Document:

<Page>
                                                                     EXHIBIT 4.1

                            WOODWARD GOVERNOR COMPANY
                             EXECUTIVE BENEFIT PLAN

                            EFFECTIVE JANUARY 1, 2004

<Page>

<Table>
<S>                                                                                                     <C>
I.                PURPOSE AND EFFECTIVE DATE............................................................1

     1.1.            Purpose............................................................................1
     1.2.            Effective Date.....................................................................1
     1.3.            History............................................................................1

II.               DEFINITIONS...........................................................................1

     2.1.            "Account"..........................................................................1
     2.2.            "Administrator"....................................................................2
     2.3.            "Affiliate"........................................................................2
     2.4.            "Base Salary"......................................................................2
     2.5.            "Beneficiary"......................................................................2
     2.6.            "Board"............................................................................2
     2.7.            "Bonus"............................................................................2
     2.8.            "Change in Control"................................................................3
     2.9.            "Code".............................................................................4
     2.10.           "Company"..........................................................................4
     2.11.           "Deferral Contribution Amounts"....................................................5
     2.12.           "Deferral Election"................................................................5
     2.13.           "Disability".......................................................................5
     2.14.           "Distribution Election"............................................................5
     2.15.           "Early Retirement Date"............................................................5
     2.16.           "Election Period"..................................................................5
     2.17.           "Eligible Member"..................................................................5
     2.18.           "Exchange Act".....................................................................5
     2.19.           "FICA".............................................................................5
     2.20.           "Investment Fund or Funds".........................................................5
     2.21.           "Normal Retirement Date"...........................................................6
     2.22.           "Participant"......................................................................6
     2.23.           "Plan".............................................................................6
     2.24.           "Plan Year"........................................................................6
     2.25.           "Prior Account Balance"............................................................6
     2.26.           "Retirement".......................................................................6
     2.27.           "Supplemental Benefit Amount"......................................................6
     2.28.           "Valuation Date"...................................................................6

III.              PARTICIPATION.........................................................................7

     3.1.            Participation......................................................................7
     3.2.            ERISA Exemption....................................................................7

IV.               DEFERRAL CONTRIBUTION AMOUNTS.........................................................7

     4.1.            Permissible Deferrals under the Plan...............................................7
             (a)     Deferral of Base Salary............................................................7
</Table>

<Page>

<Table>
<S>                                                                                                    <C>
             (b)     Deferral of Bonus..................................................................7
     4.2.            Deferral Elections.................................................................8
     4.3.            Crediting of Deferral Elections....................................................9
     4.4.            Vesting............................................................................9
     4.5.            Deferred Contribution Amounts Subject to FICA at Time of Deferral..................9

V.                SUPPLEMENTAL BENEFIT AMOUNT...........................................................9

     5.1.            Computation of Supplemental Benefit Amount.........................................9
     5.2.            Vesting...........................................................................10
     5.3.            Crediting of Supplemental Benefit Amount..........................................10

VI.               ACCOUNTS AND INVESTMENTS.............................................................10

     6.1.            Valuation of Accounts.............................................................10
     6.2.            Hypothetical Investment Funds.....................................................11
     6.3.            Crediting of Investment Return....................................................11
     6.4.            Changing Investment Fund Options..................................................12
     6.5.            Investment Alternatives After Death...............................................12

VII.              PAYMENT OF BENEFITS..................................................................12

     7.1.            Distribution at Specific Future Date..............................................12
     7.2.            Distribution Upon Retirement or Disability........................................12
     7.3.            Distribution On Other Termination of Employment...................................13
     7.4.            Unscheduled Withdrawal............................................................13
     7.5.            Unforeseeable Emergency...........................................................14
     7.6.            Time and Form of Elections........................................................14
     7.7.            Form of Payment and Withholding...................................................14

VII.              DEATH BENEFITS.......................................................................14

     8.1.            Death Prior to Commencement of Benefits...........................................14
     8.2.            Death After Commencement of Benefits..............................................14
     8.3.            Administrator Discretion Regarding Form...........................................14

IX.               ADMINISTRATION.......................................................................15

     9.1.            Authority of Administrator........................................................15
     9.2.            Participant's Duty to Furnish Information.........................................15
     9.3.            Interested Member of Administrator................................................15
     9.4.            Indemnification...................................................................15
     9.5.            Claims Procedure..................................................................15

X.                AMENDMENT AND TERMINATION............................................................16
</Table>

<Page>

<Table>
<S>                                                                                                    <C>
XI.               MISCELLANEOUS........................................................................16

     11.1.           No Implied Rights; Rights on Termination of Service...............................16
     11.2.           No Employment Rights..............................................................16
     11.3.           Nature of the Plan................................................................17
             (a)     Unfunded Plan.....................................................................17
             (b)     Exception for Change in Control...................................................17
     11.4.           Nontransferability................................................................17
     11.5.           Successors and Assigns............................................................18
     11.6.           Payment with Respect to Incapacitated Persons.....................................18
     11.7.           Arbitration.......................................................................18
     11.8.           Gender and Number.................................................................18
     11.9.           Headings..........................................................................18
     11.10.          Severability......................................................................18
     11.11.          Effect on Other Employee Benefit Plans............................................19
     11.12.          Non-U.S. Participants.............................................................19
     11.13.          Applicable Law....................................................................19
</Table>

<Page>

                            WOODWARD GOVERNOR COMPANY
                             EXECUTIVE BENEFIT PLAN

I.      PURPOSE AND EFFECTIVE DATE.

        1.1.    PURPOSE. The Woodward Governor Company Executive Benefit Plan
                has been established by Woodward Governor Company to attract and
                retain certain key members by:

                (a)     providing a tax-deferred capital accumulation vehicle to
                        supplement such members' individual retirement
                        contributions, thereby encouraging savings for
                        retirement, and

                (b)     supplementing such members' retirement income available
                        under the Woodward Governor Company Retirement Savings
                        Plan (the "RSP"), which is otherwise limited pursuant to
                        the rules and regulations of the Internal Revenue Code
                        of 1986, as amended.

        1.2.    EFFECTIVE DATE. The Plan was originally effective January 1,
                2001. This amendment and restatement of the Plan is effective
                January 1, 2004. The Plan shall remain in effect until
                terminated in accordance with Article X.

        1.3.    HISTORY. The Woodward Governor Company Amended and Restated
                Unfunded Deferred Compensation Plan No.1 (the "DC Plan No. 1")
                and the Woodward Governor Company Unfunded Deferred Compensation
                Plan No. 2 (the "DC Plan No. 2) were merged with and into this
                Plan effective January 1, 2001. The Plan is intended to be an
                amendment, restatement and continuation of such plans for
                periods following the merger date.

II.     DEFINITIONS.

        When used in the Plan and initially capitalized, the following words and
        phrases shall have the meanings indicated:

        2.1.    "ACCOUNT" means the recordkeeping account established for each
                Participant in the Plan for purposes of accounting for the
                amount of the Participant's:

                (a)     Deferral Contribution Amounts deferred and credited in
                        accordance with Article IV each year, if any,

                (b)     Supplemental Benefit Amounts determined and credited in
                        accordance with Article V each year, if any, and

                (c)     account balance, if any, under the prior DC Plan No. 1
                        and/or prior DC Plan No. 2 on the day immediately
                        preceding the original effective date of this Plan,

<Page>

                all adjusted periodically to reflect the hypothetical investment
                return on such amounts in accordance with Article VI and
                distributions in accordance with Article VII.

        2.2.    "ADMINISTRATOR" means the Compensation Committee or such other
                individual or committee appointed and delegated by the Board to
                administer the Plan in accordance with Article IX. To the extent
                so delegated, the term "Administrator" hereunder shall be deemed
                to refer to such individual or committee. The Compensation
                Committee shall take such actions it deems necessary or
                desirable to ensure that such individual or committee has
                sufficient and appropriate authority for carrying out the intent
                and purpose of the Plan.

        2.3.    "AFFILIATE" means:

                (a)     any corporation, partnership, joint venture, trust,
                        association or other business enterprise which is a
                        member of the same controlled group of corporations,
                        trades or businesses as the Company within the meaning
                        of Code Section 414, and

                (b)     any other entity that is designated as an Affiliate by
                        the Board.

        2.4.    "BASE SALARY" means a Participant's base salary in effect for a
                given year as reflected in the personnel records of the Company.

        2.5.    "BENEFICIARY" means the person or entity designated by the
                Participant to receive the Participant's Plan benefits in the
                event of the Participant's death. If the Participant does not
                designate a Beneficiary, or if the Participant's designated
                Beneficiary predeceases the Participant, the Participant's
                estate shall be the Beneficiary under the Plan.

        2.6.    "BOARD" means the Board of Directors of the Company.

        2.7.    "BONUS" means any incentive compensation awarded to a
                Participant for a given year under the Woodward Governor Company
                Annual Incentive Compensation Plan, the Woodward Governor
                Company Long-Term Incentive Compensation Plan, the Woodward
                Governor Company Retention Incentive Agreement for FST
                Executives, and/or any other bonus or incentive compensation
                plan designated by the Administrator from time to time for
                inclusion within this definition for deferral purposes.

        2.8.    "CHANGE IN CONTROL" shall be deemed to have occurred if:

                (a)     any "person" (as defined in Section 13(d) and 14(d) of
                        the Exchange Act) (excluding for this purpose the
                        Company or any subsidiary of the Company, or any
                        employee benefit plan of the Company or any subsidiary
                        of the Company, or any person or entity organized,
                        appointed or established by the Company for or pursuant
                        to the terms of such plan which acquires beneficial
                        ownership of voting securities of the Company)

<Page>

                        is or becomes the "beneficial owner" (as defined in Rule
                        13d-3 under the Exchange Act) directly or indirectly of
                        securities of the Company representing fifteen percent
                        (15%) or more of the combined voting power of the
                        Company's then outstanding securities; provided,
                        however, that no Change in Control shall be deemed to
                        have occurred:

                        (i)     as the result of an acquisition of securities of
                                the Company by the Company which, by reducing
                                the number of voting securities outstanding,
                                increases the direct or indirect beneficial
                                ownership interest of any person to fifteen
                                percent (15%) or more of the combined voting
                                power of the Company's then outstanding
                                securities, but any subsequent increase in the
                                direct or indirect beneficial ownership interest
                                of such a person in the Company shall be deemed
                                a Change in Control; or

                        (ii)    as a result of the acquisition directly from the
                                Company of securities of the Company
                                representing less than fifty percent (50%) of
                                the voting power of the Company; or

                        (iii)   if the Board determines in good faith that a
                                person who has become the beneficial owner
                                directly or indirectly of securities of the
                                Company representing fifteen percent (15%) or
                                more of the combined voting power of the
                                Company's then outstanding securities has
                                inadvertently reached that level of ownership
                                interest, and if such person divests as promptly
                                as practicable a sufficient amount of securities
                                of the Company so that the person no longer has
                                a direct or indirect beneficial ownership
                                interest in fifteen percent (15%) or more of the
                                combined voting power of the Company's then
                                outstanding securities; or

                (b)     during any period of two (2) consecutive years (not
                        including any period prior to the original effective
                        date (as set forth in Section 1.2 above) of the Plan),
                        individuals who at the beginning of such two-year period
                        constitute the Board and any new director or directors
                        (except for any director designated by a person who has
                        entered into an agreement with the Company to effect a
                        transaction described in paragraph (a) above or
                        paragraph (c) below) whose election by the Board or
                        nomination for election by the Company's shareholders
                        was approved by a vote of at least two-thirds of the
                        directors then still in office who either were directors
                        at the beginning of the period or whose election or
                        nomination for election was previously so approved,
                        cease for any reason to constitute at least a majority
                        of the Board (such individuals and any such new
                        directors being referred to as the "Incumbent Board");
                        or

                (c)     approval by the shareholders of the company of a
                        complete liquidation or dissolution of the Company; or

<Page>

                (d)     consummation of:

                        (i)     an agreement for the sale or disposition of the
                                Company or all or substantially all of the
                                Company's assets,

                        (ii)    a plan of merger or consolidation of the Company
                                with any other corporation, or

                        (iii)   a similar transaction or series of transactions
                                involving the Company (any transaction described
                                in subparagraphs (i) and (ii) of this paragraph
                                (d) being referred to as a "Business
                                Combination"), in each case unless after such a
                                Business Combination:

                                (a)     the shareholders of the Company
                                        immediately prior to the Business
                                        Combination continue to own, directly or
                                        indirectly, more than fifty-one percent
                                        (51%) of the combined voting power of
                                        the then outstanding voting securities
                                        entitled to vote generally in the
                                        election of directors of the new (or
                                        continued) entity (including, but not by
                                        way of limitation, an entity which as a
                                        result of such transaction owns the
                                        Company or all or substantially all of
                                        the Company's former assets either
                                        directly or through one or more
                                        subsidiaries) immediately after such
                                        Business Combination, in substantially
                                        the same proportion as their ownership
                                        in the Company immediately prior to such
                                        Business Combination, and

                                (b)     at least a majority of the members of
                                        the board of directors of the entity
                                        resulting from such Business Combination
                                        were members of the Incumbent Board at
                                        the time of the execution of the initial
                                        agreement, or of the action of the
                                        Board, providing for such Business
                                        Combination.

        2.9.    "CODE" means the Internal Revenue Code of 1986, as amended.

        2.10.   "COMPANY" means Woodward Governor Company and any successor
                thereto.

        2.11.   "DEFERRAL CONTRIBUTION AMOUNTS" means the amounts of Base Salary
                and Bonus deferred by a Participant, if any, and credited to his
                or her Account in accordance with Article IV but such amounts
                specifically and expressly do not include any Prior Account
                Balance of such Participant.

        2.12.   "DEFERRAL ELECTION" means the written election made by an
                Eligible Member to defer such Eligible Member's Base Salary
                and/or Bonus for any given year in accordance with Article IV.

<Page>

        2.13.   "DISABILITY" means Disability as defined in the Woodward
                Governor Company Long-Term Disability Plan.

        2.14.   "DISTRIBUTION ELECTION" means the written election made by a
                Participant for a Plan Year regarding the timing and form of
                payment of his or her Deferral Contribution Amounts under
                Article IV or Supplemental Benefit Amounts under Article V with
                respect to such Plan Year.

        2.15.   "EARLY RETIREMENT DATE" means the date on which any Plan
                Participant retires from active employment with the Company or
                any Affiliate on or after he has attained age 55 but before he
                has attained age 65.

        2.16.   "ELECTION PERIOD" means the period specified by the
                Administrator during which a Deferral Election may be made with
                respect to a Participant's Base Salary and/or Bonus payable for
                a Plan Year, or a Distribution Election may be made with respect
                to payment of Deferred Compensation Amounts or Supplemental
                Benefit Amounts credited for such Plan Year.

        2.17.   "ELIGIBLE MEMBER" means a member of the Company or an Affiliate
                who has been selected by the Administrator to participate in the
                Plan in accordance with Article III.

        2.18.   "EXCHANGE ACT" means the Securities and Exchange Act of 1934.

        2.19.   "FICA" means the employment tax imposed on a member's income
                under the Federal Insurance Contributions Act (Chapter 21 of the
                Code) which is comprised of Old-Age, Survivors and Disability
                Insurance and Hospital Insurance

        2.20.   "INVESTMENT FUND OR FUNDS" means the investment funds designated
                by the Administrator as the basis for determining the
                hypothetical investment return to be credited in accordance with
                Article VI to Participants' Accounts. As of the effective date,
                the Investment Funds shall mirror the investment funds available
                under the RSP. The Administrator, in its sole discretion, may
                change the Investment Funds at such times as it deems
                appropriate. Any Investment Fund alternatives that are different
                that those offered under the RSP shall be described in an
                Appendix to the Plan.

        2.21.   "NORMAL RETIREMENT DATE" means the date on which any Plan
                Participant retires from active employment with the Company or
                any Affiliate on or after he has attained age 65.

        2.22.   "PARTICIPANT" means an Eligible Member who has:

                (a)     been notified by the Administrator of his eligibility to
                        participate in the Plan, and

                (b)     either:

<Page>

                        (i)     completed and submitted a Deferral Election in
                                accordance with Section 4.2, or

                        (ii)    had credited to his Account, by the Company,
                                Supplemental Benefit Amounts in accordance with
                                Article V, or

                        (iii)   had an account balance under the prior DC Plan
                                No. 1 and/or the prior DC Plan No. 2 on the day
                                immediately preceding the effective date of this
                                Plan.

        2.23.   "PLAN" means the Woodward Governor Company Executive Benefits
                Plan, as amended from time to time.

        2.24.   "PLAN YEAR" means the 12 consecutive month period beginning each
                January 1.

        2.25.   "PRIOR ACCOUNT BALANCE" means an Eligible Member's account
                balance(s), if any, under the prior DC Plan No. 1 and/or prior
                DC Plan No. 2 which were transferred to this Plan by the Company
                and credited to his Account pursuant to Section 3.1.

        2.26.   "RETIREMENT" means termination of employment by a Participant by
                reason of retiring from active employment with the Company or
                any Affiliate on his Early Retirement Date or Normal Retirement
                Date.

        2.27.   "SUPPLEMENTAL BENEFIT AMOUNT" means the amount computed on
                behalf of the Participant, if any, and credited to his or her
                Account in accordance with Article V.

        2.28.   "VALUATION DATE" means a date on which the Investment Funds are
                valued and the Participant's Account is adjusted for any
                resulting gains or losses. The Administrator shall determine the
                Valuation Date and such date shall be at least once every
                calendar year.

<Page>

III.    PARTICIPATION.

        3.1.    PARTICIPATION. The Administrator shall select those members
                eligible to participate in the Plan. In selecting Eligible
                Members, the Administrator shall take into consideration such
                factors as it deems relevant in connection with accomplishing
                the purposes of the Plan. An Eligible Member shall become a
                Participant in the Plan when (A) he is notified in writing by
                the Administrator that he is eligible to participate in the
                Plan, and (B) he has either (1) completed and submitted a
                Deferral Election to the Administrator in accordance with
                Article IV, or (2) had credited to his Account, by the Company,
                Supplemental Benefit Amounts in accordance with Article V, or
                (3) had credited to his Account, by the Company, his account
                balance, if any, under the prior DC Plan No. 1 and/or the prior
                DC Plan No. 2 on the day immediately preceding the original
                effective date of this Plan.

        3.2.    ERISA EXEMPTION. It is the intent of the Company that the Plan
                be exempt from Parts 2, 3 and 4 of Subtitle B of Title I of the
                Employee Retirement Income Security Act of 1974, as amended
                ("ERISA"), as an unfunded plan that is maintained by the Company
                primarily for the purpose of providing deferred compensation for
                a select group of management of highly compensated employees
                (the "ERISA Exemption"). Notwithstanding anything to the
                contrary in Section 3.1 or in any other provision of the Plan,
                the Administrator may in its sole discretion exclude any one or
                more members from eligibility to participate or from
                participation in the Plan, may exclude any Participant from
                continued participation in the Plan, and may take any further
                action (including the immediate payment of the Participant's
                entire interest under the Plan in a lump-sum) it considers
                necessary or appropriate if the Administrator reasonably
                determines in good faith that such exclusion or further action
                is necessary in order for the Plan to qualify for, or to
                continue to qualify for, the ERISA Exemption.

IV.     DEFERRAL CONTRIBUTION AMOUNTS.

        4.1.    PERMISSIBLE DEFERRALS UNDER THE PLAN. An Eligible Member may
                elect to defer:

                (a)     DEFERRAL OF BASE SALARY: up to 50% of his or her Base
                        Salary for a Plan Year, in increments of 1%, provided,
                        however, that any election to defer over 30% of Base
                        Salary must be approved in advance by the Administrator,
                        and

                (b)     DEFERRAL OF BONUS: up to 100% of his or her Bonus for a
                        Plan Year, in increments of 25%,

                by filing a Deferral Election in accordance with Section 4.2
                below.

<Page>

        4.2.    DEFERRAL ELECTIONS. A Participant's Deferral Election shall be
                in writing, and shall be filed with the Administrator at such
                time and in such manner as the Administrator shall provide,
                subject to the following:

                (a)     A Deferral Election pertaining to Base Salary and/or
                        Bonus shall be made during the Election Period
                        established by the Administrator which shall end no
                        later than December 31 preceding the first day of the
                        Plan Year in which such Base Salary and/or Bonus would
                        otherwise be payable.

                (b)     At the discretion of the Administrator, a Deferral
                        Election may be made by

                        (i)     newly-hired Eligible Members for the Plan Year
                                in which they commence employment,

                        (ii)    a member who becomes an Eligible Member after
                                the beginning of a Plan Year for the Plan Year
                                in which they become an Eligible Member.

                        Notwithstanding the preceding sentence, such Deferral
                        Elections must be made within thirty (30) days of their
                        date of hire or the date the member becomes an Eligible
                        Member, whichever applies. However, such Deferral
                        Elections shall be prospective and shall apply only to
                        Base Salary and/or Bonus that would otherwise be paid to
                        the Eligible Member after the Deferral Election is made.

                (c)     Deferral Elections shall be expressed as a percentage of
                        Base Salary or Bonus, within the limits provided under
                        the Plan.

                Once made, a Deferral Election for:

                        (A)     Base Salary shall remain in effect for all
                                subsequent Plan Years unless changed or revoked
                                by the Participant in accordance with rules
                                established by the Administrator, and

                        (B)     Bonus shall remain in effect only for the Plan
                                Year for which such Bonus Deferral Election was
                                made.

                Any such modification or revocation with respect to Base Salary
                shall be effective for the Plan Year following the Plan Year in
                which it is made. Notwithstanding anything to the contrary, any
                revocation for Base Salary and/or Bonus shall become effective
                as soon as practicable in the event it is made because of the
                Participant's Disability or if the Administrator, in its sole
                discretion, determines that the Participant has suffered a
                severe financial hardship or a bona fide administrative mistake
                was made. If a Deferral Election is revoked in accordance with
                any of the foregoing, the Participant may not make a new
                Deferral Election until the Election Period established by the
                Administrator for making deferrals for the next Plan Year.

<Page>

                (d)     At the time a Deferral Election is made with respect to
                        Base Salary or Bonus for a Plan Year, the Participant
                        may also make a Distribution Election with respect to
                        such Plan Year deferrals in accordance with Section 7.1.

        4.3.    CREDITING OF DEFERRAL ELECTIONS. The amount of Base Salary and
                Bonus that a Participant elects to defer under the Plan shall be
                credited by the Company to the Participant's Account as Deferral
                Contribution Amounts as of the date such Base Salary or such
                Bonus would have been paid to the Participant absent the
                Deferral Election.

        4.4.    VESTING. A Participant's Deferral Contribution Amounts for each
                Plan Year shall be fully vested at the time credited to such
                Participant's Account.

        4.5.    DEFERRED CONTRIBUTION AMOUNTS SUBJECT TO FICA AT TIME OF
                DEFERRAL. A Participant's Deferred Contribution Amounts are
                subject to FICA at the time the amounts are contributed to the
                Plan for deferral. The gross amount of the Participant's Base
                Salary deferral and Bonus deferral will be contributed to the
                Participant's Account and the corresponding FICA tax due will be
                deducted from that portion of the Participant's Base Salary or
                Bonus not deferred, as the case may be. Notwithstanding the
                foregoing, if a Participant has elected to defer a percentage of
                his or her Bonus such that contribution of the gross amount of
                the Bonus deferred would leave insufficient funds to remit the
                applicable FICA tax to the government, then the applicable Bonus
                amount contributed to the Participant's Account shall be made
                net of the smallest amount of FICA tax needed to satisfy such
                liability which cannot be covered from the portion of Bonus not
                deferred.

V.      SUPPLEMENTAL BENEFIT AMOUNT.

        5.1.    COMPUTATION OF SUPPLEMENTAL BENEFIT AMOUNT. An Eligible Member
                designated by the Administrator for participation under the Plan
                shall be entitled to a Supplemental Benefit Amount for each Plan
                Year that he is an Eligible Member equal to:

                (a)     the excess, if any, of the benefit the Participant
                        otherwise would have been entitled to have credited to a
                        separate account for his benefit under the RSP for a
                        given year if such benefit was calculated without regard
                        to the following:

                              (A)  Code Section 415,

                              (B)  Code Section 401(a)(17),

                              (C)  Code Section 401(k)(3),

                              (D)  Code Section 401(m)(2),

<Page>

                              (E)  Code Section 402(g), and

                              (F)  any Deferral Election made by the Participant
                                   for such given year under Article IV of this
                                   Plan, OVER

                (b)     the accrued benefit which the Participant is entitled to
                        have credited to a separate account for his benefit for
                        such given year under the RSP.

        5.2.    VESTING. A Participant's Supplemental Benefit Amounts calculated
                by the Company for each Plan Year shall be fully vested at the
                time credited to such Participant's Account.

        5.3.    CREDITING OF SUPPLEMENTAL BENEFIT AMOUNT. The Supplemental
                Benefit Amounts computed in Section 5.1 above for each Plan Year
                shall be credited by the Company to the Participant's Account as
                soon as reasonably practicable.

        5.4.    DISTRIBUTION ELECTIONS. During the Election Period for each Plan
                Year, a Participant may also make a Distribution Election with
                respect to the distribution under Section 7.1 of any
                Supplemental Benefit Amount to be credited to his or her Account
                for such Plan Year.

VI.     ACCOUNTS AND INVESTMENTS.

        6.1.    VALUATION OF ACCOUNTS. The Administrator shall establish an
                Account for each Participant who:

                (a)     has filed a Deferral Election to defer Base Salary
                        and/or Bonus, or

                (b)     has been credited with a Supplemental Benefit Amount, or

                (c)     has a Prior Account Balance on the effective date of
                        this Plan.

                Such Account shall be credited with a Participant's Deferral
                Contribution Amounts and Supplemental Benefit Amounts as set
                forth in Sections 4.3 and 5.3, respectively, and with the
                Participant's Prior Account Balance, if any. As of each
                Valuation Date, the Participant's Account shall be adjusted
                upward or downward to reflect:

                (i)     the investment return to be credited as of such
                        Valuation Date pursuant to Section 6.3 below,

                (ii)    the amount of distributions, if any, to be debited as of
                        that Valuation Date under Article VII, and

                (iii)   the amount of forfeitures, if any, to be debited under
                        Section 7.4(a).

<Page>

        6.2.    HYPOTHETICAL INVESTMENT FUNDS. Each Participant generally may
                direct the manner in which his or her Account shall be deemed
                invested in and among the Investment Funds; provided, however,
                that each investment election made by a Participant shall,
                notwithstanding anything to the contrary in the Plan, be
                strictly subject to the consent of the Administrator which, in
                its sole discretion, may elect to honor the Participant's
                request or have the Account deemed invested in another manner.
                Such deemed investment election shall be made in accordance with
                such procedures as the Administrator shall establish and any
                such election shall be made in whole percentages. The investment
                authority shall remain at all times with the Administrator. The
                selection of Investment Funds by a Participant shall be for the
                sole purpose of determining the rate of return to be credited to
                his or her Account and shall not be treated or interpreted in
                any manner whatsoever as a requirement or direction to actually
                invest assets in any Investment Fund or any other investment
                media.

                A Participant may make an investment election for the Investment
                Fund based on Woodward Governor Company Common Stock only if
                such election is approved in advance by the Board.
                Notwithstanding any provision of the Plan to the contrary, if a
                Participant is granted permission to elect such Investment Fund,
                the Participant may only revoke such Investment Fund election
                with the prior approval of the Board. Any such revocation shall
                only be effective with respect to future deferrals and credits.
                Any portion of the Participant's Account deemed invested in the
                Company's Common Stock shall continue to be deemed to be
                invested in Common Stock and may not be transferred to any other
                hypothetical Investment Fund. The applicable value of the common
                stock as of any Valuation Date shall be equal to the closing
                price of such common stock on NASDAQ quoted by the WALL STREET
                JOURNAL for the applicable Valuation Date.

        6.3.    CREDITING OF INVESTMENT RETURN. Each Participant's Account shall
                be credited on each Valuation Date with his or her allocable
                share of investment gains or losses of each Investment Fund in
                which his or her Account is hypothetically invested. The
                Administrator shall adopt a protocol for allocating the deemed
                investment gains and losses similar to that used in the RSP.
                Notwithstanding anything to the contrary, if a Participant
                elects to invest in the hypothetical Investment Fund for
                Woodward Governor Company Common Stock, such Participant's
                Account shall also be credited with any deemed dividends paid
                during the period beginning with the immediately preceding
                Valuation Date and ending with the current Valuation Date.

        6.4.    CHANGING INVESTMENT FUND OPTIONS. Subject to the provisions of
                this Article VI, a Participant may, on a daily basis, make a new
                election with respect to the hypothetical Investments Funds in
                which his or her Account shall be deemed invested in the future.
                Any such election shall be made in the form specified by the
                Administrator.

        6.5.    INVESTMENT ALTERNATIVES AFTER DEATH. For periods after the
                Valuation Date coincident with or following a Participant's
                death and pursuant to procedures

<Page>

                established by the Administrator, the Participant's Account
                balance pertaining to Deferral Contribution Amounts,
                Supplemental Benefit Amounts, if any, and/or Prior Account
                Balance, if any, shall be reallocated and reinvested among the
                Investment Funds in accordance with the Beneficiary's
                hypothetical investment direction.

VII.    PAYMENT OF BENEFITS.

        7.1.    DISTRIBUTION AT SPECIFIC FUTURE DATE. During the Election Period
                specified by the Administrator for a Plan Year, an Eligible
                Member may elect one or more future Valuation Dates as of which
                all or a portion of his or her Deferral Contribution Amounts and
                any Supplemental Benefit Amounts for such Plan Year, and
                earnings thereon, shall be distributed. Any distribution as of a
                specific future date made to an Eligible Member pursuant to such
                election shall be paid in a single lump-sum payment. Any such
                future date shall be a Valuation Date in a specific future year
                which is at least five Plan Years after the Plan Year for which
                the initial Deferral Contribution Amounts or Supplemental
                Benefit Amounts are credited to such Participant's Account;
                provided, however, that only one distribution date per Plan Year
                may be elected under this Section 7.1; provided, further that,
                if the Participant elects a distribution at one or more specific
                future dates and has a termination of employment prior to any
                such date, distribution shall commence pursuant to Sections 7.2,
                7.3, 8.1 or 8.2, as applicable. A distribution election under
                this Section 7.1 may be revoked or extended to a Valuation Date
                in a future Plan Year by filing a one-time revocation or
                extension election with the Administrator at least 12 months
                prior to the first day of the Plan Year in which such
                distribution was scheduled to take place. Notwithstanding the
                foregoing, any amounts distributable under this Section 7.1
                shall be paid as soon as practicable following such relevant
                Valuation Date.

        7.2.    DISTRIBUTION UPON RETIREMENT OR DISABILITY. If a Participant
                terminates employment with the Company and/or Affiliates by
                reason of Retirement or Disability, distribution of the
                Participant's Account shall be made by or commence on the
                Valuation Date coincident with or next following such
                Participant's termination of employment. Distribution under this
                Section 7.2 shall be made:

                (a)     in a lump sum, or

                (b)     in substantially equal annual, quarterly or monthly
                        installments for a period up to but not exceeding 10
                        years

                as elected by the Participant on his or her Distribution
                Election. A Participant may revoke or change his or her
                Distribution Election under this Section 7.2 by filing a new
                Distribution Election with the Administrator; provided, however,
                that any Distribution Election that has not been on file with
                the Administrator at least 12 months prior to the first day of
                the Plan Year in which the Participant's termination of
                employment occurs shall be void and disregarded. A Participant

<Page>

                cannot alter or change his Distribution Election once he has
                begun to receive payments under the Plan. Notwithstanding the
                foregoing, a Participant (or his legal representative) whose
                termination of employment occurs by reason of Disability may
                request that the Administrator distribute the Participant's
                Account in another payment form following such termination of
                employment for Disability or defer distribution of the
                Participant's Account until such Participant is no longer
                eligible for coverage under the Woodward Governor Company
                Long-Term Disability Plan, in which case the Administrator, in
                its sole discretion, shall determine whether to make payment in
                another form or defer such distributions after taking into
                consideration all factors which it deems relevant. If the
                Participant does not have a valid Distribution Election on file
                with the Administrator at the time of Retirement or Disability,
                the Participant's Account shall be paid in a single sum under
                paragraph (a) above.

        7.3.    DISTRIBUTION ON OTHER TERMINATION OF EMPLOYMENT. If a
                Participant's employment with the Company or Affiliates
                terminates for any reason other than Retirement, Disability or
                death, the Participant's Account shall be paid in a lump sum
                payment as of the Valuation Date coincident with or next
                following such termination of employment.

        7.4.    UNSCHEDULED WITHDRAWAL. A Participant may request a withdrawal
                of all or a portion of his or her Deferral Contribution Amounts,
                Supplemental Benefit Amounts, and earnings thereon, by filing a
                Distribution Election with the Administrator specifying the
                amount to be withdrawn. Payment of such amount, adjusted by the
                amount forfeited as set forth in paragraph (a) below, shall be
                made as of the first Valuation Date administratively practicable
                after such request is received, and shall be subject to the
                following:

                (a)     An amount equal to 10% of the withdrawal requested shall
                        be debited to the Participant's Account and permanently
                        forfeited.

                (b)     Any Deferral Election in effect at the time of such
                        withdrawal shall be void for periods after such
                        withdrawal.

                (c)     The Participant shall not be eligible to file a new
                        Deferral Election until the election period for the Plan
                        Year commencing at least 12 months after such
                        withdrawal.

        7.5.    UNFORESEEABLE EMERGENCY. Prior to the date otherwise scheduled
                for payment under the Plan, upon showing an unforeseeable
                emergency, a Participant may request that the Administrator
                accelerate payment of all or a portion of his or her Deferral
                Contribution Amounts, Supplemental Benefit Amounts, and earnings
                thereon, in an amount not exceeding the amount necessary to meet
                the unforeseeable emergency. For purposes of the Plan, an
                unforeseeable emergency means an unanticipated emergency that is
                caused by an event beyond the control of the Participant and
                that would result in severe financial or medical hardship to the
                Participant if early withdrawal were not permitted. Severe
                financial or

<Page>

                medical hardship shall be deemed to exist in the event of the
                Participant's long and serious illness, impending bankruptcy or
                other similar extraordinary circumstances. The determination of
                an unforeseeable emergency shall be made by the Administrator in
                its sole discretion, based on such information as the
                Administrator shall deem to be necessary and relevant and such
                decision shall be final and binding on all parties.

        7.6.    TIME AND FORM OF ELECTIONS. All Distribution Elections under
                this Article VII shall be made at the time and in the form
                established by the Administrator and shall be subject to such
                other rules and limitations that the Administrator, in its sole
                discretion, may establish.

        7.7.    FORM OF PAYMENT AND WITHHOLDING. All payments under the Plan
                shall be made in cash and are subject to the withholding of all
                applicable federal, state and local and foreign governmental
                taxes; provided, however, any payment under the Plan that is
                attributable to the portion of a Participant's Account deemed
                invested in Company common stock shall be made in whole shares
                of Company common stock, with fractional shares paid in cash.

VIII.   DEATH BENEFITS.

        8.1.    DEATH PRIOR TO COMMENCEMENT OF BENEFITS. If a Participant dies
                prior to commencement of payment of his or her Account, the
                Participant's Beneficiary shall receive a survivor benefit in an
                amount equal to the Participant's Account balance to be paid in
                a single lump sum as soon as practicable following the
                Participant's death.

        8.2.    DEATH AFTER COMMENCEMENT OF BENEFITS. If a Participant
                terminates employment due to Retirement or Disability, and dies
                prior to the time his or her Account balance has been fully
                distributed, the Participant's Beneficiary shall receive the
                remaining portion of the Participant's Account at the
                regularly-scheduled date of payment for any remaining
                installment payments of the Participant's Account.

        8.3.    ADMINISTRATOR DISCRETION REGARDING FORM. Notwithstanding the
                foregoing provisions of this Article VIII, a Beneficiary may
                request that the Administrator approve an alternate form of
                payment of survivor benefits under this Article VIII which
                request may be granted in the sole discretion of the
                Administrator.

IX.     ADMINISTRATION.

        9.1.    AUTHORITY OF ADMINISTRATOR. The Administrator shall have full
                power and authority to carry out the terms of the Plan. The
                Administrator may establish such rules and regulations as it may
                consider necessary or desirable for the effective and efficient
                administration of the Plan. The Administrator's interpretation,
                construction and administration of the Plan, including any
                adjustment of the amount or recipient of the payments to be
                made, shall be binding and conclusive

<Page>

                on all persons for all purposes. Neither the Company, including
                its officers, members or directors, nor the Administrator or the
                Board or any member thereof, shall be liable to any person for
                any action taken or omitted in connection with the
                interpretation, construction and administration of the Plan.

        9.2.    PARTICIPANT'S DUTY TO FURNISH INFORMATION. Each Participant
                shall furnish to the Administrator such information as it may
                from time to time request for the purpose of the proper
                administration of this Plan.

        9.3.    INTERESTED MEMBER OF ADMINISTRATOR. If a member of the
                Administrator is also a Participant in the Plan, he or she may
                not decide or determine any matter or question concerning his or
                her benefits unless such decision or determination could be made
                by him or her under the Plan if he or she were not a member of
                the Administrator.

        9.4.    INDEMNIFICATION. No person (including any present or former
                member of the Administrator, and any present or former officer
                or member of the Company or any Affiliate) shall be personally
                liable for any act done or omitted to be done in good faith in
                the administration of the Plan. Each present or former officer
                or member of the Company or any Affiliate to whom the
                Administrator has delegated any portion of its responsibilities
                under the Plan and each present or former member of the
                Administrator shall be indemnified and saved harmless by the
                Company (to the extent not indemnified or saved harmless under
                any liability insurance or other indemnification arrangement
                with respect to the Plan) from and against any an all claims of
                liability to which they are subjected by reason of any act done
                or omitted to be done in good faith in connection with the
                administration of the Plan, including all expenses reasonably
                incurred in their defense if the Company fails to provide such
                defense. No member of the Administrator shall be liable for any
                act or omission of any other member of the Administrator, nor
                for any act or omission upon his own part, excepting his own
                willful misconduct or gross neglect.

        9.5.    CLAIMS PROCEDURE. If a Participant or Beneficiary ("Claimant")
                is denied all or a portion of an expected benefit under this
                Plan for any reason, he or she may file a claim with the
                Administrator. The Administrator shall notify the Claimant
                within 90 days of allowance or denial of the claim, unless the
                Claimant receives written notice from the Administrator prior to
                the end of the 90-day period stating that special circumstances
                require an extension (of up to 90 additional days) of the time
                for decision. The notice of the decision shall be in writing,
                sent by mail to Claimant's last known address, and if a denial
                of the claim, shall contain the following information: (a) the
                specific reasons for the denial; (b) specific reference to
                pertinent provisions of the Plan on which the denial is based;
                and (c) if applicable, a description of any additional
                information or material necessary to perfect the claim, an
                explanation of why such information or material is necessary,
                and an explanation of the claims review procedure. A Claimant is
                entitled to request a review of any denial of his or her claim
                by the Board. The request for review must be submitted within 60
                days of mailing of notice of the

<Page>

                denial. Absent a request for review within the 60-day period,
                the claim shall be deemed to be conclusively denied. The
                Claimant or his or her representatives shall be entitled to
                review all pertinent documents, and to submit issues and
                comments orally and in writing. The Board shall render a review
                decision in writing within 60 days after receipt of a request
                for a review, provided that, in special circumstances the Board
                may extend the time for decision by not more than 60 days upon
                written notice to the Claimant. The Claimant shall receive
                written notice of the Board's review decision, together with
                specific reasons for the decision and reference to the pertinent
                provisions of the Plan.

X.      AMENDMENT AND TERMINATION.

        The Board may amend or terminate the Plan at any time; provided,
        however, that no such amendment or termination shall have a material
        adverse effect on any Participant's rights under the Plan accrued as of
        the date of such amendment or termination without such Participant's
        written consent. Upon termination of the Plan, the Board may cause a
        lump-sum payment of all benefits for all Participants at substantially
        the same time.

XI.     MISCELLANEOUS.

        11.1.   NO IMPLIED RIGHTS; RIGHTS ON TERMINATION OF SERVICE. Neither the
                establishment of the Plan nor any amendment thereof shall be
                construed as giving any Participant, Beneficiary or any other
                person, individually or as a member of a group, any legal or
                equitable right unless such right shall be specifically provided
                for in the Plan or conferred by specific action of the Board or
                the Administrator in accordance with the terms and provisions of
                the Plan. Except as expressly provided in this Plan, neither the
                Company nor any of its Affiliates shall be required or be liable
                to make any payment under the Plan.

        11.2.   NO EMPLOYMENT RIGHTS. Nothing herein shall constitute a contract
                of employment or of continuing service or in any manner obligate
                the Company or any Affiliate to continue the services of any
                Participant, or obligate any Participant to continue in the
                service of the Company or Affiliates, or as a limitation of the
                right of the Company or Affiliates to discharge any of their
                members, with or without cause.

        11.3.   NATURE OF THE PLAN.

                (a)     UNFUNDED PLAN. Nothing herein contained shall require or
                        be deemed to require the Company to segregate, earmark
                        or otherwise set aside any funds or other assets to
                        provide for any payments made hereunder. Benefits
                        hereunder shall be paid from assets which shall
                        continue, for all purposes, to be part of the general,
                        unrestricted assets of the Company and its Affiliates.
                        The obligations of the Company hereunder shall be an
                        unfunded and unsecured promise to pay money in the
                        future. However, the Company may establish one or more
                        trusts to assist in meeting its obligations under the
                        Plan, the assets of which shall be subject to the

<Page>

                        claims of the Company's general creditors. No current or
                        former Participant, Beneficiary or other person,
                        individually or as a member of a group, shall have any
                        right, title or interest in any account, fund, grantor
                        trust, or any asset that may be acquired by the Company
                        in respect of its obligations under the Plan (other than
                        as a general creditor of the Company with an unsecured
                        claim against its general assets).

                (b)     EXCEPTION FOR CHANGE IN CONTROL. Notwithstanding the
                        provisions of paragraph (a) of this Section 11.3, the
                        Company shall create a rabbi trust to hold funds to be
                        used in payment of the obligations of the Company under
                        the Plan, which trust shall not be funded except as
                        provided in the following sentence. In the event of a
                        Change in Control (or prior thereto in the sole
                        discretion of the Company), the Company shall fund such
                        trust in an amount equal to not less than the total
                        value of the Participants' Accounts under the Plan as of
                        the Valuation Date immediately preceding the Change in
                        Control, provided that any funds contained therein shall
                        remain subject to the claims of the Company's general
                        creditors. In addition, upon a Change in Control, the
                        trust by its terms shall become irrevocable.

        11.4.   NONTRANSFERABILITY. Prior to payment thereof, no benefit under
                the Plan shall be assignable or subject to any manner of
                alienation, sale, transfer, claims of creditors, pledge,
                attachment or encumbrances of any kind, except pursuant to a
                domestic relations order awarding benefits to an "alternate
                payee" (within the meaning of Code Section 414(p)(8)) that the
                Administrator determines satisfies the criteria set forth in
                paragraphs (1), (2) and (3) of Code Section 414(p) (a "DRO").
                Notwithstanding any provision of the Plan to the contrary, the
                Plan benefits awarded to an alternate payee under a DRO shall be
                paid in a single lump sum to the alternate payee on the
                Valuation Date as soon as administratively practicable following
                the date the Administrator determines the order is a DRO, and
                such amounts, as adjusted for earnings, gains and losses, will
                be deducted from the Participant's Account as of such Valuation
                Date.

        11.5.   SUCCESSORS AND ASSIGNS. The rights, privileges, benefits and
                obligations under the Plan are intended to be, and shall be
                treated as legal obligations of and binding upon the Company,
                its successors and assigns, including successors by merger,
                consolidation, reorganization or otherwise.

        11.6.   PAYMENT WITH RESPECT TO INCAPACITATED PERSONS. Any amounts
                payable hereunder to any person who is a minor or under a legal
                disability, as determined under applicable state law, or who is
                unable to manage properly his or her financial affairs may be
                paid (a) to the legal representative of such person, (b) to
                anyone acting as the person's agent under a durable power of
                attorney, (c) to an adult relative or friend of the person or
                (d) to anyone with whom the person is residing. Any payment of a
                benefit made in accordance with the provisions of this section
                shall be a complete discharge of any liability for the making of
                such payment under the Plan. The Administrator's reliance on the
                written power of

<Page>

                attorney or other instrument of agency governing a relationship
                between the person entitled to benefit the person to whom the
                Administrator directs payment of the benefit shall be fully
                protected at least to the same extent as though the
                Administrator had dealt directly with the person entitled to the
                benefit as a fully competent person. In the absence of actual
                knowledge to the contrary, the Administrator may assume that the
                instrument of agency was validly executed, that the person was
                competent at the time of execution and that at the time of
                reliance, the agency had not been terminated or amended.

        11.7.   ARBITRATION. Any controversy or claim arising out of or relating
                to this Plan, or breach hereof, shall be settled by arbitration
                in the City of Chicago in accordance with the laws of the State
                of Illinois with an arbitrator appointed by the Company. The
                arbitration shall be conducted in accordance with the rules of
                the American Arbitration Association, except with respect to the
                selection of an arbitrator. The arbitrator's determination shall
                be final and binding upon all parties and judgment upon the
                award rendered by the arbitrator may be entered in any court
                having jurisdiction thereof.

        11.8.   GENDER AND NUMBER. Except when otherwise indicated by the
                context, words in the masculine gender shall include the
                feminine and neuter genders, the plural shall include the
                singular, and the singular shall include the plural.

        11.9.   HEADINGS. The headings of the various Articles and Sections in
                the Plan are solely for convenience and shall not be relied upon
                in construing any provisions hereof. Any reference to a Section
                shall refer to a Section of the Plan unless specified otherwise.

        11.10.  SEVERABILITY. Whenever possible, each provision of the Plan
                shall be interpreted in such manner as to be effective and valid
                under applicable law, but it any provision of the Plan is held
                to be invalid, illegal or unenforceable in any respect under any
                applicable law or rule in any jurisdiction, such invalidity,
                illegality or unenforceability shall not affect any other
                provision or any other jurisdiction, and the Plan shall be
                reformed, construed and enforced in such jurisdiction so as to
                best give effect to the intent of the Company under the Plan.

        11.11.  EFFECT ON OTHER EMPLOYEE BENEFIT PLANS. Any benefit paid or
                payable under this Plan shall not be included in a Participant's
                compensation for purposes of computing benefits under any
                employee benefit plan maintained or contributed by the Company
                or any Affiliate except as may otherwise be required under the
                specific terms of such employee benefit plan.

        11.12.  NON-U.S. PARTICIPANTS. With respect to any Affiliate which
                employs Participants who reside outside the United States, and
                notwithstanding anything herein to the contrary, the
                Administrator may, in its sole discretion, amend the terms of
                the Plan in order to conform such terms with the requirements of
                local law or to meet the objectives of the Plan, and may, where
                appropriate, establish one or more sub-plans to reflect such
                amended provisions.

<Page>

        11.13.  APPLICABLE LAW. This Plan is established under and will be
                construed according to the laws of the State of Illinois, to the
                extent not preempted by the laws of the United States.<Page>

                                                                     EXHIBIT 4.2

                            WOODWARD GOVERNOR COMPANY
                              DEFERRED SHARES TRUST

     This Grantor Trust AGREEMENT made and entered into this 3rd day of
February, 2003 by and between WOODWARD GOVERNOR COMPANY (the "Company") and
WACHOVIA BANK, N.A. (the "Trustee");

                                WITNESSETH THAT:

     WHEREAS, the Company has adopted a nonqualified deferred compensation plan
known as the WOODWARD GOVERNOR COMPANY EXECUTIVE BENEFIT PLAN (the "Plan"),
effective as of January 1, 2001;

     WHEREAS, the Company has incurred or expects to incur liability under the
terms of such Plan with respect to individuals who are eligible under the terms
of the Plan to participate in the Plan and to defer compensation (each of whom
shall be referred to as an "Employee");

     WHEREAS, the Company wishes to establish this trust (hereinafter called the
"Trust") and to contribute to the Trust shares of Company common stock that
shall be held therein, subject to the claims of Company's creditors in the event
of Company's Insolvency (as herein defined), until paid to the Employee or his
or her beneficiary(ies) in such manner and at such times as specified in the
Plan;

     WHEREAS, it is the intention of the parties that this Trust shall
constitute an unfunded arrangement and shall not affect the status of the Plan
as an unfunded arrangement maintained for the purpose of providing deferred
compensation for a select group of management or highly compensated employees
for purposes of Title I of the Employee Retirement Income Security Act of 1974,
as amended; and

     WHEREAS, it is the intention of Company to make contributions of its common
stock to the Trust pursuant to the terms of the Plan to provide itself with a
source of shares of common stock to assist it in the meeting of its liabilities
under the Plan with respect to the deemed investment alternative based on the
Company's common stock.

     NOW, THEREFORE, the parties do hereby establish the Trust and agree that
the Trust shall be comprised, held and disposed of as follows:

SECTION 1.   ESTABLISHMENT OF TRUST.

             (a)  The Company hereby deposits with the Trustee in trust shares
     of common stock of the Company ("Company Stock"), which shall become the
     principal of the Trust

<Page>

     to be held, administered and disposed of by the Trustee as provided in this
     Trust Agreement.

             (b)  The Trust hereby established is irrevocable by the Company.

             (c)  The Trust is intended to be a grantor trust, of which the
     Company is the grantor, within the meaning of subpart E, part I, subchapter
     J, chapter 1, subtitle A of the Internal Revenue Code of 1986, as amended,
     and shall be construed accordingly.

             (d)  The principal of the Trust, and any earnings thereon to the
     extent such earnings are paid in the form of Company Stock shall be held
     separate and apart from other funds of the Company and shall be used
     exclusively for the uses and purposes of the Employee and general creditors
     as herein set forth. The Employee and his or her beneficiaries shall have
     no preferred claim on, or any beneficial ownership interest in, any assets
     of the Trust. Any rights created under the Plan and this Trust Agreement
     shall be mere unsecured contractual rights of the Employee and his or her
     beneficiaries against the Company. Any assets held by the Trust will be
     subject to the claims of the Company's general creditors under federal and
     state law in the event of Insolvency (as defined in Section 3(a) herein).

             (e)  The Company, so long as consistent with the terms of the
     Plan, may at any time, or from time to time, make additional deposits of
     Company Stock in trust with the Trustee to augment the principal to be
     held, administered and disposed of by the Trustee as provided in this Trust
     Agreement. Neither the Trustee nor the Employee or his or her beneficiary
     shall have any right to compel such additional deposits.

             (f)  Upon a Change in Control, the Company shall, as soon as
     possible, but in no event longer than thirty (30) days following the
     occurrence of a Change in Control, make an irrevocable contribution to the
     Trust in an amount that is sufficient (taking into account the Trust
     assets, if any, resulting from prior contributions) to fund the Trust in an
     amount equal to no less than 100% but no more than 120% of the amount
     necessary to pay each Participant or Beneficiary the benefits to which
     Participants or their Beneficiaries would be entitled pursuant to the terms
     of the Arrangements as of the date on which the Change in Control occurred.
     The Company shall also fund an expense reserve for the Trustee in the
     amount of $125,000.00.

SECTION 2.   PAYMENTS TO EMPLOYEE AND HIS OR HER BENEFICIARIES.

             (a)  The Company shall deliver to the Trustee a schedule (the
     "Payment Schedule"), which from time to time shall be attached hereto as
     EXHIBIT A, that indicates the number of shares of Company Stock payable in
     respect of the Employee (or his or her beneficiaries), that provides
     instructions acceptable to the Trustee for determining the number of shares
     so payable, and the time of commencement for payment of such shares. Except
     as otherwise provided herein, the Trustee shall make payments to the
     Employee and his or her beneficiaries in accordance with such Payment
     Schedule. All payments

<Page>

     made from the Trust shall be made in the form of Company Stock. The Trustee
     shall be responsible for the reporting and withholding of any federal,
     state or local taxes that may be required to be withheld with respect to
     the payment of benefits pursuant to the terms of the Plan and shall pay
     amounts withheld to the appropriate taxing authorities or determine that
     such amounts have been reported, withheld and paid by Company.

             (b)  The entitlement of the Employee or his or her beneficiaries
     to benefits under the Plan shall be determined by the Company, and any
     claim for such benefits shall be considered and reviewed under the
     procedures set out in the Plan.

             (c)  The Company may make payment of benefits attributable to
     Company Stock directly to the Employee or his or her beneficiaries as they
     become due under the terms of the Plan. The Company shall notify the
     Trustee of its decision to make payment of benefits directly prior to the
     time amounts are payable to the Employee or his or her beneficiaries. In
     addition, if the shares of Company Stock held in the Trust, , are not
     sufficient to make payments of benefits required to be paid in the form of
     Company Stock under the Plan, the Company shall make the balance of each
     such payment as it falls due. The Trustee shall notify Company where shares
     are not sufficient.

             (d)  Prior to a Change in Control, the Company shall deliver to
     the Trustee a schedule of benefits due attributable to Company Stock under
     the Arrangements. After a Change in Control, the Trustee shall pay benefits
     due in accordance with such schedule. After a Change in Control, the
     Committee appointed by the Company shall continue to make the determination
     of benefits due to Participants or their Beneficiaries and shall provide
     the Trustee with an updated schedule of benefits due; provided however, a
     Participant or their Beneficiaries may make application to the Trustee for
     an independent decision as to the amount or form of their benefits due
     under the Arrangements. In making any determination required or permitted
     to be made by the Trustee under this Section, the Trustee shall, in each
     such case, reach its own independent determination, in its absolute and
     sole discretion, as to the Participant's or Beneficiary's entitlement to a
     payment hereunder. In making its determination, the Trustee may consult
     with and make such inquiries of such persons, including the Participant or
     Beneficiary, the Company, legal counsel, actuaries or other persons, as the
     Trustee may reasonably deem necessary. Any reasonable costs incurred by the
     Trustee in arriving at its determination shall be reimbursed by the Company
     and, to the extent not paid by the Company within a reasonable time, shall
     be charged to the Trust. The Company waives any right to contest any amount
     paid over by the Trustee hereunder pursuant to a good faith determination
     made by the Trustee notwithstanding any claim by or on behalf of the
     Company (absent a manifest abuse of discretion by the Trustee) that such
     payments should not be made.

             (e)  The Trustee agrees that it will not itself institute any
     action at law or at equity, whether in the nature of an accounting,
     interpleading action, request for a declaratory judgment or otherwise,
     requesting a court or administrative or quasi-judicial body to make the
     determination required to be made by the Trustee under this Section 2 in
     the place and stead of the Trustee. The Trustee may (and, if necessary or
     appropriate, shall) institute an action to collect a contribution due the
     Trust following a Change in

<Page>

     Control or in the event that the Trust should ever experience a short-fall
     in the amount of assets necessary to make payments pursuant to the terms of
     the Arrangements.

             (f)  In the event any Participant or his or her Beneficiary is
     determined to be subject to federal income tax on any amount to the credit
     of his or her account under any Arrangement prior to the time of payment
     hereunder, whether or not due to the establishment of or contributions to
     this Trust, a portion of such taxable amount equal to the federal, state
     and local taxes (excluding any interest or penalties) owed on such taxable
     amount, shall be distributed by the Trustee as soon thereafter as
     practicable to such Participant or Beneficiary. The Company shall promptly
     reimburse the Trust for any such distribution in an amount certified by the
     Trustee to be needed for the Participant's benefits. For these purposes, a
     Participant or Beneficiary shall be deemed to pay state and local taxes at
     the highest marginal rate of taxation in the state in which the Participant
     resides or is employed (or both) where a tax is imposed and federal income
     taxes at the highest marginal rate of taxation, net of the maximum
     reduction in federal income taxes which could be obtained from deduction of
     such state and local taxes. Such distributions shall be at the direction of
     the Company or the Trustee, or upon proper application of the Participant
     or Beneficiary; provided that the actual amount of the distribution shall
     be determined by the Company prior to a Change in Control and the Trustee
     following a Change in Control. An amount to the credit of a Participant's
     Account shall be determined to be subject to federal income tax upon the
     earliest of: (a) a final determination by the United States Internal
     Revenue Service addressed to the Participant or his Beneficiary which is
     not appealed to the courts; (b) a final determination by the United States
     Tax Court or any other federal court affirming any such determination by
     the Internal Revenue Service; or (c) an opinion by the Company's tax
     counsel, addressed to the Company and the Trustee, to the effect that by
     reason of Treasury Regulations, amendments to the Internal Revenue Code,
     published Internal Revenue Service rulings, court decisions or other
     substantial precedent, amounts to the credit of Participants hereunder are
     subject to federal income tax prior to payment. The Company shall undertake
     at its sole expense to defend any tax claims described herein which are
     asserted by the Internal Revenue Service against any Participant or
     Beneficiary, including attorney fees and cost of appeal, and shall have the
     sole authority to determine whether or not to appeal any determination made
     by the Service or by a lower court. The Company also agrees to reimburse
     any Participant or Beneficiary for any interest or penalties in respect of
     tax claims hereunder upon receipt of documentation of same. Any
     distributions from the Fund to a Participant or Beneficiary under this
     Section 2(e) shall be applied in accordance with the provisions of the
     Arrangement to reduce the Company liabilities to such Participant and/or
     Beneficiary under the Arrangement with such reductions to be made on a
     pro-rata basis over the term of benefit payments under the Arrangement;
     provided, however, that in no event shall any Participant, Beneficiary or
     estate of any Participant or Beneficiary have any obligation to return all
     or any part of such distribution to the Company if such distribution
     exceeds benefits payable under an Arrangement. Any reduction in accordance
     with the foregoing sentence and the Arrangements shall be determined by the
     Company prior to a Change in Control. Following a Change in Control, the
     Company shall continue to make such determination subject to the right of a
     Participant to petition the Trustee under Section 2(d).

<Page>

SECTION 3.   TRUSTEE RESPONSIBILITY REGARDING PAYMENTS TO TRUST BENEFICIARY
             WHEN COMPANY IS INSOLVENT.

             (a)  Trustee shall cease payment of benefits to Employee and his
     or her beneficiaries if the Company is Insolvent. Company shall be
     considered "Insolvent" for purposes of this Trust Agreement if (i) Company
     is unable to pay its debts as they become due, or (ii) Company is subject
     to a pending proceeding as a debtor under the United States Bankruptcy
     Code.

             (b)  At all times during the continuance of this Trust, as
     provided in Section 1(d) hereof, the principal and income of the Trust
     shall be subject to claims of general creditors of the Company under
     federal and state law as set forth below.

                  (1)  The Board of Directors and the Chief Executive Officer
             of the Company shall have the duty to inform the Trustee in
             writing of the Company's Insolvency. If a person claiming to be a
             creditor of the Company alleges in writing to the Trustee that
             the Company has become Insolvent, the Trustee shall determine
             whether the Company is Insolvent and, pending such determination,
             the Trustee shall discontinue payment of benefits to Employee or
             his or her beneficiaries.

                  (2)  Unless the Trustee has actual knowledge of the Company's
             Insolvency, or has received notice from the Company or a person
             claiming to be a creditor alleging that the Company is Insolvent,
             the Trustee shall have no duty to inquire whether the Company is
             Insolvent. The Trustee may in all events rely on such evidence
             concerning the Company's solvency as may be furnished to the
             Trustee and that provides the Trustee with a reasonable basis for
             making a determination concerning the Company's solvency.

                  (3)  If at any time the Trustee has determined that the
             Company is Insolvent, the Trustee shall discontinue payments to
             Employee or his or her beneficiaries and shall hold the assets of
             the Trust for the benefit of the Company's general creditors.
             Nothing in this Trust Agreement shall in any way diminish any
             rights of Employee or his or her beneficiaries to pursue their
             rights as general creditors of the Company with respect to benefits
             due under the Plan or otherwise.

                  (4)  Trustee shall resume the payment of benefits to Employee
             or his or her beneficiaries in accordance with Section 2 of this
             Trust Agreement only after Trustee has determined that the Company
             is not Insolvent (or is no longer Insolvent).

             (c)  Provided that there are sufficient assets, if the Trustee
     discontinues the payment of benefits from the Trust pursuant to Section
     3(b) hereof and subsequently

<Page>

     resumes such payments, the first payment following such discontinuance
     shall include the aggregate amount of all payments due to Employee or his
     or her beneficiaries under the terms of the Plan for the period of such
     discontinuance, less the aggregate amount of any payments made to Employee
     or his or her beneficiaries by the Company in lieu of the payments provided
     for hereunder during any such period of discontinuance.

SECTION 4.   PAYMENTS WHEN A SHORT-FALL OF THE TRUST ASSETS OCCURS

     (a) If there are not sufficient shares for the payment of current and
     expected future benefits pursuant to Section 2 or Section 3(c) hereof and
     the Company does not otherwise make such payments within a reasonable time
     after demand from the Trustee, the Trustee shall allocate the Trust shares
     among the Participants or their Beneficiaries in the following order of
     priority:

                  (1)  vested Participants (regardless of whether they are
                       actively employed) and their Beneficiaries; and

                  (2)  non-vested Participants (regardless of whether they are
                       actively employed) and their Beneficiaries

     (b) Within each category, shares shall be allocated pro-rata with respect
     to the total present value of benefits expected for each Participant or
     Beneficiary within the category, and payments to each Participant or
     Beneficiary shall be made to the extent of the shares allocated to each
     Participant or Beneficiary.

     (c) Upon receipt of a contribution, to be made in the form of Company
     Stock, from the Company necessary to make up for a shortfall in the
     payments due, the Trustee shall resume payments to all the Participants and
     Beneficiaries under the Arrangements. Following a Change in Control, the
     Trustee shall have the right and duty to compel a contribution to the Trust
     from the Company to make-up for any shortfall.

SECTION 5.   PAYMENTS TO COMPANY.

     Except as provided in Sections 4 and 7 hereof, the Company shall have no
right or power to direct the Trustee to return to the Company or to divert to
others any of the Trust assets before all payments of benefits to be made in the
form of Company Stock have been made to Employee and his or her beneficiaries
pursuant to the terms of the Plan.

SECTION 6.   INVESTMENT AUTHORITY.

             (a)  Prior to a Change in Control, the assets of the Trust shall
        be invested solely in shares of Company Stock and the Trustee shall be
        relieved in complying with the prudent investor rule. All rights
        associated with assets of the Trust shall be exercised by Trustee

<Page>

        or the person designated by Trustee, and shall in no event be
        exercisable by or rest with the Employee.

     (b) The Trustee shall not be liable in discharging its duties hereunder,
     including without limitation its duty to invest and reinvest the Fund, if
     it acts for the exclusive benefit of the Participants and their
     Beneficiaries, in good faith and as a prudent person would act in
     accomplishing a similar task and in accordance with the terms of this Trust
     Agreement and any applicable federal or state laws, rules or regulations;
     provided however, the Trustee's ability to invest the assets of the Trust,
     prior to a Change in Control, shall be limited exclusively to shares of
     Company Stock and the Trustee shall not be liable for failing to comply
     with the prudent investor rule.

     (c) Subject to investment guidelines agreed to in writing from time to time
     by the Company and the Trustee prior to a Change in Control, the Trustee
     shall have the power in investing and reinvesting the Fund in its sole
     discretion:

                  (1)  To invest and reinvest in any readily marketable common
             and preferred stocks, bonds, notes, debentures (including
             convertible stocks and securities but not including any stock or
             security of the Trustee or the Company other than a de minimis
             amount held in a mutual fund), certificates of deposit or demand or
             time deposits (including any such deposits with the Trustee) and
             shares of investment companies and mutual funds, without being
             limited to the classes or property in which the Trustees are
             authorized to invest by any law or any rule of court of any state
             and without regard to the proportion any such property may bear to
             the entire amount of the Fund;

                  (2)  To invest and reinvest all or any portion of the Fund
             collectively through the medium of any proprietary mutual fund that
             may be established and maintained by the Trustee;

                  (3)  To retain any property at any time received by the
             Trustee;

                  (4)  To sell or exchange any property held by it at public or
             private sale, for cash or on credit, to grant and exercise options
             for the purchase or exchange thereof, to exercise all conversion or
             subscription rights pertaining to any such property and to enter
             into any covenant or agreement to purchase any property in the
             future;

                  (5)  To participate in any plan of reorganization,
             consolidation, merger, combination, liquidation or other similar
             plan relating to property held by it and to consent to or oppose
             any such plan or any action thereunder or any contract, lease,
             mortgage, purchase, sale or other action by any person;

                  (6)  To deposit any property held by it with any protective,
             reorganization or similar committee, to delegate discretionary
             power thereto, and

<Page>

             to pay part of the expenses and compensation thereof any
             assessments levied with respect to any such property deposited;

                  (7)  To extend the time of payment of any obligation held by
             it;

                  (8)  To hold uninvested any moneys received by it, without
             liability for interest thereon, but only in anticipation of
             payments due for investments, reinvestments, expenses or
             disbursements;

                  (9)  To exercise all voting or other rights with respect to
             any property held by it and to grant proxies, discretionary or
             otherwise;

                  (10) For the purposes of the Trust, to borrow money from
             others, to issue its promissory note or notes therefor, and to
             secure the repayment thereof by pledging any property held by it;

                  (11) To employ suitable contractors and counsel, who may be
             counsel to the Company or to the Trustee, and to pay their
             reasonable expenses and compensation from the Fund to the extent
             not paid by the Company;

                  (12) To register investments in its own name or in the name of
             a nominee; to hold any investment in bearer form; and to combine
             certificates representing securities with certificates of the same
             issue held by it in other fiduciary capacities or to deposit or to
             arrange for the deposit of such securities with any depository,
             even though, when so deposited, such securities may be held in the
             name of the nominee of such depository with other securities
             deposited therewith by other persons, or to deposit or to arrange
             for the deposit of any securities issued or guaranteed by the
             United States government, or any agency or instrumentality thereof,
             including securities evidenced by book entries rather than by
             certificates, with the United States Department of the Treasury or
             a Federal Reserve Bank, even though, when so deposited, such
             securities may not be held separate from securities deposited
             therein by other persons; provided, however, that no securities
             held in the Fund shall be deposited with the United States
             Department of the Treasury or a Federal Reserve Bank or other
             depository in the same account as any individual property of the
             Trustee, and provided, further, that the books and records of the
             Trustee shall at all times show that all such securities are part
             of the Trust Fund;

                  (13) To settle, compromise or submit to arbitration any
             claims, debts or damages due or owing to or from the Trust,
             respectively, to commence or defend suits or legal proceedings to
             protect any interest of the Trust, and to represent the Trust in
             all suits or legal proceedings in any court or before any other
             body or tribunal; provided, however, that the Trustee shall not be
             required to take any such action unless it shall have been
             indemnified by the Company to its reasonable satisfaction against
             liability or expenses it might incur therefrom;

<Page>

                  (14) To hold and retain policies of life insurance, annuity
             contracts, and other property of any kind which policies are
             contributed to the Trust by the Company or any subsidiary of the
             Company or are purchased by the Trustee;

                  (15) To hold any other class of assets which may be
             contributed by the Company and that is deemed reasonable by the
             Trustee, unless expressly prohibited herein;

                  (16) To loan any securities at any time held by it to brokers
             or dealers upon such security as may be deemed advisable, and
             during the terms of any such loan to permit the loaned securities
             to be transferred into the name of and voted by the borrower or
             others; and

                  (17) Generally, to do all acts, whether or not expressly
             authorized, that the Trustee may deem necessary or desirable for
             the protection of the Fund.

(c) Prior to a Change in Control, the Company shall have the right, subject to
this Section to direct the Trustee with respect to investments.

                  (1)  The Company may at any time direct the Trustee to
             segregate all or a portion of the Fund in a separate investment
             account or accounts and may appoint one or more investment managers
             and/or an investment committee established by the Company to direct
             the investment and reinvestment of each such investment account or
             accounts. In such event, the Company shall notify the Trustee of
             the appointment of each such investment manager and/or investment
             committee. No such investment manager shall be related, directly or
             indirectly, to the Company, but members of the investment committee
             may be employees of the Company.

             (2)  Thereafter (until a Change in Control), the Trustee shall
             make every sale or investment with respect to such investment
             account as directed in writing by the investment manager or
             investment committee. It shall be the duty of the Trustee to act
             strictly in accordance with each direction. The Trustee shall be
             under no duty to question any such direction of the investment
             manager or investment committee, to review any securities or other
             property held in such investment account or accounts acquired by it
             pursuant to such directions or to make any recommendations to the
             investment managers or investment committee with respect to such
             securities or other property.

             (3)  Notwithstanding the foregoing, the Trustee, without obtaining
             prior approval or direction from an investment manager or
             investment committee, shall invest cash balances held by it from
             time to time in short term cash equivalents including, but not
             limited to, through the medium of any short term common, collective
             or commingled trust fund established and maintained by the Trustee
             subject to the instrument establishing such trust fund, U.S.
             Treasury Bills,

<Page>

             commercial paper (including such forms of commercial paper as may
             be available through the Trustee's Trust Department), certificates
             of deposit (including certificates issued by the Trustee in its
             separate corporate capacity), and similar type securities, with a
             maturity not to exceed one year; and, furthermore, sell such short
             term investments as may be necessary to carry out the instructions
             of an investment manager or investment committee regarding more
             permanent type investment and directed distributions.

                  (4)  The Trustee shall neither be liable nor responsible for
             any loss resulting to the Fund by reason of any sale or purchase of
             an investment directed by an investment manager or investment
             committee nor by reason of the failure to take any action with
             respect to any investment which was acquired pursuant to any such
             direction in the absence of further directions of such investment
             manager or investment committee.

                  (5)  Notwithstanding anything in this Agreement to the
             contrary, the Trustee shall be indemnified and saved harmless by
             the Company from and against any and all personal liability to
             which the Trustee may be subjected by carrying out any directions
             of an investment manager or investment committee issued pursuant
             hereto or for failure to act in the absence of directions of the
             investment manager or investment committee including all expenses
             reasonably incurred in its defense in the event the Company fails
             to provide such defense; provided, however, the Trustee shall not
             be so indemnified if it participates knowingly in, or knowingly
             undertakes to conceal, an act or omission of an investment manager
             or investment committee, having actual knowledge that such act or
             omission is a breach of a fiduciary duty; provided further,
             however, that the Trustee shall not be deemed to have knowingly
             participated in or knowingly undertaken to conceal an act or
             omission of an investment manager or investment committee with
             knowledge that such act or omission was a breach of fiduciary duty
             by merely complying with directions of an investment manager or
             investment committee or for failure to act in the absence of
             directions of an investment manager or investment committee. The
             Trustee may rely upon any order, certificate, notice, direction or
             other documentary confirmation purporting to have been issued by
             the investment manager or investment committee which the Trustee
             believes to be genuine and to have been issued by the investment
             manager or investment committee. The Trustee shall not be charged
             with knowledge of the termination of the appointment of any
             investment manager or investment committee until it receives
             written notice thereof from the Company.

             (d)  Following a Change in Control, the Trustee shall have, subject
     to any investment guidelines delivered to it prior to a Change in Control,
     the sole and absolute discretion in the management of the Trust assets and
     shall have all the powers set forth under Section 6(b). In investing the
     Trust assets, the Trustee shall consider:

                  (1)  the needs of the Arrangements;

<Page>

                  (2)  the need for matching of the Trust assets with the
             liabilities of the Arrangements; and

                  (3)  the duty of the Trustee to act solely in the best
             interests of the Participants and their Beneficiaries.

             (e)  The Trustee shall have the right, in its sole discretion, to
     delegate its investment responsibility to an investment manager who may be
     an affiliate of the Trustee. In the event the Trustee shall exercise this
     right, the Trustee shall remain, at all times responsible for the acts of
     an investment manager. The Trustee shall have the right to purchase an
     insurance policy or an annuity to fund the benefits of the Arrangements.

             (f)  The Company shall have the right at any time, and from time to
     time in its sole discretion, to substitute assets (other than securities
     issued by the Trustee or the Company) of equal fair market value for any
     asset held by the Trust. This right is exercisable by the Company in a
     nonfiduciary capacity without the approval or consent of any person in a
     fiduciary capacity; provided, however, that, following a Change in Control,
     no such substitution shall be permitted unless the Trustee determines that
     the fair market values of the substituted assets are equal.

             (g)  The Trustee is authorized to use an affiliated broker,
     Wachovia Securities Inc ("WSI") or its successor to execute purchases or
     sales. WSI is authorized to collect and retain fees or commissions related
     to its services.

SECTION 7.   DISPOSITION OF INCOME.

     Prior to a Change in Control, all dividends and other income payable with
respect to shares of Company Stock held in the Trust that are paid on a form
other than Company Stock shall be deposited in the Woodward Governor Company
Executive Benefit Trust or such other Trust or fund designated by the Company
for this purpose.

SECTION 8.   ACCOUNTING BY TRUSTEE.

     The Trustee shall keep accurate and detailed records of all investments,
receipts, disbursements, and all other transactions required to be made,
including such specific records as shall be agreed upon in writing between the
Company and Trustee. Within forty-five (45) days following the close of each
calendar year and within forty-five (45) days after the removal or resignation
of the Trustee, Trustee shall deliver to the Company a written account of its
administration of the Trust during such year or during the period from the close
of the last preceding year to the date of such removal or resignation, setting
forth all investments, receipts, disbursements and other transactions effected
by it, including a description of all securities and investments purchased and
sold with the cost or net proceeds of such purchases or sales (accrued interest
paid or receivable being shown separately), and showing all cash, securities and
other

<Page>

property held in the Trust at the end of such year or as of the date of
such removal or resignation, as the case may be.

SECTION 9.   RESPONSIBILITY OF TRUSTEE.

             (a)  The Trustee shall act with the care, skill, prudence and
     diligence under the circumstances then prevailing that a prudent person
     acting in like capacity and familiar with such matters would use in the
     conduct of an enterprise of a like character and with like aims, provided,
     however, that the Trustee shall incur no liability to any person for any
     action taken pursuant to a direction, request or approval given by the
     Company which is contemplated by, and in conformity with, the terms of the
     Arrangements or this Trust and is given in writing by the Company. In the
     event of a dispute between the Company and a party, the Trustee may apply
     to a court of competent jurisdiction to resolve the dispute, subject,
     however to Section 2(d) hereof.

             (b)  The Company hereby indemnifies the Trustee against losses,
     liabilities, claims, costs and expenses in connection with the
     administration of the Trust, unless resulting from the negligence or
     misconduct of Trustee. To the extent the Company fails to make any payment
     on account of an indemnity provided in this paragraph 10(b), in a
     reasonably timely manner, the Trustee may obtain payment from the Trust. If
     the Trustee undertakes or defends any litigation arising in connection with
     this Trust or to protect a Participant's or Beneficiary's rights under the
     Arrangements, the Company agrees to indemnify the Trustee against the
     Trustee's costs, reasonable expenses and liabilities (including, without
     limitation, attorneys' fees and expenses) relating thereto and to be
     primarily liable for such payments. If the Company does not pay such costs,
     expenses and liabilities in a reasonably timely manner, the Trustee may
     obtain payment from the Trust.

             (c)  Prior to a Change in Control, the Trustee may consult with
     legal counsel (who may also be counsel for the Company generally) with
     respect to any of its duties or obligations hereunder. Following a Change
     in Control the Trustee shall select independent legal counsel and may
     consult with counsel or other persons with respect to its duties and with
     respect to the rights of Participants or their Beneficiaries under the
     Arrangements.

             (d)  The Trustee may hire agents, accountants, actuaries,
     investment advisors, financial consultants or other professionals to assist
     it in performing any of its duties or obligations hereunder and may rely on
     any determinations made by such agents and information provided to it by
     the Company.

             (e)  The Trustee shall have, without exclusion, all powers
     conferred on the Trustee by applicable law, unless expressly provided
     otherwise herein.

             (f)  Notwithstanding any powers granted to the Trustee pursuant to
     this Trust Agreement or to applicable law, Trustee shall not have any power
     that could give this Trust the objective of carrying on a business and
     dividing the gains therefrom, within the

<Page>

     meaning of Section 301.7701-2 of the Procedure and Administrative
     Regulations promulgated pursuant to the Internal Revenue Code of 1986, as
     amended.

SECTION 10.  COMPENSATION AND EXPENSES OF TRUSTEE.

     The Trustee's compensation shall be as agreed in writing from time to time
by the Company and the Trustee. The Company shall pay all administrative
expenses and the Trustee's fees and shall promptly reimburse the Trustee for any
fees and expenses of its agents. If not so paid within 45 days of being
invoiced, the fees and expenses shall be paid from the Trust.

SECTION 11.  RESIGNATION AND REMOVAL OF TRUSTEE.

             (a)  Prior to a Change in Control, the Trustee may resign at any
     time by written notice to the Company, which shall be effective sixty (60)
     days after receipt of such notice unless the Company and the Trustee agree
     otherwise. Following a Change in Control, the Trustee may resign only after
     the appointment of a successor Trustee.

             (b)  The Trustee may be removed by the Company on sixty days (60)
     days notice or upon shorter notice accepted by the Trustee prior to a
     Change in Control. Subsequent to a Change in Control, the Trustee may only
     be removed by the Company with the consent of a majority of the
     Participants.

             (c)  If the Trustee resigns within two years after a Change in
     Control, as defined herein, the Company, or if the Company fails to act
     within a reasonable period of time following such resignation, the Trustee,
     shall apply to a court of competent jurisdiction for the appointment of a
     successor Trustee which satisfies the requirements of Section 13 or for
     instructions.

             (d)  Upon resignation or removal of the Trustee and appointment of
     a successor Trustee, all assets shall subsequently be transferred to the
     successor Trustee. The transfer shall be completed within sixty (60) days
     after receipt of notice of resignation, removal or transfer, unless the
     Company extends the time limit.

             (d)  If the Trustee resigns or is removed, a successor shall be
     appointed, in accordance with Section 12 hereof, by the effective date of
     resignation or removal under paragraph (a) or (b) of this Section 11. If no
     such appointment has been made, the Trustee may apply to a court of
     competent jurisdiction for appointment of a successor or for instructions.
     All expenses of the Trustee in connection with the proceeding shall be
     allowed as administrative expenses of the Trust.

SECTION 12.  APPOINTMENT OF SUCCESSOR.

             (a)  If the Trustee resigns or is removed in accordance with
     Section 12 hereof, the Company may appoint, subject to Section 12, any
     third party national banking association with a market capitalization
     exceeding $100,000,000 to replace the Trustee upon resignation or removal.
     The successor Trustee shall have all of the rights and

<Page>

     powers of the former Trustee, including ownership rights in the Trust. The
     former Trustee shall execute any instrument necessary or reasonably
     requested by the Company or the successor Trustee to evidence the transfer.

             (b)  The successor Trustee need not examine the records and acts of
     any prior Trustee and may retain or dispose of existing Trust assets,
     subject to Sections 7 and 8 hereof. The successor Trustee shall not be
     responsible for and the Company shall indemnify and defend the successor
     Trustee from any claim or liability resulting from any action or inaction
     of any prior Trustee or from any other past event, or any condition
     existing at the time it becomes successor Trustee.

SECTION 13.    AMENDMENT OR TERMINATION.

             (a)  This Trust Agreement may be amended by a written instrument
     executed by the Trustee and the Company. Notwithstanding the foregoing, no
     such amendment shall conflict with the terms of the Plan or shall make the
     Trust.

             (b)  Following a Change in Control, the Trust shall not terminate
     until the date on which the Employee and his or her beneficiaries are no
     longer entitled to benefits payable in the form of Company Stock pursuant
     to the terms of the Plan, unless sooner revoked in accordance with Section
     1(b) hereof. Upon termination of the Trust any assets remaining in the
     Trust shall be returned to Company.

  (c) Upon written approval of the Employee or his or her beneficiaries entitled
  to payment of benefits pursuant to the terms of the Plan, the Company may
  terminate this Trust prior to the time all benefit payments under the Plan
  have been made. All assets in the Trust at termination shall be returned to
  the Company.

             (d)  This Trust Agreement may not be amended by the Company
     following a Change in Control without the written consent of a majority of
     the Participants.

SECTION 14.  MISCELLANEOUS.

             (a)  The General Counsel of the Company shall have the specific
     authority to determine whether a Change in Control has transpired under the
     guidance as such term is defined in Section 2.8 of the Plan or any
     successor section thereto and shall be required to give the Trustee notice
     of a Change in Control or a Potential Change in Control. The Trustee shall
     be entitled to rely upon such notice, but if the Trustee receives notice of
     a Change in Control from another source, the Trustee shall make its own
     independent determination.

             (b)  Any provision of this Trust Agreement prohibited by law shall
     be ineffective to the extent of any such prohibition, without invalidating
     the remaining provisions hereof.

<Page>

             (c)  Benefits payable to Employee and his or her beneficiaries
     under this Trust Agreement may not be anticipated, assigned (either at law
     or in equity), alienated, pledged, encumbered or subjected to attachment,
     garnishment, levy, execution or other legal or equitable process.

             (d)  This Trust Agreement shall be governed by and construed in
     accordance with the laws of the State of Illinois.

<Page>

     IN WITNESS WHEREOF, the undersigned duly authorized individuals have caused
this Trust Agreement to be executed on behalf of the Company and Trustee as of
the date first above written.

                                   WOODWARD GOVERNOR COMPANY
                                   ("COMPANY")

                                   By: /s/Carol J. Manning
                                      -----------------------------------------
                                     Its: Corporate Secretary
                                         --------------------

                                   WACHOVIA BANK, N.A.
                                   ("TRUSTEE")

                                   By:/s/Ronald W. Darby
                                      -----------------------------------------
                                      Its: Vice President & Assistant Secretary
                                          --------------------------------------

<Page>

                                    EXHIBIT A

                                PAYMENT SCHEDULE

TO:      [Trustee]

FROM:    [Company]

In accordance with Section 2 of the Trust Agreement dated _______________, 2002
between the Trustee and the Company, the Company hereby submits the following
payment schedule:

<Table>
<Caption>
                EMPLOYEE                             BENEFIT AMOUNT
                --------                             --------------
<S>                                         <C>

</Table>

This payment schedule shall supersede all previously delivered payment schedules
under the Trust with respect to the Employee listed above.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00060-of-00352.parquet"}]]