Exhibit (10)(f)* to Report
on Form 10-K for Fiscal
Year Ended June 30, 1996
by Parker-Hannifin Corporation
Parker-Hannifin Corporation 1987 Employees Stock Option Plan,
as amended as of August 15, 1996
*Numbered in accordance with Item 601 of Regulation S-K.
PARKER-HANNIFIN CORPORATION
1987 EMPLOYEES STOCK OPTION PLAN
Effective: January 29, 1987
Amended: August 15, 1996
1. Purpose. This 1987 Employees Stock Option Plan (the "Plan") is
designed to enable the Corporation, by the grant of options, to attract
and retain key employees for the Corporation and its subsidiaries and to
provide additional incentive to these employees through increased stock
ownership. Options granted under the Plan may be (a) incentive stock
options within the meaning of Section 422A of the Internal Revenue Code of
1986, as amended (the "Code"), or (b) nonqualified stock options.
2. Administration. The Plan shall be administered by a committee
consisting of not less than three directors of the Corporation (the
"Committee"), to be appointed by, and to serve during the pleasure of, the
Board of Directors of the Corporation. No director who has within one
year been eligible to participate in the Plan may be appointed or serve as
a member of the Committee. Subject to the terms of the Plan, the
Committee shall have full power and authority to interpret the provisions
and to supervise the administration of the Plan and to define the terms of
and grant options under the Plan. All decisions by the Committee pursuant
to the provisions of the Plan shall be made by a majority of its members
and shall be final.
3. Employees Who May Participate in the Plan. Employees to whom
options are granted shall be designated from time by the Committee. An
option may be granted to any salaried employee of the Corporation or of a
subsidiary with executive, managerial, technical or professional
responsibility, including any officer who is a member of the Board of
Directors. An employee may hold more than one option; however, for
incentive stock options, the aggregate fair market value (determined at
the time the option is granted) of the shares with respect to such
incentive stock options which are exercisable for the first time during
any calendar year (under all plans of the Corporation and its
subsidiaries) shall not exceed $100,000.
4. Shares Subject to the Plan. The shares subject to the Plan shall
be the Corporation's Common Shares, without par value, and may be
authorized but unissued shares or treasury shares. The total number of
shares that may be delivered upon the exercise of all options granted
under the Plan may not exceed l,000,000, subject, however. to adjustment
as provided in Section 12. Stock appreciation rights may be granted with
respect to all or part of the shares subject to an option granted under
the Plan. When all or part of an option is surrendered upon exercise of
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the related stock appreciation rights, the shares subject to the
surrendered part of the option shall be considered exercised in full and shall
not be available for the grant of future options under the Plan, and the number
of shares that may be delivered under the Plan shall be reduced accordingly.
When, however, an option is surrendered or expires for any reason other than
the exercise of the related stock appreciation rights, the shares subject to
the option shall again become available for offering under the Plan.
5. Option Price. The option price shall be determined by the
Committee or by the Board of Directors. In the case of incentive stock
options, the option price may not be less than 100% of the fair market
value of the shares subject to the option on the date the option is
granted, except that, if the optionee owns, at the time the option is
granted, shares possessing more than 10% of the total combined voting
power of all classes of stock of the Corporation or a subsidiary, the
option price may be not less than 110% of the fair market value of the
shares on the date the option is granted. In no event may previously
unissued shares be issued at a price less than that permitted by the Ohio
General Corporation Law. For purposes of this Plan, the "fair market
value" of shares on any date shall be the reported closing price of the
shares as reported for New York Stock Exchange-Composite Transactions on
that date or, if no shares are traced on that date, the next preceding date
on which trading occurred. In the event that the shares cease to be traded
on the New York Stock Exchange, the "fair market value" of the shares shall
be determined in the manner prescribed by the Committee.
6. Exercise of Options. Except as otherwise provided in Section 7,
or as may be permitted pursuant to options granted under Section 13, an
option may be exercised only while the optionee is in the employ of the
Corporation or of a subsidiary. Unless an option is accelerated as
provided in this Section 6, an optionee to whom an option has been granted
must remain in the continuous employ of the Corporation or of a subsidiary
for one year from the date on which the option is granted before he or she
may exercise any part of the option. Thereafter, and during the life of
the option, the option may be exercised at any time as to all of the
Common Shares subject to the option, or from time to time, as to any
portion of such Common Shares or in such installments as the Committee may
determine at the time the option is granted. No fraction of a Common
Share may, however, be purchased upon the exercise of an option. An
option shall be treated as outstanding for this purpose until the option
is exercised in full, is surrendered upon the exercise of related stock
appreciation rights, or expires by reason of the lapse of time.
The Board of Directors may, in its discretion and upon such terms as
it deems appropriate, accelerate the date on which any outstanding option
becomes exercisable in the event of a proposed merger or consolidation of
the Corporation into or with another corporation, a proposed sale of all or
a substantial part of the Corporation's assets, a tender or exchange offer
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for the Corporation's Common Shares, or another transaction or series of
transactions that the Board determines is likely to result in a change in
control of the Corporation. In addition to the foregoing, the Committee may
purchase stock options previously granted to any person who is at the time of
any such transaction a director or officer of the Corporation for a price
equal to the difference between the consideration per share payable
pursuant to the terms of the transaction and the option price.
7. Exercise of Options After Termination of Employment. No option
may be exercised after termination of the optionee's employment except in
the following situations:
(a) If the termination of employment is due to permanent
disability or to retirement under the applicable retirement plan or policy
of the Corporation or a subsidiary, the optionee shall have the right to
exercise the option in whole or in part within the period of two years
after the date of the termination of his employment.
(b) If the termination of employment is due to the death of the
optionee, the optionee's estate, personal representative, or beneficiary
shall have the right to exercise the option in whole or in part within the
period of two years after the date of the optionee's death.
(c) If the termination of employment is due to any other reason
except the optionee's permanent disability or retirement as specified in
(a) above or the optionee's death as specified in (b) above, the optionee
shall have the right to exercise the option in whole or in part within the
period of three months after the date of such termination of employment.
8. Termination of Options. An option granted under this Plan shall
terminate, and the right of the employee to purchase shares upon exercise
of the option shall expire, on the date determined by the Committee at the
time the option is granted. No option, however, may have a life of more
than ten years after the date it is granted, and, in the case of an
employee who owns, at the time the option is granted, stock possessing
more than 10% of the total combined voting power of all classes of stock
of the Corporation or a subsidiary, no incentive stock option may have a
life of more than five years after the date it is granted. If an option
is accelerated pursuant to Section 6, the Board may prescribe an earlier
termination date.
9. Notice of Grant. When an employee is granted an option under the
Plan, the Committee shall promptly cause the employee to be notified in writing
of the nature of the grant and the terms of the option. The date on which the
Committee approves the grant shall be considered to be the date on which the
option is granted.
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10. Notice of Exercise; Payment for Shares. An option shall be
considered to be exercised when the employee notifies the Corporation in
writing of his intention to do so and tenders payment in full of the
option price. Payment of the option price may be made in cash, by
delivery of Common Shares of the Corporation (taken at their fair market
value on the date of exercise, as defined in Section 5), or partly in cash
and partly in shares, unless otherwise determined by the Committee. The
employee shall have none of the rights of a shareholder with respect to
shares purchased upon exercise of an option until he has paid the option
price in full.
11. Nontransferrability of Options. An option granted under the Plan
may not be transferred other than by will or by the laws of descent and
distribution. Notwithstanding the foregoing, an employee may transfer any
nonqualified stock option granted under this Plan to members of his immediate
family (defined as his children, grandchildren and spouse) or to one or more
trusts for the benefit of such family members or partnerships in which such
family members are the only partners if the instrument evidencing such stock
option expressly so provides (or is amended to so provide) and the employee
does not receive any consideration for the transfer; provided that any such
transferred stock option shall continue to be subject to the same terms and
considerations that are applicable to such stock option immediately prior
to its transfer (except that such transferred stock option shall not be
further transferable by the transferee inter vivos). Each employee to whom
an option is granted, by accepting the option, agrees with the Corporation
that, in the event that the Corporation merges into or consolidates with
another corporation, the Corporation sells all or a substantial part of its
assets, or the Corporation's Common Shares are subject to a tender or
exchange offer, he will consent to the transfer or assumption of the option,
or accept a new option in substitution therefor, if the Committee or the
Board of Directors requests him to do so.
12. Adjustments upon Changes in Shares. In the event of any change
in the shares subject to the Plan or to any option right granted under the
Plan by reason of a merger, consolidation, reorganization,
recapitalization, stock dividend, stock split, exchange of shares, or
other change in the corporate structure of the Corporation, the aggregate
number of Common Shares as to which options may thereafter be granted
under the Plan, the number of Common Shares subject to each outstanding
option, and the option price for shares subject to each outstanding option
shall be appropriately adjusted by the Committee.
13. Substitute Options. The Board of Directors may grant options in
substitution for, or upon the assumption of, options granted by another
corporation that is merged into, consolidated with, or all or a
substantial part of the assets or stock of which is acquired by the
Corporation or a subsidiary. Subject to the limit in Section 4 on the
number of shares that may be delivered upon the exercise of options
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granted under this Plan, the terms and provisions of any options granted
under this Section 13 may vary from the terms and provisions otherwise
specified in this Plan and may, instead, correspond to the terms and
provisions of the options granted by the other corporation.
14. Purchase for Investment. Each employee receiving shares upon
exercise of an option may be required by the Corporation to furnish a
representation that he is acquiring the shares as an investment and not
with a view to distribution if the Corporation, in its sole discretion,
determines that the representation is required to ensure that the resale
or other disposition of the shares would not violate the Securities Act of
1933, as amended, or any applicable state securities laws. The Corporation
reserves the right to place any legend or other symbol on certificates for
shares delivered pursuant to the Plan, and to issue any stop transfer or
similar instructions to the transfer agent, that the Corporation deems
necessary and proper to assure compliance with any such representation.
15. Compliance with Securities Laws. No certificate for shares
shall be delivered upon exercise of an option until the Corporation has
taken any action that is required to comply with the provisions of the
Securities Act of 1933, as amended, the Securities Exchange Act of 1934,
as amended, and any applicable state securities laws and with the
requirements of any exchange on which the Corporation's Common Shares may,
at the time, be listed.
16. Duration and Termination of the Plan. The Plan shall remain in
effect until January 28, 1997, and shall then terminate, unless terminated
at an earlier date by action of the Board of Directors. Except as provided
in Section 18, termination of the Plan shall not affect options previously
granted.
17. Amendment of the Plan. The Board of Directors may alter or
amend the Plan from time to time prior to its termination, except that,
without shareholder approval, no amendment may increase the aggregate
number of shares with respect to which options may be granted (except in
accordance with the provisions of Section 12), reduce the option price at
which options may be exercised (except in accordance with the provisions
of Section 12), extend the time within which options may be granted or the
time within which an option may be exercised, or change the requirements
relating to eligibility or to administration of the Plan. Except in
accordance with the provisions of Section 12, the Board of Directors may
not, without the consent of the holder of the option, alter or impair any
outstanding option previously granted under this Plan. The Committee may,
with the agreement of the affected optionee, cancel any stock option
granted pursuant to the Plan. In the event of such cancellation the
Committee may authorize the grant of a new option for the same number of
Common Shares specified in the canceled stock option or for a different
number of Common Shares, at such option price and upon terms and
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conditions which would have been applicable under the Plan had the original
cancelled stock option not been granted.
18. Effective Date. This Plan was adopted by the Board of Directors
and became effective on January 29, 1987, subject to approval by the
Corporation's shareholders on or before October 28, 1987. Options may be
granted prior to approval of the Plan by shareholders, but no such option
may be exercised until after the Plan has been approved by shareholders.
If the shareholders do not approve the Plan on or before October 28, 1987,
all options previously granted under the Plan shall terminate.
Approved by the Shareholders on October 28,1987.
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