year United States Treasury Bonds as published in the
Federal Reserve Statistical Release G.13 (415) "Select Interest Rates" for constant maturities and in effect on the first day of the month prior to the month in which a payment is to be made; provided, that for purposes of calculating a
Change in Control Lump Sum Payment, the interest rate for immediate annuities of the Pension Benefit Guaranty Corporation (PBGC) in effect on the date of the Change in Control as set forth in Appendix B to Part 2619 of 29 Code of Federal
Regulations, or any other successor or similar rate.

        (x)       Subsidiary: 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 or interests of such corporation or other entity.

        (y)       Surviving Spouse: The person who is the Participant's spouse at the time of the Participant's death and who
has been such spouse for at least one year immediately prior to the date of the Participant's death.

2. Participation

       

2.01      Participants. The Participants in the Program shall be: (i) such officers and other key executives of the Company as shall be designated as Participants from time to time by the Committee; and (ii) upon
a Change in Control, those individuals who have entered into a Change in Control Severance Agreement with the Company as of the date of such Change in Control.

       

2.02      Designation of Participants. An individual may be designated a Participant by action of the Committee or in a written employment agreement approved by the Committee. Participation of each individual
designated as a Participant shall be subject to the terms, conditions, and limitations set forth in the Program and to such other terms, conditions and limitations as the Committee may, in its discretion, impose upon the participation of any such
individual at the time the individual is designated a Participant in the Program.

6

        

2.03       Continuation of Participation. Subject only to the provisions of Section 2.04 and Article 6 of the Program, an individual designated as a Participant shall continue to be a Participant for
the purpose of eligibility to receive the supplemental retirement benefits provided by the Program and his participation in the Program shall not be terminated; provided, however, that a Participant who terminates employment at a time when he is not
eligible for a benefit under Article 3 shall cease to be a Participant in the Program.

       

 2.04       Effect of Voluntary Termination of Employment. To be eligible for supplemental retirement benefits under the Program a Participant shall not voluntarily terminate employment with the Company
without the consent of the Committee for a period, not exceeding 60 calendar months, set by the Committee at the time he is designated a Participant. If he shall so voluntarily terminate his employment within such period, his participation in the
Program shall terminate, he shall cease to be a Participant and (subject to Section 3.02) he shall forfeit all benefits under the Program. Notwithstanding the foregoing, for purposes of this Section 2.04, in no event shall an exercise by a
Participant of his right to terminate his employment for "Good Reason" as defined under any Change in Control Severance Agreement between the Participant and the Company be deemed to be a voluntary termination of employment with the
Company.

3. Supplemental Retirement Benefits

       

 3.01       Eligibility at or After Normal Retirement Date. Any provision of Section 2.04 to the contrary notwithstanding, any Participant with at least 120 calendar months of Service who
terminates his employment with the Controlled Group on or after his Normal Retirement Date shall be eligible for a monthly supplemental retirement benefit computed as set forth in Section 3.03.

        

3.02       Eligibility Prior to Normal Retirement Date. Any Participant with at least 120 calendar months of Service: (i) who terminates his employment with the Controlled Group with the consent of the
Committee after attainment of age 55; or (ii) who is employed at the time of a Change in Control of the Company; or (iii) whose employment with the Controlled Group is terminated by the Company for reasons other than for cause (as
determined solely by the Committee) after attainment of age 55 but prior to the expiration of the requisite period of employment established by the Committee with respect to him pursuant to Section 2.04; or (iv) who terminates his
employment with the Controlled Group due to Disability prior to his Normal Retirement Date; or (v) who terminates his employment with the Controlled Group after attainment of age 60 (and after completion of the requisite period of employment
established by the Committee with respect to him pursuant to Section 2.04) but prior to his Normal Retirement Date; shall be eligible for a monthly supplemental retirement benefit as set forth in Section 3.04.

        

3.03       Amount of Normal Retirement Supplemental Benefit. The monthly supplemental retirement benefit payable to an eligible Participant at Normal Retirement Date shall be an amount equal to
1/12th
of 55% of his Highest Average Three-Year Compensation, reduced by all of the following that are applicable:

7

        (a)        in the case of a Participant who does not have at least 15 years of Service at the time of his
retirement, .3055 percent for each calendar month his Service is less than 15 years;

        (b)        the monthly single life Actuarial Equivalent of any benefit to which the Participant is entitled under the
Retirement Plan, including the single life monthly equivalent attributable to the Participant's Profit-Sharing Account Balance, determined as if the Profit-Sharing Account Balance had remained in the Retirement Plan until retirement, whether
or not such Profit-Sharing Account Balance has been transferred to the Savings Plan;

        (c)        the monthly single life Actuarial Equivalent of any benefit to which the Participant is entitled under any
other tax-qualified defined benefit plan of the Company and which is attributable to contributions of the Company, unless benefit service for employment on which such benefit is based is credited to the Participant under the Retirement
Plan;

        (d)        the monthly single life Actuarial Equivalent of any benefit to which the Participant is entitled under any
non-qualified defined benefit program of the Company;

        (e)        50 percent of the monthly primary social security benefit to which the Participant is entitled or would be
entitled as of the earliest date following the Participant's termination of employment for which social security benefits would be payable (whether or not social security benefits are actually paid to the Participant at such time), with such
reduction to begin at the earliest date after retirement for which social security benefits would be payable to the Participant; and

        (f)        the monthly single life Actuarial Equivalent of any benefit which the Participant is entitled to receive from
any previous employer, provided that a contract between the Participant and the Company grants the Participant service for service with the previous employer and the contract states the amount to be offset.

        

3.04     Amount of Early Retirement Supplemental Benefit. The monthly supplemental retirement benefit payable to a Participant who is retiring prior to Normal Retirement Date shall be an amount equal to 1/12th of 55
percent of the Highest Average Three-Year Compensation, reduced by all of the following that are applicable:

        (a)        in the case of a Participant who does not have at least 15 years of Service at the time of his retirement,
 .3055 percent for each month that his Service is less than 15 years;

        (b)       after applying Section 3.04(a) if applicable, .1515 percent for each of the first 60 months by which commencement
of the benefit precedes Normal Retirement Date, and by .3030 percent for each additional month by which commencement of the benefit precedes Normal Retirement Age; provided, however, that if the Participant has at least 30 years of
Service, and entitlement to payment is a result of a Change in Control, the .1515 shall be reduced to .07575, and the .3030 shall be reduced to .1515; and

8

        (c)        any amounts described in Sections 3.03(b)-(f).

        

3.05      Gross-Up Payment. Anything in this Program notwithstanding, in the event it shall be determined that any payment, distribution or acceleration of vesting of any benefit hereunder would be subject to the
excise tax imposed by Section 4999 of the Code, or any interest or penalties are incurred by the Participant with respect to such excise tax, then the Participant shall be entitled to receive an additional payment calculated as set forth in the
Change in Control Severance Agreement with respect to such benefit hereunder; provided, however, that there shall be no duplication of such additional payment under this Program and the Change in Control Severance Agreement.

4. Payment of Benefits 

        

4.01      Commencement of Benefits. Subject to Sections 4.02 (b) and (c), supplemental retirement benefits shall be payable monthly to an eligible Participant commencing with the month next following the
month in which he becomes eligible for such benefit and terminating with the month in which the death of such Participant occurs.

        

4.02      Payments Under Certain Situations. 

       

 (a)        Optional Methods of Payment. Subject to Sections 4.02 (b) and (c), an optional method of payment selected by the Participant for payment of his retirement benefit under the
Retirement Plan shall automatically be applicable to the payment of the supplemental retirement benefits provided by the Program. The benefits provided pursuant to any such optional method of payment shall be the Actuarial Equivalent of the monthly
amount of benefit to which the Participant otherwise would be entitled under the Program.

       

 (b)       Payment Upon a Change in Control. Within 15 business days of a Change in Control, in lieu of any other payments due with respect to benefits earned under the Program to the date of the Change
in Control, each Participant and each Recipient shall receive a Change in Control Lump Sum Payment, as calculated under Section 4.03(a).

       

 (c)       Election to Receive a Lump Sum Payment.  A Participant who is eligible to receive benefits under the Program pursuant to Section 3.01 or 3.02, or a Recipient, may file a written request
with the Committee, subject to the terms and conditions hereinafter set forth, to receive, in lieu of future payments of any and all then unpaid accrued and vested benefits under the Program, a Lump Sum Payment determined in accordance with
Section 4.03(b). If the request for a Lump Sum Payment is filed at least 13 months prior to the Participant's termination of employment and is approved by the Committee, then 100% of such Lump Sum Payment shall be paid on the date on which the
first monthly benefit payment under the Program would otherwise be made. In any case in which the request for a Lump Sum Payment is not filed at least 13 months prior to the Participant's termination of employment or is denied by the 

9

Committee, then the Participant or Recipient shall receive 90% of the Lump Sum Payment, and the remaining 10% shall be forfeited to the Company.

        

4.03      Determination of the Lump Sum Payment.

        (a)        The Change in Control Lump Sum Payment referred to in Section 4.02(b) shall be equal to
the present value of the monthly payments to which a Participant or Recipient would be entitled under the Program based on the following assumptions:  (i) the Participant (but not a Recipient) is treated as having been employed, for
purposes of determining age and service hereunder, for the lesser of (A) the duration of the "Termination Period", if any, under Participant's Change in Control Severance Agreement or (B) the period of time remaining until Normal
Retirement Date; (ii) Highest Average Three-Year Compensation shall be the greater of (A) the amount that would be taken into account in determining a Participant's benefit under the Program as of the date of the Change in Control if there were no
Change in Control or (B) the lump sum severance payment under Section 2(a)(ii) of the Participant's (but not the Recipient's) Change in Control Severance Agreement (as if he had been terminated immediately following the Change in Control) divided by
the multiple used under such section to determine severance pay; (iii) the discount rate equals the Specified Rate; (iv) the Participant (or, if applicable, Recipient) lives the number of years equal to his Life Expectancy (calculated as of the date
which includes any additional Service credited hereunder); and (v) with respect to any benefit to be deducted as an offset as described in Section 3.03(b) through (f), the Participant terminated employment with the Company on the date of the Change
in Control and began to receive such benefits at the earliest date thereafter permitted under the applicable plan, agreement or statute.

        (b)       The Lump Sum Payment referred to in Section 4.02(c) shall be equal to the present value of the
future monthly payments to which the participant is entitled under the Program based on the following assumptions: (i) the discount rate equals the Specified Rate; and (ii) the Participant lives the number of years equal to his Life Expectancy on
the later of (A) date of his election to receive a Lump Sum Payment, or (B) the date of his termination of employment.

       

 4.04     Certain Matters Following a Lump Sum Payment.

        (a)       A Participant who has received a Change in Control Lump Sum Payment pursuant to Section 4.02(b)
shall thereafter: (i) while in the employ of the Company, continue to accrue benefits under the Program, and (ii) be eligible for further benefits under Section 4.01 or 4.02(a), (b) or (c). The amount of such benefit shall be determined
by:

	    	               (i) calculating the benefit that would be payable to the Participant if there had been no previous
Change in Control Lump Sum Payment;
	     	
	     	              (ii) determining the present lump sum value of such benefit, using the Specified Rate as the discount
rate and assuming the Participant lives the number of years equal to his Life Expectancy on the date of his retirement or termination of employment;

10 

	        	

          (iii)  determining the present lump sum value of the Change in Control Lump Sum Payment, assuming the Change in Control Lump
Sum Payment had earned interest at the average Specified Rate in effect from the time of payment of the Change in Control Lump Sum Payment until the date of retirement or other termination of employment;

	        	
	        	

          (iv)  reducing the amount determined in (ii) by the amount determined in (iii); and

	        	
	        	

          (v)   if applicable, converting the amount determined in (iv) to an Actuarially Equivalent single life only form of
payment.

5. Death Benefits

        

5.01      Eligibility.  If a Participant dies after completing 120 calendar months of Service (without regard to the requirements of Section 2.04) but prior to the earlier of his retirement or his Normal
Retirement Date, his Surviving Spouse (or, in the event there is no surviving spouse, or there is a common death, his estate) shall be eligible for a benefit under this Article 5.

        

5.02      Benefit Amount.

        (a)        The monthly amount of a benefit payable under this Article 5 to a deceased Participant's Surviving
Spouse who has applied therefor, shall be equal to the monthly payment the spouse would have received had the Participant retired on the day before his death after having effectively elected to receive payment in the form of a Joint and 75% Survivor
Annuity under the Retirement Plan, with his spouse as his Contingent Annuitant under such option; provided, that in lieu of the offset for the Participant's primary social security benefit under Section 3.03(e), the benefit to the Surviving Spouse
shall be offset by 50% of the primary or survivor social security benefit to which the Surviving Spouse is entitled at the earliest date as of which such payments become payable. If the estate is the death beneficiary, the estate shall receive a
lump sum payment equal to the present value (using the Specified Rate) of the total monthly payments that would have been paid to the Participant assuming he had not died but rather that he: (i) retired on the day before the date of his death (or
the first day of the month following the time he would have reached age 55, if later); (ii) elected the 10-Year Certain Annuity under the Retirement Plan; and (iii) received 120 monthly payments.

        (b)       If the Participant dies before reaching the age that is ten years prior to the Participant's Normal Retirement
Date, then the monthly benefit used to determine the death benefit shall be further reduced by .3030 for each month that the Participant was under such age at the time of his death.

       

 5.03     Benefit Payments.  Subject to Section 4.02 (b) and (c), the benefit under this Article 5 shall be paid to the deceased Participant's Surviving Spouse commencing with the first day of the
month following the month in which the Participant's death occurs, and shall be payable monthly thereafter during the life of the Surviving Spouse, the last payment being for the 

11

month in which the death of the Surviving Spouse shall occur. If payment is made to the estate of the Participant, payment shall be made within 30 days of the date of the Participant's
death.

6. Non-Competition

        

6.01        Condition of Payment. Payment of supplemental retirement benefits under the Program shall be subject to the condition that the Participant or retiree-Recipient shall not have engaged in
competition (as defined in Section 6.02) with the Company at any time prior to the date of such payment; provided, however, that this Section 6.01 shall not apply to a Participant following his termination of employment if such termination
occurs after the date of a Change in Control that occurs at the time the Participant is actively participating in the Program. 

12

       

 6.02      Competition. Competition for purposes of the Program shall mean assuming an ownership position or a consulting, management, employee or director
position with a business engaged in the manufacture, processing, purchase or distribution of products of the type manufactured, processed or distributed by the Controlled Group; provided, however, that in no event shall ownership of less than two
percent of the outstanding capital stock entitled to vote for the election of directors of a corporation with a class of equity securities held of record by more than 500 persons in itself be deemed Competition; and provided further, that all of the
following shall have taken place:

        (a)        the Secretary of the Company shall have given written notice to the Participant or
retiree-Recipient that, in the opinion of the Committee, the Participant or retiree-Recipient is engaged in Competition within the meaning of the foregoing provisions of this Section 6.02, specifying the details;

        (b)        the Participant or retiree-Recipient shall have been given a reasonable opportunity, upon
receipt of such notice, to appear before and to be heard by the Committee with respect to his views regarding the Committee's opinion that the Participant or retiree-Recipient engaged in Competition;

        (c)        following any hearing pursuant to Section 6.02(b), the Secretary of the Company shall have
given written notice to the Participant or retiree-Recipient that the Committee determined that the Participant or retiree-Recipient is engaged in Competition; and

        (d)        the Participant or retiree-Recipient shall neither have ceased to engage in such Competition
within thirty days from his receipt of notice of such determination nor diligently taken all reasonable steps to that end during such thirty-day period and thereafter.

7. General Provisions

        

7.01      Denial of Claims. Whenever the Company denies, in whole or in part, a claim for benefits filed by any person (hereinafter referred to as the
"Claimant"), the Company shall transmit a written notice setting forth, in a manner calculated to be understood by the Claimant, a statement of the specific reasons for the denial of the claim, references to the specific Program provisions
on which the denial is based, a description of any additional material or information necessary to perfect the claim and an explanation of why such material or information is necessary, and an explanation of the claims review procedure as set forth
in Section 7.02. In addition, the written notice shall contain the date on which the written notice was sent and a statement advising the Claimant that, within 60 days of the date on which such notice was received, he may obtain review of the
decision of the Company.

        

7.02      Claims Review Procedure. Within 60 days of the date on which the notice of denial of claim is received by the Claimant, the Claimant, or his
authorized representative, may 

13

request that the claim denial be reviewed by filing with the Company a written request therefor, which request shall contain the following information:

        (a)        The date on which the notice of denial of claim was received by the Claimant;

        (b)        The date on which the Claimant's request was filed with the Company; provided,
however, that the date on which the Claimant's request for review was in fact filed with the Company shall control in the event that the date of the actual filing is later than the date stated by the Claimant pursuant to this subsection (b);

        (c)        The specific portions of the denial of his claim which the Claimant requests the Company to
review;

        (d)        A statement by the Claimant setting forth the basis upon which he believes the Company should
reverse its previous denial of his claim for benefits and accept his claim as made; and

        (e)        Any written material (included as exhibits) which the Claimant desires the Company to examine
in its consideration of his position as stated pursuant to subsection (d).

Within 60 days of the date determined pursuant to Section 7.02(b), the Company shall conduct a full and fair review of the decision denying the Claimant's claim for benefits. Within ten
days following the date of such review, the Company will send to the Claimant its written decision setting forth, in a manner calculated to be understood by the Claimant, a statement of the specific reasons for its decision, including references to
the specific Program provision relied upon. If the Claimant disputes the Company's decision, such dispute shall be resolved by arbitration in Cleveland, Ohio under the rules of the American Arbitration Association.

        

7.03      ERISA Plan. The Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for "a select group
of management or highly compensated employees" within the meaning of Sections 201, 301 and 401 of ERISA and therefore to be exempt from Parts 2, 3 and 4 of Title I of ERISA.

        

7.04      Trust. The Company shall be responsible for the payment of all benefits under the Plan. At its discretion, the Company may establish one or
more grantor trusts for the purpose of providing for payment of benefits under the Plan. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Company's creditors. Benefits paid to a Participant from
any such trust shall be considered paid by the Company for purposes of meeting the obligations of the Company under the Plan.

       

 7.05      Rights of Participants. Except as expressly provided in any grantor trust agreement established by the Company:

14

        (a)        no Participant or Recipient shall have any right, title, or interest whatsoever in or to any investments
which the Company may make to aid it in meeting its obligations under the Program;

        (b)        nothing contained in the Program shall create or be construed to create a trust of any kind, or a fiduciary
relationship between the Company and any Participant, Recipient or any other person;

        (c)        to the extent that any person acquires a right to receive payments from the Company under the Program, such
right shall be no greater than the right of an unsecured general creditor of the Company; and

        (d)        all payments to be made under the Program shall be paid from the general funds of the Company and no special
or separate fund shall be established and no segregation of assets shall be made to assure payment of amounts payable under the Program.

        

7.06      Administration. The Committee shall be responsible for the general administration of the Program and for carrying out the provisions thereof. Any act authorized, permitted or required to be taken by the
Company under the Program may be taken by action of the Committee. Subject to the provisions of Section 7.01 relating to denial of claims and claims review procedure, any action taken by the Committee which is authorized, permitted or required
under the Program shall be final and binding upon the Company, all persons who have or who claim an interest under the Program, and all third parties dealing with the Company.

        

7.07      Program Non-Contractual. Nothing herein contained shall be construed as a commitment or agreement on the part of any person to continue his employment with the Company, and nothing herein contained
shall be construed as a commitment on the part of the Company to continue the employment or the rate of compensation of any such person for any period, and all employees of the Company shall remain subject to discharge to the same extent as if the
Program had never been put into effect.

        

7.08      Non-Alienation of Retirement Rights or Benefits. No right or benefit under the Program shall at any time be subject in any manner to alienation or encumbrances. If any person shall attempt to, or shall,
alienate or in any way encumber his rights or benefits under the Program, or any part thereof, or if by reason of his bankruptcy or other event happening at any time any such benefits would otherwise be received by anyone else or would not be
enjoyed by him, his interest in all such benefits shall automatically terminate and the same, at the discretion of the Company, shall be held or applied to or for the benefit of such person, his spouse, children, or other dependents as the Company
may select.

        

7.09      Payment of Benefits to Others. If any person to whom a retirement benefit is payable is unable to care for his affairs because of illness or accident, any payment due (unless prior claim therefor shall
have been made by a duly qualified guardian or legal representative) may be paid to the spouse, parent, brother, or sister, or any other individual deemed by the Company to be maintaining or responsible for the maintenance of such person. The
monthly

15

 payment of a retirement benefit to a person for the month in which he dies, if not paid to such person prior to his death, shall be paid to his estate. Any payment made in accordance with the
provisions of this Section 7.09 shall be a complete discharge of any liability of the Program with respect to the retirement benefit so paid.

        

7.10      Notices. All notices provided for by the Program shall be in writing and shall be sufficiently given if and when mailed in the continental United States by registered or certified mail or personally
delivered to the party entitled thereto at the address stated below or to such changed address as the addressee may have given by a similar notice:

	       	To the Company:      	Attention: Secretary
			6035 Parkland Boulevard
			Cleveland, Ohio 44124
	        		
		To the Participant: 	address of residence

Any such notice delivered in person shall be deemed to have been received on the date of delivery.

        

7.11      Amendment, Modification, Termination. The Program may at any time be terminated, or at any time or from time to time be amended or otherwise modified, prospectively, by the Board of Directors of the
Company; provided, however, that no such termination, amendment or modification of the Program shall operate to:

        (a)        reduce or terminate the benefit of a Participant participating in the Program at the time of any such
termination, amendment, or modification;

        (b)        terminate the participation of a Participant participating in the Program at the time of any such
termination, amendment, or modification;

        (c)        increase the eligibility requirements applicable to a Participant participating in the Program at the time of
any such termination, amendment or modification; or

        (d)        terminate the Program, or reduce or terminate any benefit, or terminate the participation or any rights or
benefits, after the occurrence of a Change in Control, with respect to a Participant or Recipient who was a Participant or Recipient, or became a Participant or Recipient, at the time of the occurrence of the Change in Control.

        

7.12        Applicable Law. Except to the extent preempted by ERISA, the laws of the State of Ohio shall govern the Program and any disputes arising thereunder.

        

7.13        Gender, Singular and Plural. All pronouns and variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may 

16

require. As the context may require, the singular may be read as the plural and the plural as the singular.

       

 7.14        Headings.        All headings are for convenience only and shall not be used in interpreting any text to which they relate.

        EXECUTED in Cleveland, Ohio as of the __ day of ____, 1996.

	 	
PARKER-HANNIFIN CORPORATION

By:_______________________________________

17

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