Parker-Hannifin Corporation
PENSION RESTORATION PLAN
Parker-Hannifin Corporation
PENSION RESTORATION PLAN
Parker-Hannifin Corporation, an Ohio corporation (the "Company"), hereby
establishes this Pension Restoration Plan (the "Plan"), effective July 1,
1994, for the purpose of attracting high quality executives and promoting in
its executives increased efficiency and an interest in the successful
operation of the Company by restoring benefits that are lost due to
legislative limits on the Company's qualified retirement plan(s). The
benefits provided under the Plan shall be provided in consideration for
services to be performed after the effective date of the Plan, but prior to
the executive's retirement.
ARTICLE 1
Definitions
1.1 Actuarial Value shall mean the actuarial present value of the
benefits calculated by an actuary selected by the Administrator and using the
actuarial assumptions employed under the Qualified Plan (other than the
Pension Benefit Guaranty Corporation rates used to determine a lump sum
benefit).
1.2 Administrator shall mean the Company or, if applicable, the
committee appointed by the Board of Directors of the Company to administer the
Plan pursuant to Article 6 of the Plan.
1.3 Beneficiary shall mean the person or persons or entity designated
as such under the Qualified Plan.
1.4 Change in Control shall mean any of the following events shall
have occurred:
(i) Any person (as that term is defined in Section 13(d)(3) or
Section 14(d)(2) of the Securities Exchange Act of 1934 (the "Exchange
Act")) has become the beneficial owner (as that term is defined under
Rule 13d-3 or any successor rule or regulation promulgated under the
Exchange Act) of securities representing twenty-five percent (25%) of
the combined voting power of the then outstanding securities entitled to
vote generally in the election of the directors of the Company ("Voting
Stock"), which ownership of securities has not been specifically
approved by the Company's Board of Directors with specific reference to
this Plan;
(ii) The Company files a report or proxy statement with the
Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to the applicable disclosure requirements of Form
8-K or Schedule 14A (or any successor schedule, form or report or item
therein) that a change in control of the Company has occurred or will
occur in the future pursuant to any then existing contract or
transaction; provided, however, that if the report or proxy statement
reports a prospective change in control, any consequences of a Change in
Control as set forth elsewhere in this Plan will not occur until the
reported change in control has occurred;
(iii) If, during any period of twenty-four (24) consecutive
months, beginning before or after the effective date of this Plan,
individuals who at the beginning of any such period constitute the
directors of the Company cease for any reasons (other than death,
disability, or retirement pursuant to the Company's policy relating to
retirement of directors, if any, in effect on the date of this Plan) to
constitute at least a majority of the Board of Directors of the Company;
provided, however, that for purposes of this clause (iii) if a person is
first elected, or first nominated for election by the Company's
stockholders, by a vote of at least two-thirds of the Board of Directors
of the Company (or a committee thereof) then still in office who were
directors of the Company at the beginning of any such period, then such
person will be deemed to have been a director of the Company at the
beginning of such period.
Notwithstanding the foregoing provisions of paragraph 1.4(i) or 1.4(ii),
unless otherwise determined in a specific case by a majority vote of the
Board of Directors, a Change in Control shall not be deemed to have
occurred for purposes of paragraph 1.4(i) or 1.4(ii) solely because (1)
the Company, (2) an entity in which the Company directly or indirectly
beneficially owns 50% or more of the voting equity securities (a
"Subsidiary"), or (3) any employee stock ownership plan or any other
employee benefit plan of the Company or any Subsidiary (an "Employee
Plan") either files or becomes obligated to file a report or proxy
statment under or in response to the applicable disclosure requirements
of Schedule 13D, Schedule 14D-1, Form 8-K or Schedule 14A (or any
successor schedule, form or report or item therein) under the Exchange
Act disclosing beneficial ownership by it of shares of Voting Stock,
whether in excess of 25% or otherwise, or because the Company, a
Subsidiary or an Employee Plan reports that a change in control of the
Company has ooccurred or will occur in the future by reason of such
beneficial ownership.
1.5 Code shall mean the Internal Revenue Code of 1986, as amended,
inluding any successor provisions.
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1.6 Early Retirement Date shall mean the "Early Retirement Date" as
defined in the Qualified Plan.
1.7 Eligible Executive shall mean an employee of the Company or any
of its subsidiaries who (i) participates in the Qualified Plan, (ii) is
designated by the Administrator as eligible to participate in the Plan, and
(iii) qualifies as a member of the "select group of management or highly
compensated employees" under ERISA.
1.8 ERISA shall mean the Employee Retirement Income Security Act of
1974, as amended.
1.9 Normal Retirement Date shall mean the "Normal Retirement Date"
as defined in the Qualified Plan.
1.10 Participant shall mean an Eligible Executive who has become a
participant hereunder pursuant to Article 2.
1.11 Qualified Plan shall mean the Parker-Hannifin Corporation
Retirement Plan as it currently exists and as it may subsequently be amended,
or any other qualified defined benefit plan maintained by the Company and in
which an Eligible Executive participates.
1.12 Statutory Limit shall mean any limit on compensation taken into
account in calculating benefits under qualified retirement plans under Section
401(a)(17) of the Code or that directly or indirectly affects the amount of
benefits payable from a Qualified Plan.
1.13 Termination of Employment shall mean the date of the cessation of
the Participant's employment with the Company for any reason whatsoever,
whether voluntary or involuntary, other than as a result of the Participant's
death.
ARTICLE 2
Participation
Eligible Executives shall become Participants in the Plan on the first
day of the month following their appointment as Eligible Executives.
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ARTICLE 3
Restoration Benefits
3.1 Amount. Upon Termination of Employment on or after Normal or
Early Retirement Date, or after the Participant has a nonforfeitable right to
a deferred benefit under the Qualified Plan, the Participant shall be entitled
to a retirement benefit as provided in paragraph 3.2 of this Plan. The
retirement benefit shall equal the benefits that would be payable to the
Participant under the Qualified Plan calculated as if the Statutory Limit did
not apply to such benefits, less the benefits that are payable under the
Qualified Plan taking the Statutory Limit into account.
3.2 Form of Retirement Benefits. (a) Subject to (b) and (c) below,
the retirement benefit shall be paid in the same form and at the same time as
the Participant's benefits under the Qualified Plan.
(b) Notwithstanding (a) above, the Administrator may, in its sole
discretion, elect to pay the Actuarial Value of the benefit under this Plan in
a single lump sum if the monthly benefit otherwise due hereunder is less than
$50.00.
(c) Notwithstanding (a) above, a Participant who has retired at or
after Normal or Early Retirement Date, or who reaches Normal or Early
Retirement Date after a Termination of Employment may elect at any time
thereafter to receive the remaining Actuarial Value of his benefit in a single
lump sum, provided that his lump sum payment shall be reduced by 10%.
ARTICLE 4
Survivor Benefits
4.1 Survivor Benefit. If benefits are payable to the Participant's
Beneficiary under the Qualified Plan following the Participant's death
(whether the Participant's death occurs before or after Termination of
Employment), the Company shall pay to the Participant's Beneficiary a survivor
benefit equal to the benefits that would be payable to the Beneficiary under
the Qualified Plan calculated as if the Statutory Limit did not apply to such
benefits, less the survivor benefits that are payable under the Qualified Plan
taking the Statutory Limit into account.
4.2 Form of Survivor Benefit. The survivor benefit shall be paid in
the same form and at the same time as the survivor benefits under the
Qualified Plan; provided, however that the Administrator may, in its sole
discretion, elect to pay the
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Actuarial Value of the survivor benefit under this Plan in a single lump sum,
if the monthly benefit otherwise payable hereunder is less than $50.00
ARTICLE 5
Conditions Related to Benefits
5.1 Nonassignability. The benefits provided under the Plan may not
be alienated, assigned, transferred, pledged or hypothecated by or to any
person or entity, at any time or any manner whatsoever. These benefits shall
be exempt from the claims of creditors of any Participant or other claimants
and from all orders, decrees, levies, garnishment or executions against any
Participant to the fullest extent allowed by law.
5.2 No Right to Company Assets. The benefits paid under the Plan
shall be paid from the general funds of the Company, and the Participant and
any Beneficiary shall be no more than unsecured general creditors of the
Company with no special or prior right to any assets of the Company for
payment of any obligations hereunder.
5.3 Protective Provisions. The Participant shall cooperate with the
Company by furnishing any and all information requested by the Administrator,
in order to facilitate the payment of benefits hereunder, taking such physical
examinations as the Administrator may deem necessary and taking such other
actions as may be requested by the Administrator. If the Participant refuses
to cooperate, the Company shall have no further obligation to the Participant
under the Plan. In the event of a Participant's suicide during the first two
(2) years of participation in the Plan, or if the Participant makes any
material misstatement of information or nondisclosure of medical history, then
no benefits shall be payable to the Participant or the Participant's
Beneficiary or estate under the Plan.
5.4 Withholding. The Participant or the Beneficiary shall make
appropriate arrangements with the Company for satisfaction of any federal,
state or local income tax withholding requirements and Social Security or
other employee tax requirements applicable to the payment of benefits under
the Plan. If no other arrangements are made, the Company may provide, at its
discretion, for such withholding and tax payments as may be required.
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ARTICLE 6
Administration of Plan
The Company shall administer the Plan, provided, however, that the
Company may elect by action of its Board of Directors to appoint a committee
of three (3) or more individuals to administer the Plan. All references to
the Administrator herein shall refer to the Company or, if such committee has
been appointed, the committee.
The Administrator shall administer the Plan and interpret, construe and
apply its provisions in accordance with its terms. The Administrator shall
further establish, adopt or revise such rules and regulations as it may deem
necessary or advisable for the administration of the Plan. All decisions of
the Administrator shall be final and binding. The individuals serving on the
committee shall, except as prohibited by law, be indemnified and held harmless
by the Company from any and all liabilities, costs, and expenses (including
legal fees), to the extent not covered by liability insurance arising out of
any action taken by any member of the committee with respect to the Plan,
unless such liability arises from the individual's own gross negligence or
willful misconduct.
ARTICLE 7
Change in Control
In the event there is a Change in Control, each Participant shall
receive the Actuarial Value of his benefit earned hereunder to the date of the
Change in Control. Such benefit shall be paid in monthly installments over
thirty-six (36) months commencing within 3 months of the Change in Control;
provided, however, that the Administrator may elect, in its sole discretion,
to make payment in a single lump sum.
ARTICLE 8
Amendment and Termination of Plan
8.1 Amendment of Plan. The Company may at any time amend the Plan in
whole or in part, provided, however, that such amendment shall not decrease
the value of benefits accrued under the Plan prior to the time of such
amendment.
8.2 Termination of Plan. The Company may at any time terminate the
Plan. If the Company terminates the Plan, the date of such termination shall
be treated as the date of Termination of Employment for the purpose of
calculating Plan benefits. The Company shall pay to the Participant the
benefits the Participant
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is entitled to receive under the Plan in monthly installments over a thirty-
six (36) month period; provided, however, that the Administrator may elect, in
its sole discretion, to make payment in a single lump sum.
8.3 Amendment or Termination After Change in Control.
Notwithstanding the foregoing, the Company shall not amend or terminate the
Plan without the prior written consent of affected Participants for a period
of two calendar years following a Change in Control and shall not thereafter
amend or terminate the Plan in any manner which affects any Participant (or
Beneficiary of a deceased Participant) who commences receiving payment of
benefits under the Plan prior to the end of such two year period following a
Change in Control.
8.4 Company Action. Except as provided in paragraph 8.5, the
Company's power to amend or terminate the Plan shall be exercisable by the
Company's Board of Directors or by the committee or individual authorized by
the Company's Board of Directors to exercise such powers.
8.5 Constructive Receipt Termination. In the event the Administrator
determines that benefits under the Plan have been constructively received by
Participants and must be recognized as income for federal income tax purposes,
the Plan shall terminate and distributions shall be made to Participants in
accordance with the provisions of paragraph 8.2 or as may be determined by the
Administrator. The determination of the Administrator under this paragraph
8.5 shall be binding and conclusive.
ARTICLE 9
Miscellaneous
9.1 Successors of the Company. The rights and obligations of the
Company under the Plan shall inure to the benefit of, and shall be binding
upon, the successors and assigns of the Company.
9.2 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.
9.3 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 purposes of providing for payment of benefits
under the Plan.
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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 the
Participant from any such trust shall be considered paid by the Company for
purposes of meeting the obligations of the Company under the Plan.
9.4 Employment Not Guaranteed. Nothing contained in the Plan nor any
action taken hereunder shall be construed as a contract of employment or as
giving any Participant any right to continued employment with the Company.
9.5 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 require. As the context may require,
the singular may be read as the plural and the plural as the singular.
9.6 Captions. The captions of the articles and paragraphs of the
Plan are for convenience only and shall not control or affect the meaning or
construction of any of its provisions.
9.7 Validity. If any provision of the Plan is held invalid, void or
unenforceable, the same shall not affect, in any respect whatsoever, the
validity of any other provisions of the Plan.
9.8 Waiver of Breach. The waiver by the Company of any breach of any
provision of the Plan by the Participant shall not operate or be construed as
a waiver of any subsequent breach by the Participant.
9.9 Applicable Law. The Plan shall be governed and construed in
accordance with the laws of the Ohio except where the laws of the Ohio are
preempted by ERISA.
9.10 Notice. Any notice or filing required or permitted to be given
to the Company under the Plan shall be sufficient if in writing and hand-
delivered, or sent by first class mail to the principal office of the Company,
directed to the attention of the Administrator. 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.
ARTICLE 10
Claims and Review Procedures
10.1 Claims Procedure. The Company shall notify a Participant in
writing, within ninety (90) days after his or her written application for
benefits, of his or her
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eligibility or noneligibility for benefits under the Plan. If the Company
determines that a Participant is not eligible for benefits or full benefits,
the notice shall set forth (1) the specific reasons for such denial, (2) a
specific reference to the provisions of the Plan on which the denial is based,
(3) a description of any additional information or material necessary for the
claimant to perfect his or her claim, and a description of why it is needed,
and (4) an explanation of the Plan's claims review procedure and other
appropriate information as to the steps to be taken if the Participant wishes
to have the claim reviewed. If the Company determines that there are special
circumstances requiring additional time to make a decision, the Company shall
notify the Participant of the special circumstances and the date by which a
decision is expected to be made, and may extend the time for up to an
additional ninety-day period.
10.2 Review Procedure. If a Participant is determined by the Company
not to be eligible for benefits, or if the Participant believes that he or she
is entitled to greater or different benefits, the Participant shall have the
opportunity to have such claim reviewed by the Company by filing a petition
for review with the Company within sixty (60) days after receipt of the notice
issued by the Company. Said petition shall state the specific reasons which
the Participant believes entitle him or her to benefits or to greater or
different benefits. Within sixty (60) days after receipt by the Company of
the petition, the Company shall afford the Participant (and counsel, if any)
an opportunity to present his or her position to the Company orally or in
writing, and the Participant (or counsel) shall have the right to review the
pertinent documents. The Company shall notify the Participant of its decision
in writing within the sixty-day period, stating specifically the basis of its
decision, written in a manner calculated to be understood by the Participant
and the specific provisions of the Plan on which the decision is based. If,
because of the need for a hearing, the sixty-day period is not sufficient, the
decision may be deferred for up to another sixty-day period at the election of
the Company, but notice of this deferral shall be given to the Participant.
In the event of the death of the Participant, the same procedures shall apply
to the Participant's beneficiaries.
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