EX-10(B) Non-Employee Directors Compensation Plan



 



Exhibit (10)(b)



THE GORMAN-RUPP COMPANY



NON-EMPLOYEE DIRECTORS’

COMPENSATION PLAN



1. Purpose



     The purpose of The Gorman-Rupp Company Non-Employee Directors’ Compensation
Plan (the “Plan”) is to promote the interests of The Gorman-Rupp Company (the
“Company”) and its shareholders by attracting and retaining Non-Employee
Directors capable of furthering the future success of the Company and by
aligning their economic interests more closely with those of the Company’s
shareholders. “Non-Employee Director” means a member of the Board of Directors
of the Company (the “Board”) who is not employed by the Company or any of its
subsidiaries.


2. Effective Date, Term and Administration of the Plan



     The effective date of the Plan is May 22, 1997 (the “Effective Date”).


     The term during which Common Shares, without par value, of the Company
(“Common Shares”) may be awarded under the Plan shall expire on May 21, 2007,
unless earlier terminated by action of the Board.


     The Plan will be administered by the Board.


3. Common Shares Available for Awards



     The number of Common Shares which may be awarded to Non-Employee Directors
shall not exceed 50,000 Common Shares in the aggregate. The Company will file a
registration statement on Form S-8 covering 50,000 Common Shares available
for award to Non-Employee Directors.


4. Awards of Common Shares



     As compensation for regular services to be performed as a Non-Employee
Director, an automatic award of 500 Common Shares will be made on each July 1 to
each Non-Employee Director then serving on the Board (or as of the date of
initial election, as the case may be), commencing after the Effective Date. In
addition, each Non-Employee Director will receive $1,000 per Board meeting
attended from the date of election to the expiration of his or her term of
office. No Common Shares awarded under the Plan shall be subject to forfeiture
upon the termination of a Non-Employee Director’s service prior to completion of
his or her term.


     Common Shares awarded under the Plan shall be treasury shares. The
obligation of the Company to deliver Common Shares shall be subject to all
applicable laws, rules and regulations, and to such approvals by governmental
agencies as may be deemed necessary or advisable by the Company. In particular,
upon advice from counsel for the Company, the Company shall take such steps as
deemed necessary or advisable to comply with all requirements of the relevant
securities laws, including the placement of a “restricted securities” legend on


17






 


     certificates representing Common Shares and the application of a one-year
holding period to Common Shares awarded. In addition, the Non-Employee Directors
shall remain subject to the following requirements; (i) Common Shares received
can only be sold in brokers’ transactions and in accordance with the standard
volume limitations of Rule 144 of the Securities Act of 1933, and (ii) Common
Shares cannot be sold in violation of the insider trading rules and policies of
the American Stock Exchange.


5. Adjustments



     The number and kind of Common Shares which will be awarded to each
Non-Employee Director under Section 4 of the Plan will be automatically adjusted
to prevent dilution or enlargement of the rights of Non-Employee Directors in
the event of any changes in the number or kind of outstanding Common Shares
resulting from a merger, recapitalization, stock exchange, stock split, stock
dividend, other extraordinary dividend or distribution, corporate division or
other change in the Company’s corporate or capital structure; provided, however,
that no such adjustment will be made if the adjustment would cause the Plan to
fail to comply with an exemption pursuant to Section 16 of the Securities
Exchange Act of 1934 (the “1934 Act”).


6. Amendment, Suspension and Termination



     The Board may at any time amend, suspend or terminate the Plan.


7. Compliance with Rule 16b-3



     The Company intends that the Plan and all transactions hereunder meet or
will meet all of the requirements of Rule 16b-3 under the 1934 Act.


8. Retention of Powers



     Nothing contained in the Plan shall prevent the Board from exercising those
powers granted to it by law, the Company’s Amended Articles of Incorporation, as
amended, the Company’s Code of Regulations, or otherwise to set the compensation
of directors from time to time.


9. Governing Law



     The Plan shall be construed in accordance with and governed by the laws of
the State of Ohio and applicable Federal laws.



18