Exhibit 10(b)
PARKER-HANNIFIN
CORPORATION
AMENDED AND RESTATED
CHANGE IN CONTROL SEVERANCE PLAN
Adopted: 07/21/2008
Effective: 07/21/2008
The Parker-Hannifin Corporation (the
“Company”), having determined that it is in the best
interests of the Company and its stockholders to secure the
continued services, dedication and objectivity of its management
employees in the event of any threat or occurrence of, or
negotiation or other action that could lead to, or create the
possibility of, a Change in Control (as defined in
Section 1(e)), without concern as to whether such employees
might be hindered or distracted by personal uncertainties and risks
created by any such possible Change in Control, established this
Parker-Hannifin Corporation Change in Control Severance Plan (the
“Plan”), originally effective March 1, 1996. To
encourage the full attention and dedication to the Company by such
employees, the Board authorized the Company to adopt the Plan. The
Plan is hereby amended and restated as of July 21, 2008 to
reflect the requirements of the American Jobs Creation Act (the
“Act”) with respect to nonqualified deferred
compensation subject to Section 409A of the Code. The Plan
will be administered in a manner consistent with all applicable
requirements of the Act and Section 409A of the Code and any
regulations or other guidance thereunder and any provision in the
Plan that is inconsistent with Section 409A of the Code shall
be void and without effect.
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1.
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Definitions . As used in this Plan, the following terms
shall have the respective meanings set forth below:
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(a)
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“
Affiliated Group ” means the Company and all entities
with which the Company would be considered a single employer under
Sections 414(b) and 414(c) of the Code, provided that in applying
Sections 1563(a)(1), (2), and (3) of the Code for purposes of
determining a controlled group of corporations under
Section 414(b) of the Code, the language “at least 50
percent” is used instead of “at least 80 percent”
each place it appears in Sections 1563(a)(1), (2), and (3) of
the Code, and in applying Section 1.414(c)-2 of the Treasury
Regulations for purposes of determining trades or businesses
(whether or not incorporated) that are under common control for
purposes of Section 414(c) of the Code, “at least 50
percent” is used instead of “at least 80 percent”
each place it appears in that regulation. Such term shall be
interpreted in a manner consistent with the definition of
“service recipient” contained in Section 409A of
the Code.
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(b)
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“
Board ” means the Board of Directors of the
Company.
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(c)
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“
Bonu s” means the annual bonuses payable pursuant to
the RONA Plan and the Target Incentive Program, except to the
extent determined by the Company to be extraordinary.
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(i)
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a material
breach by a Participant (as defined in Section 1(m)) of the
duties and responsibilities of the Participant (other than as a
result of incapacity due to physical or mental illness) which is
demonstrably willful and deliberate on the Participant’s
part, which is committed in bad faith or without reasonable belief
that such breach is in the best interests of the Company and which
is not remedied in a reasonable period of time after receipt of
written notice from the Company specifying such breach;
or
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(ii)
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the commission
by the Participant of a felony involving moral turpitude. The
determination of Cause shall be made by the Board unless expressly
delegated in writing by the Board to the Compensation Committee of
the Board (the “Committee”). Cause shall not exist
unless and until the Company has delivered to the Participant a
copy of a resolution duly adopted by three-quarters (3/4) of
the Board (or a majority of the Committee) at a meeting of the
Board (or the Committee) called and held for such purpose (after
reasonable notice to the Participant and an opportunity for the
Participant, together with the Participant’s counsel, to be
heard before the Board or the Committee, as the case may be),
finding that in the good faith opinion of the Board (or the
Committee) the Participant was guilty of the conduct set forth in
this Section 1(d) and specifying the particulars thereof in
detail. The Company must notify the Participant that it believes
“Cause” has occurred within ninety (90) days of
its knowledge of the event or condition constituting Cause. For
purposes of paragraph (i) above, any act, or failure to act,
by the Participant based upon authority given pursuant to a
resolution duly adopted by the Board or based upon the advice of
counsel for the Company shall be conclusively presumed to be done,
or omitted to be done, by the Participant in good faith and in the
best interests of the Company.
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(e)
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“
Change in Control ” means the occurrence of one of the
following events:
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(i)
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any
“person” (as such term is defined in
Section 3(a)(9) of the Securities Exchange Act of 1934 (the
“Exchange Act”) and as used in Sections 13(d)(3)
and 14(d)(2) of the Exchange Act) is or becomes a “beneficial
owner” (as defined in Rule 13d-3 under the Exchange Act),
directly or indirectly, of securities of the Company representing
20% or more of the combined voting power of the Company’s
then outstanding securities eligible to vote for the election of
the Board (the “Company Voting Securities”);
provided , however , that the event described in this
paragraph shall not be deemed to be a Change in Control by virtue
of any of the following situations:
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(A)
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an acquisition
by the Company or any Subsidiary;
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(B)
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an acquisition
by any employee benefit plan sponsored or maintained by the Company
or any Subsidiary;
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(C)
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an acquisition
by any underwriter temporarily holding securities pursuant to an
offering of such securities;
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(D)
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a Non-Control
Transaction (as defined in paragraph (iii));
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(E)
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with respect to
a Participant, any acquisition by the Participant or any group of
persons (within the meaning of Sections 13(d)(3) and 14(d)(2)
of the Exchange Act) including the Participant (or any entity in
which the Participant or a group of persons including the
Participant, directly or indirectly, holds a majority of the voting
power of such entity’s outstanding voting interests);
or
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(F)
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the acquisition
of Company Voting Securities from the Company, if a majority of the
Board approves a resolution providing expressly that the
acquisition pursuant to this clause (F) does not constitute a
Change in Control under this paragraph (i); or
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(ii)
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individuals
who, at the beginning of any period of twenty-four
(24) consecutive months, constitute the Board (the
“Incumbent Board”) cease for any reason to constitute
at least a majority thereof, provided that any person becoming a
director subsequent to the beginning of such twenty-four
(24) month period, whose election, or nomination for election,
by the Company’s shareholders was approved by a vote of at
least two-thirds of the directors comprising the Incumbent Board
who are then on the Board (either by a specific vote or by approval
of the proxy statement of the Company in which such person is named
as a nominee for director, without objection to such nomination)
shall be, for purposes of this paragraph (ii), considered as
though such person were a member of the Incumbent Board;
provided , however , that no individual initially
elected or nominated as a director of the Company as a result of an
actual or threatened election contest with respect to directors or
any other actual or threatened solicitation of proxies or consents
by or on behalf of any person other than the Board shall be deemed
to be a member of the Incumbent Board; or
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(iii)
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the
consummation of a merger, consolidation, share exchange or similar
form of corporate reorganization of the Company or any Subsidiary
that requires the approval of the Company’s stockholders,
whether for such transaction or the issuance of securities in
connection with the transaction or otherwise (a “Business
Combination”), unless:
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(A)
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immediately following such
Business Combination: (1) more than 50% of the total voting
power of the corporation resulting from such Business Combination
(the “Surviving Corporation”) or, if applicable, the
ultimate parent corporation which directly or indirectly has
beneficial ownership of 100% of the voting securities) eligible to
elect directors of the Surviving Corporation (the “Parent
Corporation”), is represented by Company Voting Securities
that were outstanding immediately prior to the Business Combination
(or, if applicable, shares into which such Company Voting
Securities were converted pursuant to such Business Combination),
and such voting power among the holders thereof is in substantially
the same proportion as the voting power of such Company Voting
Securities among the holders thereof immediately prior to the
Business Combination, (2) no person (other than any employee
benefit plan sponsored or maintained by the Surviving Corporation
or Parent Corporation) is or becomes the beneficial owner, directly
or indirectly, of 20% or more of the total voting power of the
outstanding voting securities eligible to elect directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation), and (3) at least a majority of the
members of the board of directors of the Parent
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Corporation (or, if there is no
Parent Corporation, the Surviving Corporation), following the
Business Combination, were members of the Incumbent Board at the
time of the Board’s approval of the execution of the initial
agreement providing for such Business Combination (a
“Non-Control Transaction”); or
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(B)
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the Business
Combination is effected by means of the acquisition of Company
Voting Securities from the Company, and a majority of the Board
approves a resolution providing expressly that such Business
Combination does not constitute a Change in Control under this
paragraph (iii); or
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(iv)
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the
stockholders of the Company approve a plan of complete liquidation
or dissolution of the Company or the sale or other disposition of
all or substantially all of the assets of the Company and its
Subsidiaries.
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Notwithstanding the foregoing, a
Change in Control shall not be deemed to occur solely because any
person acquires beneficial ownership of more than 20% of the
Company Voting Securities as a result of the acquisition of Company
Voting Securities by the Company which, by reducing the number of
Company Voting Securities outstanding, increases the percentage of
shares beneficially owned by such person; provided , that if
a Change in Control would occur as a result of such an acquisition
by the Company (if not for the operation of this sentence), and
after the Company’s acquisition such person becomes the
beneficial owner of additional Company Voting Securities that
increases the percentage of outstanding Company Voting Securities
beneficially owned by such person, a Change in Control shall then
occur.
Notwithstanding anything in this
Plan to the contrary, if the Participant’s employment is
terminated prior to a Change in Control, and the Participant
reasonably demonstrates that such termination was at the request of
a third party who has indicated an intention or taken steps
reasonably calculated to effect a Change in Control (a “Third
Party”), then for all purposes of this Plan except with
respect to benefits under sections 2(a)(1)(B) and 2(b)(2) that
constitute nonqualified deferred compensation subject to
Section 409A of the Code, the date immediately prior to the
date of such termination of employment shall be deemed to be the
date of a Change in Control for such Participant.
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(f)
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“
Code ” means the Internal Revenue Code of 1986, as
amended, or any successor statute, and regulations or other
guidance issued thereunder.
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(g)
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“
Company ” means Parker-Hannifin Corporation, an Ohio
corporation.
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(h)
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“
Corporate Change 409A Event ” means the occurrence of
one of the following events:
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(i)
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A change in ownership of the
Company, which occurs on the date that any one person or more than
one person acting as a group (within the meaning of the Regulations
under Section 409A of the Code) acquires ownership of stock of
the Company that, together with stock held by such person or group,
constitutes more than 50% of the total voting power of the stock of
the Company. Notwithstanding the foregoing, if any one person or
group is considered to own more than 50% of the total
voting
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power of the stock of the Company,
the acquisition of additional stock by the same person or group is
not considered to cause a change in the ownership of the Company or
a change in the effective control of the Company (within the
meaning of Section 1(h)(ii) of this Plan). Notwithstanding the
foregoing, a Corporate Change 409A Event shall not be deemed to
occur solely because any person acquires ownership of more than 50%
of the total voting power of the stock of the Company as a result
of the acquisition by the Company of stock of the Company which, by
reducing the number of shares outstanding, increases the percentage
of shares beneficially owned by such person; provided, that if a
Corporate Change 409A Event 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 stock of the Company
that increases the percentage of outstanding shares of stock of the
Company owned by such person, a Corporate Change 409A Event shall
then occur.
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(ii)
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A change in
effective control of the Company, which occurs on either of the
following dates:
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(A)
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The date that
any one person or more than one person acting as a group (within
the meaning of the Regulations under Section 409A of the Code)
acquires (or has acquired during the 12-month period ending on the
date of the most recent acquisition by such person or group)
ownership of stock of the Company possessing 30% or more of the
total voting power of the Company. Notwithstanding the foregoing,
if any one person or group is considered to own 30% or more of
total voting power of the stock of the Company, the acquisition of
additional stock by the same person or group is not considered to
cause a change in the effective control of the Company or a change
in ownership of the Company (within the meaning of
Section 1(h)(i) of this Plan). Notwithstanding the foregoing,
a Corporate Change 409A Event shall not be deemed to occur solely
because any person acquires ownership of more than 30% of the total
voting power of the stock of the Company as a result of the
acquisition by the Company of stock of the Company which, by
reducing the number of shares outstanding, increases the percentage
of shares beneficially owned by such person; provided, that if a
Corporate Change 409A Event 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 stock of the Company
that increases the percentage of outstanding shares of stock of the
Company owned by such person, a Corporate Change 409A Event shall
then occur.
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(B)
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The date that a
majority of the Company’s Board is replaced during any
12-month period by directors whose appointment or election was not
endorsed by a majority of the members of the Board prior to the
date of such appointment or election.
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(iii)
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A change in the ownership of a
substantial portion of the Company’s assets, which occurs on
the date that any one person or more than one person acting as a
group (within the meaning of the regulations under
Section 409A of the Code) acquires (or
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has acquired during the 12-month
period ending on the date of the most recent acquisition by such
person or group) assets that have a total gross fair market value
equal to or more than 65% of the total gross fair market value of
all the assets of the Company immediately before such acquisition
or acquisitions. The gross fair market value of assets shall be
determined without regard to liabilities associated with such
assets. Notwithstanding the foregoing, a transfer of assets shall
not result in a change in ownership of a substantial portion of the
Company’s assets if such transfer is to (A) a
shareholder of the Company (immediately before the asset transfer)
in exchange for or with respect to its stock, (B) an entity
50% or more of the total value or voting power of which is owned,
directly or indirectly, by the Company, (C) a person or group
(within the meaning of the regulations under Section 409A of
the Code) that owns, directly or indirectly, 50% or more of the
total value or voting power of the stock of the Company, or
(D) an entity, at least 50% of the total value or voting power
of which is owned, directly or indirectly by a person or group
described in Section 1(h)(iii)(C) of this Plan.
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Notwithstanding Sections 1(h)(i),
1(h)(ii)(A) and 1(h)(iii) above, the consummation of a Business
Combination shall not be deemed a Corporate Change 409A Event if,
immediately following such Business Combination: (a) more than
50% of the total voting power of the Surviving Corporation
resulting from such Business Combination or, if applicable, the
Parent Corporation of such Surviving Corporation, is represented by
Company Voting Securities that were outstanding immediately prior
to the Business Combination (or, if applicable, shares into which
such Company Voting Securities were converted pursuant to such
Business Combination), and such voting power among the holders
thereof is in substantially the same proportion as the voting power
of such Company Voting Securities among the holders thereof
immediately prior to the Business Combination, (b) no person
(other than any employee benefit plan sponsored or maintained by
the Surviving Corporation or the Parent Corporation) is or becomes
the beneficial owner, directly or indirectly, of 20% or more of the
total voting power of the outstanding voting securities eligible to
elect directors of the Parent Corporation (or, if there is no
Parent Corporation, the Surviving Corporation), and (c) at
least a majority of the members of the board of directors of the
Parent Corporation (or, if there is no Parent Corporation, the
Surviving Corporation), following the Business Combination, were
members of the Company’s Board at the time of the
Board’s approval of the execution of the initial agreement
providing for such Business Combination.
Notwithstanding the foregoing, an
acquisition of stock of the Company described in
Section 1(h)(i) or 1(h)(ii)(A) above shall not be deemed to be
a Corporate Change 409A Event by virtue of any of the following
situations: (a) an acquisition by the Company or any
Subsidiary; (b) an acquisition by any employee benefit plan
sponsored or maintained by the Company or any Subsidiary;
(c) an acquisition by any underwriter temporarily holding
securities pursuant to an offering of such securities; or
(d) the acquisition of stock of the Company from the
Company.
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(i)
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“ Date of
Termination ” means the date of a Participant’s
separation from service with the Company, within the meaning of
Sect
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