GRC Gorman Rupp Company

Section 1701.13(E) of the Ohio Revised Code sets forth the conditions and limitations governing a corporation’s indemnification of officers, directors and other persons. Section 1701.13(E) provides that a corporation shall have the power to indemnify any person who was or is a party or threatened to be made a party to any threatened, pending or contemplated action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he or she is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation in a similar capacity with another

corporation or other entity, against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred in connection therewith if he or she acted in good faith and in a manner that he or she reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to a criminal proceeding, had no reasonable cause to believe that his or her conduct was unlawful.

With respect to a suit by or in the right of the corporation, indemnity may be provided to the foregoing persons under Section 1701.13(E) on a basis similar to that set forth above, except that no indemnity may be provided in respect of any claim, issue or matter as to which such person has been adjudged to be liable to the corporation unless and to the extent that the court of common pleas or the court in which such action, suit or proceeding was brought determines that despite the adjudication of liability but in view of all the circumstances of the case such person is entitled to indemnity for such expenses as the court deems proper.

Moreover, Section 1701.13(E) provides for mandatory indemnification of a director, officer, employee or agent of the corporation to the extent that such person has been successful in defense of any such action, suit or proceeding and provides that a corporation shall pay the expenses of an officer or director in defending an action, suit or proceeding upon receipt of an undertaking to repay such amounts if it is ultimately determined that such person is not entitled to be indemnified. Section 1701.13(E) establishes provisions for determining whether a given person is entitled to indemnification, and also provides that the indemnification provided by or granted under Section 1701.13(E) is not exclusive of any rights to indemnity or advancement of expenses to which such person may be entitled under any articles, regulations, agreement, vote of shareholders or disinterested directors or otherwise.

The general effect of Article IV of the Company’s Regulations is to provide for the indemnification of its directors, officers and employees to the full extent permitted by applicable law, on terms generally consistent with the statutory authority in Section 1701.13(E) of the Ohio Revised Code. Article IV of the Company’s Regulations further provides that such indemnification is not exclusive of any other rights to which those seeking indemnification may be entitled, including under the Company’s Articles of Incorporation or any agreement, vote of shareholders or disinterested directors or otherwise.

The Company has entered into Indemnification Agreements (the “Indemnification Agreements”) with each present director and such officers of the Company and its subsidiaries as have been designated by the Board of Directors and expects to enter into similar agreements with its directors and certain officers elected or appointed in the future at the time of their election or appointment. The effect of the Indemnification Agreements is to provide for mandatory indemnification of an officer or director of the Company, or of an individual who serves at the request of the Company as an officer, director, member, manager, trustee, employee or agent of another corporation, limited liability company, partnership, joint venture, trust or other entity or enterprise, whether or not for profit, if the individual meets certain standards of conduct required by the Indemnification Agreements. The Indemnification Agreements provide indemnification to an individual who was or is a party to any threatened, asserted, pending or completed claim, demand, action, suit or proceeding, including those made, instituted or conducted by the Company. The Indemnification Agreements also contemplate indemnification in connection with arbitrative, administrative and investigative proceedings as well as criminal and civil claims, demands, actions, suits or proceedings.

The Company also maintains insurance covering certain liabilities of the directors and officers of the Company and its subsidiaries.