Exhibit (10)(r)* to Report
on Form 10-K for Fiscal
Year Ended June 30, 1995
by Parker-Hannifin Corporation
Parker-Hannifin Corporation Pension Restoration Plan,
as amended as of August 17, 1995
*Numbered in accordance with Item 601 of Regulation S-K.
Parker-Hannifin Corporation
PENSION RESTORATION PLAN
Parker-Hannifin Corporation, an Ohio corporation (the "Company"),
hereby establishes this Pension Restoration Plan (the "Plan"), effective
January 1, 1995, 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 have
occurred:
(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 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: (A)
an acquisition by the Company or, direct or indirect, majority-owned
subsidiaries of the Company; (B) an acquisition by any employee benefit
plan sponsored or maintained by the Company or any corporation
controlled by the Company; (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) any acquisition by one or more of the officers who have
"change in control" contracts with the Company; or (F) 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 (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 of Directors of the
Company (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 (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 of Directors shall be deemed to be a member of the
Incumbent Board;
(iii) 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:
(A) 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 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); (B) 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 (C) 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,
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or action of the Board of Directors, providing for such Business
Combination (a "Non-Control Transaction"); or
(iv) 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.
1.5 Code shall mean the Internal Revenue Code of 1986, as amended,
including any successor provisions.
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.
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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.
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%.
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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 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.
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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.
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.
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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 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.
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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. 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.
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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 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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