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                                                                    EXHIBIT 4(c)










                       THE GORMAN-RUPP COMPANY 401(k) PLAN

                 (As Amended and Restated as of August 1, 2000)










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                       THE GORMAN-RUPP COMPANY 401(k) PLAN
                 (As Amended and Restated as of August 1, 2000)


                                TABLE OF CONTENTS
                                -----------------

<TABLE>
<CAPTION>
                                                                                              Page

<S>                 <C>                                                                         <C>
ARTICLE I - DEFINITIONS AND CONSTRUCTION.......................................................  1
         1.1        Definitions................................................................  1
                    (1)       Account and Sub-Account..........................................  1
                    (2)       Act..............................................................  1
                    (3)       Administrator or Plan Administrator..............................  1
                    (4)       Automatic Salary Reduction Election................................1
                    (5)       Before-Tax Contributions.........................................  1
                    (6)       Before-Tax Contributions Sub-Account.............................  1
                    (7)       Beneficiary......................................................  2
                    (8)       Code.............................................................  3
                    (9)       Committee........................................................  3
                    (10)      Company..........................................................  3
                    (11)      Contributing Member..............................................  3
                    (12)      Controlled Group.................................................  3
                    (13)      Covered Employee.................................................  3
                    (14)      Credited Compensation............................................  4
                    (15)      Effective Date...................................................  4
                    (16)      Eligible Employee................................................  4
                    (17)      Employee.........................................................  4
                    (18)      Employer.........................................................  4
                    (19)      Employer Contributions...........................................  5
                    (20)      Employer Matching Contributions..................................  5
                    (21)      Employer Matching Contributions Sub-Account......................  5
                    (22)      Employer Profit Sharing Contributions............................  5
                    (23)      Employer Profit Sharing Contributio5
                                Sub-Account....................................................  5
                    (24)      Fiduciary........................................................  5
                    (25)      Gorman-Rupp Stock................................................  5
                    (26)      Gorman-Rupp Stock Fund...........................................  5
                    (27)      Hardship.........................................................  5
                    (28)      Investment Fund................................................... 6
                    (29)      Member............................................................ 6
                    (30)      Money Market Fund................................................. 6
                    (31)      Named Fiduciaries................................................. 6
                    (32)      Plan.............................................................. 6
                    (33)      Plan Year......................................................... 6
                    (34)      Restricted Employer Matching Contributions........................ 6
                    (35)      Restricted Employer Matching Contributions Sub-Account............ 6
                    (36)      Rollover Contributions............................................ 6
                    (37)      Rollover Contributions Sub-Account................................ 7
</TABLE>

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<TABLE>
<S>                 <C>                                                                         <C>
                    (38)      Salary Reduction Agreement........................................ 7
                    (39)      Spouse............................................................ 7
                    (40)      Trust............................................................. 7
                    (41)      Trust Agreement................................................... 7
                    (42)      Trust Fund........................................................ 7
                    (43)      Trustee........................................................... 7
                    (44)      Valuation Date.................................................... 7
         1.2        Construction................................................................ 7

ARTICLE II - ELIGIBILITY AND MEMBERSHIP......................................................... 9
         2.1        Eligible Employee........................................................... 9
         2.2        Commencement of Membership.................................................. 9
         2.3        Contributing Membership..................................................... 9
         2.4        Duration of Membership..................................................... 10

ARTICLE III - BEFORE-TAX AND ROLLOVER CONTRIBUTIONS............................................ 11
         3.1        Amount of Contributions.................................................... 11
         3.2        Payments to Trustee........................................................ 11
         3.3        Changes in Contributions................................................... 11
         3.4        Suspension and Resumption of Contributions................................. 12
         3.5        Rollover Contributions..................................................... 12

ARTICLE IV - EMPLOYER CONTRIBUTIONS............................................................ 13
         4.1        Amount of Employer Contributions........................................... 13
         4.2        Time for Making Employer Contributions..................................... 14
         4.3        Return of Employer Contributions........................................... 14
         4.4        Allocation of Employer Matching Contributions
                    and Restricted Employer Matching Contributions............................. 15
         4.5        Funding Policy............................................................. 16

ARTICLE V - LIMITATIONS ON CONTRIBUTIONS....................................................... 17
         5.1        Limitation on Deferrals.................................................... 17
         5.2        Limitation on Before-Tax Contributions..................................... 18
         5.3        Limitation on Matching Contributions....................................... 20
         5.4        Aggregate Limit and Monitoring Procedures.................................. 22
         5.5        Limitation on Individual Allocations....................................... 24
         5.6        Limitation on Total Individual Benefits.................................... 26
         5.7        Definitions for Limitations Provisions..................................... 27
         5.8        Limitation on Employer Contributions....................................... 28

ARTICLE VI - INVESTMENT OF CONTRIBUTIONS....................................................... 25
         6.1        Investment Funds........................................................... 29
         6.2        Account; Sub-Account....................................................... 29
         6.3        Reports.................................................................... 30
         6.4        Investment of Contributions................................................ 30
         6.5        Directions to Trustee...................................................... 31
         6.6        Loans to Members........................................................... 31

ARTICLE VII - MAINTENANCE AND VALUATION
                        OF MEMBERS' ACCOUNTS................................................... 36
</TABLE>


                                       ii

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<TABLE>
<S>                 <C>                                                                         <C>
         7.1        Valuation of Investment Funds.............................................. 36
         7.2        Procedures in Making Allocations and Corrections........................... 37
         7.3        Registration and Voting of Gorman-Rupp Stock............................... 38
         7.4        Tender or Sale of Gorman-Rupp Stock........................................ 39

ARTICLE VIII - VESTING, DISTRIBUTIONS AND WITHDRAWALS.......................................... 41
         8.1        Nonforfeitable Member Interests............................................ 41
         8.2        Distributions on Death While an Employee................................... 41
         8.3        Distributions on Other Termination of Employment........................... 41
         8.4        Distributions on Death after Termination
                      of Employment............................................................ 41
         8.5        Time of Distribution....................................................... 41
         8.6        Withdrawal of Contributions................................................ 43
         8.7        Order of Distributions and Withdrawals..................................... 44
         8.8        Facility of Payment........................................................ 45
         8.9        Duplication of Benefits.................................................... 45
         8.10       Distribution on Sale of Assets or Subsidiary................................45
         8.11       Transfers of Eligible Rollover Distributions................................46
         8.12       Distribution of Gorman-Rupp Stock...........................................48
         8.13       Distributions Pursuant to a QDRO............................................48

ARTICLE IX - ADMINISTRATION OF THE TRUST FUND.................................................. 49
         9.1        Appointment of Trustee..................................................... 49
         9.2        Duties of Trustee.......................................................... 49
         9.3        The Trust Fund............................................................. 49
         9.4        No Guarantee Against Loss.................................................. 49
         9.5        Payment of Benefits........................................................ 50
         9.6        Compensation and Expenses.................................................. 50
         9.7        No Diversion of Trust Fund................................................. 50
         9.8        Transfer to this Plan from Other Plans..................................... 51

ARTICLE X - ADOPTION OF THE PLAN BY OTHER EMPLOYERS............................................ 52
         10.1       Adoption................................................................... 52
         10.2       Withdrawal of Employer..................................................... 52
         10.3       Withdrawal of Employee Group............................................... 52

ARTICLE XI - THE COMMITTEE..................................................................... 54
         11.1       Appointment of Committee................................................... 54
         11.2       Formalities of Committee Action............................................ 54
         11.3       Plan Interpretation and Findings of Fact................................... 54
         11.4       Electronic Media........................................................... 55
         11.5       Assistance................................................................. 56
         11.6       Uniform Administration of Plan............................................. 56

ARTICLE XII - ADMINISTRATION OF THE PLAN
                       AND FIDUCIARY RESPONSIBILITY............................................ 57
         12.1       Responsibility for Administration.......................................... 57
         12.2       Named Fiduciaries.......................................................... 57
         12.3       Delegation of Fiduciary Responsibilities................................... 57
         12.4       Immunities................................................................. 58
</TABLE>

                                       iii

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<TABLE>
<S>                 <C>                                                                         <C>
         12.5       Limitation on Exculpatory Provisions....................................... 59
         12.6       Plan Conversions........................................................... 59

ARTICLE XIII - CLAIMS PROCEDURES............................................................... 60
         13.1       Method of Filing Claim..................................................... 60
         13.2       Notification by Committee.................................................. 60
         13.3       Review Procedure........................................................... 60

ARTICLE XIV - AMENDMENT, SUSPENSION OR TERMINATION............................................. 62
         14.1       Right to Amend, Suspend or Terminate....................................... 62
         14.2       Procedure for Amendment, Suspension
                      or Termination........................................................... 62
         14.3       Effect of Termination...................................................... 62
         14.4       Prohibition on Decreasing Accrued Benefits..................................62

ARTICLE XV - MISCELLANEOUS..................................................................... 64
         15.1       Spendthrift Provisions..................................................... 64
         15.2       No Enlargement of Employment Rights........................................ 64
         15.3       Notices, Reports and Statements............................................ 64
         15.4       Action by Company.......................................................... 65
         15.5       Merger or Transfer of Assets............................................... 65
         15.6       Acquisitions............................................................... 65
         15.7       Severability Provision..................................................... 66
         15.8       Military Service............................................................66

ARTICLE XVI - TOP-HEAVY PLAN REQUIREMENTS...................................................... 67
         16.1       Definitions................................................................ 67
                    (1)       Aggregation Group................................................ 67
                    (2)       Compensation..................................................... 67
                    (3)       Defined Benefit Plan............................................. 67
                    (4)       Defined Contribution Plan........................................ 67
                    (5)       Determination Date............................................... 67
                    (6)       Former Key Employee.............................................. 67
                    (7)       Key Employee...................................................   67
                    (8)       Non-Key Employee................................................. 68
                    (9)       Permissive Aggregation Group..................................... 68
                    (10)      Required Aggregation Group....................................... 69
                    (11)      Top-Heavy Account Balance........................................ 69
                    (12)      Top-Heavy Group.................................................. 69
                    (13)      Top-Heavy Plan................................................... 70
         16.2       Determination of Top-Heavy Status.......................................... 70
         16.3       Minimum Contribution Requirement........................................... 70
         16.4       Coordination With Other Plans.............................................. 71
</TABLE>




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                       THE GORMAN-RUPP COMPANY 401(k) PLAN
                 (As Amended and Restated as of August 1, 2000)


                  The Gorman-Rupp Company, an Ohio corporation, hereby amends
and completely restates The Gorman-Rupp Company Individual Profit Sharing
Retirement Plan to be known as The Gorman-Rupp Company 401(k) Plan to read as
follows effective as of August 1, 2000.

                    ARTICLE I - DEFINITIONS AND CONSTRUCTION
                    ----------------------------------------

                  1.1 DEFINITIONS. The following terms when used in the Plan and
Trust Agreement with initial capital letters, unless the context clearly
indicates otherwise, shall have the following respective meanings:

                  (1)  ACCOUNT AND SUB-ACCOUNT:  See Section 6.2.

                  (2) ACT: The Employee Retirement Income Security Act of 1974,
as the same has been and may be amended from time to time.

                  (3) ADMINISTRATOR OR PLAN ADMINISTRATOR: The Administrator of
the Plan as defined in section 3(16)(A) of the Act and section 414(g) of the
Code, shall be the Company, which may delegate all or any part of its powers,
duties and authorities in such capacity (without ceasing to be the Administrator
of the Plan) as hereinafter provided.

                  (4) AUTOMATIC SALARY REDUCTION ELECTION. An election deemed to
be made by an Eligible Employee to reduce, or to forego an increase in, his
Credited Compensation by the percentage specified in Section 3.1 and to have his
Employer contribute such amount to the Trust as a Before-Tax Contribution.

                  (5) BEFORE-TAX CONTRIBUTIONS: See Section 3.1.

                  (6) BEFORE-TAX CONTRIBUTIONS SUB-ACCOUNT: See Section 6.2.

                  (7) BENEFICIARY: A Member's Spouse or, if he has no Spouse or
his Spouse consents (in the manner hereinafter described in this Subsection (6))
to the designation


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                                                                               3


hereinafter provided for in this Subsection (6), such person or persons other
than, or in addition to, his Spouse as may be designated by a Member as his
death beneficiary under the Plan. Such a designation may be made, revoked or
changed only by an instrument (in form acceptable to the Committee) which is
signed by the Member, which, if he has a Spouse, includes his Spouse's written
consent to the action to be taken pursuant to such instrument (unless such
action results in the Spouse being named as the Member's sole Beneficiary), and
which is filed with the Committee before the Member's death. A Spouse's consent
required by this Subsection (6) shall be signed by the Spouse, shall acknowledge
the effect of such consent, shall be witnessed by a member of the Committee or
by a notary public and shall be effective only with respect to such Spouse. At
any time when all the persons designated by the Member as his Beneficiary have
ceased to exist, his Beneficiary shall be his Spouse or, if he does not then
have a Spouse, such relative or relatives of the Member (by blood, marriage or
adoption) and in such proportions as the Committee may select, or, in the
discretion of the Committee, the Member's estate. If a Member has no Spouse and
he has not made an effective Beneficiary designation pursuant to this Subsection
(6), his Beneficiary shall be determined by the Committee as provided in the
immediately preceding sentence. A person (or persons) designated by a
Participant as his Beneficiary who or which ceases to exist shall not be
entitled to any part of any payment thereafter to be made to the Participant's
Beneficiary unless the Participant's designation specifically provided to the
contrary or unless the Participant's Beneficiary is his Spouse who shall have
survived him, in which event any remaining payments shall be made to such
Spouse's estate unless the Participant has otherwise provided and the Spouse has
consented thereto as hereinabove set forth. If two or more persons designated as
a Member's Beneficiary are in existence, any action permitted or required to be
taken by a Beneficiary pursuant to any provision of the Plan shall not be
effective unless such action is taken by all such persons other than any


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                                                                               4


contingent Beneficiary who is not entitled to any payment under the Plan until
after another then existing Beneficiary ceases to exist; and if all such persons
cannot agree in respect of any such action required to be taken by a
Beneficiary, such action shall be taken by the Committee and shall be binding on
all such persons to the extent permitted by applicable law.

                  (8) CODE: The Internal Revenue Code of 1986, as the same has
been and may be amended from time to time.

                  (9)  COMMITTEE:  The committee provided for in Article XI.

                  (10)  COMPANY:  The Gorman-Rupp Company, an Ohio corporation.

                  (11)  CONTRIBUTING MEMBER:  See Section 2.3.

                  (12) CONTROLLED GROUP: The Employers and any and all other
corporations, trades and/or businesses, the employees of which, together with
Employees of the Employers, are required by section 414 of the Code to be
treated as if they were employed by a single employer.

                  (13) COVERED EMPLOYEE: (a) An Employee of an Employer,
excluding (i) in the case of the Company each Employee who is employed as a
Student Employee by the Company and (ii) any Employee who is a 'leased employee'
within the meaning of section 414(n) of the Code and (b) effective as of January
1, 1992, an Employee of a foreign subsidiary of an Employer who is a U.S.
citizen. For the purposes of the Plan, an Employee is employed as a Student
Employee if he is employed by the Company pursuant to its interns, cooperative
education, work experience or summer help programs.

                  (14) CREDITED COMPENSATION: The total of an Employee's
compensation for services performed for a Controlled Group Member which is
currently includible in gross income determined without regard to any Salary
Reduction Agreement under this Plan or amounts deferred by an Employee pursuant
to a salary reduction agreement entered into under Section 125 of the Code. For
purposes of this Subsection and any other Section of the Plan, Credited


<PAGE>   9


                                                                               5


Compensation of an Employee for any Plan Year in excess of $170,000 (as adjusted
pursuant to Code section 401(a)(17)) shall not be taken into account.

                  (15) EFFECTIVE DATE: January 1, 1984, for the Company and
Members who enter the Plan as its Employees, and, for any other Employers and
Members who enter the Plan as their Employees, the effective date specified by
such Employer in connection with its adoption of the Plan.

                  (16) ELIGIBLE EMPLOYEE: An Employee who satisfies the
eligibility requirements for membership in the Plan set forth in Section 2.1.

                  (17) EMPLOYEE: Effective as of January 1, 1997, any person who
is classified by a Controlled Group Member as an employee and, to the extent
required by Code section 414(n), any person who is a "leased employee" of a
Controlled Group Member. For purposes of this Subsection, a "leased employee"
means any person who, pursuant to an agreement between a Controlled Group Member
and any other person ("leasing organization"), has performed services for the
Controlled Group Member on a substantially full-time basis for a period of at
least one year, and such services are performed under the primary direction or
control of the Controlled Group Member.

                  (18) EMPLOYER: The Company and any other member of the
Controlled Group adopting the Plan pursuant to Section 10.1.

                  (19) EMPLOYER CONTRIBUTIONS: Employer Matching Contributions,
Employer Profit Sharing Contributions and Restricted Employer Matching
Contributions.

                  (20) EMPLOYER MATCHING CONTRIBUTIONS: See Section 4.1(1).

                  (21) EMPLOYER MATCHING CONTRIBUTIONS SUB-ACCOUNT: See Section
6.2.


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                                                                               6


                  (22) EMPLOYER PROFIT SHARING CONTRIBUTIONS: Employer
Contributions made to the Trust on account of each Plan Year during the period
commencing on January 1, 1984 and ending on December 31, 1988 which were
credited to a Member's Account

                  (23) EMPLOYER PROFIT SHARING CONTRIBUTIONS SUB-ACCOUNT: See
Section 6.2.

                  (24) FIDUCIARY: Any person, including each Named Fiduciary,
who is a fiduciary as defined in section 3(21)(A) of the Act.

                  (25) GORMAN-RUPP STOCK: Common shares, without par value, of
the Company.

                  (26) GORMAN-RUPP STOCK FUND: One of the Investment Funds which
shall be invested and reinvested in Gorman-Rupp Stock.

                  (27) HARDSHIP: Financial need on the part of a Member on
account of:

                           (a) expenses for medical care described in section
                  213(d) of the Code previously incurred by the Member, the
                  Member's Spouse or any dependents of the Member (as defined in
                  section 152 of the Code) or necessary for those persons to
                  obtain medical care described in such section 213(d);

                           (b) costs directly related to the purchase of a
                  principal residence for the Member (excluding mortgage
                  payments);

                           (c) payment of tuition, related educational fees and
                  room and board expenses for the next 12 months of
                  post-secondary education for the Member, or the Member's
                  Spouse, children or dependents;

                           (d) payments necessary to prevent the eviction of the
                  Member from the Member's principal residence or foreclosure on
                  the mortgage of that residence; or

                           (e) any other financial need which the Commissioner
                  of Internal Revenue, through the publication of revenue
                  rulings, notices and other documents of general


<PAGE>   11


                                                                               7


                  applicability, may from time to time designate as a deemed
                  immediate and heavy financial need as provided in Treasury
                  Regulations ss. 1.401(k)-1(d)(2)(iv)(A).


                  (28) INVESTMENT FUND: Any of the funds established and
maintained under the provisions of Section 6.1.

                  (29) MEMBER: An Eligible Employee who has become or continues
to be a Member of the Plan in accordance with the provisions of Article II.

                  (30) MONEY MARKET FUND: One of the Investment Funds which
shall be invested and reinvested in money market instruments including U.S.
Government securities, high-quality commercial paper, repurchase agreements and
certificates of deposit.

                  (31) NAMED FIDUCIARIES: The persons designated in or pursuant
to Section 12.2.

                  (32) PLAN: The Gorman-Rupp Company 401(k) Plan, the terms of
which are herein set forth, as the same may be amended, supplemented or restated
from time to time.

                  (33) PLAN YEAR: A calendar year.

                  (34) RESTRICTED EMPLOYER MATCHING CONTRIBUTIONS: See Section
4.1(2).

                  (35) RESTRICTED EMPLOYER MATCHING CONTRIBUTIONS SUB-ACCOUNT:
An account established for each Member to which Restricted Employer Matching
Contributions made on or after August 1, 2000 shall be allocated.

                  (36) ROLLOVER CONTRIBUTIONS: Amounts transferred to a Member's
Account pursuant to Section 3.5 of the Plan.

                  (37) ROLLOVER CONTRIBUTIONS SUB-ACCOUNT: See Section 6.2.

                  (38) SALARY REDUCTION AGREEMENT: An arrangement made under the
Plan pursuant to which an Employee agrees to reduce, or to forego an increase
in, his Credited Compensation and his Employer agrees to contribute to the Trust
the amount so reduced or foregone as a Before-Tax Contribution.


<PAGE>   12


                                                                               8


                  (39) SPOUSE: The person to whom a Member is legally married at
the specified time.

                  (40) TRUST: The trust created by the Trust Agreement.

                  (41) TRUST AGREEMENT: The Trust Agreement between the Company
and the Trustee dated as of January 1, 1984, creating the Trust contemplated by
the Plan, as the same may be amended, supplemented or restated from time to
time, or any trust agreement superseding the same.

                  (42) TRUST FUND: The trust estate held by the Trustee under
the provisions of the Plan and Trust Agreement.

                  (43) TRUSTEE: National City Bank, or its successor or
successors in trust under the Trust Agreement.

                  (44) VALUATION DATE: Each day on which the New York Stock
Exchange is open for trading.

                  1.2 CONSTRUCTION. (1) Unless the context otherwise indicates,
the masculine wherever used in the Plan shall include the feminine, the singular
shall include the plural and the plural shall include the singular.

         (2) Whenever the word "person" appears in the Plan, it shall refer to
both natural and legal persons.

         (3) Where headings have been supplied for portions of the Plan and of
the Trust Agreement (other than the headings to the Subsections in Section 1.1),
they have been supplied for convenience only and are not to be taken as limiting
or extending the meaning of any of such portions of such documents.

         (4) Except to the extent federal law controls, the Plan shall be
governed, construed and administered according to the laws of the State of Ohio,
and all persons accepting or claiming


<PAGE>   13


                                                                               9


benefits under the Plan or Trust Agreement shall be bound and deemed to consent
to their provisions.

         (5) This amendment and restatement of the Plan shall constitute an
amendment, restatement and continuation of the Plan. This amendment and
restatement is generally effective August 1, 2000. However, certain provisions
of this amendment and restatement are effective as of some other date. The
provisions of this amendment and restatement which are effective prior to August
1, 2000 shall be deemed to amend the corresponding provisions of the Plan as in
effect before this amendment and restatement. Events occurring before the
applicable effective date of any provision of this amendment and restatement
shall be governed by the applicable provision of the Plan in effect on the date
of the event.



<PAGE>   14


                                                                              10


                     ARTICLE II - ELIGIBILITY AND MEMBERSHIP
                     ---------------------------------------

                  2.1 ELIGIBLE EMPLOYEE. On and after January 1, 1999, an
Employee shall become an Eligible Employee under the Plan on the first date that
he is a Covered Employee.

                  2.2 COMMENCEMENT OF MEMBERSHIP. An Eligible Employee shall
become a Member in the Plan by becoming a Contributing Member pursuant to an
Automatic Salary Reduction Election or a Salary Reduction Agreement.

                  2.3 CONTRIBUTING MEMBERSHIP. Any Eligible Employee who was a
Contributing Member on December 31, 1998 shall continue to be a Contributing
Member on January 1, 1999, unless he has elected to suspend his Before-Tax
Contributions pursuant to Section 3.4. An Employee who first becomes an Eligible
Employee (or again becomes an Eligible Employee after ceasing to be an Eligible
Employee) on or after January 1, 1999 shall become a Contributing Member, as of
the first payroll date after becoming an Eligible Employee, pursuant to an
Automatic Salary Reduction Election, unless such Eligible Employee files with
the Committee at least ten days before such payroll date a Salary Reduction
Agreement or a written election (on a form provided by the Committee) not to
have Before-Tax Contributions contributed to the Trust on his behalf. A Salary
Reduction Agreement filed by an Eligible Employee shall include (a) his
authorization to his Employer to withhold from, or reduce, each payment of
Credited Compensation made to him after the date his Salary Reduction Agreement
is filed with the Committee by the amount designated in such Agreement and to
have his Employer pay the same amount to the Trust as Before-Tax Contributions,
and (b) his direction that the Before-Tax Contributions and Employer
Contributions made for him be invested in any one or more of the Investment
Funds, as provided in Section 6.4.

                  2.4 DURATION OF MEMBERSHIP. Once an Eligible Employee becomes
a Member, he shall remain a Member so long as he continues to be an Employee or
has an Account under the


<PAGE>   15


                                                                              11


Plan, whether or not he continues to be an Eligible Employee, provided, however,
that if a Member ceases to be an Eligible Employee, Before-Tax Contributions may
not be made for him pursuant to Section 3.1, until he again becomes an Eligible
Employee. If a Member ceases to be an Employee and later again becomes an
Employee, he shall become an Eligible Employee on the first date that he is a
Covered Employee.



<PAGE>   16


                                                                              12


               ARTICLE III - BEFORE-TAX AND ROLLOVER CONTRIBUTIONS
               ---------------------------------------------------

                  3.1 AMOUNT OF CONTRIBUTIONS. A Member who files a Salary
Reduction Agreement with the Committee, as provided in Section 2.3, shall agree
to have his Employer make Before-Tax Contributions for him to the Trust of (1)
effective prior to January 1, 2001, up to 10% (in 1% increments) and, (2)
effective January 1, 2001, up to 15% (in 1% increments), of his unreduced
Credited Compensation through equal percentage reductions of each payment of
Credited Compensation otherwise payable to him. A Member who becomes a
Contributing Member pursuant to an Automatic Salary Reduction Election as
provided in Section 2.3 shall be deemed to agree to have his Employer make
Before-Tax Contributions for him to the Trust of 2% of his unreduced Credited
Compensation through equal percentage reductions of each payment of Credited
Compensation otherwise payable to him. If a Member's Before-Tax Contributions
must be reduced to comply with the requirements of Section 5.4 or the
requirements of applicable law, his Before-Tax Contributions as so reduced shall
be the maximum percentage of his unreduced Credited Compensation permitted by
such Section or law notwithstanding the foregoing provisions of this Section
requiring that Before-Tax Contributions be made in 1% increments of his
unreduced Credited Compensation.

                  3.2 PAYMENTS TO TRUSTEE. Before-Tax Contributions made for a
Member pursuant to his Salary Reduction Agreement shall be transmitted by his
Employer to the Trustee not later than 15 business days after the end of the
month in which such Contributions would otherwise have been payable to him as
Credited Compensation.

                  3.3 CHANGES IN CONTRIBUTIONS. The percentage of Before-Tax
Contributions elected (or deemed elected) to be made by a Member pursuant to
Section 3.1 shall continue in effect, notwithstanding any changes in the
Member's Credited Compensation. A Member may, however, in accordance with the
percentages permitted by Sections 3.1, change the percentage of


<PAGE>   17


                                                                              13


his Before-Tax Contributions effective as of the next payroll date in accordance
with procedures established by the Committee.

                  3.4 SUSPENSION AND RESUMPTION OF CONTRIBUTIONS. A Member may
suspend his Before-Tax Contributions effective as of any date in accordance with
procedures established by the Committee. A Member who has suspended his
Before-Tax Contributions may, in accordance with procedures established by the
Committee, resume making such Before-Tax Contributions as of any payroll date if
he is then an Eligible Employee and he has again enrolled pursuant to Sections
2.3 and 3.1.

                  3.5 ROLLOVER CONTRIBUTIONS. The Trustee shall, at the
direction of the Committee, receive and thereafter hold and administer as a
Rollover Contribution and part of the Trust Fund (1) all or any portion of an
eligible rollover distribution (as defined in Section 8.11(3) of the Plan except
that the distribution shall be from another qualified trust) that was
distributed to a Member, or is transferred at the request of a Member, from a
qualified trust, provided that the requirements of Section 402(c) or 401(a)(31)
of the Code are met or (2) the entire amount of a distribution to a Member that
satisfies the requirements of section 408(d)(3)(A)(ii) of the Code. For purposes
of this Section, the term "qualified trust" shall have the meaning ascribed to
such term in Subsection 9.8(1) of the Plan.



<PAGE>   18


                                                                              14


                       ARTICLE IV - EMPLOYER CONTRIBUTIONS
                       -----------------------------------

                  4.1 AMOUNT OF EMPLOYER CONTRIBUTIONS. (1) (Employer Matching
Contributions) Subject to the provisions of the Plan and Trust Agreement and to
the extent it lawfully may, each Employer shall contribute to the Trust on
account of each Plan Year, out of its net earnings for such Plan Year, and/or
its accumulated earnings from prior Plan Years, an amount (the "Employer
Matching Contributions") equal to (a) for the period commencing on or after
January 1, 1989 and ending on December 31, 1998, 20% of the first 2% of
Before-Tax Contributions and 10% of the next 4% of Before-Tax Contributions made
during the Plan Year pursuant to Section 3.1, and (b) for the Plan Year
commencing on January 1, 1999 and for the period from January 1, 2000 through
July 31, 2000, an Employer Matching Contribution equal to 20% of the first 4% of
Before-Tax Contributions made during such Plan Year or period pursuant to
Section 3.1 for its Employees who are entitled to an allocation of the
Employer's Employer Matching Contributions for such Plan Year or period pursuant
to Section 4.4.

                  (2) (Restricted Employer Matching Contributions) Subject to
the provisions of the Plan and Trust Agreement and to the extent it lawfully
may, each Employer shall contribute to the Trust on account of the period
commencing on or after August 1, 2000 and ending on December 31, 2000 and on
account of each Plan Year thereafter, out of its net earnings for such period or
Plan Year, and/or its accumulated earnings from prior Plan Years, an amount (the
"Restricted Employer Matching Contributions") equal to 40% of the first 4% of
Before-Tax Contributions made during such period or Plan Year pursuant to
Section 3.1 for its Employees who are entitled to an allocation of the
Employer's Restricted Employer Matching Contributions for such period or Plan
Year pursuant to Section 4.4.

                  (3) As used in this Section, the terms "net earnings" and
"accumulated earnings" shall mean the net earnings and accumulated earnings,
respectively, of each Employer as


<PAGE>   19


                                                                              15


determined by the auditor of such Employer in accordance with generally accepted
accounting principles.

                  4.2 TIME FOR MAKING EMPLOYER CONTRIBUTIONS. (1) (Employer
Matching Contributions) Each Employer shall make its Employer Matching
Contributions to the Trust not later than 30 days after the end of each calendar
month and such Contributions shall be equal to 20% of the first 4% of Before-Tax
Contributions made during such calendar month for Members who are Employees of
such Employer and who are entitled to an allocation of the Employer's Matching
Contributions for such calendar month pursuant to Section 4.4.

                  (2) (Restricted Employer Matching Contributions) Each Employer
shall make its Restricted Employer Matching Contributions to the Trust not later
than 30 days after the end of each calendar month and such Contributions shall
be equal to 40% of the first 4% of Before-Tax Contributions made during such
calendar month for Members who are Employees of such Employer and who are
entitled to an allocation of the Restricted Employer's Matching Contributions
for such calendar month pursuant to Section 4.4.

                  4.3 RETURN OF EMPLOYER CONTRIBUTIONS. (1) Except as provided
in Subsection (2) of this Section or in Sections 5.1(3), 5.2(5) and 5.5(4), the
Trust Fund shall never inure to the benefit of the Employers and shall be held
for the exclusive purposes of providing benefits to Employees, Members and their
Beneficiaries and defraying reasonable expenses of administering the Plan.

                  (2) If an Employer Contribution to the Trust is made by an
Employer by a mistake of fact, the excess of the amount contributed over the
amount that would have been contributed had there not occurred a mistake of fact
shall be returned to such Employer if the Employer so directs within one year
after the payment of such contribution. If an Employer Contribution made by an
Employer which is conditioned upon the deductibility of the


<PAGE>   20


                                                                              16


Contribution under section 404 of the Code (or any successor thereto) is not
fully deductible under such Code Section (or any successor thereto), such
Contribution, to the extent the deduction therefor is disallowed, shall be
returned to the Employer if the Employer so directs within one year after the
disallowance of the deduction.

                  (3) Earnings attributable to Employer Contributions returned
to an Employer pursuant to this Section may not be returned, but losses
attributable thereto shall reduce the amount to be returned.

                  4.4 ALLOCATION OF EMPLOYER MATCHING CONTRIBUTIONS AND
RESTRICTED EMPLOYER MATCHING CONTRIBUTIONS. (1) Each Employer Matching
Contribution made in respect of a calendar month pursuant to Section 4.2(1)
shall, subject to the provisions of Articles V and XVI, be allocated and
credited to the Account of each Employee of the Employer for whom Before- Tax
Contributions were made during such calendar month, and who is both a Member and
an Eligible Employee on the last day of such calendar month, with each such
Employee being credited with a portion of such Employer's Employer Matching
Contribution equal to (a) for the period from January 1, 1989 through December
31, 1998, 20% of the first 2% of Before-Tax Contributions and 10% of the next 4%
of Before-Tax Contributions made for him pursuant to Section 3.1 during such
calendar month and (b) for the period from January 1, 1999 through July 31,
2000, 20% of the first 4% of Before-Tax Contributions made for him pursuant to
Section 3.1 during such calendar month.

                   (2) On or after August 1, 2000, each Restricted Employer
Matching Contribution made in respect of a calendar month pursuant to Section
4.2(2) shall, subject to the provisions of Articles V and XVI, be allocated and
credited to the Account of each Employee of the Employer for whom Before-Tax
Contributions were made during such calendar month, with each such Employee
being credited with a portion of such Employer's Restricted Employer Matching


<PAGE>   21


                                                                              17


Contribution equal to 40% of the first 4% of Before-Tax Contributions made for
him pursuant to Section 3.1 during such calendar month.

                  4.5 FUNDING POLICY. To the extent such has not already been
done, the Company shall determine, establish and carry out a funding policy and
method consistent with the objectives of the Plan and the requirements of Title
I of the Act.



<PAGE>   22


                                                                              18


                    ARTICLE V - LIMITATIONS ON CONTRIBUTIONS
                    ----------------------------------------

                  5.1 LIMITATION ON DEFERRALS. (1) Notwithstanding the foregoing
provisions of Articles III and IV, the sum of a Member's Before-Tax
Contributions shall not, for any taxable year of such Member commencing on or
after January 1, 2000, exceed $10,500 (as such amount may be adjusted for
increases in the cost of living pursuant to regulations prescribed by the
Secretary of the Treasury). For purposes of this Section a Member's Before-Tax
Contributions shall include (a) any employer contribution made under any
qualified cash or deferred arrangement as defined in section 401(k) of the Code
to the extent not includible in gross income for the taxable year under section
402(a)(8) of the Code (determined without regard to section 402(g) of the Code),
(b) any employer contribution to the extent not includible in gross income for
the taxable year under section 402(h)(1)(B) of the Code (determined without
regard to section 402(g) of the Code) and (c) any employer contribution to
purchase an annuity contract under section 403(b) of the Code under a salary
reduction agreement within the meaning of section 3121(A)(5)(D) of the Code.

                  (2) In the event that the amount described in Subsection (1)
of this Section is exceeded for a Member for any taxable year of such Member
specified in such Subsection (1) (hereinafter called the "excess deferrals"),
such excess deferrals (and any income allocable thereto) shall be distributed to
the Member by April 1 following the close of the taxable year in which such
excess deferrals occurred if (and only if), by March 1 following the close of
such taxable year the Member (a) allocates the amount of such excess deferrals
among the plans under which the excess deferrals were made and (b) notifies the
Committee of the portion allocated to this Plan.

                  (3) In the event that a portion of a Member's Before-Tax
Contributions are distributed to him pursuant to Subsection (2) of this Section,
Restricted Employer Matching


<PAGE>   23


                                                                              19


Contributions (prior to August 1, 2000, Employer Matching Contributions) made
with respect to such Before-Tax Contributions (and any income allocable thereto)
shall be returned to the Employer which made such Restricted Employer Matching
Contributions (prior to August 1, 2000, Employer Matching Contributions).

                  5.2 LIMITATION ON BEFORE-TAX CONTRIBUTIONS. (1)
Notwithstanding the foregoing provisions of Articles III and IV and effective as
of January 1, 1997, for any Plan Year,

                  (a) the actual deferral percentage (as defined in Subsection
         (2) of this Section) for the group of highly compensated Eligible
         Employees (as defined in Subsection (3) of this Section) for such Plan
         Year shall not exceed the actual deferral percentage for all other
         Eligible Employees for the preceding Plan Year multiplied by 1.25, or

                  (b) the excess of the actual deferral percentage for the group
         of highly compensated Eligible Employees for such Plan Year over the
         actual deferral percentage for all other Eligible Employees for the
         preceding Plan Year shall not exceed 2 percentage points, and the
         actual deferral percentage for the group of highly compensated Eligible
         Employees for such Plan Year shall not exceed the actual deferral
         percentage for all other Eligible Employees for the preceding Plan Year
         multiplied by 2.

If two or more plans which include cash or deferred arrangements are considered
as one plan for purposes of sections 401(a)(4) or 410(b) of the Code, such
arrangements included in such plans shall be treated as one arrangement for the
purposes of this Subsection; and if any highly compensated Eligible Employee is
a participant under two or more cash or deferred arrangements of the Controlled
Group, all such arrangements shall be treated as one cash or deferred
arrangement for purposes of determining the deferral percentage with respect to
such Eligible Employee.


<PAGE>   24


                                                                              20


                  (2) For the purposes of this Section, the actual deferral
percentage for a specified group of Eligible Employees for a Plan Year shall be
the average of the ratios (calculated separately for each Eligible Employee in
such group) of (a) the amount of Before-Tax Contributions actually paid to the
Trust for each such Eligible Employee for such Plan Year (including any "excess
deferrals" described in Section 5.1) to (b) the Eligible Employee's Credited
Compensation for such Plan Year.

                  (3) For the purposes of the Plan, the term "highly compensated
Eligible Employee" for a particular Plan Year shall mean any Eligible Employee
(a) who, during the current or the preceding Plan Year, was at any time a
5-percent owner (as such term is defined in Code section 416(i)(1)) or (b) for
the preceding Plan Year, received compensation from the Controlled Group in
excess of the amount in effect for such Plan Year under Code section
414(q)(1)(B). For the purposes of this Subsection, the term "compensation" shall
mean (i) for the period prior to January 1, 1998, the sum of an Employee's
compensation under Section 5.5(3) and his Before-Tax Contributions, and (ii) for
the period commencing on and after January 1, 1998, an Employee's compensation
under Section 5.5(3).

                  (4) In the event that excess contributions (as such term is
hereinafter defined) are made to the Trust for any Plan Year, then, prior to
March 15 of the following Plan Year, such excess contributions (and any income
allocable thereto) shall be distributed to the highly compensated Eligible
Employees on the basis of the respective portions of the excess contributions
attributable to each such Eligible Employee. The income allocable to excess
contributions is equal to the sum of the allocable gain or loss for the Plan
Year. Effective as of January 1, 1997, for the purposes of this Subsection (4),
the term "excess contributions" shall mean, for any Plan Year, the excess of (a)
the aggregate amount of Before-Tax Contributions actually paid to the Trust on
behalf of highly compensated Eligible Employees for such Plan


<PAGE>   25


                                                                              21


Year over (b) the maximum amount of such Before-Tax Contributions permitted for
such Plan Year under Subsection (1) of this Section, determined by reducing
Before-Tax Contributions made on behalf of highly compensated Eligible Employees
beginning with the highly compensated Eligible Employee with the highest dollar
amount of Before-Tax Contributions.

                  (5) In the event all or a portion of a Member's Before-Tax
Contributions are distributed to him pursuant to Subsection (4) of this Section,
Restricted Employer Matching Contributions (prior to August 1, 2000, Employer
Matching Contributions) made with respect to such Before-Tax Contributions (and
any income allocable thereto) shall be returned to the Employer which made such
Restricted Employer Matching Contributions (prior to August 1, 2000, Employer
Matching Contributions).

                  5.3 LIMITATION ON MATCHING CONTRIBUTIONS. (1) Notwithstanding
the foregoing provisions of Article IV and effective as of January 1, 1997, for
any Plan Year the contribution percentage (as defined in Subsection (2) of this
Section) for the group of highly compensated Eligible Employees (as defined in
Section 5.2(3)) for such Plan Year shall not exceed the greater of (a) 125
percent of the contribution percentage for all other Eligible Employees for the
preceding Plan Year or (b) the lesser of (i) 200 percent of the contribution
percentage for all other Eligible Employees for the preceding Plan Year or (ii)
the contribution percentage for all other Eligible Employees for the preceding
Plan Year plus 2 percentage points. If two or more plans of the Controlled Group
to which employer matching contributions are made are treated as one plan for
purposes of section 410(b) of the Code, such plans shall be treated as one plan
for purposes of this Subsection (1); and if a highly compensated Eligible
Employee participates in two or more plans of the Controlled Group to which such
contributions are made, all such contributions shall be aggregated for purposes
of this Subsection (1).


<PAGE>   26


                                                                              22


                  (2) For the purposes of this Section, the contribution
percentage for a specified group of Eligible Employees for a Plan Year shall be
the average of the ratios (calculated separately for each Eligible Employee in
such group) of (a) the sum of the Restricted Employer Matching Contributions
(prior to August 1, 2000, Employer Matching Contributions) and, at the election
of the Company, any Before-Tax Contributions not taken into account for the Plan
Year under Section 5.2(2), made under the Plan by or on behalf of each such
Eligible Employee for such Plan Year to (b) the Eligible Employee's Credited
Compensation for such Plan Year.

                  (3) In the event that excess aggregate contributions (as such
term is hereinafter defined) are made to the Trust for any Plan Year, then,
prior to March 15 of the following Plan Year, such excess contributions (and any
income allocable thereto) shall be distributed to the highly compensated
Eligible Employees on the basis of the respective portions of the excess
contributions attributable to each such Eligible Employee. The income allocable
to excess aggregate contributions is equal to the sum of the allocable gain or
loss for the Plan Year. Effective as of January 1, 1997, for the purposes of
this Subsection (3), the term "excess aggregate contributions" shall mean, for
any Plan Year, the excess of (a) the aggregate amount of the Restricted Employer
Matching Contributions (prior to August 1, 2000, Employer Matching
Contributions) actually paid to the Trust on behalf of highly compensated
Eligible Employees for such Plan Year over (b) the maximum amount of such
Restricted Employer Matching Contributions (prior to August 1, 2000, Employer
Matching Contributions) permitted for such Plan Year under Subsection (1) of
this Section, determined by reducing Restricted Employer Matching Contributions
(prior to August 1, 2000, Employer Matching Contributions) made on behalf of
highly compensated Eligible Employees beginning with the highly compensated
Eligible Employee with the highest dollar amount of Restricted Employer Matching
Contributions (prior to August 1, 2000, Employer Matching Contributions).


<PAGE>   27


                                                                              23


                  (4) The determination of excess aggregate contributions under
this Section shall be made after (a) first determining the excess deferrals
under Section 5.1 and (b) then determining the excess contributions under
Section 5.2.

                  5.4 AGGREGATE LIMIT AND MONITORING PROCEDURES. (1)
Notwithstanding the provisions of Article III or Article IV, if after the
application of Sections 5.1, 5.2 and 5.3, the sum of the actual deferral
percentage and the contribution percentage for the group of highly compensated
Eligible Employees (as defined in Section 5.2(3)) exceeds the "aggregate limit"
(as defined in Treasury Regulation section 1.401(m)-2(b)(3)) then the
contributions made for such Plan Year for highly compensated Eligible Employees
shall be reduced so that the aggregate limit is not exceeded. Such reductions
shall be made first in Before-Tax Contributions (but only to the extent that
they are not matched by Restricted Employer Matching Contributions (prior to
August 1, 2000, Employer Matching Contributions)) and then in Restricted
Employer Matching Contributions (prior to August 1, 2000, Employer Matching
Contributions). Reductions in contributions shall be made in the manner provided
in Section 5.2 or 5.3, as applicable. The amount by which each such highly
compensated Eligible Employee's contributions are reduced shall be treated as
excess contributions or excess aggregate contributions under Section 5.2 or 5.3,
as applicable. For the purposes of this Section, the actual deferral percentage
and contribution percentage of the highly compensated Eligible Employees are
determined after any reductions required to meet those tests under Sections 5.2
and 5.3. Notwithstanding the foregoing provisions of this Section, no reduction
shall be required by this Subsection if either (a) the actual deferral
percentage of the highly compensated Eligible Employees does not exceed 1.25
multiplied by the actual deferral percentage of the non-highly compensated
Eligible Employees, or (b) the contribution


<PAGE>   28


                                                                              24


percentage of the highly compensated Eligible Employees does not exceed 1.25
multiplied by the contribution percentage of the non-highly compensated Eligible
Employees.

                  (2) In order to ensure that at least one of the actual
deferral percentages specified in Section 5.2(1), at least one of the
contribution percentages specified in Section 5.3(1) and the aggregate limit
described in Subsection (1) of this Section are satisfied for each applicable
Plan Year, the Company shall monitor (or cause to be monitored) the amount of
Before-Tax Contributions and Employer Contributions being made to the Plan for
each Eligible Employee during each Plan Year. In the event that the Company
determines that neither of such actual deferral percentages, neither of such
contribution percentages or the aggregate limit will be satisfied for a Plan
Year, the Before-Tax Contributions and Employer Contributions made thereafter
for each highly compensated Eligible Employee (as defined in Section 5.2(3))
shall be reduced (pursuant to non-discriminatory rules adopted by the Company)
to the extent necessary to decrease the actual deferral percentage and/or the
contribution percentage for highly compensated Eligible Employees for such Plan
Year to a level which satisfies either of the actual deferral percentages,
either of the contribution percentages and/or the aggregate limit.

                  (3) In order to ensure that excess deferrals (as such term is
defined in Section 5.1(2)) shall not be made to the Plan for any taxable year
for any Member, the Company shall monitor (or cause to be monitored) the amount
of Before-Tax Contributions being made, or to be made, to the Plan for each
Member during each taxable year and shall take such action (pursuant to
non-discriminatory rules adopted by the Company) to prevent Before-Tax
Contributions made, or to be made, for any Member under the Plan for any taxable
year from exceeding the maximum amount applicable under Section 5.1(1).


<PAGE>   29


                                                                              25


                  (4) The actions permitted by Subsections (2) and (3) of this
Section are in addition to, and not in lieu of, any other actions that may be
taken pursuant to other Sections of the Plan or that may be permitted by
applicable law or regulation in order to ensure that the limitations described
in Sections 5.1, 5.2, and 5.3 and Subsection (1) of this Section are met.

                  5.5 LIMITATION ON INDIVIDUAL ALLOCATIONS. (1) Notwithstanding
any other provision of the Plan, the maximum annual addition (as defined in
Subsection (2) of this Section) to a Member's account for any Plan Year (which
shall be the limitation year) shall in no event exceed the lesser of (a) 25% of
the Member's compensation for such Plan Year or (b)(1) $30,000 ($35,000
effective January 1, 2001) (as such amount is adjusted pursuant to section
415(d) of the Code).

                  (2) For the purposes of this Section, the term "annual
addition" means the sum for any Plan Year of:

                  (a) all contributions (including, without limitation,
         Before-Tax Contributions made pursuant to Section 3.1 but excluding
         Rollover Contributions) made by a member of the Controlled Group which
         are allocated to the Member's account pursuant to a defined
         contribution plan maintained by a member of the Controlled Group,

                  (b) all employee contributions made by the Member to a defined
         contribution plan maintained by a member of the Controlled Group,

                  (c) all forfeitures allocated to the Member's account pursuant
         to a defined contribution plan maintained by a member of the Controlled
         Group, and

                  (d) any amount attributable to medical benefits allocated to
         the Member's account established under section 419A(d)(1) of the Code
         if the Member is or was a key-employee (as such term is defined in
         section 416(i) of the Code) during such Plan


--------
(1)      As amended by Amendment No. 1, effective as of January 1, 1995.


<PAGE>   30


                                                                              26


         Year or any preceding Plan Year, and any amounts allocated after March
         31, 1984, to the Member's individual medical account, as defined in
         section 415(1)(2) of the Code, which is part of a pension or annuity
         plan maintained by a member of the Controlled Group.

                  (3) For the purposes of this Section and effective as of
January 1, 1998, the term "compensation" shall mean compensation with the
meaning of Code section 415(c)(3) and the regulations thereunder. A Member's
compensation as used in this Section shall not exceed $170,000 (as adjusted
pursuant to Code section 401(a)(17)) for any Plan Year.

                  (4) If a Member's annual addition (as defined in Subsection
(2) of this Section) for a Plan Year would exceed the limitations of Subsection
(1) of this Section as a result of the allocation of forfeitures, a reasonable
error in estimating the Member's compensation, or a reasonable error in
determining the amount of Before-Tax Contributions that may be made with respect
to the Member under the limitations of this Section (or other facts and
circumstances which the Commissioner of Internal Revenue finds justify
application of the following rules of this Subsection), Before-Tax Contributions
(if any) made with respect to the Member for such Plan Year (together with any
gains attributable thereto) shall be returned to him to the extent necessary to
effectuate the required reduction in the annual addition. If the return of all
such Before-Tax Contributions is not sufficient to effectuate such reduction,
Employer Contributions allocable to such Member's Account for such Year shall,
to the extent necessary to effectuate that such reduction, be held by the
Trustee in a suspense account and shall be used to reduce Employer Contributions
for the next Year (and succeeding Years, as necessary) for such Member if such
Member is covered by the Plan at the end of any such Year; and if he is not
covered by the Plan at the end of any such Year, such Employer Contributions
held by the Trustee in such suspense account shall be allocated and reallocated
to the accounts of other Members, except that no such allocation or reallocation
shall cause the limitations of Subsection (1) of this Section to


<PAGE>   31


                                                                              27


be exceeded for any such other Member for such Year. Investment gains and losses
shall not be allocated to the suspense account during the period such suspense
account is required to be maintained pursuant to this Subsection (4). In the
event of termination of the Plan, any then remaining balance of the suspense
account, to the extent it may not then be allocated to Employee-Members, shall
revert to the Company.

                  5.6 LIMITATION ON TOTAL INDIVIDUAL BENEFITS. The provisions of
this Section 56. shall only be effective prior to January 1, 2000.
Notwithstanding any other provision of the Plan, except as otherwise provided in
section 415(e) of the Code, in any case in which an individual is a participant
in both a defined benefit plan and a defined contribution plan maintained by the
Controlled Group, the sum of the defined benefit plan fraction and the defined
contribution plan fraction for any Plan Year shall not exceed 1.0. For purposes
of the preceding sentence,

                  (a) the defined benefit plan fraction for any Plan Year is a
         fraction, (i) the numerator of which is the projected annual benefit of
         the participant under the plan (determined as of the close of the Plan
         Year), and (ii) the denominator of which is the lesser of (A) the
         product of 1.25 multiplied by the dollar limitation in effect under
         section 415(b)(1)(A) of the Code for such Year or (B) the product of
         1.4, multiplied by the amount which may be taken into account under
         section 415(b)(1)(B) of the Code with respect to such participant under
         the plan for such Year; and

                  (b) the defined contribution plan fraction for any Plan Year
         is a fraction (i) the numerator of which is the sum of the annual
         additions to the participant's account as of the close of the Plan Year
         and for all prior Plan Years, and (ii) the denominator of which is the
         sum of the lesser of the following amounts determined for such Plan
         Year and for each prior Plan Year of service with the Controlled Group:


<PAGE>   32


                                                                              28


                           (A) the product of 1.25, multiplied by the dollar
                  limitation in effect under section 415(c)(1)(A) of the Code
                  for such Year, or

                           (B) the product of 1.4, multiplied by the amount
                  which may be taken into account under section 415(c)(1)(B) of
                  the Code with respect to such participant under such plan for
                  such Year.

                  5.7 DEFINITIONS FOR LIMITATIONS PROVISIONS. (1) For purposes
of applying the limitations set forth in Sections 5.5 and 5.6, all qualified
defined benefit plans (whether or not terminated) ever maintained by the
Controlled Group shall be treated as one defined benefit plan, and all qualified
defined contribution plans (whether or not terminated) ever maintained by the
Controlled Group shall be treated as one defined contribution plan.

                  (2) As used in Sections 5.5, 5.6 and this Section 5.7, the
term "Controlled Group" shall be construed in the light of sections 414(b) and
414(c) of the Code, as modified by section 415(h) of the Code.

                  (3) Notwithstanding any other provisions of the Plan, the
limitations of Code section 415 are hereby incorporated by reference to the
extent not described in or inconsistent with the provisions of Sections 5.5 and
5.6 and this Section 5.7.

                  5.8 LIMITATION ON EMPLOYER CONTRIBUTIONS. An Employer's
Employer Contributions to the Trust on account of any Plan Year shall in no
event exceed the amount that would be deductible for such Year for purposes of
federal taxes on income under applicable provisions of the Code and shall be
made on the condition that such Contributions are deductible under applicable
provisions of the Code. For the purposes of this Section, the term "Employer
Contributions" shall include Before-Tax Contributions made for an Employee of an
Employer.



<PAGE>   33


                                                                              29


                    ARTICLE VI - INVESTMENT OF CONTRIBUTIONS
                    ----------------------------------------

                  6.1 INVESTMENT FUNDS. The Trust Fund shall be divided into
Investment Funds, which shall include the Gorman-Rupp Stock Fund and the Money
Market Fund. The Trustee shall establish such other Investment Funds, as
directed by the Committee in its discretion, which may be in addition to or in
lieu of the initial Investment Funds. All Before-Tax Contributions and Employer
Contributions shall be invested therein as provided in Section 6.4. Subject to
applicable provisions of the Plan and Trust Agreement, the Trustee shall hold,
manage, administer, value, invest, reinvest, account for and otherwise deal with
each Investment Fund separately. The Trustee shall invest and reinvest the
principal and income of each such Fund and shall keep each such Fund invested,
without distinction between principal and income, as required under the terms of
the Plan and Trust Agreement. Dividends, interest and other distributions
received by the Trustee in respect of each Investment Fund shall be reinvested
in the same Fund. The determination of the Trustee as to whether an investment
is within the category of investments which may be purchased for an Investment
Fund shall be conclusive. The Trustee in its sole discretion may keep such
portion of each Investment Fund in cash or cash equivalents pending the
selection and purchase of suitable investments under each such Fund or as the
Trustee may from time to time deem to be advisable to maintain sufficient
liquidity to meet the obligations of the Plan or for other reasons, and the
Trustee shall not be liable for interest on uninvested funds.

                  6.2 ACCOUNT; SUB-ACCOUNT. The Trustee shall establish and
maintain an Account for each Member, which Account shall reflect, pursuant to
Sub-Accounts established and maintained thereunder, the amount, if any, of the
Member's (a) Before-Tax Contributions, (b) Employer Profit Sharing
Contributions, (c) Employer Matching Contributions, (d) Restricted Employer
Matching Contributions and (e) Rollover Contributions. The Trustee shall also


<PAGE>   34


                                                                              30


maintain separate records which shall show (i) the portion of each such
Sub-Account invested in each Investment Fund and (ii) the amount of
contributions thereto, payments and withdrawals therefrom and the amount of
income, expenses, gains and losses attributable thereto. The interest of each
Member in the Trust Fund at any time shall consist of his Account balance (as
determined pursuant to Sections 7.1 and 7.2) as of the last preceding Valuation
Date plus credits and minus debits to such Account since that Date.

                  6.3 REPORTS. The Trustee shall cause reports to be made
quarterly to each Member and to the Beneficiary of each deceased Member as to
the value of his Account. In addition, the Trustee shall cause such a report to
be made to each Member who (a) requests such a report in writing (provided that
only one report shall be furnished a Member upon such a request in any 12-month
period) or (b) terminates his employment with an Employer.

                  6.4 INVESTMENT OF CONTRIBUTIONS. (1) Each Member shall, in
accordance with procedures established by the Committee, direct that all
Before-Tax Contributions, Employer Contributions (other than Restricted Employer
Matching Contributions) and Rollover Contributions made to the Trust Fund for
such Member be invested in such of the Investment Funds provided in Section 6.1
as the Member shall elect, provided, however, that investment elections shall be
made in multiples of 1% of such Contributions. An investment election made by a
Member shall remain in effect and be applicable to all subsequent Before-Tax
Contributions, Employer Contributions (other than Restricted Employer Matching
Contributions) and Rollover Contributions made for him unless an investment
change is made by him and becomes effective pursuant to Subsection (2) of this
Section. In the absence of an effective investment election by a Member, all
Before-Tax Contributions, Employer Contributions (other than Restricted Employer
Matching Contributions) and Rollover Contributions made to the Trust Fund for
such Member shall be invested in the Money Market Fund. Restricted Employer


<PAGE>   35


                                                                              31


Matching Contributions made on behalf of a Member shall be invested in the
Gorman-Rupp Stock Fund.

                  (2) A Member may, in accordance with procedures established by
the Committee, change his investment election to any other election permitted by
Subsection (1) of this Section with respect to all subsequent Before-Tax
Contributions and Employer Contributions (other than Restricted Employer
Matching Contributions) made for him. In addition, a Member may, as of any
Valuation Date, in accordance with procedures established by the Committee,
elect to transfer all or a part (in 1% increments) of the portion of his Account
(excluding his Restricted Employer Matching Contributions Sub-Account) which has
been invested in an Investment Fund (based on the value of such Account on the
immediately preceding Valuation Date) to any other Investment Fund specified by
him. In addition, after age 59, a Member may, in accordance with procedures
established by the Committee, elect to transfer all or a part (in 1% increments)
of his Restricted Employer Matching Contributions Sub-Account which has been
invested in the Gorman-Rupp Stock Fund (based on the value of such Sub-Account
on the immediately preceding Valuation Date) to any other Investment Fund
specified by him.

                  6.5 DIRECTIONS TO TRUSTEE. The Committee shall give
appropriate and timely directions to the Trustee in order to permit the Trustee
to give effect to the investment elections and investment change elections made
under Section 6.4 and to provide funds for distributions and withdrawals
pursuant to Article VIII and other provisions of the Plan.

                  6.6 LOANS TO MEMBERS. (1) A Member who is an Employee or a
"party in interest" within the meaning of Section 3(14) of ERISA may apply, in a
manner prescribed by the Committee, for a loan from his Account (which, for
purposes of this Section 6.6 shall not include any amounts allocated to the
Member's Restricted Employer Matching Contributions


<PAGE>   36


                                                                              32


Sub-Account). If the Committee determines that the Member is not in bankruptcy
or similar proceedings and is entitled to a loan in accordance with the
following provisions of this Section, the Committee shall direct the Trustee to
make a loan to the Member from his Account.

                  (2) A Member shall not be entitled to a loan under this
Section unless the Member consents to (a) the use of the Member's Account as
security as provided in Subsection (5)(c) of this Section and (b) the possible
reduction of the Member's Account as provided in Subsection (6) of this Section.

                  (3) Each loan shall be in an amount which is not less than
$1,000. A Member may have only one loan outstanding at any one time. The maximum
loan to any Member (when added to the outstanding balance of all other loans to
the Member from all qualified employer plans (as defined in section 72(p)(4) of
the Code) of the Controlled Group) shall be an amount which does not exceed the
lesser of

                   (a) $50,000, reduced by the excess (if any) of (i) the
         highest outstanding balance of such other loans during the one-year
         period ending on the day before the date on which such loan is made,
         over (ii) the outstanding balance of such other loans on the date on
         which such loan is made, or

                  (b) 50% of the value of such Member's Account (excluding the
         Member's Restricted Matching Employer Contributions Sub-Account) on the
         date on which such loan is made.

         (4) For each Member for whom a loan is authorized pursuant to this
Section, the Committee shall (a) direct the Trustee to liquidate the Member's
interest in the Investment Funds as directed in writing by the Member or, in the
absence of such written direction, on a default basis determined by the
Committee, to the extent necessary to provide funds for the loan, (b) direct the
Trustee to disburse such funds to the Member upon the Member's execution of the


<PAGE>   37


                                                                              33


promissory note and security agreement referred to in Subsection (5)(d) of this
Section, (c) transmit to the Trustee the executed promissory note and security
agreement referred to in Subsection (5)(d) of this Section, and (d) establish
and maintain a separate recordkeeping account within the Member's Account (the
"Loan Account") (i) which initially shall be in the amount of the loan, (ii) to
which the funds for the loan shall be deemed to have been allocated and then
disbursed to the Member, (iii) to which the promissory note shall be allocated
and (iv) which shall show the unpaid principal of and interest on the promissory
note from time to time. All payments of principal and interest by a Member shall
be credited initially to his Loan Account and applied against the Member's
promissory note, and then invested in the Investment Funds pursuant to the
Member's direction under Section 6.1.

                  (5) Loans made pursuant to this Section:

                  (a) shall be made available to all Members on a reasonable
         equivalent basis;

                  (b) shall not be made available to highly compensated Eligible
         Employees in a percentage amount greater than the percentage amount
         made available to other Members;

                  (c) shall be secured by the Member's Loan Account; and

                  (d) shall be evidenced by a promissory note and security
         agreement executed by the Member which provides for:

                           (i) the security referred to in paragraph (c) of this
                  Subsection;

                           (ii) a rate of interest determined by the Committee
                  in accordance with applicable law;

                           (iii) repayment within a specified period of time,
                  which shall not extend beyond five years unless the loan is
                  used for the purchase of the Member's principal residence;


<PAGE>   38


                                                                              34


                           (iv) repayment in equal payments over the term of the
                  loan, with payments not less frequently than quarterly; and

                           (v) for such other terms and conditions as the
                  Committee shall determine, which shall include provision that:

                                    (A) with respect to a Member who is an
                           Employee, the loan will be repaid pursuant to
                           authorization by the Member of equal payroll
                           deductions over the repayment period sufficient to
                           amortize fully the loan within the repayment period,
                           provided, however, the Committee may waive the
                           requirement of equal payroll deductions if the
                           Company payroll through which the Member is paid
                           cannot accommodate such deductions;

                                    (B) the loan shall be prepayable in whole at
                           any time without penalty; and

                                    (C) the loan shall be in default and become
                           immediately due and payable upon the first to occur
                           of the following events:

                                            (I) the Member's failure to make a
                                    required payment on the promissory note,
                                    which payment remains unpaid through the end
                                    of the calendar quarter following the
                                    calendar quarter in which such payment was
                                    due;

                                            (II) in the case of a Member who is
                                    not an Employee, distribution of his
                                    Account;

                                            (III) the filing of a petition, the
                                    entry of an order or the appointment of a
                                    receiver, liquidator, trustee or other
                                    person in a similar capacity, with respect
                                    to the Member, pursuant to any state or
                                    federal law relating to bankruptcy,
                                    moratorium, reorganization,


<PAGE>   39


                                                                              35


                                    insolvency or liquidation, or any assignment
                                    by the Member for the benefit of his
                                    creditors; or

                                            (IV) the death, retirement or
                                    termination of employment of a Member or the
                                    occurrence of any other event permitting
                                    distribution of any portion of the Member's
                                    Account (other than a withdrawal on account
                                    of Hardship as permitted under Section 8.6).

                  (6) Notwithstanding any other provision of the Plan, a loan
made pursuant to this Section shall be a first lien against the Member's Loan
Account. Any amount of principal or interest due and unpaid on the loan at the
time of any default on the loan shall be deemed to be distributed to the Member
at the time of default and shall be satisfied by deduction from the Member's
Loan Account, as follows:

                  (a) in the case of a Member who is an Employee and who is not,
         at the time of the default, eligible to receive distribution of his
         Account under the provisions of Article VIII, other than a withdrawal
         on account of Hardship under Section 8.6, or by order of a court, at
         such time as he first becomes eligible to receive distribution of his
         Account under the provisions of Article VIII, other than a withdrawal
         on account of Hardship under Section 8.6, or by order of a court; or

                  (b) in the case of any other Member, immediately upon such
         default.

                     ARTICLE VII - MAINTENANCE AND VALUATION
                     ---------------------------------------
                              OF MEMBERS' ACCOUNTS
                              --------------------

                  7.1 VALUATION OF INVESTMENT FUNDS. (1) The Trustee shall, as
of the close of business on each Valuation Date, determine the value of each
Investment Fund. Each such valuation shall be made on the basis of the market
value (as determined by the Trustee) of the assets of each Fund, except that
property which the Trustee determines does not have a readily


<PAGE>   40


                                                                              36


determinable market value, and bonds and notes issued or guaranteed by the
United States, shall be valued at fair market value as determined by the Trustee
in such manner as it deems appropriate, and the Trustee's determination of such
value shall be conclusive on all interested persons for all purposes of the
Plan. A similar valuation shall be made at any other time upon the written
direction of the Committee to the Trustee or when the Trustee deems it
appropriate to make such a valuation.

                  (2) The Trustee shall determine, from the change in value of
each Investment Fund between the current Valuation Date and the then last
preceding Valuation Date, the net gain or loss of each such Fund during such
period resulting from expenses and realized and unrealized earnings, profits and
losses of the Fund during such period. For this purpose, income or other
earnings accrued but not collected during such period and expenses incurred but
not paid during such period shall not be counted, and the transfer of funds to
or from an Investment Fund pursuant to Section 6.4, Before-Tax Contributions and
Employer Contributions allocated to an Investment Fund, and payments,
distributions and withdrawals from an Investment Fund to provide benefits under
the Plan for Members or Beneficiaries shall not be deemed to be earnings,
profits, expenses or losses of the Investment Fund.

                  (3) After each Valuation Date, the net gain or loss of each
Investment Fund determined pursuant to Subsections (1) and (2) of this Section
shall be allocated as of such Valuation Date to the Accounts of Members and
Beneficiaries of deceased Members in proportion to the amounts of such Accounts
invested in each Fund on such Valuation Date. In determining the amounts of
Accounts on a Valuation Date for the purposes of this Subsection (3), Before-Tax
Contributions and Employer Contributions to the Trust during or on account of a
Plan Year shall be deemed to have been made and allocated to the Accounts of
Members on the first day following the close of such Year. However, the
Committee may adopt rules to the


<PAGE>   41


                                                                              37


effect that in determining the allocation of the net gain or loss of each
Investment Fund for any such period there shall be counted, on a proportionate
basis, distributions from or other debits to the Accounts of Members and
Beneficiaries since the beginning of such period to the extent the amounts so
distributed or debited were in such Fund during such period. Such rules shall be
uniform in their application to all persons who are similarly situated.

                  7.2 PROCEDURES IN MAKING ALLOCATIONS AND CORRECTIONS. In
computing the allocation of Employer Contributions and of the net gain or loss
of each Investment Fund, computations shall be made to four decimal places
unless the Committee determines that a different number of decimal places should
be used. In computing the amounts to be allocated and credited or debited to the
Accounts of Members or Beneficiaries, computations shall be made to the nearest
cent or, in the discretion of the Committee, to the last full cent, ten cents or
dollar, and any resulting excess or deficiency shall either be treated as
general earnings or expenses of the Fund or be used to correct errors in
determining or making any debits or credits to the Accounts of Members or
Beneficiaries, all as determined by the Committee in its discretion. Errors in
determining or making any credits or debits to Accounts may be adjusted in such
manner as the Committee and the Trustee deem to be fair and feasible, including,
but not limited to, the recomputation of the credits or debits in question, the
addition of adjustments to the income or expenses of an Investment Fund or the
making of adjustments as provided in the preceding sentence. The Trustee need
not delay distributions because of the possibility of such recomputations and
adjustments, and, to the extent permitted by applicable law, neither the
Trustee, any Employer nor the Committee (either as a committee or as
individuals) shall be liable for any overpayment made by the Trustee in reliance
upon the amounts of the Accounts of Members or Beneficiaries as reflected at the
time of such distribution in the record of such Accounts maintained by the
Trustee as provided in Section 6.2.


<PAGE>   42


                                                                              38


                  7.3 REGISTRATION AND VOTING OF GORMAN-RUPP STOCK. All shares
of Gorman-Rupp Stock acquired by the Trustee shall be held in the possession of
the Trustee or in a depository until disposed of pursuant to provisions of the
Plan. Such shares may be registered in the name of the Trustee or its nominee.
Before each annual or special meeting of its stockholders, the Company shall
cause to be sent to each Member and Beneficiary of a deceased Member who has
Gorman-Rupp Stock allocated to his Account on the record date of such meeting a
copy of the proxy solicitation material therefor, together with a form
requesting confidential instructions to the Trustee on how to vote the shares of
Gorman-Rupp Stock (including fractional shares) allocated to such Member's
Account. Upon receipt of such instructions, the Trustee shall vote the shares as
instructed. Instructions received from individual Members and Beneficiaries by
the Trustee shall be held in the strictest confidence and shall not be divulged
or released to any person including officers or Employees of the Company. To the
extent a Member or Beneficiary does not direct the Trustee in whole or in part
with respect to the exercise of voting rights arising under Gorman-Rupp Stock
allocated to his Account, such voting rights shall not be exercised by the
Trustee.

                  7.4 TENDER OR SALE OF GORMAN-RUPP STOCK. (1) Except to the
extent necessary to make distributions or withdrawals from the Plan as provided
in Article VIII or except as otherwise expressly provided in the Plan or the
Trust Agreement, the Trustee shall not sell, alienate, encumber, pledge,
transfer or otherwise dispose of, or tender or withdraw, any Gorman-Rupp Stock
held by it under the Plan. In the event the Committee determines that a tender
offer for shares of Gorman-Rupp Stock has commenced, then, notwithstanding any
other provision of the Plan or Trust Agreement, the following provisions of this
Section shall become applicable.


<PAGE>   43


                                                                              39


                  (2) In the event it is determined that an offer described in
Subsection (1) of this Section has commenced, the Trustee shall cause to be sent
to each Member and Beneficiary of a deceased Member who, on the effective date
of such offer or at any time during the effective period of such offer, has
Gorman-Rupp Stock allocated to his Account all pertinent information in respect
of such offer, including all the terms and conditions thereof, together with a
form prescribed by the Trustee pursuant to which each such Member and
Beneficiary may direct the Trustee to tender or sell pursuant to such offer all
or part of the shares of Gorman-Rupp Stock so allocated to his Account. The
Trustee shall tender or sell only those shares of Gorman-Rupp Stock as to which
valid and timely directions to tender or sell are received and not validly and
timely revoked, and all other shares of Gorman-Rupp Stock held under the Plan
shall continue to be held by the Trustee. If in the course of an offer described
in Subsection (1) of this Section there shall arise any issue on which Members
or Beneficiaries of deceased Members who have directed the tender or sale of
shares of Gorman-Rupp Stock are required or have an opportunity to alter their
circumstances (including but not limited to an opportunity to withdraw shares of
Gorman-Rupp Stock previously tendered and an opportunity to tender shares of
Gorman-Rupp Stock in a competing offer), the Trustee shall, in accordance with
the foregoing provisions of this Subsection (2) and to the extent reasonably
practicable, solicit the directions of such Members and Beneficiaries with
respect to each such issue and act in response to such directions. The
instructions received by the Trustee from Members or Beneficiaries shall be held
by the Trustee in strict confidence and shall not be divulged or released to any
person, including directors, officers or employees of the Company or any
Employer, except as otherwise required by law.

                  (3) Funds received in exchange for tendered shares of
Gorman-Rupp Stock shall be used by the Trustee to purchase Gorman-Rupp Stock (or
other employer securities within the


<PAGE>   44


                                                                              40


meaning of Section 407(d) of ERISA) as soon as practicable. In the interim, the
Trustee shall invest such funds in short-term investments permitted under the
Trust Agreement.

                  (4) Any decision by a Member or Beneficiary to tender (or not
tender) or to sell (or not sell) pursuant to Subsection (2) of this Section
shall constitute an exercise of control over the assets in his Account by such
Member or Beneficiary within the meaning of section 404(c) of the Act, and each
Member or Beneficiary who so exercises such control shall by such exercise
release and agree, on his behalf and on the behalf of his heirs and
beneficiaries, to indemnify and hold harmless the Trustee, the Employers and the
Committee from and against any claim, demand, loss, liability, cost or expense
(including reasonable attorney's fees) caused by or arising out of such
exercise, including without limitation any diminution in value or losses
incurred from such exercise.



<PAGE>   45


                                                                              41


              ARTICLE VIII - VESTING, DISTRIBUTIONS AND WITHDRAWALS
              -----------------------------------------------------

                  8.1 NONFORFEITABLE MEMBER INTERESTS. Each Member's interest in
the Trust Fund shall be nonforfeitable at all times and shall be distributed and
withdrawn only as provided in the following Sections of this Article.

                  8.2(2) DISTRIBUTIONS ON DEATH WHILE AN EMPLOYEE. If a Member
dies while in the employ of a Controlled Group Member, his entire Account shall
be paid to the Member's Beneficiary in a lump sum in cash and/or shares of
Gorman-Rupp Stock to the extent provided in Section 8.12, as elected by the
Beneficiary, within 60 days after the date of such Member's death.

                  8.3(3) Distributions on Other Termination of Employment. If a
Member's employment with the Controlled Group terminates other than by reason of
his death, his entire Account shall be paid to him in a lump sum in cash and/or
shares of Gorman-Rupp Stock to the extent provided in Section 8.12, as elected
by the Member. If the value of a Member's Account is $5,000 or less,
distribution of his Account shall be made as soon as practicable after the date
of his termination of employment. If the value of a Member's Account exceeds
$5,000, distribution of such Account shall not be made prior to the Member's
attainment of age 70 without his written request.

                  8.4 DISTRIBUTIONS ON DEATH AFTER TERMINATION OF EMPLOYMENT. If
a Member dies after his employment with the Controlled Group terminates and
before his Account has been paid to him, his Account shall be paid to his
Beneficiary as provided in Section 8.3.

                  8.5 TIME OF DISTRIBUTION. Effective as of January 1, 1997 and
subject to the provisions of Section 8.6, the distribution of a Member's Account
shall occur as provided in the preceding Sections of this Article, but in no
event later than 60 days after the close of the Plan


----------
(2)     As amended in its entirety by Amendment No. 1, effective as of 8/1/2000.
(3)     As amended in its entirety by Amendment No. 1, effective as of 8/1/2000.


<PAGE>   46


                                                                              42


Year in which the latest of the following events occurs: (a) the date on which
the Member attains age 70, (b) the 10th anniversary of the year in which the
Member commenced membership in the Plan, or (c) the date of the Member's
termination of employment with the Controlled Group; provided, however, that (i)
a distribution to a Member pursuant to Section 8.3 shall be made not later than
the time provided in the following sentences of this Section and (ii) a
distribution to a Beneficiary pursuant to Sections 8.2 and 8.4 shall be made
within five years after the Member's death. Notwithstanding any other provision
of the Plan, to the extent required under section 401(a)(9) of the Code, the
entire Account of a Member who is a 5-percent owner (as defined in section 416
of the Code) or who attains age 70 1/2 prior to January 1, 1999 shall be
distributed or commence to be distributed to him, in accordance with Section 8.3
or section 401(a)(9) of the Code (as elected by the Member), not later than
April 1 of the calendar year following the calendar year in which he attains age
70 1/2 (whether or not his employment with the Controlled Group has terminated)
and, with respect to such Members who are Employees, on December 31 of such year
and each succeeding year. In addition, the entire Account of any other Member
shall be distributed or commence to be distributed to him, in accordance with
Section 8.3 or section 401(a)(9) of the Code (as elected by the Member), not
later than the April 1 of the calendar year following the later of (I) the
calendar year in which he attains age 70 1/2 or (II) the calendar year of his
termination of employment. Distributions under the Plan shall be made in
accordance with the provisions of section 401(a)(9) of the Code and Treasury
Regulations issued thereunder, (including Treasury Regulations ss.
1.401(a)(9)-2), and such provisions shall control to the extent that they are
inconsistent with any other provision of the Plan.

                  8.6 WITHDRAWAL OF CONTRIBUTIONS. (1) Pursuant to procedures
prescribed by the Committee, effective as of any Valuation Date, a Member who
has established the existence of a Hardship may withdraw in cash such portion of
his Before-Tax Contributions Sub-Account


<PAGE>   47


                                                                              43


(excluding any earnings allocated thereto) as is necessary to alleviate such
Hardship (as determined under Subsection (5) of this Section).

                  (2) Pursuant to procedures prescribed by the Committee,
effective as of any Valuation Date, a Member who has withdrawn his entire
Before-Tax Contributions Sub-Account (except any earnings allocated thereto) and
who has established the existence of a Hardship may withdraw in cash such part
of his Employer Profit Sharing Contributions Sub-Account, if any, as is
necessary to alleviate such Hardship (as determined under Subsection (5) of this
Section).

                  (3) Pursuant to procedures prescribed by the Committee,
effective as of any Valuation Date, a Member who has withdrawn his entire
Before-Tax Contributions Sub-Account (except any earnings allocated thereto) and
his Employer Profit Sharing Contributions Sub- Account and who has established
the existence of a Hardship may withdraw in cash such part of his Rollover
Contributions Sub-Account, if any, as is necessary to alleviate such Hardship
(as determined under Subsection (5) of this Section).

                  (4) Pursuant to procedures prescribed by the Committee,
effective as of any Valuation Date, a Member who has withdrawn his entire
Before-Tax Contributions Sub-Account (except any earnings allocated thereto),
his entire Employer Profit Sharing Contributions Sub-Account and his entire
Rollover Contributions Sub-Account and who has established the existence of a
Hardship may withdraw in cash such part of his Employer Matching Contributions
Sub-Account as is necessary to alleviate such Hardship (as determined under
Subsection (5) of this Section).

                  (5) For purposes of the Plan, a withdrawal will be treated as
being necessary to alleviate such Hardship only if (a) the withdrawal does not
exceed the amount necessary to meet such financial needs (including any amounts
necessary to pay any federal, state or local income taxes or penalties
reasonably anticipated to result from such distribution); (b) the Member has


<PAGE>   48


                                                                              44


obtained all distributions, other than hardship withdrawals, and all nontaxable
(at the time of the loan) loans currently available under the Plan and any other
plan maintained by any Employer; (c) the Member's Before-Tax Contributions (or
any comparable contributions to any other plan maintained by any Employer) are
suspended for a period of 12 months following receipt of the Hardship
withdrawal; and (d) the amount of the Member's Before-Tax Contributions (and any
comparable contributions to any other plan maintained by any Employer) for the
Member's taxable year immediately following the taxable year of the Hardship
withdrawal shall not be in excess of the applicable limit under Section 402(g)
of the Code for such next taxable year less the amount of such Member's
Before-Tax Contributions (and any comparable contributions to any other plan
maintained by any Employer) for the taxable year of the Hardship withdrawal. For
purposes of the preceding sentence, the phrase "any other plan maintained by any
Employer" means any other qualified or nonqualified deferred compensation plan
maintained by any Employer, including a stock option, stock purchase or similar
plan, or a cash or deferred arrangement that is part of a cafeteria plan within
the meaning of Section 125 of the Code, and such phrase shall be interpreted in
a manner consistent with Treasury regulations issued under Section 401(k) of the
Code.

                  8.7 ORDER OF DISTRIBUTIONS AND WITHDRAWALS. In the event a
distribution or withdrawal is to be made from the Trust Fund pursuant to any
provision of the Plan or Trust Agreement and it is necessary to liquidate part
(but not all) of the Member's Account which is invested in more than one
Investment Fund to effect such distribution or withdrawal, such Member shall
designate (on a form approved by the Trustee, signed by him and filed with the
Committee) which Investment Fund or Funds in which his Account is invested shall
be liquidated (to the extent of his interest therein) in order to make such
distribution or withdrawal.


<PAGE>   49


                                                                              45


If the Member is not able or willing to make the decision contemplated by the
first sentence of this Section, such decision shall be made by the Trustee.

                  8.8 FACILITY OF PAYMENT. In the event the Committee finds that
any Member or Beneficiary to whom a benefit is payable hereunder is unable to
care for his affairs because of physical, mental, or legal incompetence, the
Committee, in its discretion, may cause any payment due to him hereunder, for
which prior claim has been made by a duly qualified guardian or other legal
representative, to be paid to the individual or institution deemed by the
Committee to be maintaining or responsible for the maintenance of such Member or
Beneficiary. Any such payment shall be deemed a payment for the account of such
Member or Beneficiary and shall constitute a complete discharge of any liability
therefor under the Plan.

                  8.9 DUPLICATION OF BENEFITS. To the extent permitted by law
and except as otherwise provided in the Plan, benefits under this Plan shall be
in addition to benefits provided under any other employee pension benefit plan
(as such term is defined in section 3(2) of the Act) which is now or hereafter
adopted or maintained by any member of the Controlled Group.

                  8.10 DISTRIBUTION ON SALE OF ASSETS OR SUBSIDIARY. In the
event that a Member's employment with the Controlled Group is terminated because
of the disposition by an Employer of substantially all of the assets of a trade
or business, or its interest in a subsidiary, and such Member continues
employment with the corporation acquiring such assets or such subsidiary, the
Member shall be entitled to a distribution of his Account as provided in Section
8.3 within 60 days after the Valuation Date coinciding with or next following
the date his employment so terminates; provided that the purchaser of such
assets or subsidiary does not maintain the Plan (within the meaning of Treasury
Regulations issued under section 401(k)(10) of the Code) after the disposition.


<PAGE>   50


                                                                              46


                  8.11 TRANSFERS OF ELIGIBLE ROLLOVER DISTRIBUTIONS. (1) If a
Member or Spouse is eligible to receive a distribution from the Plan that
constitutes an "eligible rollover distribution" (as defined in Subsection (3) of
this Section) and the Member or Spouse elects to have all or a portion of such
distribution paid directly to an "eligible retirement plan" (as defined in
Subsection (3) of this Section) and specifies the eligible retirement plan to
which the distribution is to be paid, such distribution (or portion thereof)
shall be made in the form of a direct rollover to the eligible retirement plan
so specified. A Member or Spouse may not elect a direct rollover of a portion of
an eligible rollover distribution unless the amount to be rolled over is at
least $500. A direct rollover is a payment made by the Plan to the eligible
retirement plan so specified for the benefit of the Member or Spouse.
Notwithstanding the preceding provisions of this Section, a direct rollover of
an eligible rollover distribution shall not be made if a Member's or Spouse's
eligible rollover distributions for a Plan Year are reasonably expected to total
less than $200. Unless otherwise specifically provided herein, for purposes of
this Section, the term "Spouse" shall include a former spouse who is an
alternate payee under a qualified domestic relations order, as defined in
section 414(p) of the Code.

                  (2) The Company shall prescribe reasonable procedures for
elections to be made pursuant to this Section. Within a reasonable period of
time (as prescribed by Treasury regulations or rulings) before the payment of an
eligible rollover distribution, the Company shall provide a written notice to
the Member or Spouse describing his or her rights under this Section and such
other information required to be provided under section 402(f) of the Code.

                  (3) For purposes of the Plan, the term "eligible rollover
distribution" means any distribution of all or any portion of the balance to the
credit of the distributee from the Plan, except (a) any distribution that is one
of a series of substantially equal periodic payments


<PAGE>   51


                                                                              47


(not less frequently than annually) made for the life (or life expectancy) of
the distributee or the joint lives (or joint life expectancies) of the
distributee and the distributee's designated beneficiary, or for a specified
period of ten years or more, (b) any distribution to the extent the distribution
is required under section 401(a)(9) of the Code, (c) the portion of any
distribution that is not includible in gross income, (d) any withdrawal on
account of Hardship and (e) such other amounts specified in Treasury regulations
or rulings issued under section 402(c) of the Code. For purposes of this
Section, the term "eligible retirement plan" means an individual retirement
account or annuity described in section 408 of the Code, a defined contribution
plan that meets the requirements of section 401(a) of the Code and accepts
rollovers, an annuity plan described in section 403(a) of the Code, or any other
type of plan that is included within the definition of "eligible retirement
plan" under section 401(a)(31)(D) of the Code; provided however, that with
respect to a Spouse (but not a former spouse who is an alternate payee) who
receives a distribution after a Member's death an "eligible retirement plan"
shall mean only an individual retirement account or annuity described in section
408 of the Code.

                  (4) The provisions of this Section are intended to comply with
the provisions of section 401(a)(31) of the Code and shall be interpreted in
accordance with such section and Treasury regulations and rulings issued
thereunder. The provisions of this Section shall be effective for distributions
under the Plan on and after January 1, 1993.

                  8.12 DISTRIBUTION OF GORMAN-RUPP STOCK. Notwithstanding the
preceding provisions of this Article, a Member or Beneficiary who is eligible to
receive a distribution under Section 8.2, 8.3 or 8.4 (but not Section 8.6) may
elect to receive that portion of his distribution which is attributable to his
interest in the Gorman-Rupp Stock Fund in the form of whole shares of
Gorman-Rupp Stock with any fractional shares of Gorman-Rupp Stock in cash.


<PAGE>   52


                                                                              48


                  8.13 DISTRIBUTIONS PURSUANT TO A QDRO. If a qualified domestic
relations order (as defined in section 414(p) of the Code) so provides, the
portion of a Member's Account that is payable to the alternate payee(s) may be
distributed to the alternate payee(s) at the time specified in such order,
regardless of whether the Member is entitled to a distribution from the Plan at
such time. The portion of the Account so payable shall be valued as of the
Valuation Date coinciding with or next following the date specified in such
order.



<PAGE>   53


                                                                              49


                  ARTICLE IX - ADMINISTRATION OF THE TRUST FUND
                  ---------------------------------------------

                  9.1 APPOINTMENT OF TRUSTEE. The Company has appointed National
City Bank to act as Trustee under the Plan and has executed the Trust Agreement
with such Trustee. The Company may, without the consent of any Member, other
Employer or other person, execute amendments to such Trust Agreement, execute
such further agreements as it in its sole discretion may deem necessary or
desirable to carry out the Plan, or at any time, upon 30 days written notice,
remove the Trustee and appoint a successor.

                  9.2 DUTIES OF TRUSTEE. The Trustee shall invest Before-Tax
Contributions and Employer Contributions paid to it and earnings thereon in
accordance with the Plan and Trust Agreement. The Trustee shall also establish
and maintain separate Accounts for each Member in accordance with Articles IV,
VI and VII. The Trustee in its relation to the Plan shall be entitled to all of
the rights, privileges, immunities and benefits conferred upon it by the Plan or
Trust Agreement and shall be subject to all of the duties imposed upon it by the
Plan and Trust Agreement. The Trustee Agreement is hereby incorporated in the
Plan by reference, and each Employer, by adopting the Plan, approves the Trust
Agreement and authorizes the Company to execute any amendment or supplement
thereto in its behalf.

                  9.3 THE TRUST FUND. The Trust Fund shall be held by the
Trustee for the exclusive benefit of the Members and their Beneficiaries and
shall be invested by the Trustee upon such terms and in such property as is
provided in the Plan and in the Trust Agreement. The Trustee shall from time to
time make payments and distributions from the Trust Fund as provided in the
Plan.

                  9.4 NO GUARANTEE AGAINST LOSS. Neither the Trustee nor any
Employer nor the Committee nor any member of the Committee in any manner
guarantees the Trust Fund or any


<PAGE>   54


                                                                              50


part thereof against loss or depreciation. All persons having any interest in
the Trust Fund shall look solely to the Trust Fund for payment with respect to
such interest.

                  9.5 PAYMENT OF BENEFITS. All payments of benefits provided for
by the Plan shall be made solely out of the Trust Fund and in accordance with
instructions given to the Trustee by the Committee pursuant to the terms of the
Plan, and neither any Employer nor the Trustee nor the Committee nor any member
of the Committee shall be otherwise liable for any benefits payable under the
Plan.

                  9.6 COMPENSATION AND EXPENSES. The Trustee shall be entitled
to receive such reasonable compensation for its services as may be agreed upon
by it and the Company. Such compensation and the expenses of the Trustee and
other expenses necessary for the proper administration of the Plan and Trust,
including without limitation, costs incident to the purchase and sale of
securities, such as brokerage fees, commissions and transfer taxes, shall be
paid by the Trustee from the Trust Fund, except that the Employers may, in their
sole discretion, pay all or any part of such compensation and expenses. Taxes,
if any, on any property held by the Trustee shall be paid out of the Trust Fund
and taxes, if any, other than transfer taxes, on distributions to a Member or
Beneficiary of a Member shall be paid by the Member or the Beneficiary,
respectively.

                  9.7 NO DIVERSION OF TRUST FUND. Except as provided in Sections
4.3(2), 5.1(3), 5.2(5), 5.5(4) and 9.6, it shall be and is hereby made
impossible, at any time prior to the satisfaction of all liabilities with
respect to Employees and their Beneficiaries under the Plan, for any part of the
corpus or income of the Trust Fund to be (within the taxable year or thereafter)
used for, or diverted to, purposes other than the exclusive benefit of Employees
or their Beneficiaries.


<PAGE>   55


                                                                              51


                  9.8 TRANSFER TO THIS PLAN FROM OTHER PLANS. (1) The Trustee
shall, at the direction of the Committee, receive and thereafter hold and
administer as a part of the Trust Fund for a Member all cash and other property
which may be transferred to the Trustee from a trust held under another plan in
which the Member was a participant, which meets the requirements of sections
401(a) and 501(a) of the Code ("a qualified trust") and which is not subject to
the survivor annuity requirements of section 401(a)(11) of the Code. Subject to
other provisions of the Plan and Trust Agreement, the Trustee shall have the
authority to sell or otherwise convert to cash any property transferred to it
pursuant to this Section.

                  (2) Cash or other property transferred to the Trustee pursuant
to Subsection (1) of this Section shall be allocated to such Investment Fund(s)
(including a new Investment Fund or Investment Funds established and maintained
by the Trustee) as the Trustee shall determine.



<PAGE>   56


                                                                              52


               ARTICLE X - ADOPTION OF THE PLAN BY OTHER EMPLOYERS
               ---------------------------------------------------

                  10.1 ADOPTION. Any member of the Controlled Group may, with
the consent of the Company, adopt the Plan and thereby become an Employer
hereunder by executing an instrument evidencing such adoption on the order of
its Board of Directors and filing a copy thereof with the Company and the
Trustee, and such instrument shall (subject to such terms and conditions as the
Company may require or approve) become incorporated in the Plan by reference.

                  10.2 WITHDRAWAL OF EMPLOYER. Any Employer (other than the
Company) which adopts the Plan may elect separately to withdraw from the Plan,
and such withdrawal shall constitute a termination of the Plan as to it, but
amendments to the Plan (except those made pursuant to Sections 10.1 and 10.3)
may be made only by the Company. Any such withdrawal shall be expressed in an
instrument executed by the withdrawing Employer on the order of its Board of
Directors and filed with the Company, the Committee and the Trustee. In the
event of such a withdrawal of an Employer or in the event the Plan is terminated
as to an Employer (but not all the Employers) pursuant to Section 14.1, such
Employer shall cease to be an Employer and, as soon as practicable after such
withdrawal or termination, the Trustee shall make distribution (if such
distribution is permitted by applicable law) pursuant to Section 8.3 to Members
affected by such withdrawal or termination as if each such Member's employment
with the Controlled Group had terminated.

                  10.3 WITHDRAWAL OF EMPLOYEE GROUP. Any Employer may elect to
withdraw from the Plan any designated group of its Employees while continuing to
include another group or other groups of its Employees within the Plan, and any
such withdrawal shall constitute a termination of the Plan as to the Employees
to which it is applicable. Any such withdrawal of a designated group of
Employees shall be expressed in an instrument executed by the Employer on


<PAGE>   57


                                                                              53


the order of its Board of Directors and filed with the Company (if the Employer
making such withdrawal is not the Company), the Committee and the Trustee. In
the event of such a withdrawal by an Employer or in the event the Plan is
terminated by the Company as to a group of Employees of another Employer
pursuant to Section 14.1, the Trustee shall, as soon as practicable after such
withdrawal or termination, make distribution (if such distribution is permitted
by applicable law) pursuant to Section 8.3 to Members affected by such
withdrawal or termination as if each such Member's employment with the
Controlled Group had terminated.



<PAGE>   58


                                                                              54


                           ARTICLE XI - THE COMMITTEE
                           --------------------------

                  11.1 APPOINTMENT OF COMMITTEE. The President of the Company
shall appoint a Committee of at least three persons (who may or may not be
Members) to administer the Plan, shall fill vacancies whenever necessary to
maintain three members serving on the Committee, shall designate the Chairman of
the Committee and from time to time may remove members from the Committee and
add members thereto. The Company shall certify the number and names of the
members of the Committee to the Trustee, which may rely upon such certification
until it receives written notice from the Company as to a change in the
membership of the Committee.

                  11.2 FORMALITIES OF COMMITTEE ACTION. The Committee shall hold
its meetings at such times and places as it may determine. A majority of its
members shall constitute a quorum and all decisions and determinations of the
Committee shall be made by a majority of its members. Any decision or
determination reduced to writing and signed by a majority of the members of the
Committee shall be as fully effective as if it had been made by a majority vote
at the meeting duly called and held. The Committee may authorize any one member
to sign documents on behalf of the Committee in order to give evidence with
respect to action taken by the Committee. The Committee may appoint a Secretary
who need not be a member of the Committee and who shall keep minutes of its
meetings. The Committee may make such rules and regulations for the conduct of
its business as it deems advisable.

                  11.3 PLAN INTERPRETATION AND FINDINGS OF FACT. The Committee
shall have sole and absolute discretion to interpret the provisions of the Plan
(including, without limitation, by supplying omissions from, correcting
deficiencies in, or resolving inconsistencies or ambiguities in, the language of
the Plan), to make factual findings with respect to any issue arising under the
Plan, to determine the rights and status under the Plan of Members and other
persons, to decide


<PAGE>   59


                                                                              55


disputes arising under the Plan and to make any determinations and findings with
respect to the benefits payable thereunder and the persons entitled thereto as
may be required for the purposes of the Plan. In furtherance of, but without
limiting, the foregoing, the Committee is hereby granted the following specific
authorities, which it shall discharge in its sole and absolute discretion in
accordance with the terms of the Plan (as interpreted, to the extent necessary,
by the Committee): (1) to resolve all questions (including factual questions)
arising under the provisions of the Plan as to any individual's entitlement to
become a Member; (2) to determine the amount of benefits, if any, payable to any
person under the Plan (including, to the extent necessary, making any factual
findings with respect thereto); and (3) to conduct the review procedure
specified in Section 13.3. All decisions of the Committee as to the facts of any
case, as to the interpretation of any provision of the Plan or its application
to any case, and as to any other interpretative matter or other determination or
question under the Plan shall be final and binding on all parties affected
thereby, subject to the provisions of Article XIII. The Committee shall direct
the Trustee relative to benefits to be paid under the Plan and shall furnish the
Trustee with any information reasonably required by it for the purpose of paying
benefits under the Plan.

                  11.4 ELECTRONIC MEDIA. Notwithstanding any provision of the
Plan to the contrary, including any provision which requires the use of a
written instrument, to the extent permitted by applicable law, the Committee may
establish procedures for the use of electronic media in communications and
transactions between the Plan or the Committee and Participants and
Beneficiaries. Electronic media may include, but are not limited to, e-mail, the
Internet, intranet systems and automated telephonic response systems.

                  11.5 ASSISTANCE. The Committee may employ or retain such
clerical, legal, accounting, investment or other assistance as it deems
necessary or advisable for the proper administration of the Plan and Trust Fund.


<PAGE>   60


                                                                              56


                  11.6 UNIFORM ADMINISTRATION OF PLAN. All action taken by the
Committee under the Plan shall treat all persons similarly situated in a uniform
and consistent manner.



<PAGE>   61


                                                                              57


                    ARTICLE XII - ADMINISTRATION OF THE PLAN
                    ----------------------------------------
                          AND FIDUCIARY RESPONSIBILITY
                          ----------------------------

                  12.1 RESPONSIBILITY FOR ADMINISTRATION. Except to the extent
that particular responsibilities are assigned to other Fiduciaries pursuant to
the Trust Agreement or some other Section of the Plan, the Company (as the Plan
Administrator) shall be responsible for the administration of the Plan. Each
other Fiduciary shall have such powers, duties, responsibilities and authorities
as shall be conferred upon him or delegated to him pursuant to provisions of the
Plan or Trust Agreement. Any person may serve in more than one fiduciary
capacity with respect to the Plan or Trust Fund if, pursuant to the Plan and/or
Trust Agreement, he is assigned or delegated any multiple fiduciary capacities.

                  12.2 NAMED FIDUCIARIES. For purposes of the Plan, the Named
Fiduciaries shall be the Company, the Committee and the Trustee. The Company
may, by an instrument authorized and signed by the President of the Company,
designate any other person or persons as a Named Fiduciary or Named Fiduciaries
to perform functions specified in such instrument (or in a delegation pursuant
to Section 12.3) which relate to the administration of the Plan or the Trust
Fund, provided such designee accepts such designation. Such a designation may be
terminated at any time by written notice from the President of the Company to
the designee or by written notice from the designee to such President.

                  12.3 DELEGATION OF FIDUCIARY RESPONSIBILITIES. (1) The Company
may delegate to any person or persons any one or more powers, functions, duties
and/or responsibilities with respect to the Plan or the Trust Fund, other than
trustee responsibilities (as defined in section 405(c) of the Act) assigned to
the Trustee by the Trust Agreement or some other Section of the Plan. However,
no such power, function, duty or responsibility which is assigned to a Fiduciary
(other than the Company) pursuant to the Trust Agreement or some other Section
of the Plan shall be so delegated without the written consent of such Fiduciary.


<PAGE>   62


                                                                              58


                  (2) Any delegation pursuant to Subsection (1) of this Section
(a) shall be signed by the President of the Company, be delivered to and
accepted in writing by the delegatee, (b) shall contain such provisions and
conditions relating to such delegation as such President deems appropriate, (c)
shall specify the powers, functions, duties and/or responsibilities therein
delegated, (d) may be amended from time to time by written agreement signed by
the President of the Company and by the delegatee, and (e) may be revoked (in
whole or in part) at any time by written notice (i) from the President of the
Company delivered to the delegatee or (ii) from the delegatee delivered to the
President of the Company.

                  12.4 IMMUNITIES. Except as otherwise provided in Section 12.5
or by applicable law, (a) no Fiduciary shall have the obligation to discharge
any duty, function or responsibility which is specifically assigned to another
Fiduciary or Fiduciaries by the terms of the Plan or the Trust Agreement or is
delegated exclusively to another Fiduciary or Fiduciaries pursuant to procedures
for such delegation provided for in the Plan or in the Trust Agreement; (b) no
Fiduciary shall be liable for any action taken or not taken with respect to the
Plan or Trust Fund except for his own negligence, bad faith or willful
misconduct; (c) no Fiduciary shall be personally liable upon any contract or
other instrument made or executed by him or in his behalf in the administration
of the Plan or Trust Fund; (d) no Fiduciary shall be liable for the neglect,
omission or wrongdoing of another Fiduciary; (e) each Employer and each officer
or director thereof, Employees, the Committee and each member thereof, and any
other person(s) to whom the Company delegates (or the Plan or the Trust
Agreement assigns) any duty with respect to the Plan or Trust Fund, may rely and
shall be fully protected in acting in good faith (i) upon the advice of counsel
(who may be of counsel for an Employer or another Fiduciary), (ii) upon the
records of a member of the Controlled Group, (iii) upon the opinion,
certificate, valuation, report, recommendation or determination (A) of the
auditor selected by an Employer or of the Trustee or


<PAGE>   63


                                                                              59


(B) of any person employed by the Trustee to render advice with regard to any
responsibility the Trustee has under the Plan or Trust Agreement and (iv) upon
any certificate, statement or other representation made by or any information
furnished by an Employee, a Member, a Beneficiary or the Trustee and (f) the
Committee and its members shall not be required to make inquiry into the
propriety of any action by an Employer or the Trustee.

                  12.5 LIMITATION ON EXCULPATORY PROVISIONS. Notwithstanding any
other provision of the Plan or Trust Agreement, no provision of the Plan or
Trust Agreement shall be construed to relieve or have the effect of relieving
any Fiduciary from any responsibility or liability for any obligation,
responsibility or duty imposed on such Fiduciary by Part 4 of Title I of the
Act.

                  12.6 PLAN CONVERSIONS. Notwithstanding any provision of the
Plan to the contrary, during any conversion period, in accordance with
procedures established by the Administrator, the Administrator may temporarily
suspend, in whole or in part, certain provisions of the Plan, which may include,
but are not limited to, a Participant's right to change his contribution
election, a Participant's right to change his investment election and a
Participant's right to borrow or withdraw from his Account or obtain a
distribution from his Account.



<PAGE>   64


                                                                              60


                        ARTICLE XIII - CLAIMS PROCEDURES
                        --------------------------------

                  13.1 METHOD OF FILING CLAIM. Any Member or Beneficiary who
thinks that he is entitled to have received a distribution under the Plan or the
Trust Agreement which he has not received or that the amounts credited to his
Account are inaccurate may file with any member of the Committee a written claim
specifying the basis for his claim and the facts upon which he relies in making
such claim. Such claim must be signed by the claimant or his authorized
representative and shall be deemed filed when delivered to such a Committee
member.

                  13.2 NOTIFICATION BY COMMITTEE. Unless such claim is allowed
in full by the Committee, the Committee shall (within 90 days after such was
filed, plus an additional 90 days if required for processing and if notice of
the additional 90-day extension of time indicating the specific circumstances
requiring the extension and the day by which a decision shall be rendered is
given to the claimant within the first 90-day period) cause written notice to be
mailed to the claimant of the total or partial denial of such claim. Such notice
shall be written in a manner calculated to be understood by the claimant and
shall state the specific reason(s) for the denial of the claim, specific
reference(s) to pertinent provisions of the Plan and/or Trust Agreement on which
the denial of the claim was based, a description of any additional material or
information necessary for the claimant to perfect the claim and an explanation
of why such material or information is necessary, and appropriate information as
to the steps to be taken if the claimant wishes to submit his claim for review.
If a claimant does not receive any notice from the Committee within 90 days
after his claim is filed with the Committee, his claim shall be deemed to have
been denied.

                  13.3 REVIEW PROCEDURE. Within six months after the denial of
his claim, the claimant or his duly authorized representative may appeal such
denial by filing with any officer of the Company a written request for a review
of said claim. If such an appeal is so filed within


<PAGE>   65


                                                                              61


such six months, a Named Fiduciary designated by the Company, shall conduct a
full and fair review of such claim and mail or deliver to the claimant a written
decision within 60 days after such appeal was filed unless special circumstances
require an extension of time, in which case such decision shall be rendered not
later than 120 days after such appeal was filed. If an extension of time for
review is required, written notice of the extension shall be furnished to the
claimant prior to the commencement of the extension. Such decision shall be
written in a manner calculated to be understood by the claimant, shall state the
specific reason(s) for the decision, shall make specific reference(s) to
pertinent provisions of the Plan and/or Trust Agreement on which the decision is
based and shall, to the extent permitted by applicable law, be final and binding
on all interested persons. During such review, the claimant or his duly
authorized representative shall be given an opportunity to review documents that
are pertinent to the claimant's claim and to submit issues and comments in
writing. If the decision on review is not furnished within such 60-day or
120-day period, as the case may be, the claim shall be deemed denied on review.



<PAGE>   66


                                                                              62


               ARTICLE XIV - AMENDMENT, SUSPENSION OR TERMINATION
               --------------------------------------------------

                  14.1 RIGHT TO AMEND, SUSPEND OR TERMINATE. Subject to the
limitations of Section 9.7, the Company has reserved, and does hereby reserve,
the right at any time, without the consent of any other Employer or of the
Members, Beneficiaries or any other person, (a) to amend the Plan, in whole or
in part, and (b) to suspend Employer Contributions to the Plan and (c) to
terminate the Plan, in whole or in part or as to any or all of the Employers or
as to any designated group of Employees, Members and their Beneficiaries. No
such amendment, suspension or termination shall decrease the amount to be
contributed by the Employers on account of any Plan Year preceding the Plan Year
in which such amendment, suspension or termination is approved by the Company.

                  14.2 PROCEDURE FOR AMENDMENT, SUSPENSION OR TERMINATION. Any
amendment, suspension or termination of the Plan pursuant to Section 14.1 shall
be expressed in an instrument executed by the Company and shall become effective
as of the date designated in such instrument or, if no date is so designated, on
the date of its execution.

                  14.3 EFFECT OF TERMINATION. If the Plan shall be terminated by
the Company as to all Employers, Before-Tax Contributions and Employer
Contributions shall cease and, as soon as practicable after such termination,
the Trustee shall make distribution (if such distribution is permitted by
applicable law) to all Members pursuant to Section 8.3 as if each Member's
employment with the Controlled Group had terminated.

                  14.4 PROHIBITION ON DECREASING ACCRUED BENEFITS. No amendment
to the Plan (other than an amendment described in section 412(c)(8) of the Code)
shall have the effect of decreasing the accrued benefit of any Member. For
purposes of the preceding sentence, a Plan amendment which has the effect of (a)
eliminating or reducing an early retirement benefit or a retirement-type subsidy
(as defined in regulations of the Secretary of the Treasury) or (b)


<PAGE>   67


                                                                              63


eliminating an optional form of benefit (except as permitted by any such
regulations) with respect to benefits attributable to service before the
amendment, shall be treated as decreasing accrued benefits, provided, however,
that in the case of a retirement-type subsidy this sentence shall apply only
with respect to a Member who satisfies (either before or after the amendment)
the preamendment conditions for the subsidy.



<PAGE>   68


                                                                              64


                           ARTICLE XV - MISCELLANEOUS
                           --------------------------

                  15.1 SPENDTHRIFT PROVISIONS. No right or interest of any kind
of a Member or Beneficiary in the Trust Fund shall be anticipated, assigned
(either in law or in equity), alienated or be subject to encumbrance,
garnishment, attachment, execution or levy of any kind, voluntary or
involuntary, or any other legal or equitable process, except in accordance with
a qualified domestic relations order as defined in section 414(p) of the Code.
The Committee shall establish procedures to determine the qualified status of
domestic relations orders and to administer distributions under such qualified
orders in accordance with section 414(p) of the Code.

                  15.2 NO ENLARGEMENT OF EMPLOYMENT RIGHTS. The establishment of
the Plan shall not be construed as conferring any legal rights upon any Employee
or any person in respect of commencement, continuation, suspension, resumption
or termination of employment nor shall it interfere with or in any other way
affect the rights of an Employer to terminate or suspend employment and to treat
any Employee or other person without regard to the effect which such treatment
might have upon him as a Member.

                  15.3 NOTICES, REPORTS AND STATEMENTS. (1) All notices, reports
and statements given, made, delivered or transmitted to a Member shall be deemed
duly given, made, delivered or transmitted when mailed with postage prepaid and
addressed to the Member at the address last appearing on the books of the
Committee. A Member may change his address from time to time by written notice
in the form prescribed by the Committee.

                  (2) Written directions, instructions, notices and other
communications from Members to the Employers or the Committee shall be mailed by
first class mail or delivered to

                           The Gorman-Rupp Company
                           305 Bowman Street
                           P.O. Box 1217
                           Mansfield, Ohio 44901

                           Attention:  401(k) Plan Committee


<PAGE>   69


                                                                              65



or to such other address as may be communicated in writing by the Company. Any
such direction, instruction, notice or other communication shall be deemed to
have been given when actually received at such location.

                  15.4 ACTION BY COMPANY. Whenever the Company is authorized to
act under the Plan, such action shall be taken, unless otherwise provided in the
Plan or in a resolution of the Board of Directors of the Company, by written
instrument executed by (a) the President or a Vice President of the Company and
(b) the Secretary, Treasurer, an Assistant Treasurer or an Assistant Secretary
of the Company. To the extent permitted by applicable law, the Trustee may rely
on any instrument so executed as being validly authorized and as properly
evidencing the action of the Company.

                  15.5 MERGER OR TRANSFER OF ASSETS. There shall be no merger or
consolidation of this Plan with, or transfer of assets or liabilities of such
Plan to, any other plan unless each Member in the Plan would (if the Plan then
terminated) receive a benefit immediately after the merger, consolidation, or
transfer which is equal to or greater than the benefit he would have been
entitled to receive immediately before the merger, consolidation, or transfer
(if the Plan had then terminated).

                  15.6 ACQUISITIONS. In the event an Employer acquires all or a
part of another business organization (whether by merger, purchase of assets or
otherwise), the Committee shall determine the terms and conditions under which,
and the extent, if any, to which, remuneration paid by such business
organization and its predecessors, subsidiaries and affiliates shall be
recognized as Credited Compensation for purposes of the Plan, but no action
shall be taken pursuant to this Section which would discriminate in favor of
shareholders, officers or highly


<PAGE>   70


                                                                              66


compensated employees of such business organization as compared with other
employees of such business organization.

                  15.7 SEVERABILITY PROVISION. If any provision of the Plan or
Trust Agreement or the application of such provision to any person or
circumstances shall be held invalid, the remainder of the Plan and Trust
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid, shall not be affected thereby.

                  15.8 MILITARY SERVICE. Effective as of December 12, 1994,
notwithstanding any provisions of this Plan to the contrary, contributions,
benefits and service credit with respect to qualified military service will be
provided in accordance with section 414(u) of the Code. "Qualified military
service" means any service in the uniformed services (as defined in Chapter 43
of title 38 of the United States Code) by an individual if such individual is
entitled to reemployment rights under such chapter with respect to such service.



<PAGE>   71


                                                                              67


                    ARTICLE XVI - TOP-HEAVY PLAN REQUIREMENTS
                    -----------------------------------------

                  16.1 DEFINITIONS. For the purposes of this Article, the
following terms, when used with initial capital letters, shall have the
following respective meanings:

                  (1) AGGREGATION GROUP: Permissive Aggregation Group or
Required Aggregation Group, as the context shall require.

                  (2) COMPENSATION: An Employee's compensation as defined in
Section 5.5(3), subject to the dollar limitation described in Section 1.1(14).

                  (3) DEFINED BENEFIT PLAN: A qualified plan as defined in
section 414(j) of the Code.

                  (4) DEFINED CONTRIBUTION PLAN: A qualified plan as defined in
section 414(i) of the Code.

                  (5) DETERMINATION DATE: For any Plan Year, the last day of the
immediately preceding Plan Year, except that in the case of the first Plan Year
of the Plan, the Determination Date shall be the last day of such first Plan
Year.

                  (6) FORMER KEY EMPLOYEE: A Non-Key Employee with respect to a
Plan Year who was a Key Employee in a prior Plan Year. Such term shall also
include his Beneficiary in the event of his death.

                  (7) KEY EMPLOYEE: An Employee or former Employee who, at any
time during the current Plan Year or any of the four preceding Plan Years, is
(a) an officer of a Controlled Group member (limited to no more than 50
Employees, or, if lesser, the greater of 3 or 10 percent of the Employees)
having an annual Compensation greater than 50 percent of the dollar amount in
effect under section 415(b)(1)(A) of the Code for any such Plan Year, (b) one of
the 10 Employees owning (or considered as owning within the meaning of section
318 of the Code) the largest interests in a Controlled Group member and having
annual compensation of more than


<PAGE>   72


                                                                              68


the dollar amount in effect under section 415(c)(1)(A) of the Code, (c) a
5-percent owner (as such term is defined in section 416(i)(1)(B)(i) of the
Code), or (d) a 1-percent owner (as such term is defined in Section
416(i)(1)(B)(ii) of the Code) having an annual Compensation of more than
$150,000. For purposes of clause (b) of this Subsection, if two Employees have
the same interest in a Controlled Group member, the Employee having greater
annual compensation from such Controlled Group member shall be treated as having
a larger interest. For purposes of determining the number of officers taken into
account under clause (a) of this Subsection, Employees described in section
414(q)(8) of the Code shall be excluded. Effective for Plan Years beginning
after December 31, 1988, for purposes of this Subsection, compensation has the
meaning given such term by Code section 414(q)(7). The term 'Key Employee' shall
also include such Employee's Beneficiary in the event of his death.

                  (8) NON-KEY EMPLOYEE: An Employee or former Employee who is
not a Key Employee. Such term shall also include his Beneficiary in the event of
his death.

                  (9) PERMISSIVE AGGREGATION GROUP: The group of qualified plans
of the Employer consisting of:

                  (a)  the plans in the Required Aggregation Group; plus

                  (b) one (1) or more plans designated from time to time by the
         Committee that are not part of the Required Aggregation Group but that
         satisfy the requirements of sections 401(a)(4) and 410 of the Code when
         considered with the Required Aggregation Group.

If the group includes two or more Defined Benefit Plans, the same actuarial
assumptions shall be used with respect to all such Plans and shall be specified
in such Plans.

                  (10) REQUIRED AGGREGATION GROUP: The group of qualified plans
of the Employer consisting of:

                  (a) each plan in which a Key Employee participates; plus


<PAGE>   73


                                                                              69


                  (b) each other plan which enables a plan in which a Key
         Employee participates to meet the requirements of sections 401(a)(4) or
         410 of the Code.

If the group includes two or more Defined Benefit Plans, the same actuarial
assumptions shall be used with respect to all such Plans and shall be specified
in such Plans.

                  (11) TOP-HEAVY ACCOUNT BALANCE: A Member's (including a Member
who has received a total distribution from this Plan) or a Beneficiary's
aggregate-balance standing to his Account as of the Valuation Date coinciding
with or immediately preceding the Determination Date (as adjusted by the amount
of any Employer Contributions made or due to be made after such Valuation Date
but before the expiration of the extended payment period in section 412(c)(10)
of the Code); provided, however, that such balance shall include the aggregate
distributions made during the five (5) consecutive Plan Years ending with the
Plan Year that includes the Determination Date (including distributions under a
terminated plan which if it had not been terminated would have been included in
a Required Aggregation Group), and provided further that if an Employee or
former Employee has not performed services for any Employer maintaining the Plan
at any time during the 5-year period ending on the Determination Date, his
Account (and/or the Account of his Beneficiary) shall not be taken into account.

                  (12) TOP-HEAVY GROUP: An Aggregation Group if, as of a
Determination Date, the aggregate present value of accrued benefits for Key
Employees in all plans in the Aggregation Group (whether Defined Benefit Plans
or Defined Contribution Plans) is more than sixty percent (60%) of the aggregate
present value of accrued benefits for all employees in such plans. Proportional
subsidies shall be ignored in determining the top-heavy status of a Defined
Benefit Plan, but non-proportional subsidies shall be considered when making
such determination.

                  (13) TOP-HEAVY PLAN: See Section 16.2.


<PAGE>   74


                                                                              70


                  16.2 DETERMINATION OF TOP-HEAVY STATUS. (1) Except as provided
by Subsections (2) and (3) of this Section, the Plan shall be a Top-Heavy Plan
if, as of a Determination Date:

                  (a) the aggregate of Top-Heavy Account Balances for Key
         Employees is more than sixty percent (60%) of the aggregate of all
         Top-Heavy Account Balances, excluding for this purpose the aggregate
         Top-Heavy Account Balances of Former Key Employees; or

                  (b)  if the Plan is included in a Required Aggregation Group
         which is a Top-Heavy Group.

                  (2) If the Plan is included in a Required Aggregation Group
which is not a Top-Heavy Group, the Plan shall not be a Top-Heavy Plan
notwithstanding the fact that the Plan would otherwise be a Top-Heavy Plan under
Subsection (1) of this Section.

                  (3) If the Plan is included in a Permissive Aggregation Group
which is not a Top-Heavy Group, the Plan shall not be a Top-Heavy Plan
notwithstanding the fact that the Plan would otherwise be a Top-Heavy Plan under
Subsection (1) of this Section.

                  16.3 MINIMUM CONTRIBUTION REQUIREMENT. Notwithstanding any
other provisions of the Plan to the contrary, if the Plan is a Top-Heavy Plan
for any Plan Year:

                  (a) Each Non-Key Employee who is eligible to share in any
         Employer Contribution for such Plan Year shall be entitled to receive
         an allocation of such Contribution which is at least equal to three
         percent (3%) of his Compensation for such Plan Year.

                  (b) The percentage minimum contribution requirement set forth
         in paragraph (a) above with respect to a Plan Year shall not exceed the
         percentage at which Employer Contributions are made (or required to be
         made) under the Plan for such Plan Year for the Key Employee for whom
         such percentage is the highest for such Year. The


<PAGE>   75


                                                                              71


         determination referred to in the immediately preceding sentence shall
         be determined for each Key Employee by dividing the Employer
         Contributions allocated to such Key Employee in that Plan Year by such
         Key Employee's Compensation for such Plan Year.

                  (c) The percentage minimum contribution requirement set forth
         in paragraph (a) above may also be reduced or eliminated in accordance
         with Section 16.4(2).

                  (d) For the purpose of paragraph (b) above, contributions
         taken into account shall include like contributions under all other
         Defined Contribution Plans in the Required Aggregation Group, excluding
         any such plan in the Required Aggregation Group if that plan enables a
         Defined Benefit Plan in such Required Aggregation Group to meet the
         requirements of section 401(a)(4) or section 410 of the Code.

                  (e) For the purpose of this Section, the term "Employer
         Contributions" shall include Before-Tax Contributions made for an
         Employee.

                  16.4 COORDINATION WITH OTHER PLANS. (1) In applying this
Article, an Employer and all Controlled Group Members shall be treated as a
single employer, and the qualified plans maintained by such single employer
shall be taken into account.

                  (2) In the event that another Defined Contribution Plan
maintained by the Controlled Group provides contributions or benefits on behalf
of Members in this Plan, such other plan(s) shall be taken into account in
determining whether this Plan satisfies Section 16.3 and, the minimum
contribution required for a Non-Key Employee in this Plan under Section 16.3
will be reduced or eliminated, in accordance with the requirements of section
416 of the Code and the Regulations thereunder, if a minimum contribution is
made in whole or in part in respect of such other plan(s).

                  (3) Principles similar to those specifically applicable to
this Plan under this Article, and in general as provided for in section 416 of
the Code and the Regulations thereunder,


<PAGE>   76


                                                                              72


shall be applied to the other plan(s) required to be taken into account under
this Article in determining whether this Plan and such other plan(s) meet the
requirements of such section 416 of the Code and the Regulations thereunder.



                          *    *    *    *    *

                  DATED as of August 1, 2000, but actually executed at
Mansfield, Ohio, on December 28, 2000.

                                          THE GORMAN-RUPP COMPANY


                                          By:  /S/ JEFFREY S. GORMAN
                                               ---------------------------------
                                                  PRESIDENT AND CEO


                                          And  /S/ ROBERT E. KIRKENDALL
                                               ---------------------------------
                                                   VICE PRESIDENT AND SECRETARY


<PAGE>   77





                               AMENDMENT NO. 1 TO
                       THE GORMAN-RUPP COMPANY 401(k) PLAN
                 (AS AMENDED AND RESTATED AS OF AUGUST 1, 2000)
                 ----------------------------------------------

                    The Gorman-Rupp Company hereby adopts this Amendment No. 1
to The Gorman-Rupp Company 401(k) Plan (As Amended and Restated as of August 1,
2000) (the "Plan"). Words and phrases used herein with initial capital letters
that are defined in the Plan are used herein as so defined.

                                       I.

                    Effective as of January 1, 1995, clause (b) of Section
5.5(1) of the Plan is hereby amended to read as follows:

                    "(b) $30,000 ($35,000 effective January 1, 2001) (as such
                    amount is adjusted pursuant to section 415(d) of the Code)"

                                       II.

                    Effective as of August 1, 2000, Section 8.2 of the Plan is
hereby amended in its entirety to read as follows:

                              "8.2 Distributions on Death While an Employee. If
                    a Member dies while in the employ of a Controlled Group
                    Member, his entire Account shall be paid to the Member's
                    Beneficiary in a lump sum in cash and/or shares of
                    Gorman-Rupp Stock to the extent provided in Section 8.12, as
                    elected by the Beneficiary, within 60 days after the date of
                    such Member's death."

                                      III.

                    Effective as of August 1, 2000, Section 8.3 of the Plan is
hereby amended in its entirety to read as follows:

                              "8.3 Distributions on Other Termination of
                    Employment. If a Member's employment with the Controlled
                    Group terminates other than by reason of his death, his
                    entire Account shall be paid to him in a lump sum in cash
                    and/or shares of Gorman-Rupp Stock to the extent provided in
                    Section 8.12, as elected by the Member. If the value of a
                    Member's Account is $5,000 or less, distribution of his
                    Account shall be made as soon as practicable after the





<PAGE>   78





                    date of his termination of employment. If the value of a
                    Member's Account exceeds $5,000, distribution of such
                    Account shall not be made prior to the Member's attainment
                    of age 70 without his written request."

                    EXECUTED this 15th day of March, 2001.

                                     THE GORMAN-RUPP COMPANY



                                     By:  /S/ KENNETH E. DUDLEY
                                          --------------------------------------
                                          Name:  Kenneth E. Dudley
                                          Title:    Chief Financial Officer
                                                      & Treasurer


                                     By:  /S/ ROBERT E. KIRKENDALL
                                          --------------------------------------
                                          Name:  Robert E. Kirkendall
                                          Title:    Vice President & Corporate
                                                       Secretary