Exhibit (10)(a)* to Report
on Form 10-K for Fiscal
Year Ended June 30, 1995
by Parker-Hannifin Corporation
Form of Change in Control Agreement
entered into by the Registrant and
certain executive officers, as amended and
restated as of August 17, 1995
*Numbered in accordance with Item 601 of Regulation S-K.
A M E N D E D and R E S T A T E D
A G R E E M E N T
between
PARKER-HANNIFIN CORPORATION
and
__________
effective August 17, 1995
TABLE OF CONTENTS
Section Page
Recitals 1
1 Operation of Agreement 1
2 Employment, Period of Employment 2
3 Position, Duties, Responsibilities 3
4 Compensation, Compensation Plans, 5
Perquisites
5 Employee Benefit Plans 8
6 Effect of Death or Disability 10
7 Termination 11
8 Obligation to Mitigate Damages 20
9 Confidential Information 21
10 Severance Allowance 22
11 Withholding 23
12 Notices 23
13 General Provisions 24
14 Amendment or Modification, Waiver 26
15 Severability 27
16 Successors to the Company 27
17 Change in Control 27
18 Intention Relating to Recent
Legislation, Possible Future Amendments 30
Exhibits (A, B, C, D, E, and F)
This AMENDED and RESTATED AGREEMENT between PARKER-HANNIFIN
CORPORATION, an Ohio Corporation (the Company), and
__________ (the Executive), effective the __________ day of
__________.
W I T N E S S E T H :
WHEREAS:
A. The Executive is a principal officer of the
Company and an integral part of its management.
B. The Company wishes to assure both itself and
the Executive of continuity of management in the event of any
actual or threatened change in control of the Company.
C. This agreement is not intended to alter
materially the compensation and benefits that the Executive
could reasonably expect in the absence of a change in control
of the Company and, accordingly, this Agreement, though taking
effect upon execution thereof, will be operative only upon a
Change in Control of the Company, as that term is hereafter
defined.
NOW, THEREFORE, it is hereby agreed by and between
the parties as follows:
1. OPERATION OF AGREEMENT
This Agreement shall be effective immediately upon
its execution by the parties hereto, but, anything in this
Agreement to the contrary notwithstanding, neither this
Agreement nor any provision thereof, except for this Section
1, Sections 14 through 18 inclusive, paragraph 13.01,
paragraphs 13.07 through 13.10 inclusive, and provisions of
subparagraphs 3.01 (a)(ii), 3.04(b) and 4.01(b) and of Section
12 providing for automatic updating of Exhibits B, D, E and F
from time to time prior to the date this Agreement becomes
operative, shall be operative
unless and until there has been a Change in Control of the Company
as defined in Section 17 below while the Executive is in the employ
of the Company. Upon such a Change in Control of the Company, this
Agreement and all provisions thereof shall become operative immediately
(the Operative Date). This Agreement supersedes the prior Agreement
between the Company and the Executive dated __________.
2. EMPLOYMENT, PERIOD OF EMPLOYMENT
2.01 The Company hereby agrees to continue the Executive
in its employ, and the Executive hereby agrees to remain in
the employ of the Company, for the period set forth in
paragraph 2.02 below (the Period of Employment), in the
position and with the duties and responsibilities set forth in
Section 3 below, and upon the other terms and conditions
hereinafter stated.
2.02 The Period of Employment shall commence on the
Operative Date and, subject only to the provisions of Section
6 below relating to death or Disability, shall continue until
the close of business on the date stated in Exhibit A attached
to and made part of this Agreement. In the event that the
Executive shall continue in the full-time employment of the
Company after the latter date, such continued employment shall
be subject to the terms and conditions of this Agreement and
the Period of Employment shall include the period during which
the Executive in fact so continues in such employment.
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3. POSITION, DUTIES, RESPONSIBILITIES
3.01 (a) (i) It is contemplated that during the Period of
Employment the Executive shall continue to serve as a
principal officer of the Company and as a member of its
Board of Directors if serving as a member of its Board of
Directors immediately prior to the Operative Date, with
the office(s) and title(s), reporting responsibility, and
duties and responsibilities of the Executive immediately
prior to the Operative Date.
(ii) The office(s), title(s), reporting
responsibility, duties and responsibilities of the
Executive on the date of this Agreement, as the same may
be changed from time to time prior to the Operative Date,
shall be summarized in Exhibit B to this Agreement to the
end that, if this Agreement becomes operative pursuant to
the provisions of Section 1 above, Exhibit B will reflect
accurately the office(s), title(s), reporting
responsibility, duties and responsibilities of the
Executive immediately prior to the Operative Date, it
being understood and agreed that if, as and when the
office(s), title(s), reporting responsibility, duties and
responsibilities of the Executive shall be changed prior
to the Operative Date, Exhibit B shall be deemed to be
and shall be updated by the parties to reflect such
change; provided, however, that Exhibit B is intended
only as a memorandum for the convenience of the parties
and shall be disregarded if and to the extent that, on
the Operative Date, Exhibit B shall fail to reflect
accurately the office(s), title(s), reporting
responsibility, duties or responsibilities of the
Executive immediately prior to the Operative Date because
the parties shall have failed to update Exhibit B as
contemplated hereby.
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(b) At all times during the Period of Employment, the
Executive shall hold a position of responsibility and
importance and a position of scope, with the functions, duties
and responsibilities attached thereto, at least equal in
responsibility and importance and in scope to and commensurate
with his position described in general terms in subparagraph
3.01(a) above and intended to be summarized in Exhibit B to
this Agreement.
3.02 During the Period of Employment the Executive shall
also serve and continue to serve, if and when elected and
reelected, as an officer or director, or both, of any
subsidiary, division or affiliate of the Company.
3.03 Throughout the Period of Employment the Executive
shall devote his full time and undivided attention during
normal business hours to the business and affairs of the
Company, except for reasonable vacations and except for
illness or incapacity, but nothing in this Agreement shall
preclude the Executive from devoting reasonable periods
required for serving as a director or member of a committee of
any organization involving no conflict of interest with the
interests of the Company, from engaging in charitable and
community activities, and from managing his personal
investments, provided that such activities do not materially
interfere with the regular performance of his duties and
responsibilities under this Agreement.
3.04 (a) The office of the Executive shall be located at the
offices of the Company within the area within which the office
of the Executive is located immediately prior to the Operative
Date, and the Executive shall not be required to locate his
office elsewhere without his prior written consent, nor shall
he be required to be absent therefrom on travel status or
otherwise
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more than the total number of working days in any calendar year
stated in Exhibit C attached to and made part of this Agreement
nor more than the number of consecutive days at any one time
stated in such Exhibit C.
(b) The area within which the office of the Executive is
located on the date of this Agreement, as the same may be
changed from time to time prior to the Operative Date, shall
be described in Exhibit D to this Agreement to the end that,
if this Agreement becomes operative pursuant to the provisions
of Section 1 above, Exhibit D will reflect accurately the area
within which the office of the Executive was located
immediately prior to the Operative Date, it being understood
and agreed that if, as and when the area within which the
office of the Executive is located shall be changed prior to
the Operative Date, Exhibit D shall be deemed to be and shall
be updated by the parties to reflect such change; provided,
however, that Exhibit D is intended only as a memorandum for
the convenience of the parties and shall be disregarded if and
to the extent that, on the Operative Date, Exhibit D shall
fail to reflect accurately the area within which the office of
the Executive was located immediately prior to the Operative
Date because the parties shall have failed to update Exhibit D
as contemplated hereby.
4. COMPENSATION, COMPENSATION PLANS, PERQUISITES
4.01 (a) For all services rendered by the Executive in any
capacity during the Period of Employment, including, without
limitation, services as an executive, officer, director or
member of any committee of the Company or of any subsidiary,
division or affiliate thereof, the Executive shall be paid as
compensation:
(i) A base salary, payable not less often than
monthly, at a monthly rate (before reduction for any
deduction including, without limitation, any deduction for
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withholding of income taxes or F.I.C.A. taxes and any
deduction pursuant to Section 401(k) of the Internal
Revenue Code of 1986, as amended (the "Code")) at least
equal to the monthly rate (before reduction for any such
deduction) of salary which was payable to the Executive
immediately prior to the Operative Date, with increases
in such rate after the Operative Date in accordance with
the Company's regular administrative practices relating
to salary increases applicable to executives of the
Company, in effect immediately prior to the Operative
Date (the Minimum Base Salary), and
(ii) An executive performance award or bonus under
the Company's recurring annual incentive compensation
plans (which currently include the Return on Net Assets
Bonus Plan and the Target Incentive Compensation
Program), or such equivalent successor plans as may be
adopted by the Company (the Annual Bonus Plans), upon a
basis that will render an executive performance award or
bonus for each calendar month which is within the
calendar year to which such executive performance award
or bonus relates, and within the Period of Employment or
within the calendar year in which the Period of
Employment commences, equal to no less than the highest
executive performance award or bonus awarded by the
Company to the Executive (whether on a current or
deferred payment basis) prior to the Operative Date,
divided by twelve (the Minimum Monthly Bonus), so that
total compensation paid in any such calendar month (the
Minimum Total Monthly Compensation) shall consist of the
Minimum Base Salary for such month provided for in clause
(i) if this subparagraph 4.01(a), plus the Minimum
Monthly Bonus for such month provided for in clause (ii)
of this subparagraph 4.01(a).
(b) The Minimum Total Monthly Compensation that is
applicable from time to time after the date of this Agreement
pursuant to the provisions of subparagraph 4.01(a) above, or
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that would be applicable if this Agreement were operative at
such time, shall be set forth in Exhibit E to this Agreement,
the intent of this subparagraph 4.01(b) being that such
Exhibit E shall be deemed to be and shall be updated from time
to time after the date of this Agreement, whether or not this
Agreement shall then be operative, to reflect the Minimum
Total Monthly Compensation that applies at the time, or that
would apply at the time if this Agreement were then operative,
provided, however, that such Exhibit E is intended only as a
memorandum for the convenience of the parties hereto and, in
the event that there is at any time any conflict, disparity or
discrepancy between the Minimum Total Monthly Compensation
provided by subparagraph 4.01(a) above and the amount then set
forth in Exhibit E hereto, the provisions of subparagraph
4.01(a) shall in all events control.
(c) Subject to the provisions of subparagraph 4.01(a)
above relating to the Minimum Total Monthly Compensation,
nothing in this Agreement shall preclude a change in the mix
between the Minimum Base Salary and Minimum Monthly Bonus of
the Executive by increasing the Minimum Base Salary of the
Executive.
(d) Any increase in salary pursuant to clause (i) of
subparagraph 4.01(a) or in bonus or other compensation shall
in no way diminish any other obligation of the Company under
this Agreement.
4.02 (a) During the Period of Employment the Executive shall
be and continue to be eligible to participate in future award
opportunities in the Company's stock option plans, long-term
incentive plans and other long-term executive compensation
plans with at least the same award opportunities as shall have
been provided immediately prior to the Operative Date.
Nothing in this Agreement shall preclude improvement of award
opportunities in such plans
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or other plans in accordance with the practice of the Company
immediately prior to the Operative Date.
(b) The Company agrees to honor the terms of any
existing stock option plans and awards thereunder and long-term
incentive plans and awards thereunder in the event of a Change
in Control.
4.03 During the Period of Employment, the Executive shall
be entitled to perquisites, including, without limitation, an
office, secretarial and clerical staff, and to fringe
benefits, including, without limitation, the business and
personal use of an automobile and payment or reimbursement of
club dues, in each case at least equal to those attached to
his office immediately prior to the Operative Date, as well as
to reimbursement, upon proper accounting, of reasonable
expenses and disbursements incurred by him in the course of
his duties.
5. EMPLOYEE BENEFIT PLANS
5.01 The compensation provided for in Section 4 above,
together with other matters therein set forth, is in addition
to the benefits provided for in this Section 5.
5.02 In the event that the Executive shall not have been
designated a Participant in the Supplemental Executive
Retirement Benefits Program of the Company prior to the
Operative Date, the Executive shall be and hereby is
designated, on and as of the Operative Date, a Participant in
that Program as in effect immediately prior to the Operative Date.
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5.03 The Executive, his dependents and beneficiaries
shall be entitled to all payments and benefits and service
credit for benefits during the Period of Employment to which
officers of the Company, their dependents and beneficiaries
are entitled as the result of the employment of such officers
during the Period of Employment under the terms of employee
plans and practices of the Company, including, without
limitation, the Company's retirement program (consisting of
the Parker-Hannifin Corporation Retirement Plan, the Parker-
Hannifin Employees' Savings Plus Stock Ownership Plan, the
Parker-Hannifin Corporation Pension Restoration Plan, the
Parker-Hannifin Corporation Savings Restoration Plan, any excess
benefits plan or any other program designed to restore benefits
unavailable under tax-qualified plans of the Company solely by
application of the requirements of the Code, the Supplemental
Executive Retirement Benefits Program, the Executive Deferral
Plan and any other applicable plan of deferred compensation),
other Company stock purchase and savings, thrift and investment
plans or programs, if any, the Benefits Plus Plan (including
the group life insurance, accidental death and dismemberment
insurance, disability, medical, dental and health and welfare
plans) and other present or equivalent successor plans and
practices of the Company, its subsidiaries and divisions,
for which officers, their dependents and beneficiaries are
eligible, and to all payments or other benefits under any such
plan or practice after the Period of Employment as a result of
participation in such plan or practice during the Period of
Employment.
5.04 Nothing in this Agreement shall preclude the Company
from amending or terminating any employee benefit plan or
practice, but, it being the intent of the parties that the
Executive shall continue to be entitled during the Period of
Employment to perquisites as set forth in paragraph 4.03 above
and to benefits and service credit for benefits under
paragraph
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5.03 above at least equal to those attached to his
position immediately prior to the Operative Date, nothing in
this Agreement shall operate as, or be construed to reduce or
authorize, a reduction without the Executive's written consent
in the level of such perquisites, benefits or service credit
for benefits; in the event of any such reduction, by amendment
or termination of any plan or practice or otherwise, the
Executive, his dependents and beneficiaries shall continue to
be entitled to perquisites, benefits and service credit for
benefits at least equal to the perquisites and to benefits and
service credit for benefits under such plans or practices that
he or his dependents and beneficiaries would have received if
such reduction had not taken place.
6. EFFECT OF DEATH OR DISABILITY
6.01 In the event of the death of the Executive during
the Period of Employment, the legal representative of the
Executive shall be entitled to the Minimum Total Monthly
Compensation for the month in which death shall have occurred,
and the Period of Employment shall be deemed to have ended as
of the close of business on the last day of such month but
without prejudice to any payments due in respect of the
Executive's death.
6.02 (a) The term "Disability", as used in this Agreement,
shall mean an illness or accident which prevents the Executive
from performing his duties under this Agreement for a period
of six (6) consecutive months. The Period of Employment shall
be deemed to have ended as of the close of business on the
last day of such six (6) month period but without prejudice to
any payments due the Executive in respect of disability.
(b) In the event of the Disability of the Executive
during the Period of Employment, the Executive shall be paid
an amount equal to the Minimum Total Monthly Compensation for
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the month in which such Disability commenced. Such amount
shall be paid at the end of each month during the period of
such Disability but not in excess of six (6) months.
(c) The amount of any payments due under this paragraph
6.02 shall be reduced by any payments to which the Executive
may be entitled for the same period because of disability
under any disability or pension plan of the Company or of any
subsidiary or affiliate thereof.
7. TERMINATION
7.01 In the event of a Termination, as defined in
paragraph 7.03 below, during the Period of Employment, the
provisions of this Section 7 shall apply.
7.02 In the event of a Termination and subject to the
provisions of Section 8 of this Agreement relating to
mitigation of damages and to compliance by the Executive with
the provisions of paragraph 7.04 below relating to Competition
and of Section 9 below relating to confidential information,
the Company shall, as liquidated damages or severance pay or
both, pay to the Executive and provide him, his dependents,
beneficiaries and estate with the following:
(a) The Company shall pay the Executive an amount equal
to the Minimum Total Monthly Compensation that would have been
paid to the Executive for the month in which Termination
occurred had such Termination not occurred,
(i) at the end of the month in which Termination
occurred, and
(ii) at the end of each month thereafter during the
remainder of the Period of Employment,
provided, however, that in no event shall the Company be
required to pay such an amount after
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the month in which the death of the Executive shall have occurred
or after the sixth month following the occurrence of an illness
or accident which would constitute a "Disability" under
subparagraph 6.02(a) above in the absence of such Termination.
(b) During the period that the payments provided for in
subparagraph (a) of this paragraph 7.02 are required to be
made, the Executive, his dependents, beneficiaries and estate,
shall continue to be entitled to all benefits and service
credit for benefits under employee benefit plans of the
Company as if still employed during such period under this
Agreement and, if and to the extent that such benefits or
service credit for benefits shall not be payable or provided
under any such plans to the Executive, his dependents,
beneficiaries and estate by reason of his no longer being an
employee of the Company as the result of Termination, the
Company shall itself pay or provide for payment of such
benefits and service credit for benefits to the Executive, his
dependents, beneficiaries and estate.
(c) The period in which the payments provided for in
subparagraph (a) of this paragraph 7.02 are required to be
made shall be considered service with the Company for the
purpose (i) of continued credits under the Company's pension
program (consisting of the Parker-Hannifin Corporation
Retirement Plan, the Parker-Hannifin Corporation Pension
Restoration Plan, any excess benefits plan or other program
designed to restore benefits unavailable under any tax-qualified
defined benefit plans of the Company solely by application of the
requirements of the Code, if any, and the Supplemental Executive
Retirement Benefits Program) as each such plan or program was in
effect immediately prior to Termination (but without giving effect
to any reduction of benefits thereunder as the result of amendment
or termination of any such Plan or Program during the Period of
Employment) and (ii) of all other benefit plans of the Company as in
effect immediately prior to Termination.
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(d) In the event that the Executive shall at the time of
Termination hold an outstanding and unexercised (whether or
not exercisable at the time) non-statutory stock option or
options theretofore granted by the Company, the Company shall,
in addition to the amounts provided for in subparagraphs
7.02(a) and 7.02(b), pay to the Executive in a lump sum an
amount equal to the excess above the option price under each
such non-statutory stock option of the Fair Market Value at
the time of Termination of the shares subject to each such
non-statutory stock option. Solely for the purpose of this
subparagraph (d), Fair Market Value at the time of Termination
shall be deemed to mean the higher of (i) the average of the
reported closing prices of the Common Shares of the Company,
as reported on the New York Stock Exchange-Composite
Transactions, on the last trading day prior to the Termination
and on the last trading day of each of the two preceding
thirty (30) day periods, and (ii) in the event that a Change
in Control, as defined in Section 17 below, prior to
Termination shall have taken place as the result of a tender
or exchange offer and such Change in Control was consummated
within twelve (12) months of Termination, the highest
consideration paid for Common Shares of the Company in the
course of such tender or exchange offer. Upon receiving the
payment from the Company called for by clause (i) of
subparagraph (a) of this paragraph 7.02, the Executive shall
execute and deliver to the Company a general release in favor
of the Company, its successors and assigns, in respect of any
and all matters, including, without limitation, any and all
rights under any outstanding and unexercisable non-statutory
stock options at the time of Termination, except for the
payments and obligations required to be made or assumed by the
Company under this Agreement which at the time had not yet
been made or assumed by the Company and except for such other
valid obligations of the Company as shall be set forth in such
release.
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(e) If as a result of a termination of employment
pursuant to the provisions of paragraph 7.03(b), the Executive
(or anyone claiming under or through him) loses any part or
all of the benefits he would have received as a Participant in
the Supplemental Executive Retirement Benefits Program of the
Company as in effect immediately prior to the Operative Date,
the Company will provide him with a substantially equivalent
benefit.
7.03 The word "Termination", for the purpose of this
Section 7 and any other provision of this Agreement, shall
mean:
(a) Termination by the Company of the employment of the
Executive by the Company and its subsidiaries for any reason
other than for Cause as defined in paragraph 7.05 below or for
Disability as defined in subparagraph 6.02(a) above; or
(b) Termination by the Executive of his employment by
the Company and its subsidiaries upon the occurrence of any of
the following events:
(i) Failure to elect or reelect the Executive to
the Board of Directors of the Company, if the Executive
shall have been a member of the Board of Directors
immediately prior to the Operative Date, or failure to
elect or reelect the Executive to, or removal of the
Executive from, any of the office(s) described in
paragraph 3.01(a)(i) above and intended to be summarized
in Exhibit B to this Agreement.
(ii) A significant change in the nature or scope of
the authorities, powers, functions or duties attached to
the position described in paragraph 3.01(a)(i) above and
intended to be summarized in Exhibit B to this Agreement,
or a reduction in compensation, which is not remedied
within 30 days after receipt by the Company of written
notice from the Executive.
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(iii) A determination by the Executive made in
good faith that as a result of a Change in Control of the
Company, as defined in Section 17 below, and a change in
circumstances on or after the Operative Date
significantly affecting his position, he is unable to
carry out the authorities, powers, functions or duties
attached to his position and contemplated by Section 3 of
this Agreement and the situation is not remedied within
30 days after receipt by the Company of written notice
from the Executive of such determination.
(iv) A breach by the Company of any provision of
this Agreement not embraced within the foregoing clauses
(i), (ii) and (iii) of this subparagraph 7.03(b) which is
not remedied within 30 days after receipt by the Company
of written notice from the Executive.
(v) The liquidation, dissolution, consolidation or
merger of the Company or transfer of all or a significant
portion of its assets unless a successor or successors
(by merger, consolidation or otherwise) to which all or
a significant portion of its assets have been transferred
shall have assumed all duties and obligations of the
Company under this Agreement; provided that in any event
set forth in this subparagraph 7.03(b), the Executive
shall have elected to terminate his employment under this
Agreement upon not less than forty and not more than
ninety days' advance written notice to the Board of
Directors of the Company, Attention of the Secretary,
given, except in the case of a continuing breach, within
three calendar months after (A) failure to be so elected
or reelected, or removal, (B) expiration of the thirty
(30) day cure period with respect to such event, or (C)
the closing date of such liquidation, dissolution,
consolidation, merger or transfer of assets, as the case
may be.
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An election by the Executive to terminate his
employment given under the provisions of this paragraph 7.03
shall not be deemed a voluntary termination of employment by
the Executive for the purpose of this Agreement or any plan or
practice of the Company.
7.04 (a) There shall be no obligation on the part of the
Company to make any further payments provided for in paragraph
7.02 above or to provide any further benefits specified in
such paragraph 7.02 if the Executive shall, during the period
that such payments are being made or benefits provided, engage
in Competition with the Company as hereinafter defined,
provided all of the following shall have taken place:
(i) the Secretary of the Company, pursuant to
resolution of the Board of Directors of the Company,
shall have given written notice to the Executive that, in
the opinion of the Board of Directors, the Executive is
engaged in such Competition, specifying the details;
(ii) the Executive shall have been given a
reasonable opportunity to appear before the Board of
Directors prior to the determination of the Board
evidenced by such resolution; and
(iii) the Executive shall neither have ceased to
engage in such Competition within thirty (30) days from
his receipt of such notice nor diligently taken all
reasonable steps to that end during such thirty (30) day
period and thereafter.
(b) The word "Competition" for purposes of this
paragraph 7.04 and any other provision of this Agreement shall
mean taking a management position with, or control of, a
business engaged in the manufacture, processing, purchase or
distribution of products which constituted 15% or more of the
sales of the Company and its subsidiaries and divisions during
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the last fiscal year of the Company preceding the termination
of the Executive's employment (or during any fiscal year of
the Company during the Period of Employment); provided,
however, that in no event shall ownership of less than 5% 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, standing
alone, be deemed Competition with the Company within the
meaning of this paragraph 7.04.
7.05 For the purpose of any provision of this Agreement,
the termination of the Executive's employment shall be deemed
to have been for Cause only:
(a) if termination of his employment shall have been the
result of an act or acts of dishonesty on the part of the
Executive constituting a felony and resulting or intended to
result directly or indirectly in gain or personal enrichment
at the expense of the Company, or
(b) if there has been a breach by the Executive during
the Period of Employment of the provisions of paragraph 3.03
above, relating to the time to be devoted to the affairs of
the Company, or of Section 9, relating to confidential
information, and such breach results in demonstrably material
injury to the Company, and with respect to any alleged breach
of paragraph 3.03 hereof, the Executive shall have both failed
to remedy such alleged breach within thirty (30) days from his
receipt of written notice by the Secretary of the Company
pursuant to a resolution duly adopted by the Board of
Directors of the Company after notice to the Executive and an
opportunity to be heard demanding that he remedy such alleged
breach, and failed to take all reasonable steps to that end
during such thirty (30) day period and thereafter; provided
that there shall have been delivered to the Executive a
certified copy of a resolution of the Board of Directors of
the Company adopted by the affirmative vote of not less than
three-fourths (3/4)
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of the entire membership of the Board of Directors called and
held for that purpose and at which the Executive was given an
opportunity to be heard, finding that the Executive was guilty
of conduct set forth in subparagraphs (a) or (b) above,
specifying the particulars thereof in detail.
Anything in this paragraph 7.05 or elsewhere in this
Agreement to the contrary notwithstanding, the employment of
the Executive shall in no event be considered to have been
terminated by the Company for Cause if termination of his
employment took place (i) as the result of bad judgment or
negligence on the part of the Executive, or (ii) as the result
of an act or omission without intent of gaining therefrom
directly or indirectly a profit to which the Executive was not
legally entitled, or (iii) because of an act or omission
believed by the Executive in good faith to have been in or not
opposed to the interests of the Company, or (iv) for any act
or omission in respect of which a determination could properly
be made that the Executive met the applicable standard of
conduct prescribed for indemnification or reimbursement or
payment of expenses under the Code of Regulations of the
Company or the laws of the State of Ohio or the directors' and
officers' liability insurance of the Company, in each case as
in effect at the time of such act or omission, or (v) as the
result of an act or omission which occurred more than twelve
(12) calendar months prior to the Executive's having been
given notice of the termination of his employment for such act
or omission unless the commission of such act or such omission
could not at the time of such commission or omission have been
known to a member of the Board of Directors of the Company
(other than the Executive, if he is then a member of the Board
of Directors), in which case more than twelve (12) calendar
months from the date that the commission of such act or such
omission was or could reasonably have been so known, or (vi)
as the result of a continuing course of action which commenced
and was or could reasonably have been known to a member of the
Board of
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Directors of the Company (other than the Executive) more than
twelve (12) calendar months prior to notice having been given
to the Executive of the termination of his employment.
7.06 In the event that the Executive's employment shall
be terminated by the Company during the Period of Employment
and such termination is alleged to be for Cause, or the
Executive's right to terminate his employment under paragraph
7.03(b) above shall be questioned by the Company, or the
Company shall withhold payments or provision of benefits
because the Executive is alleged to be engaged in Competition
in breach of the provisions of paragraph 7.04 above or for any
other reason, the Executive shall have the right, in addition
to all other rights and remedies provided by law, at his
election either to seek arbitration within the area within
which the office of the Executive was located immediately
prior to the Operative Date and intended to be described in
Exhibit D to this Agreement, under the rules of the American
Arbitration Association, by serving a notice to arbitrate upon
the Company or to institute a judicial proceeding, in either
case within ninety (90) days after having received notice of
termination of his employment or notice in any form that the
termination of his employment under paragraph 7.03(b) is
subject to question or that the Company is withholding or
proposed to withhold payments or provision of benefits or
within such longer period as may reasonably be necessary for
the Executive to take action in the event that his illness or
incapacity should preclude his taking such action within such
ninety (90) day period.
7.07 Any provision above in this Section 7 to the
contrary notwithstanding, if the Company should default on any
obligation set forth in this Section 7 and shall have failed
to remedy such default within thirty (30) days after having
received written notice of such default
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from the Executive or his beneficiaries, then, in that event:
(a) any and all undischarged, future obligations of the
Company under this Section 7 shall, at the sole option of the
Executive or his beneficiaries, exercised in writing signed by
the Executive or his beneficiaries, as the case may be, and
delivered to the Company within ninety (90) days after the
expiration of such thirty (30) day period, become immediately
due and payable in a lump sum discounted to present value
using the "Federal short-term rate," "Federal mid-term rate"
or "Federal long-term rate" that would apply at the time under
section 1274(d) of the Code to a debt instrument having a term
equal to the period extending from the date such option is
exercised in writing to the date or dates such future
obligations of the Company would otherwise have become due and
payable; and
(b) in addition to, and not in substitution for,
interest for any other period properly payable to the
Executive as a result of such default, the Company agrees to
pay pre-judgment interest on any such obligation in default,
calculated at the "Federal short-term rate," "Federal mid-term
rate" or "Federal long-term rate" that would apply at the time
under section 1274(d) of the Code to a debt instrument having
a term equal to the period extending from the date that the
Company's obligation became due and payable hereunder to the
date the Executive or his beneficiaries obtain a money
judgment therefor (whether in litigation or arbitration).
8. OBLIGATION TO MITIGATE DAMAGES
8.01 In the event of a Termination, as defined in
paragraph 7.03 above, the Executive shall make reasonable
efforts to mitigate damages by seeking other employment;
provided, however, that he shall not be required to accept a
position of less dignity and importance or of substantially
different character than the highest position theretofore held
by him with the
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Company or a position that would call upon him to engage in
Competition within the meaning of paragraph 7.04(b) above,
nor shall he be required to accept a position other than in
a location reasonably convenient to his principal residence
immediately prior to such Termination.
8.02 To the extent that the Executive shall receive
compensation, benefits and service credit for benefits from
other employment secured pursuant to the provisions of
paragraph 8.01 above, the payments to be made and the benefits
and service credit for benefits to be provided by the Company
under the provisions of paragraph 7.02 above shall be
correspondingly reduced. Such reduction shall, in the event
of any question, be determined jointly by the firm of
certified public accountants of the Company and the firm of
certified public accountants selected by the Executive, in
each case upon the advice of actuaries to the extent the
certified public accountants consider necessary, and, in the
event such accountants are unable to agree on a resolution of
the question, such reduction shall be determined by an
independent firm of certified public accountants selected
jointly by both firms of accountants.
9. CONFIDENTIAL INFORMATION
9.01 The Executive agrees not to disclose, either while
in the Company's employ or at any time thereafter, to any
person not employed by the Company, or not engaged to render
services to the Company, any confidential information obtained
by him while in the employ of the Company, including, without
limitation, any of the Company's inventions, processes,
methods of distribution, customers or trade secrets; provided,
however, that this provision shall not preclude the Executive
from use or disclosure of information known generally to the
public or of information not considered confidential by
persons engaged in the business conducted by the Company or
from disclosure required by law or Court order.
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9.02 The Executive also agrees that upon leaving the
Company's employ, he will not take with him, without the prior
written consent of an officer authorized to act in the matter
by the Board of Directors of the Company, any drawing,
blueprint, specification or other document of the Company, its
subsidiaries, affiliates and divisions, which is of a
confidential nature relating to the Company, its subsidiaries,
affiliates and divisions, including, without limitation, any
information relating to its or their methods of distribution,
or any description of any formulae or secret processes.
9.03 The Executive further agrees that upon leaving the
Company's employ (or prior to leaving, if in connection with
an intention of the Executive to leave), he will not solicit
any other employee of the Company or otherwise cause any other
employee to consider terminating employment with the Company
without the prior written consent of an officer authorized to
act in the matter by the Board of Directors of the Company.
10. SEVERANCE ALLOWANCE
In the event that, following the date stated in
Exhibit A attached to and made part of this Agreement, the
employment of the Executive shall be terminated by the Company
prior to his normal retirement date and such termination shall
be for any reason other than for Cause, as defined in
paragraph 7.05 above, the Company shall pay the Executive as
a severance allowance a lump sum equal to the Minimum Total
Monthly Compensation for the month prior to such termination
of employment, multiplied by six.
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11. WITHHOLDING
Anything to the contrary notwithstanding, all
payments required to be made by the Company hereunder to the
Executive or his estate or beneficiaries shall be subject to
the withholding of such amounts, if any, relating to tax and
other payroll deductions as the Company may reasonably
determine it should withhold pursuant to any applicable law or
regulation. In lieu of withholding such amounts, the Company
may accept other provisions to the end that it has sufficient
funds to pay all taxes required by law to be withheld in
respect of any or all of such payments.
12. NOTICES
(a) All notices, requests, demands and other
communications provided for by this Agreement shall be in
writing and shall be sufficiently given if and when mailed in
the continental United States by registered or certified mail
to, or personally delivered to the party entitled thereto at,
(i) the address set forth below, unless the addressee shall
have given notice of a different address by a similar notice,
in which case (ii) the latest address given by the addressee
by a similar notice (the Official Address):
To the Company: Attention: Secretary
Parker-Hannifin Corporation
17325 Euclid Avenue
Cleveland, Ohio 44112
To the Executive: __________
Parker-Hannifin Corporation
__________
__________
With additional copy to: __________
__________
__________
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Any such notice, request, demand or other communication
delivered in person shall be deemed to have been received on
the date of delivery.
(b) The Official Address of each party to this
Agreement, as the same may be changed from time to time after
the date of this Agreement pursuant to the provisions of
subparagraph 12(a) above, shall be set forth in Exhibit F to
this Agreement to the end that Exhibit F will reflect
accurately the Official Address of each party hereto from time
to time after the date of this Agreement, it being understood
and agreed that if, as and when any party hereto shall change
his Official Address after the date of this Agreement by
giving the notice required by subparagraph 12(a) above,
Exhibit F shall be deemed to be and shall be updated by the
parties to reflect such change; provided, however, that
Exhibit F is intended only as a memorandum for the convenience
of the parties and shall be disregarded if and to the extent
that, subsequent to the date of this Agreement, Exhibit F
shall fail to reflect accurately the Official Address in
accordance with the provisions of subparagraph 12(a) above
because the parties shall have failed to update Exhibit F as
contemplated hereby.
13. GENERAL PROVISIONS
13.01 This Agreement is not intended to and shall not
infer or imply any right on the part of the Executive to
continue in the employ of the Company, or any subsidiary or
affiliate of the Company, prior to a Change in Control of the
Company, and is not intended in any way to limit the right of
the Company to terminate the employment of the Executive, with
or without assigning a reason therefor, at any time prior to
a Change in Control of the Company. Nor is This Agreement is
not intended to nor shall it infer or imply any obligation on
the part of the Executive to continue in the employment of the
Company, nor any subsidiary or affiliate of the Company, prior
to a Change in Control of the Company. Neither the Company
nor the Executive shall incur any liability under this
Agreement if the employment of the Executive shall be
terminated by the Company or by the Executive prior to a
Change in Control of the Company.
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13.02 There shall be no right of set-off or counter-claim,
in respect of any claim, debt or obligation, against any
payments to the Executive, his dependents, beneficiaries or
estate provided for in this Agreement.
13.03 The Company and the Executive recognize that each
party will have no adequate remedy at law for breach by the
other of any of the agreements contained herein and, in the
event of any such breach, the Company and the Executive hereby
agree and consent that the other shall be entitled to a decree
of specific performance, mandamus or other appropriate remedy
to enforce performance of such agreements.
13.04 No right or interest to or in any payments shall be
assignable by the Executive; provided, however, that this
provision shall not preclude him from designating one or more
beneficiaries to receive any amount that may be payable after
his death and shall not preclude the legal representative of
his estate from assigning any right hereunder to the person or
persons entitled thereto under his will or, in the case of
intestacy, to the person or persons entitled thereto under the
laws of intestacy applicable to his estate. The term
"beneficiaries" as used in this Agreement shall mean a
beneficiary or beneficiaries so designated to receive any such
amount or, if no beneficiary has been so designated, the legal
representative of the Executive's estate.
13.05 No right, benefit or interest hereunder, shall be
subject to anticipation, alienation, sale, assignment,
encumbrance, charge, pledge, hypothecation, or set-off in
respect of any claim, debt or obligation, or to execution,
attachment, levy or similar process, or assignment by
operation of law. Any attempt, voluntary or involuntary, to
effect any action specified in the immediately preceding
sentence shall, to the full extent permitted by law, be null,
void and of no effect.
13.06 In the event of the Executive's death or a judicial
determination of his incompetence, reference in this Agreement
to the Executive shall be deemed, where appropriate, to refer
to his legal representative, or, where appropriate, to his
beneficiary or beneficiaries.
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13.07 If any event provided for in this Agreement is
scheduled to take place on a legal holiday, such event shall
take place on the next succeeding day that is not a legal
holiday.
13.08 The titles to sections in this Agreement are
intended solely for convenience and no provision of this
Agreement is to be construed by reference to the title of any
section.
13.09 This Agreement shall be binding upon and shall inure
to the benefit of the Executive, his heirs and legal
representatives, and the Company and its successors as
provided in Section 16 hereof.
13.10 This instrument contains the entire agreement of the
parties relating to the subject matter of this Agreement and
supersedes and replaces all prior agreements and
understandings with respect to such subject matter, and the
parties hereto have made no agreements, representations or
warranties relating to the subject matter of this Agreement
which are not set forth herein.
14. AMENDMENT OR MODIFICATION, WAIVER
No provision of this Agreement may be amended,
modified or waived unless such amendment, modification or
waiver shall be authorized by the Board of Directors of the
Company or any authorized committee of the Board of Directors
and shall be agreed to in writing, signed by the Executive and
by an officer of the Company thereunto duly authorized.
Except as otherwise specifically provided in this Agreement,
no waiver by either party hereto of any breach by the other
party hereto of any condition or provision of this Agreement
to be performed by such other party shall be deemed a waiver
of a subsequent breach of such condition or provision or a
waiver of a similar or dissimilar provision or condition at
the same or at any prior or subsequent time.
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15. SEVERABILITY
Anything in this Agreement to the contrary
notwithstanding:
(a) In the event that any provision of this Agreement,
or portion thereof, shall be determined to be invalid or
unenforceable for any reason, in whole or in part, the
remaining provisions of this Agreement and parts of such
provision not so invalid or unenforceable shall be unaffected
thereby and shall remain in full force and effect to the
fullest extent permitted by law.
(b) Any provision of this Agreement, or portion thereof,
which may be invalid or unenforceable in any jurisdiction
shall be limited by construction thereof, to the end that such
provision, or portion thereof, shall be valid and enforceable
in such jurisdiction; and
(c) Any provision of this Agreement, or portion thereof,
which may for any reason be invalid or unenforceable in any
jurisdiction shall remain in effect and be enforceable in any
jurisdiction in which such provision, or portion thereof,
shall be valid and enforceable.
16. SUCCESSORS TO THE COMPANY
Except as otherwise provided herein, this Agreement
shall be binding upon and inure to the benefit of the Company
and any successor of the Company, including, without
limitation, any corporation or corporations acquiring directly
or indirectly all or substantially all of the assets of the
Company whether by merger, consolidation, sale or otherwise
(and such successor shall thereafter be deemed "the Company"
for the purposes of this Agreement), but shall not otherwise
be assignable by the Company.
17. CHANGE IN CONTROL
For the purpose of this Agreement, a "Change in
Control of the Company" shall be deemed to have occurred if:
(a) 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
- 27 -
for the election of the Board of Directors of the Company
(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: (i) an acquisition by the Company or, direct
or indirect majority-owned subsidiaries of the Company;
(ii) an acquisition by any employee benefit plan sponsored
or maintained by the Company or any corporation controlled
by the Company; (iii) an acquisition by any underwriter
temporarily holding securities pursuant to an offering of
such securities; (iv) a Non-Control Transaction (as defined
in paragraph (c)); (v) any acquisition by one or more of
the officers who have "change in control" contracts with
the Company; or (vi) the acquisition of Company Voting
Securities from the Company, if a majority of the Board of
Directors of the Company approves a resolution providing
expressly that the acquisition pursuant to this clause (vi)
does not constitute a Change in Control under this paragraph
(a);
(b) individuals who, at the beginning of any period of
twenty-four (24) consecutive months, constitute the Board of
Directors of the Company (the "Incumbent Board") cease for any
reason to constitute at least a majority thereof, provided
that (i) 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 (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 (b), 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 of
Directors shall be deemed to be a member of the Incumbent
Board;
(c) a merger or consolidation or similar form of
corporate reorganization, or sale or other disposition of all
or substantially all of the assets, of the Company (a
"Business Combination") is consummated, unless immediately
following such Business Combination: (i) more than 55% of the
total voting power of the corporation resulting from such
Business Combination (including, without limitation, for
purposes of making such 55% determination, any
- 28 -
shares owned through any entity which directly or indirectly
has beneficial ownership of the Company Voting Securities or
all or substantially all of the Company's assets) eligible to elect
directors of such corporation is represented by shares held by
shareholders of the Company immediately prior to such Business
Combination (either by remaining outstanding or being
converted), (ii) no person (other than any holding company
resulting from such Business Combination, any employee benefit
plan sponsored or maintained by the Company (or the
corporation resulting from such Business Combination), or any
person which beneficially owned, immediately prior to such
Business Combination, directly or indirectly, 20% or more of
the Company Voting Securities) 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 corporation resulting from such Business
Combination, and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such
Business Combination were members of the Incumbent Board at
the time of the execution of the initial agreement, or action
of the Board of Directors, providing for such Business
Combination (a "Non-Control Transaction"); or
(d) the stockholders of the Company approve a plan of
complete liquidation or dissolution of the Company.
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, then a Change in Control
shall occur.
- 29 -
18. INTENTION RELATING TO RECENT LEGISLATION,
POSSIBLE FUTURE AMENDMENTS
18.01 The Company and the Executive intend that this
Agreement shall be performed according to its terms
hereinbefore set forth, and that such performance shall not
give rise to or result in any payment or benefit being subject
to the excise tax imposed by Section 4999 of the Code or the
related loss of deduction mandated by Section 280G(a) of the
Code. Each and every provision of this Agreement shall be
administered, interpreted and construed to carry out such
intention.
18.02 As a result of the issuance of proposed Department
of Treasury regulations on May 5, 1989, and with respect to
paragraph 18.01 of this Agreement, the amount to be paid to
the Executive under this Agreement upon a Change in Control of
the Company shall be limited to an amount not to exceed two
hundred ninety-nine percent (299%) of the "disqualified
individual's base amount" as those terms are defined in
Regulation 1.280G-1. The Company and the Executive recognize
that there are as yet no final regulations or rulings under,
or official interpretations of Sections 280G(a) and 4999.
Accordingly, the Company and the Executive agree that, when
Treasury Regulations are issued in proposed or final form
under Section 280G or 4999 of the Code or relevant rulings or
official interpretations are promulgated, they will at that
time, or from time to time, review this Agreement and take
such action, including executing amendments hereto, as the
Company and the Executive may agree to be necessary or
appropriate to carry out the aforesaid intention.
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IN WITNESS WHEREOF, the parties hereto have executed
this Agreement as of the day and year first above written.
ATTEST: PARKER-HANNIFIN CORPORATION,
an Ohio corporation
________________________________ By:__________________________
Secretary President & Chief
Executive Officer
THE EXECUTIVE
_________________________
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