EXHIBIT 10.5

PATENT SECURITY AGREEMENT

This PATENT SECURITY AGREEMENT (“Agreement”), dated as of December 2, 2015 is
made by Graham Corporation, a Delaware corporation (the “Borrower”), and the
undersigned subsidiaries of the Borrower (each, a “Grantor” and collectively,
the “Grantors”), in favor of JPMorgan Chase Bank, N.A., as Administrative Agent
(in such capacity, the “Administrative Agent”) for the banks and other financial
institutions or entities (the “Lenders”) from time to time parties to the Credit
Agreement, dated as of December 2, 2015 (as amended, restated, supplemented or
otherwise modified from time to time, the “Credit Agreement”), among the
Borrower, the Lenders, the Administrative Agent and the other parties thereto.

W I T N E S S E T H:

WHEREAS, pursuant to the Credit Agreement, the Lenders have severally agreed to
make extensions of credit to the Borrower upon the terms and subject to the
conditions set forth therein;

WHEREAS, in connection with the Credit Agreement the Grantors have executed and
delivered a Pledge and Security Agreement dated as of December 2, 2015 in favor
of the Administrative Agent (as amended, restated, supplemented or otherwise
modified from time to time, the “Security Agreement”);

WHEREAS, pursuant to the Security Agreement, the Grantors pledged and granted to
the Administrative Agent for the benefit of the Secured Parties a continuing
security interest in all Intellectual Property, including the Patents; and

WHEREAS, each Grantor has duly authorized the execution, delivery and
performance of this Agreement.

NOW THEREFORE, for good and valuable consideration, the receipt of which is
hereby acknowledged, and in order to induce the Lenders to enter into the Credit
Agreement, each Grantor agrees, for the benefit of the Administrative Agent and
the Lenders, as follows:

SECTION 1.     Definitions.   Unless otherwise defined herein or the context
otherwise requires, terms used in this Agreement, including its preamble and
recitals, have the meanings provided or provided by reference in the Security
Agreement.

SECTION 2.     Grant of Security Interest.   Each Grantor hereby pledges and
grants a continuing security interest in, and a right of setoff against, and
agrees to assign, transfer and convey, upon demand made upon the occurrence and
during the continuance of an Event of Default without requiring further action
by either party and to be effective upon such demand, (i) all of such Grantor’s
Patents and any licenses thereof, including without limitation those referred to
on Schedule A hereto, (ii) all reissues, divisions, continuations,
continuations-in-part, extensions, renewals, and reexaminations thereof,
(iii) all rights corresponding thereto throughout the world, (iv) all inventions
and improvements described therein, (v) all rights to sue for past, present and
future infringements thereof (collectively, the “Patent Collateral”), and
(v) all proceeds of the foregoing, including, without limitation, licenses,
royalties, income, payments, claims, damages, and proceeds of suit, to the
Administrative Agent for the benefit of the Secured Parties to secure payment,
performance and observance of the Obligations.

SECTION 3.     Purpose.    This Agreement has been executed and delivered by
each Grantor for the purpose of recording the grant of security interest herein
with the United States Patent and Trademark Office. The security interest
granted hereby has been granted to the Administrative Agent for the benefit of
the Secured Parties in connection with the Security Agreement and is expressly
subject to the terms and conditions thereof. The Security Agreement (and all
rights and remedies of the Lenders thereunder) shall remain in full force and
effect in accordance with its terms.

 

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SECTION 4.     Authorization to Supplement.   If any Grantor shall obtain rights
to any new Patents, the provisions of this Patent Security Agreement shall
automatically apply thereto. Such Grantor shall give notice in writing to
Administrative Agent in accordance with the terms of the Security Agreement with
respect to any such new Patents or renewal or extension of any Patent
registration. Without limiting such Grantor’s obligations under this Section,
such Grantor hereby authorizes the Administrative Agent unilaterally to modify
this Patent Security Agreement by amending Schedule A to include any such new
Patent rights of such Grantor. Notwithstanding the foregoing, no failure to so
modify this Patent Security Agreement or amend Schedule A shall in any way
affect, invalidate or detract from the Administrative Agent’s continuing
security interest in all Patent Collateral, whether or not listed on Schedule A.

SECTION 5.     Applicable Law.   THIS PATENT SECURITY AGREEMENT SHALL BE SUBJECT
TO THE PROVISIONS REGARDING CHOICE OF LAW AND VENUE, JURY TRIAL WAIVER, AND
JUDICIAL REFERENCE SET FORTH IN SECTION 7 OF THE SECURITY AGREEMENT, AND SUCH
PROVISIONS ARE INCORPORATED HEREIN BY THIS REFERENCE, MUTATIS MUTANDIS.

SECTION 6.     Acknowledgment.   Each Grantor does hereby further acknowledge
and affirm that the rights and remedies of the Secured Parties with respect to
the security interest in the Patent Collateral granted hereby are more fully set
forth in the Credit Agreement and the Security Agreement, the terms and
provisions of which (including the remedies provided for therein) are
incorporated by reference herein as if fully set forth herein. In the event of
any conflict between the terms of this Agreement and the terms of the Security
Agreement, the terms of the Security Agreement shall govern.

SECTION 7.     Counterparts.     This Agreement may be executed in any number of
counterparts and delivered via facsimile or other electronic format, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument.

[Signature page follows]

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the day and year first above written.

 

GRANTORS:

GRAHAM CORPORATION, a Delaware corporation

By: /s/ Jeffrey Glajch

Name: Jeffrey Glajch

Title: Chief Financial Officer

ENERGY STEEL & SUPPLY CO., a Michigan corporation

By: /s/ Jeffrey Glajch

Name: Jeffrey Glajch

Title: Chief Financial Officer

ADMINISTRATIVE AGENT:

JPMORGAN CHASE BANK, N.A.,

as Administrative Agent for the Lenders

By: /s/ Philip M. Hendrix

Name:

 

Philip M. Hendrix

Title:

 

Vice President and Authorized Officer

 

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SCHEDULE A

U.S. Patent Registrations and Applications

PATENTS

 

Name of Grantor   Patent Description    Patent Number   Issue Date Graham
Corporation   Instantaneous Water Heater    7140378   11-28-2006 Graham
Corporation  

Apparatus For Removing Ammonia And Carbon

Dioxide Gases From A

Steam

  5772709   06-30-1998

PATENT APPLICATIONS

None.