EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
by and among
GRAHAM CORPORATION,
ES ACQUISITION CORP.,
ENERGY STEEL & SUPPLY CO.
and
LISA D. RICE, individually
and as Trustee of the LISA D. RICE REVOCABLE TRUST DATED JUNE 5, 2003
Dated as of December 14, 2010

 

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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (this “Agreement”) has been made as of
December 14, 2010 (“Effective Date”), by and among GRAHAM CORPORATION, a
Delaware corporation (“Graham”), ES ACQUISITION CORP., a Delaware corporation
and a direct wholly-owned Subsidiary of Graham (“Buyer”), ENERGY STEEL & SUPPLY
CO., a Michigan corporation (“Energy Steel”), and LISA D. RICE individually
(“Rice”) and as sole Trustee of the LISA D. RICE REVOCABLE TRUST DATED JUNE 5,
2003 (the “Trust”, collectively referred to with Rice as the “Seller”). Graham,
Buyer, Energy Steel and the Seller are collectively referred to herein as the
“parties,” and each is a “party” as described further below.
     WHEREAS, the Seller is the sole beneficial and record holder of nine
thousand (9,000) shares of no par value voting common stock of Energy Steel,
which constitute all of the issued and outstanding shares of capital stock of
Energy Steel (the “Energy Steel Shares”);
     WHEREAS, the Buyer desires to acquire from the Seller, and the Seller
desires to sell to the Buyer, for the consideration hereinafter provided, the
Energy Steel Shares; and
     NOW, THEREFORE, in consideration of the premises and the representations,
warranties and covenants herein contained, the parties agree as follows:
ARTICLE 1.
DEFINITIONS
1.1 Definitions.
     In addition to the other definitions contained in this Agreement, the
following terms will, when used in this Agreement, have the following respective
meanings:
     “Actual Unpaid Transaction Expenses” means the actual amount of all Energy
Steel Transaction Expenses that were not paid by Energy Steel as of the close of
business on the Closing Date.
     “Affiliate” means a Person which, directly or indirectly, controls, is
controlled by, or is under common control with, the referenced party.
     “Business” means the business conducted by Energy Steel, both as of the
date hereof and as of the Closing, that being principally the manufacture and
supply of certain products and raw materials to the nuclear industry.
     “Capital Expenditure” means any expenditures by Energy Steel for the
acquisition, lease, repair or improvement of fixed or capital assets, including
any and all improvements or repairs to equipment.

 

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     “Certifying Officers” means: (a) in the case of Energy Steel, its
President; and (b) in the case of Graham, any one of its duly elected executive
officers.
     “Claim” means any actual or threatened contest, claim, demand, assessment,
action, suit, cause of action, complaint, litigation, proceeding, hearing,
arbitration, investigation or notice involving any Person.
     “Closing” means the consummation of the purchase and sale of the Energy
Steel Shares as set forth in Section 2.3.
     “Code” means the Internal Revenue Code of 1986, as amended, together with
all rules and regulations promulgated thereunder.
     “Competition Laws” means and includes the Sherman Act, as amended, the
Clayton Act, as amended, the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, the Federal Trade Commission Act, as amended, national
competition Laws, European Union competition Laws and all other U.S. or non-U.S.
Laws that are designed or intended to prohibit, restrict or regulate actions
having the purpose or effect of monopolization or restraint of trade.
     “Contracts” means and includes all contracts, subcontracts, agreements,
leases, licenses, sublicenses, options, notes, bonds, mortgages, indentures,
deeds of trust, collateral assignments, obligations, instruments, concessions,
guarantees, franchises, purchase orders, arrangements, commitments, undertakings
and understandings of any kind, whether written or oral.
     “Disclosure Schedules” means the disclosure schedules, in the form approved
by the Buyer and Graham (as evidenced by their execution of this Agreement), and
delivered by Energy Steel to Graham and Buyer concurrently with the execution
and delivery of this Agreement.
     “Earn Out Agreement” means the earn out agreement delivered by Buyer to
Seller at the Closing in the form attached hereto as Exhibit A.
     “Encumbrances” means and includes all liens, charges, encumbrances,
mortgages, pledges, security interests, options and any other restrictions or
third party rights, including without limitation guarantees.
     “Energy Steel Debt” means all indebtedness of Energy Steel on which
interest accrues (including both the current and long-term portions of any
long-term indebtedness), all as identified on Schedule 1.1.
     “Energy Steel Transaction Expenses” means fees and expenses incurred by
Energy Steel, on its behalf or on behalf of Seller (including any obligation of
Energy Steel to reimburse the Seller for any such fees and expenses), in respect
of (i) legal, accounting, investment banking services and other professional
services, in each case on the sell-side of the transaction in connection with
the transactions contemplated under this Agreement through and including the
Closing Date, (ii) any severance or stay bonus payment payable to directors,
officers, employees and respective Affiliates of Energy Steel at or prior to the
Closing as a result of or in contemplation of the consummation of the
transactions contemplated by this Agreement, (iii) any fees paid by the Seller
or Energy Steel on behalf of the Seller to the Unrelated Accounting Firm and
(iv) any fees or expenses paid by or due

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from Seller or Energy Steel in connection with that certain Letter Agreement
with August Mack Environmental, Inc. dated November 8, 2010, accepted by Energy
Steel on November 16, 2010 and that certain Letter Agreement with Kurschat &
Company dated November 11, 2010, accepted by Energy Steel on November 16, 2010.
     “Environmental Laws” means, collectively, all U.S. federal, national, state
and local statutes, regulations, ordinances, codes, published guidelines and
policies, directives and orders (including all amendments thereto) pertaining to
environmental matters (which includes air, water vapor, surface water,
groundwater, soil, natural resources, chemical use, health, safety and
sanitation), including the Comprehensive Environmental Response, Compensation
and Liability Act, the Resource Conservation and Recovery Act, the Clean Air
Act, the Federal Water Pollution Control Act, the Safe Water Drinking Act, the
Toxic Substance Control Act and the Occupational Safety and Health Act.
     “ERISA” means the Employee Retirement Income Security Act of 1974, as
amended, together with all rules and regulations promulgated thereunder.
     “Escrow Agent” means PNC Bank, National Association.
     “Escrow Agreement” means the escrow agreement by and among Buyer, Seller
and Escrow Agent in the form attached hereto as Exhibit B.
     “Estimated Net Working Capital” means the Net Working Capital, as set forth
on the Estimated Working Capital and Unpaid Transaction Expenses Schedule.
     “Estimated Unpaid Transaction Expenses” means the estimate, as prepared and
specified in the Estimated Working Capital and Unpaid Transaction Expenses
Schedule, of the amount of all Energy Steel Transaction Expenses that will not
be paid by Energy Steel as of the close of business on the Closing Date and that
are to be paid by Energy Steel after the Closing Date.
     “Estimated Working Capital and Unpaid Transaction Expenses Schedule” means
the draft schedule of the Net Working Capital as of the Closing Date, prepared
and delivered by Energy Steel and the Seller at the Closing in accordance with
the calculation formula attached hereto as Exhibit C.
     “Exchange Act” means the Securities Exchange Act of 1934, as amended,
together with all rules and regulations promulgated thereunder.
     “Excluded Assets and Claims” means all assets and claims of Energy Steel
listed on Schedule 2.5.
     “Final Working Capital and Unpaid Transaction Expenses Schedule” means the
schedule of the Net Working Capital and Estimated Unpaid Transaction Expenses as
of the Closing Date, which shall be in the same format as the Estimated Working
Capital and Unpaid Transaction Expenses Schedule and will include a calculation
of the Net Working Capital, as finally agreed to or otherwise determined by
operation of Section 2.2(b), and the Working Capital Deficit or Working Capital
Surplus, if any, and the Actual Unpaid Transaction Expenses.

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     “Fiscal 2008” means Energy Steel’s fiscal year beginning on October 1, 2007
and ending on September 30, 2008.
     “Fiscal 2009” means Energy Steel’s fiscal year beginning on January 1, 2009
and ending on December 31, 2009.
     “Foreign Corrupt Practices Act” means the Foreign Corrupt Practices Act of
1977, as amended, and the regulations promulgated thereunder.
     “GAAP” means United States generally accepted accounting principles as in
effect from time to time.
     “GAAP Exceptions” means the exceptions to GAAP and/or the accounting
principles and methods of Energy Steel which modify or interpret GAAP, all as
set forth on Exhibit D.
     “Governmental Entity” means any U.S. or non-U.S. federal, national, state
or local court, legislative body, governmental or quasi-governmental body,
municipality, political subdivision, department, commission, board, bureau,
tribunal, department, administration, council, agency, arbitrator, authority or
other instrumentality.
     “Hazardous Substances” means and includes: (a) any hazardous materials,
hazardous wastes, hazardous substances and toxic substances as those or similar
terms are defined under any Environmental Law; (b) any asbestos or any material
that contains any hydrated mineral silicate, including chrysolite, amosite,
crocidolite, tremolite, anthophylite and/or actinolite, whether friable or
non-friable; (c) any polychlorinated biphenyls or polychlorinated
biphenyl-containing materials or fluids; (d) radon; (e) any other hazardous,
radioactive, toxic or noxious substance, material, pollutant, contaminant or
solid, liquid or gaseous waste; (f) any petroleum, petroleum hydrocarbons,
petroleum products, crude oil or any fractions thereof, natural gas or synthetic
gas; and (h) any substance that, whether by its nature or its use, is or becomes
subject to regulation under any Environmental Laws or with respect to which any
Environmental Laws or Governmental Entity requires or will require environmental
investigation, monitoring or remediation.
     “Improvements” means all buildings, structures, fixtures, building systems
and equipment, and all components thereof, including the roof, foundation,
load-bearing walls and other structural elements thereof, heating, ventilation,
air conditioning, mechanical, electrical, plumbing and other building systems,
environmental control, remediation and abatement systems, sewer, storm and waste
water systems, irrigation and other water distribution systems, parking
facilities, fire protection, security and surveillance systems, and
telecommunications, computer, wiring and cable installations, included in any
Leased Real Property (as defined below).
     “Intellectual Property” means all of the following in any jurisdiction
throughout the world: (a) all inventions (whether patentable or unpatentable and
whether or not reduced to practice), all improvements thereto, and all patents,
patent applications, and patent disclosures, together with all reissuances,
continuations, continuations-in-part, revisions, extensions, and reexaminations
thereof; (b) all trademarks, service marks, trade dress, logos, slogans, trade
names, corporate names, internet domain names, and rights in telephone numbers
(excluding the cellular telephone number of Seller, whether or not a paid
expense of Energy Steel), together with all translations, adaptations,
derivations, and combinations thereof and including all goodwill associated
therewith, and all

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applications, registrations, and renewals in connection therewith; (c) all
copyrightable works, all copyrights, and all applications, registrations, and
renewals in connection therewith; (d) all mask works and all applications,
registrations, and renewals in connection therewith; (e) all trade secrets and
confidential business information (including ideas, research and development,
know-how, formulas, compositions, manufacturing and production processes and
techniques, technical data, designs, drawings, specifications, customer, contact
and supplier lists (including, without limitation, all addresses, phone numbers
and other relevant contact information in whatever medium for any of the
aforementioned), pricing and cost information, and business and marketing plans
and proposals); (f) all computer software (including source code, executable
code, data, databases and related documentation); (g) all advertising and
promotional materials; (h) all other proprietary rights; and (i) all copies and
tangible embodiments thereof (in whatever form or medium).
     “IRS” means the U.S. Internal Revenue Service.
     “Laws” means, collectively, all U.S. laws, statutes, rulings, rules,
regulations, judgments, orders, decrees, awards, injunctions, writs,
requirements, permits, certificates and ordinances of any Governmental Entity,
as in effect from time to time.
     “Leases” means all leases, subleases, licenses, concessions and other
agreements (written or oral), including all amendments, extensions, renewals,
guaranties and other agreements with respect thereto, pursuant to which Energy
Steel holds any real property, including the right to all security deposits and
other amounts and instruments deposited by or on behalf of Energy Steel
thereunder.
     “Liability” means any liability (whether known or unknown, whether asserted
or unasserted, whether absolute or contingent, whether accrued or unaccrued,
whether liquidated or unliquidated, and whether due or to become due), including
any liability for Taxes.
     “Loss” or “Losses” means any and all judgments, losses, Liabilities,
amounts paid in settlement, damages, fees, fines, penalties, deficiencies, costs
and expenses (including interest, court costs, reasonable fees and expenses of
attorneys, accountants and other experts or other reasonable expenses of
litigation or other proceedings or of any claim, default or assessment).
     “Material Adverse Effect” or “Material Adverse Change” means, with respect
to any entity any occurrence, incident, action, failure to act, event, change or
effect that is or could reasonably be expected to be, materially adverse to the
condition (financial or otherwise), properties, assets, liabilities, business,
results of operations, or prospects of such entity and its subsidiaries, taken
as a whole, or to the enforcement of this Agreement and any agreement
contemplated herein, except changes or any effect resulting from (a) the
announcement or other disclosure of this Agreement, (b) changes in general
business and/or economic conditions, hostilities involving the United States or
in general financial market conditions; (c) any changes in Laws directly or
indirectly affecting the Buyer, Seller or Energy Steel; and (d) general
developments affecting the industry in which Energy Steel competes (so long as
such changes do not disproportionately and adversely affect Energy Steel to a
materially disproportionate degree as compared to similarly situated
businesses).
     “Mitchell” means Michael Mitchell.
     “Mitchell Note” means that certain promissory note between Seller and
Michael Mitchell dated August 28, 2003, as amended.

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     “Net Working Capital” means the current assets (other than cash) less the
current liabilities of Energy Steel as of the close of business on the Closing
Date less debt paid as of the Closing Date, prepared in accordance with GAAP
consistently applied and the other terms and conditions set forth herein.
Current liabilities shall specifically exclude any that relate to any Energy
Steel Transaction Expenses, which shall be and remain the sole responsibility of
the Seller.
     “Ordinary Course of Business” means, when used with respect to any Person,
the ordinary course of business of such Person, consistent with past custom and
practice of such Person (including with respect to quantity and frequency).
     “Person” means and includes any individual, partnership, corporation,
trust, company, unincorporated organization, joint venture or other entity, and
any Governmental Entity.
     “Pre-Closing Taxes” means (i) all Taxes (or the non-payment thereof) of
Energy Steel attributable to any Pre-Closing Tax Period; (ii) any Tax Liability
resulting from the operations of Energy Steel for the Pre-Closing Tax Period;
(iii) all Taxes (or the non-payment thereof) of any member of an affiliated,
consolidated, combined or unitary group of which Energy Steel was a member prior
to the Closing Date imposed on Energy Steel, including pursuant to Treasury
Regulation Section 1.1502-6 or any analogous or similar state, local, or foreign
law or regulation, and (iv) all Taxes (or the non-payment thereof) of any Person
(other than Energy Steel) imposed on Energy Steel as a transferee or successor,
by Contract or pursuant to any Law, rule or regulation, which Taxes relate to an
event or transaction occurring prior to Closing. In the case of any taxable
period that includes (but does not end on) the Closing Date (a “Straddle
Period”), the amount of any Taxes based on or measured by income or receipts of
Energy Steel for the Pre-Closing Tax Period shall be determined based on an
interim closing of the books as of the close of business on the Closing Date
(and for such purpose, the taxable period of any partnership or other
pass-through entity in which Energy Steel holds a beneficial interest shall be
deemed to terminate at such time) and the amount of other Taxes of Energy Steel
that relate to the Pre-Closing Tax Period shall be deemed to be the amount of
such Tax for the entire taxable period multiplied by a fraction, the numerator
of which is the number of days in the taxable period ending on and including the
Closing Date and the denominator of which is the number of days in the entire
taxable period.
     “Pre-Closing Tax Period” means any taxable period or portion thereof ending
on or before the Closing Date. In the case of any Straddle Period, the portion
of the Straddle Period through the end of the Closing Date shall constitute a
Pre-Closing Tax Period.
     “Prime Rate” means the per annum rate of interest publicly announced from
time to time by HSBC Bank, N.A. as its prime rate (or reference rate).
     “Release” means the release, deposit, disposal or leakage of any Hazardous
Substance at, into, upon or under any land, water or air, or otherwise into the
environment or in any other manner that threatens human health or the
environment, including without limitation, by means of burial, disposal,
discharge, emission, injection, spillage, leakage, seepage, leaching, dumping,
pumping, pouring, escaping, placement and the like.
     “Representatives” means, when used with respect to any Person, such
Person’s attorneys, accountants and other advisors.

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     “SEC” means the U.S. Securities and Exchange Commission.
     “Securities Act” means the Securities Act of 1933, as amended, together
with all rules and regulations promulgated thereunder.
     “Subsidiary” means, with respect to any Person, any corporation,
partnership, joint venture, trust or other entity of which such Person, directly
or indirectly through an Affiliate, owns an amount of voting securities, or
possesses other ownership interests, having the power, direct or indirect, to
elect a majority of the board of directors or other governing body thereof.
     “Target Working Capital” means an amount specified in and/or derived from
application of the Working Capital Formula Schedule attached hereto as
Exhibit E.
     “Tax” or “Taxes” means, collectively, U.S. and non-U.S. federal, national,
state and local income, payroll, withholding, employment, excise, sales, use,
real and personal property, use and occupancy, business and occupation, gross
receipts, mercantile, real estate, capital stock and franchise or other taxes,
duties or assessments of any nature whatsoever, including all penalties,
interest or addition thereon and estimated or deferred taxes.
     “U.S.” means the United States of America.
     “Violation” means that the referenced fact or event: (a) conflicts with, or
results in any violation of, or a default (with or without notice or lapse of
time, or both) under, or gives rise to a right of termination, cancellation or
acceleration of any obligation or the loss of a material benefit under, or the
creation of an Encumbrance (other than a Permitted Encumbrance) on assets in
connection with, the referenced Contract or other document; or (b) conflicts
with, or results in any violation (with or without notice or lapse of time, or
both) under, or gives rise to any Liability, damages, penalty or remedial action
under, the referenced Law.
     “Working Capital Deficit” means the amount, if any, by which the Net
Working Capital reflected on the Final Working Capital and Unpaid Transaction
Expenses Schedule is less than the Estimated Net Working Capital applying the
Working Capital Formula.
     “Working Capital Formula” means the formula utilized in determining both
the Target Working Capital and the Final Working Capital as set forth on
Exhibit E.
     “Working Capital Surplus” means the amount, if any, by which the Net
Working Capital reflected on the Final Working Capital and Unpaid Transaction
Expenses Schedule is more than the Estimated Net Working Capital.
1.2 Interpretation.
     In this Agreement, unless the express context otherwise requires:
          (a) the words “herein,” “hereof” and “hereunder” and words of similar
import refer to this Agreement as a whole, including the Disclosure Schedules
and the Exhibits, and not to any particular provision of this Agreement;

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          (b) references to “Article” or “Section” are to the respective
Articles and Sections of this Agreement, and references to “Exhibit” are to the
respective Exhibits annexed hereto;
          (c) references to a “party” means a party to this Agreement and
include references to such party’s successors and permitted assigns;
          (d) references to a “third party” means a Person that is neither a
party to this Agreement nor an Affiliate thereof;
          (e) the terms “dollars” and” means U.S. dollars;
          (f) the terms “knowledge” or “known” means those facts or things of
which a party has actual information. For purposes of this Agreement, the
(i) term “Energy Steel’s knowledge” or “knowledge of Energy Steel” shall mean
the actual knowledge of Seller, Allan Valentine, Robert Paton, Waylon Waters,
Arthur Olson, Timothy Shepherd, Neal Lake and Wendy Kirk, and (ii) term
“knowledge of Graham” or “knowledge of Buyer” shall mean the actual knowledge of
Jeffrey F. Glajch, James R. Lines and Jennifer R. Condame;
          (g) terms defined in the singular have a comparable meaning when used
in the plural, and vice versa;
          (h) the masculine pronoun includes the feminine and the neuter, and
vice versa, as appropriate in the context; and
          (i) wherever the word “include,” “includes” or “including” is used in
this Agreement, it will be deemed to be followed by the words “without
limitation,” unless the context provides otherwise, i.e., “including only. . . .
”
ARTICLE 2.
PURCHASE AND SALE OF ENERGY STEEL SHARES
2.1 Basic Transaction.
     On and subject to the terms and conditions of this Agreement, the Buyer
agrees to purchase from the Seller, and the Seller agree to sell the Energy
Steel Shares free and clear of all Encumbrances for a purchase price comprised
of: (a) a fixed amount of Eighteen Million Dollars ($18,000,000) in cash (the
“Initial Cash Payment”); and (b) an amount up to Two Million Dollars
($2,000,000) (the “Earn Out Amount”), plus or minus any adjustments determined
in accordance with Section 2.2(b) (collectively, the “Purchase Price”).
2.2 Payment of Purchase Price; Adjustments.
     (a) Closing Payments. The Purchase Price shall be paid by Graham to Seller
in accordance with Subsections 2.2(a)(i), (ii), (iii) and (iv) below at the
Closing as follows:

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     (i) Initial Cash Payment — On the Closing Date, Graham will pay to Seller
the Initial Cash Payment, in cash or immediately available funds by wire
transfer to an account specified by Seller in writing at least two (2) days
prior to the Closing Date, less any of the following: (1) to the holder of the
Energy Steel Debt an amount equal to the Energy Steel Debt contemplated to be
paid in cash in accordance with the instructions set forth in the Pay-Off
Letter(s); (2) to Mitchell in an amount equal to the outstanding balance under
the Mitchell Note to be paid in cash in accordance with the instructions set
forth in the Pay-Off Letter(s); (3) the payment of the Estimated Unpaid
Transaction Expenses in the amount set forth on Schedule 2.2(a); (4) the amount,
if any, by which the Target Working Capital exceeds the Estimated Net Working
Capital; and (5) the Escrow Amount (as defined below).
     (ii) Earn Out Amount — On the Closing Date, Graham shall execute and
deliver to Seller the Earn Out Agreement in the amount of Two Million Dollars
($2,000,000);
     (iii) Escrow Amount — On the Closing Date, Graham shall deliver One Million
Seven Hundred Fifty Thousand Dollars ($1,750,000) (the “Escrow Amount”) to the
Escrow Agent to be held pursuant to the terms and conditions of the Escrow
Agreement; and
     (iv) Preliminary/Working Capital Surplus/Deficit — On the Closing Date, in
addition to the Initial Cash Payment and the Escrow Amount, Graham shall pay to
the Seller a cash payment in an amount equal to the amount, if any, by which the
Estimated Net Working Capital exceeds the Target Working Capital.
     (b) Post-Closing Adjustments. Graham shall prepare and by May 31, 2011
deliver to the Seller the Final Working Capital and Unpaid Transaction Expenses
Schedule. Graham shall provide the Seller and its accounting and tax
representatives, at the Seller’s sole cost and expense, with full and prompt
access to the books and records of Energy Steel for purposes of validating the
Final Working Capital and Unpaid Transaction Expenses Schedule. In the absence
of any objections from the Seller within thirty (30) days following receipt of
such calculation, Graham’s determination of the Final Working Capital and Unpaid
Transaction Expenses Schedule shall be conclusive, final and binding on the
parties for purposes of determining the Net Working Capital, Working Capital
Surplus, Working Capital Deficit and the Actual Unpaid Transaction Expenses.
However, such determination shall not affect any other of Graham’s or Buyer’s
rights under this Agreement, including without limitation under Article 7. If
Seller objects to the Final Working Capital and Unpaid Transaction Expenses
Schedule within thirty (30) days following receipt of such calculation from
Graham, the Seller shall deliver a written dispute notice to Graham which shall
set forth the specific line items in dispute and provide the basis for such
dispute in reasonable detail, including but not limited to a claim that Seller
and Representatives have not been furnished adequate information to confirm or
refute the determination of Graham. If, after ten (10) days from the date notice
of a dispute is given hereunder, the Seller and Graham cannot agree on the
resolution of all of the disputed items, the Final Working Capital and Unpaid
Transaction Expenses Schedule shall be adjusted to the extent of any items that
are not in dispute, and the items still in dispute shall be referred to Grant
Thornton LLP or another independent public accounting firm acceptable to both
the Seller and Graham (the “Unrelated Accounting Firm”) to resolve the dispute,
whose decision as to the issues in dispute shall be conclusive, final and
binding upon the Seller and Graham for purposes of this Agreement. The Unrelated
Accounting Firm shall address only those issues in dispute in accordance with
the terms of this Section 2.2(b) and may not assign a value to any item

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greater than the greatest value for such item claimed by either party or less
than the smallest value for such item claimed by either party. The fees and
expenses of the Unrelated Accounting Firm shall be paid 50/50 by the Seller and
Buyer.
     (c) Upon finalizing the Final Working Capital and Unpaid Transaction
Expenses Schedule, either by agreement or by the Unrelated Accounting Firm:
(i) to the extent there is a Working Capital Surplus, Graham will pay the Seller
an amount equal to such Working Capital Surplus within ten (10) days of delivery
of the Final Working Capital and Unpaid Transaction Expenses Schedule. If such
Working Capital Surplus is not paid within such ten (10) day period, then
interest shall accrue and be due and payable from Graham on the Working Capital
Surplus from and including the Closing through and including the date of payment
at Prime Rate plus two percent (2%) per annum; and (ii) to the extent there is a
Working Capital Deficit or the Actual Unpaid Transaction Expenses exceeds the
Estimated Unpaid Transaction Expenses, within ten (10) days following the
delivery of the Final Working Capital and Unpaid Transaction Expenses Schedule,
the Seller will pay to Graham in cash (by wire transfer of immediately available
funds to an account designated by Graham) the amount of the Working Capital
Deficit and the amount by which the Actual Unpaid Transaction Expenses exceeds
the Estimated Unpaid Transaction Expenses, if any. If such amounts are not paid
within such fifteen (15) day period, then interest shall accrue and be due and
payable from the Seller on such amounts from and including the Closing through
and including the date of payment at Prime Rate plus two percent (2%) per annum.
     (d) Delivery of all payments required under this Section 2.2 or any
provision hereof shall be made in cash by the wire transfer of immediately
available funds to such bank account as designated in writing by the recipient
or, in the case of any payments owed Graham or Buyer by the Seller, may be
offset against any future amounts that Buyer or Graham may owe the Seller under
this Agreement or the Earn Out Agreement.
2.3 The Closing.
     The Closing of the transactions contemplated by this Agreement shall take
place at a location mutually agreed to by the Buyer and Seller commencing on the
date of this Agreement (the “Closing Date”).
2.4 Deliveries at the Closing.
     At the Closing, (i) Energy Steel and the Seller will execute and deliver or
cause to be executed and delivered to the Buyer the agreements, certificates,
instruments, and documents referred to in Section 6.2 or otherwise contemplated
herein, (ii) Graham and the Buyer will execute and deliver or cause to be
executed and delivered to the Seller the agreements, certificates, instruments,
and documents referred to in Section 6.3 or otherwise contemplated herein,
(iii) the Seller will deliver to the Buyer stock certificates representing all
of the Energy Steel Shares, endorsed in blank or accompanied by duly executed
assignment documents, and (iv) Graham and the Buyer will deliver the Purchase
Price as specified in Section 2.2(a).
2.5 Excluded Assets.
     Notwithstanding anything to the contrary set forth herein, all of the
tangible and intangible assets, rights and claims listed on Schedule 2.5 shall
be excluded from the sale contemplated by this

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Agreement and shall remain the property of the Seller or shall be transferred
and assigned by Energy Steel to Seller prior to Closing.
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF ENERGY STEEL AND THE SELLER
     Energy Steel and the Seller jointly and severally represent and warrant to
Graham and Buyer that the statements contained in this Section are correct and
true as of the date of this Agreement and will be correct and true as of the
Closing Date (as though made then and as though the Closing Date were
substituted for the date of this Agreement throughout this Article), except as
set forth in the Disclosure Schedules.
3.1 Organization, Standing and Power.
     (a) Energy Steel is a corporation duly organized, validly existing and in
good standing under the Laws of the State of Michigan. Energy Steel has no
Subsidiaries and does not own an equity interest in any Person. Energy Steel has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted and, except as could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, is duly qualified and in good standing to do business in each
other jurisdiction in which the nature of its business or the ownership or
leasing of its properties makes such qualification necessary. Energy Steel has
heretofore made available to Graham and Buyer true, correct and complete copies
of the articles of incorporation and bylaws, as currently in effect, of Energy
Steel and has made available to Graham and Buyer true, correct and complete
minute books and stock records of Energy Steel. The stock records fairly and
accurately reflect the ownership of all of outstanding shares of capital stock
of Energy Steel. The minute books contain accurate records of the proceedings of
all material actions formally taken by the shareholders, the board of directors
and each committee of the board of directors of Energy Steel. The other books
and records of Energy Steel have been maintained in accordance with reasonable
business practices in accordance with past practices of Energy Steel. Energy
Steel is not in default under or in violation of any provision of its charter or
bylaws.
3.2 Capital Structure.
     (a) The authorized capital stock of Energy Steel consists entirely of sixty
thousand (60,000) shares of no par value common stock.
     (b) As of the date hereof, the only shares of capital stock issued and
outstanding of Energy Steel are the Energy Steel Shares (being nine thousand
(9,000) shares of common stock issued to or otherwise held in the name of
Seller).
     (c) All of the Energy Steel Shares have been duly authorized, are validly
issued, fully paid, and nonassessable. Except as provided on Schedule 3.2, there
are no outstanding or authorized options, warrants, purchase rights,
subscription rights, conversion rights, exchange rights, or other contracts or
commitments that could require Energy Steel to issue, sell, or otherwise cause
to become outstanding any additional shares of Energy Steel capital stock.
Except as provided on Schedule 3.2, there are no outstanding or authorized stock
appreciation, phantom stock, profit

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participation, or similar rights with respect to Energy Steel. Except as
provided on Schedule 3.2, there are no voting trusts, proxies, or other
agreements or understandings with respect to the voting of the capital stock of
Energy Steel.
     (d) The Seller holds of record and beneficially owns all of the Energy
Steel Shares as more particularly described in Schedule 3.2(d), free and clear
of any restrictions on transfer (other than any restrictions under the
Securities Act and state securities laws), Taxes, Encumbrances, options,
warrants, purchase rights, contracts, commitments, equities, claims, and
demands. The Seller is not a party to any option, warrant, purchase right, or
other agreement, contract or commitment involving any shares of Energy Steel
capital stock, including any agreement, contract or commitment that would
require the Seller to sell, transfer, or otherwise dispose of any capital stock
of Energy Steel (other than this Agreement). The Seller has full voting power
over all of the Energy Steel Shares and none of them is a party to any voting
trust, proxy, or other agreement or understanding with respect to the voting of
any shares of the Energy Steel Shares. Other than this Agreement, there is no
agreement between any Seller and any other Person with respect to the
disposition of the Energy Steel Shares, except for the existing Shareholder
Agreement which shall terminate effective as of the Closing Date.
3.3 Authority; Binding Effect.
     Energy Steel has all requisite corporate power and authority and the Seller
has the requisite power and trust power (as evidenced by that certain
Certificate of Trust Existence and Authority dated December 10, 2010 (the “Trust
Certificate”)) to enter into this Agreement and, subject to the approval of the
Seller (which is evidenced by the execution and delivery of this Agreement), to
consummate the transactions contemplated hereby. The representations and
certifications made in the Trust Certificate are true and accurate in all
respects as of the Closing Date. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Energy Steel and the
Seller, including without limitation the approval of the Seller. The board of
directors of Energy Steel and the Seller have, as of the date of this Agreement,
duly adopted resolutions which unanimously approve and adopt this Agreement and
the consummation of the transactions contemplated herein. This Agreement has
been duly executed and delivered by Energy Steel and the Seller and, assuming
the due execution and delivery hereof by Graham and Buyer, constitutes the valid
and binding obligation of Energy Steel and the Seller, enforceable against
Energy Steel and the Seller in accordance with its terms, except as the
enforceability hereof may be limited by (i) bankruptcy, insolvency or other Laws
relating to or affecting creditors’ rights generally, and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
3.4 No Conflict.
     Except for the Required Approvals set forth on Schedule 3.4, the execution
and delivery of this Agreement by Energy Steel and the Seller does not, and the
consummation of the transactions contemplated hereby and the fulfillment of its
obligations and undertakings hereunder will not, result in any Violation (other
than Violations, if any, arising solely out of the failure to obtain a Required
Approval as described below and as set forth on the Disclosure Schedules) of any
provision of: (a) the articles of incorporation or bylaws of Energy Steel;
(b) any material Contract applicable to

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Energy Steel, the Seller, or any of their respective assets; or (c) any Law
applicable to Energy Steel, the Seller, or any of their respective assets;
except, in the case of Contracts and Laws, for Violations which could not
reasonably be expected to have, individually or in the aggregate, any adverse
effect on the validity or enforceability of this Agreement or a Material Adverse
Effect. Except as set forth in Schedule 3.4 (each, a “Required Approval”), to
Energy Steel’s and the Seller’s knowledge no consent, approval, order or
authorization of, or registration, declaration or filing with, or notice to, any
Governmental Entity or other third party is required by or with respect to
Energy Steel in connection with the execution and delivery of this Agreement by
Energy Steel or the Seller or the consummation by Energy Steel or the Seller of
the transactions contemplated hereby.
3.5 Energy Steel Financial Statements; Internal Accounting Controls.
     (a) Attached as Schedule 3.5(a) to the Disclosure Schedules are (i) the
unaudited balance sheets, statements of income for Energy Steel for Fiscal 2008
(ending September 30) and 2009 (ending December 31), (ii) the unaudited balance
sheet and statement of income for Energy Steel as of and for the three (3) month
period ended December 31, 2008, and (iii) the unaudited balance sheet and
statement of income for Energy Steel as of and for the six (6) and nine
(9) month periods ended June 30, 2010 and September 30, 2010 (all such financial
statements collectively referred to as the “Financial Statements”). The
Financial Statements (including the notes thereto) are complete and accurate in
all material respects and have been applied and prepared on a consistent basis
throughout the periods covered thereby (except as to GAAP Exceptions), and
present fairly the financial condition of Energy Steel as of such dates and the
results of operations of Energy Steel for such periods, are correct and complete
in all material respects.
     (b) Subject to the application of the GAAP Exceptions, the books and
records of Energy Steel accurately and fairly reflect the income, expenses,
assets and liabilities for the periods covered and Energy Steel maintains
internal accounting controls which provide reasonable assurances that:
(A) transactions are executed in accordance with the general or specific
authorization of Energy Steel’s management, and (B) transactions are recorded as
necessary to permit preparation of such financial statements.
3.6 No Additional Material Liabilities.
     Except as set forth in the Financial Statements or in Schedule 3.6:
(a) Energy Steel has not had since October 31, 2010 any material liabilities or
accrued expenses, whether accrued, absolute, contingent or otherwise, of a kind
or character that would be required (in accordance with GAAP, subject to
application of the GAAP Exceptions) to be reflected in the balance sheet of
Energy Steel as of October 31, 2010; (b) since October 31, 2010, except for
trade payables and accrued expenses incurred in the Ordinary Course of Business,
Energy Steel has not incurred any such liabilities; and (c) since October 31,
2010, Energy Steel has not drawn down on any line of credit. All liabilities of
Energy Steel incurred since October 31, 2010 have been properly recorded in
their books and records. Schedule 1.1 sets a complete and accurate list of all
of the Energy Steel Debt.
3.7 Energy Steel Permits; Compliance with Laws.
     (a) Schedule 3.7(a) contains a complete and accurate list, as of the date
hereof, of all licenses, permits, certificates, registrations, accreditations,
orders, franchises, authorizations,

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approvals, consents, variances and exemptions of any Governmental Entity which
are necessary for the operation of the Business as currently operated and which
are held by Energy Steel (collectively, the “Energy Steel Permits”), including
the respective termination dates thereof. Except as could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect:
(i) Energy Steel duly holds all Energy Steel Permits; (ii) all of the Energy
Steel Permits are in full force and effect; (iii) Energy Steel is in compliance
with the terms of each of the Energy Steel Permits; and (iv) no action is
pending, or to the knowledge of Seller or Energy Steel, threatened or
recommended, by any Governmental Entity to revoke, condition, withdraw or
suspend any Energy Steel Permit.
     (b) The Business of Energy Steel is being, and since January 1, 2005 has
been, conducted in compliance with all Laws, except for such Violations that
could not reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect. No investigation or review by any Governmental Entity
with respect to Energy Steel is pending or threatened nor has any Governmental
Entity indicated an intention to conduct the same.
3.8 Assets; Title; Absence of Liens and Encumbrances.
     Except as provided on Schedule 3.8 and except with respect to Intellectual
Property (which is the subject of Section 3.10), Energy Steel owns or validly
leases all properties and assets, real, personal and mixed, tangible and
intangible, comprising and employed in the operation of or associated with the
Business. Except for leased assets, Energy Steel has good and marketable title
to each and all of its assets, including those reflected in the balance sheet of
Energy Steel as of October 31, 2010, free and clear of all asserted and
threatened title defects, Claims and Encumbrances except, with respect to all
such assets, the following Encumbrances (collectively, “Permitted
Encumbrances”): (a) Encumbrances securing debt reflected as liabilities in the
Financial Statements, which Encumbrances are listed in Schedule 3.8;
(b) mechanics’, carriers’, workers’, repairmen’s, statutory or common law liens
being contested in good faith and by appropriate proceedings, which contested
liens are listed in Schedule 3.8; (c) liens or obligations for current Taxes not
yet due and payable which have been fully reserved against, or which, if due,
are being contested in good faith and by appropriate proceedings, which
contested liens are listed in Schedule 3.8; (d) such imperfections of title,
easements and Encumbrances, if any, against the Leased Real Property as are set
forth in the Leases or which are not, individually or in the aggregate,
substantial in character, amount or extent, and do not, individually or in the
aggregate, materially detract from the value, or interfere with the present use
of the Leased Real Property or otherwise have a Material Adverse Effect; and
(e) those additional Encumbrances listed in Schedule 3.8.
3.9 Real Property.
     (a) Energy Steel does not own any real property and, instead, leases real
property as a tenant pursuant to the Leases. Schedule 3.9(a) contains a true,
correct and complete list of all real property leased, operated or used by
Energy Steel (collectively, the “Leased Real Property”). Energy Steel has
delivered to Graham and Buyer a true and complete copy of each of the Leases for
the Leased Real Property.
     (b) Except as set forth in Schedule 3.9(b), with respect to each of the
Leases for the Leased Real Property:

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     (i) assuming the due execution by lessor and enforceability against the
lessor, such Lease is legal, valid, binding, enforceable and in full force and
effect;
     (ii) the transaction contemplated by this Agreement does not require the
consent of any other party to such Lease, will not result in a breach of or
default under such Lease, and will not otherwise cause such Lease to cease to be
legal, valid, binding, enforceable and in full force and effect on identical
terms following the Closing;
     (iii) Energy Steel’s possession and quiet enjoyment of the Leased Real
Property under such Lease has not been disturbed and there are no disputes with
respect to such Lease;
     (iv) neither Energy Steel nor any other party to the Lease is in breach or
default under such Lease, and no event has occurred or circumstance exists
which, with the delivery of notice, the passage of time or both, would
constitute such a breach or default, or permit the termination, modification or
acceleration of rent under such Lease;
     (v) the other party to such Lease is not an Affiliate of, and otherwise
does not have any economic interest in Energy Steel;
     (vi) Energy Steel has not assigned, subleased, licensed or otherwise
granted any Person the right to use or occupy such Leased Real Property or any
portion thereof;
     (vii) Energy Steel has not assigned, transferred, conveyed, mortgaged,
deeded in trust or encumbered any leasehold or subleasehold interest under any
such Lease; and
     (viii) the Leased Real Property, comprises all of the real property used or
intended to be used in, or otherwise related to the Business; and Energy Steel
is not a party to any agreement or option to purchase any real property or
interest therein.
     (c) Except as set forth in Schedule 3.9(c), to Energy Steel’s and the
Seller’s knowledge, all Improvements are in reasonably good condition and
repair, ordinary wear and tear excepted, have been appropriately and routinely
maintained, and are sufficient for the operation of the Business as currently
conducted. To Energy Steel’s and the Seller’s knowledge, there are no structural
deficiencies or latent defects affecting any of the Improvements and to their
knowledge there are no facts or conditions affecting any of the Improvements
which would, individually or in the aggregate, interfere in any material manner
with the use or occupancy of the Improvements or any portion thereof in the
operation of the Business as currently conducted thereon.
     (d) Neither Energy Steel nor Seller have been served with any written
notice of a condemnation, expropriation or other proceeding in eminent domain,
pending or threatened, affecting any parcel of Leased Real Property or any
portion thereof or interest therein. There is no injunction, decree, order, writ
or judgment outstanding, nor any claims, litigation, administrative actions or
similar proceedings, pending or, to the knowledge of Energy Steel and Seller,
threatened, relating to the ownership, lease, use or occupancy of the Leased
Real Property or any portion thereof, or the operation of the Business as
currently conducted thereon.

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     (e) To Energy Steel’s and the Seller’s knowledge, the Leased Real Property
as currently used by Energy Steel is in material compliance with all applicable
building, zoning, subdivision, environmental, health and safety requirements and
other land use laws, including The Americans with Disabilities Act of 1990, as
amended (collectively, the “Real Property Laws”), and the current use and
occupancy of the Leased Real Property and operation of the Business thereon does
not violate any Real Property Laws. Energy Steel has not received any notice of
violation of any Real Property Laws and, to Energy Steel’s and the Seller’s
knowledge, there is no basis for the issuance of any such notice or the taking
of any action for such violation.
     (f) None of the Improvements or any portion thereof is dependent for its
access, use or operation on any land, building, improvement or other real
property interest which is not included in the Leased Real Property, except as
would be disclosed on a survey of the Leased Real Property or of public record.
     (g) To Energy Steel’s and the Seller’s knowledge, all water, oil, gas,
electrical, steam, compressed air, telecommunications, sewer, storm and waste
water systems and other utility services or systems for the Leased Real Property
have been installed and are operational and sufficient for the operation of the
Business as currently conducted thereon, ordinary wear and tear excepted.
     (h) All certificates of occupancy, permits, licenses, franchises, approvals
and authorizations (collectively, the “Real Property Permits”) of all
Governmental Entities, board of fire underwriters, association or any other
entity having jurisdiction over the Leased Real Property, which are required or
appropriate to use or occupy the Leased Real Property or operate the Business as
currently conducted thereon, have been issued and are in full force and effect.
Schedule 3.9(h) lists all Real Property Permits held by Energy Steel with
respect to each parcel of Leased Real Property. Energy Steel has not received
any notice from any governmental authority or other entity having jurisdiction
over the Leased Real Property threatening a suspension, revocation, modification
or cancellation of any Real Property Permit and, to the knowledge of each, there
is no basis for the issuance of any such notice or the taking of any such
action.
     (i) The classification of each parcel of Leased Real Property under
applicable zoning laws, ordinances and regulations permits the use and occupancy
of such parcel and the operation of the Business as currently conducted thereon,
and permits the Improvements located thereon as currently constructed, used and
occupied. There are sufficient parking spaces, loading docks and other
facilities at such parcel to comply with such zoning laws, ordinances and
regulations.
     (j) To Energy Steel’s and the Seller’s knowledge, the current use and
occupancy of the Leased Real Property and the operation of the Business as
currently conducted thereon do not violate any easement, covenant, condition,
restriction or similar provision in any instrument of record or other unrecorded
agreement affecting such Leased Real Property, except to the extent such
violation could reasonably be likely to have a Material Adverse Effect. Neither
of the Seller nor Energy Steel has received any notice of violation of any such
documents, and there is no basis for the issuance of any such notice or the
taking of any action for such violation.
     (k) There are no taxes, assessments, fees, charges or similar costs or
expenses imposed by any Governmental Entity, association or other entity having
jurisdiction over the Leased Real Property with respect to any Leased Real
Property or portion thereof which are delinquent.

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     (l) Energy Steel does not occupy or possess any real property pursuant to
an oral lease.
3.10 Intellectual Property.
     (a) “Energy Steel Intellectual Property” means all Intellectual Property
used or held for use in, related to or which arise out of the Business or its
products or services including, without limitation, the following:
     (i) all trademarks, service marks, trade names, trade dress, product names,
product configurations, slogans and logos, applications and registrations,
including those listed in Schedule 3.10(a)(i), and corresponding foreign
applications, registrations and rights thereto, whether or not registered
(collectively, the “Trademarks”);
     (ii) all source code, object code, design documentation and procedures for
product generation and testing of all computer software and firmware, including
the software and firmware listed in Schedule 3.10(a)(ii) and including the
software rules and algorithms, flowcharts, trade secrets, know-how, inventions,
patents, copyrights, designs, technical processes, works of authorship and
technical data included in or relating to the same (collectively, the
“Software”); provided, however, that the terms “Software” and “Energy Steel
Intellectual Property” do not include: (A) “shrink wrap” and “click wrap”
software; (B) shareware and freeware software not incorporated in any of the
Products (as defined below) or any of Energy Steel’s business systems; and
(C) software and firmware that is owned by a third party and is the subject of a
License to Energy Steel;
     (iii) all product development projects planned as of the date of this
Agreement, as listed in Schedule 3.10(a)(iii);
     (iv) all Contracts by which: (i) Energy Steel uses Intellectual Property
owned by a third party (other than (A) supply Contracts providing for the
license solely of Intellectual Property not incorporated in any of the Products
or any of Energy Steel’s business systems and (B) Contracts relating solely to
“shrink wrap” or “click wrap” software); or (ii) a third party uses Intellectual
Property owned by Energy Steel (other than Contracts relating solely to “shrink
wrap” or “click wrap” software); all as listed in Schedule 3.10(a)(iv)
(collectively, the “Licenses”); and
     (v) all internet, intranet and World Wide Web content, sites and pages, and
all HTML and other code related thereto; all as listed in Schedule 3.10(a)(v).
     (b) Energy Steel does not own or license any patents or patent applications
(or any division, continuation, continuation-in-part, continuing prosecution
application, continued examination application, reinstatement, reexamination,
revival, reissue, extension or substitution of any thereof) (collectively, the
“Patents”). Except as set forth on Schedule 3.16(a), Energy Steel does not
license any Patents. Energy Steel owns or has the right to use (pursuant to
written License) all of the Energy Steel Intellectual Property. Subject to the
receipt or making of all Required Approvals specifically identified for this
purpose in Schedule 3.4, each item of Energy Steel Intellectual Property will be
owned or available for continued use by the Energy Steel immediately after the
Closing Date, without the payment of any additional amounts to any third party
(except as may be required subsequent to the Closing Date by the express terms
of any License). Without

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making any representation or warranty as to the substantive patentability of the
Intellectual Property, at the Closing Date and except as set forth in
Schedule 3.10(b), all available Patent rights (other than Patents that are the
subject of a License to Energy Steel) that may encompass any of the Software or
any of the Products may be pursued exclusively by Energy Steel, other than
non-exclusive rights to third party software included within the Software or the
Products.
     (c) Energy Steel currently owns and will own as of the Closing Date, free
and clear of all Encumbrances (other than Permitted Encumbrances), all
Intellectual Property and other proprietary information, processes and formulae
used in, related to or arising from the Business or otherwise necessary for the
ownership, maintenance and use of the Products and the conduct of the Business,
other than Intellectual Property that is owned by a third party and is the
subject of a License in favor of Energy Steel.
     (d) To Energy Steel’s and the Seller’s knowledge, Energy Steel has not
interfered with, infringed upon, misappropriated or otherwise violated (whether
through the use of the Energy Steel Intellectual Property or otherwise) any
Intellectual Property rights of any third party, and no Claim has been asserted
(and is currently pending) or to Energy Steel’s and Seller’s knowledge
threatened by any Person as to the use of the Energy Steel Intellectual Property
by Energy Steel or alleging any such interference, infringement,
misappropriation or violation (including any such Claim that Energy Steel must
license or refrain from using any Intellectual Property rights of any third
party), and to their knowledge there is no valid basis for any such Claim,
except for those Claims listed in Schedule 3.18. Except as set forth in
Schedule 3.10(d), to Energy Steel’s and the Seller’s knowledge no third party
has interfered with, infringed upon, misappropriated or otherwise violated any
rights of Energy Steel with respect to the Energy Steel Intellectual Property.
Energy Steel does not possess any infringement studies, including any opinions
of counsel, prepared by or on behalf of Energy Steel.
     (e) Schedule 3.10(a)(i) identifies each trademark, service mark, trade
name, trade dress, product name, slogan and logo currently used or held for use
by Energy Steel in, related to or arising out of the Business. Energy Steel has
made available to Graham correct and complete copies of all Trademarks, as
amended to date, and correct and complete copies of all other written
documentation evidencing ownership and prosecution (if applicable) of each
Trademark. Except as set forth in Schedule 3.10(e), with respect to each
Trademark:
     (i) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge nor, to the knowledge of Energy Steel and Seller, is
any of the foregoing threatened;
     (ii) no Claim is pending or, to the knowledge of Energy Steel and Seller,
threatened which challenges the legality, validity, enforceability, use or
ownership of the item; and
     (iii) except for the terms and conditions contained in the Contracts listed
on Schedule 3.16(a), Energy Steel has not agreed to indemnify any Person for or
against any interference, infringement, misappropriation or other violation with
respect to the item.

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     (f) Schedules 3.10(a)(ii) and 3.10(a)(iv) identifies all software, firmware
(other than “shrink wrap” and “click wrap” software and shareware and freeware
software not incorporated in any of the Products or any of Energy Steel’s
business systems) and components thereof used or held for use by Energy Steel.
Except as set forth in Schedule 3.10(f), with respect to each item of the
Software:
     (i) the item is not subject to any outstanding injunction, judgment, order,
decree, ruling, or charge nor, to the knowledge of Energy Steel and Seller, is
any of the foregoing threatened;
     (ii) no Claim is pending or to the knowledge of Energy Steel and Seller,
threatened in writing which challenges the legality, validity, enforceability,
use or ownership of the item;
     (iii) except for standard terms and conditions contained in the Contracts
entered into in the ordinary course of business and except for the Contracts
listed on Schedule 3.16(a), Energy Steel has not agreed to indemnify any Person
for or against any interference, infringement, misappropriation or other
violation with respect to the item;
     (iv) to Energy Steel’s and the Seller’s knowledge, the Software as used by
Energy Steel or its licensees does not infringe any copyright, patent,
trademark, trade secret or other Intellectual Property rights of any third
party; and there are no copyright, trademark, trade secret or patent Claims,
asserted or threatened, by any third party, or any acts of Energy Steel upon the
basis of which Energy Steel has any reason to believe that the Software will
infringe any proprietary rights, including patent, copyright, trademark or trade
secret of any third party;
     (v) to Energy Steel’s and the Seller’s knowledge, no third party that is
not duly authorized by Energy Steel is engaged in any activity which would
constitute an infringement or misappropriation of any proprietary rights in the
Software;
     (vi) to Energy Steel’s and the Seller’s knowledge, none of the Software
contains any “back door,” “time bomb,” “Trojan Horse,” “worm,” “drop dead
device,” “virus,” “trap” or other software routines designed to permit
unauthorized access, to disable or erase software, hardware or data, or perform
any other similar actions.
3.11 Tangible Assets.
     (a) All of the tangible assets owned or leased by Energy Steel (i) to
Energy Steel’s and the Seller’s knowledge, are free from defects (patent and
latent), (ii) have been reasonably maintained in accordance with normal industry
practice, is in operating condition and repair, subject to normal wear and tear
and except for unused or obsolete assets, if any, and (iii) are currently
suitable for the purposes for which it presently is used.
     (b) Schedule 3.11(b) is a true, correct and complete listing of: (i) all
material tangible assets, including without limitation, all equipment, computer
equipment and hardware, furniture, fixtures, vehicles, machinery, apparatus,
media, tools, appliances, implements, supplies and other tangible personal
property of Energy Steel as of October 31, 2010, together with the cost and

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depreciation recorded therefor; and (ii) all material additions to and
dispositions of the foregoing made between October 31, 2010 and the date hereof.
Except as set forth in Schedule 3.11(b), to Energy Steel’s and the Seller’s
knowledge, such assets are in a usable state of repair and condition, ordinary
wear and tear excepted.
     (c) Schedule 3.11(c) is a listing of all personal and tangible property of
Seller located at the Business.
     (d) Schedule 3.11(d) is a true, correct and complete listing as of the date
hereof of substantially all products and services of the Business, including all
approved development projects (collectively, the “Products”).
3.12 Inventory.
     (a) Energy Steel’s inventories consist of a quantity and quality
historically useable or saleable in the Ordinary Course of Business. Energy
Steel’s inventories in its balance sheet for the period ended October 31, 2010
and in its books and records are in material accordance with GAAP (subject to
application of the GAAP Exceptions), with inventory recorded at a lower cost
(determined on a first-in, first-out basis) or market.
     (b) Schedule 3.12(b) contains and/or Energy Steel has provided to Graham a
list of all suppliers, purchasing agents and third party manufacturers from or
through whom Energy Steel has purchased inventory during the previous fiscal
year and the current fiscal year up to December 9, 2010. Energy Steel is not a
party to any minimum purchase order arrangements with such suppliers, purchasing
agents and third party manufacturers, except as expressly stated on purchase
orders or other contracts of purchase.
     (c) Energy Steel has made available to Graham a true and complete list of
all purchase orders or commitments placed as of December 9, 2010 by it with
suppliers, purchasing agents or manufacturers for the purchase of inventory and
an accurate and complete breakdown and aging of Energy Steel’s accounts payable,
in each case as of December 9, 2010.
     (d) Neither the Seller nor Energy Steel has received any written notice
specifying that any suppliers, purchasing agents or manufacturers will or plans
to terminate or cancel its relationship with Energy Steel at any time, including
after the Closing Date.
     (e) Schedule 3.12(e) is a true, correct and complete listing, by category
and volume level as of December 9, 2010, of all of Energy Steel’s inventories of
(i) Products, including finished products, work-in-process, and raw material
inventory, and (ii) all other unused or reusable materials and supplies (the
“Current Inventory”). All of such Current Inventory have been properly costed
and valued or properly reserved for, and properly presented in the Financial
Statements. All of such Current Inventory of Products, materials, stores and
supplies are usable and fit for their intended purpose.
3.13 Environmental Matters.
     Except as disclosed in Schedule 3.13, to Energy Steel’s and the Seller’s
knowledge:

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     (a) None of the Leased Real Property is in Violation of any Environmental
Laws and there is no outstanding or pending Liability under the Environmental
Laws related to the Leased Real Property or any property previously owned or
leased by Energy Steel;
     (b) Energy Steel’s use, handling, and disposal of Hazardous Substances has
not resulted in a Violation of or Liability under any Environmental Laws;
     (c) None of the Leased Real Property has (i) ever had any underground
storage tanks regulated under Environmental Laws, whether empty, filled or
partially filled with any substance, or (ii) any asbestos or any material that
contains any hydrated mineral silicate, including chrysolite, amosite,
crocidolite, tremolite, anthophylite and/or actinolite, whether friable or
non-friable;
     (d) Energy Steel has not received any request for information, notice or
order alleging that it may be a potentially responsible party or otherwise have
Liability under any Environmental Laws for investigation, remediation or other
response action related to Hazardous Substances;
     (e) No event has occurred with respect to any property owned or leased by
Energy Steel including the Leased Real Property which, with the passage of time
or the giving of notice, or both, is reasonably expected to constitute a
Violation of, non-compliance with or Liability under any applicable
Environmental Law or Energy Steel Permit;
     (f) There is no Encumbrance (other than a Permitted Encumbrance), Claim or
threat thereof relating to a Release or threatened Release of any Hazardous
Substance on, about or beneath the Leased Real Property (or any portion
thereof), or the migration of any Hazardous Substance to or from property
adjoining or in the vicinity of the Leased Real Property, or alleging any
Liability under Environmental Laws; and
     (g) Energy Steel holds, and is in compliance with, all Energy Steel Permits
required under any Environmental Law in connection with its use of the Leased
Real Property or the operation of the Business, and all such Environmental
Permits are valid and in good standing and will remain so through the Closing
Date and are not subject to meritorious challenge. A true and complete list of
all such Energy Steel Permits is set forth in Schedule 3.7(a).
3.14 Employee Plans.
     (a) Schedule 3.14(a) lists all employee benefit plans and collective
bargaining, employment or severance agreements or other similar arrangements
which Energy Steel currently sponsors, maintains, or to which contributions are
made, or for which obligations have been incurred and currently exist, for the
benefit of employees or former employees of Energy Steel including, without
limitation, (1) any “employee benefit plan” (within the meaning of Section 3(3)
of ERISA), (2) any profit-sharing, deferred compensation, bonus, stock option,
stock purchase, restricted stock, equity incentive, pension, retainer,
compensation, consulting, retirement, severance, indemnification, retention,
change-in-control, welfare or incentive plan, agreement or arrangement, (3) any
plan, agreement or arrangement providing for “fringe benefits” or perquisites to
employees, officers, directors or agents, including but not limited to benefits
relating to automobiles, clubs, vacation, child care, parenting, sabbatical,
sick leave, tuition reimbursement, medical, dental, hospitalization, life
insurance, disability insurance and other types of insurance, and (4) any
employment agreement.

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The plans, agreements and arrangements described in this Section 3.14(a) are
referred to herein as “Employee Plans.”
     (b) Energy Steel has delivered to Graham true, correct and complete copies
of all Employee Plans, all related summary plan descriptions, the most recent
determination letters and/or opinion letters received from the IRS, Form 5500
Annual Reports for the last three (3) years (including all schedules and
attachments thereto), all communications received from or sent to the IRS or the
U.S. Department of Labor within the last five (5) years (including any Forms
5330) with respect to any Employee Plan, the most recent financial reports and
summary annual reports, summaries of material modifications and material
communications distributed within the last year to participants of each Employee
Plan and, where applicable, summary descriptions of any Employee Plans not
otherwise reduced to writing. Except as set forth in Schedule 3.14(b), there are
no negotiations, demands or proposals that are pending or have been made since
the respective dates of the Employee Plans which concern matters now covered, or
that would be covered, by any Employee Plan. Energy Steel has maintained all
employee data necessary to administer each Employee Plan, including all data
required to be maintained under Sections 107 and 209 of ERISA, and such data are
true and correct.
     (c) Except as set forth in Schedule 3.14(c), Energy Steel and each of the
Employee Plans (and any related trust agreement, insurance contract or fund) has
been maintained, funded and administered in accordance with its terms and any
applicable collective bargaining agreement, and Energy Steel is in compliance in
all respects with the applicable provisions of the Code, ERISA and all other
applicable Laws.
     (d) All contributions (including all employer contributions and employee
salary reduction contributions) and premium payments which are or have been due
have been paid to or with respect to each Employee Plan within the time required
by law. All required or discretionary (in accordance with historical practices)
payments, premiums, contributions, reimbursements, or accruals for all periods
ending prior to or as of the Closing Date shall have been made or properly
accrued on the Closing balance sheets or will be properly accrued on the books
and records of Energy Steel as of the Closing date. None of the Employee Plans
has any unfunded liabilities which are not reflected on the Closing balance
sheet or the books and records of Energy Steel. Energy Steel does not have any
assets subject to (or expected to be subject to) a lien for unpaid contributions
to any Employee Plan. Energy Steel has performed in all respects all of their
obligations under all of the Employee Plans, including the payment of all
applicable Taxes.
     (e) Neither Energy Steel nor any Employee Plan fiduciary has, with respect
to the Employee Plans, engaged in a breach of fiduciary duty or engaged or
permitted an Employee Plan to engage in a non-exempt “prohibited transaction,”
as such term is defined in Section 4975 of the Code or Section 406 of ERISA. To
Energy Steel’s and the Seller’s knowledge, no event has occurred and no
condition exists with respect to any Employee Plan which would give rise to any
liability under the Code or ERISA or other applicable law, including but not
limited to Sections 511, 4971, 4972, 4975, 4976, 4977, 4979, 4980B, 4980D,
4980E, 4980F or 6652 of the Code, or to any fine or civil penalty under
Sections 502, 4069 or 4071 of ERISA. None of the Employee Plans, nor any
fiduciary thereof, is or has been the direct or indirect subject of an audit,
investigation or examination by any Governmental Entity within the last five
(5) years, and to Energy Steel’s and the Seller’s knowledge, there are no facts
which could give rise to any liability in the event of any

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investigation, audit, review or other proceeding. There are no Claims (other
than routine undisputed Claims for benefits) pending or threatened against or
arising out of any of the Employee Plans or the respective assets thereof and to
Energy Steel’s and the Seller’s knowledge, no facts exist which could give rise
to any such Claims which could reasonably be expected to have, individually or
in the aggregate, a material adverse effect on any Employee Plan, or a Material
Adverse Effect.
     (f) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter (or an opinion
letter on which it is entitled to rely) from the Internal Revenue Service that
such Employee Plan is qualified under Section 401(a) of the Code, and such
determination letter or opinion letter considers the Economic Growth & Tax
Relief Reconciliation Act of 2001. Each Employee Plan that is intended to be
qualified under Section 401(a) of the Code has been timely amended to reflect
the provisions of all statutory or regulatory changes requiring amendments for
which the deadline for amendment has passed, and if not entitled to rely upon an
opinion letter has been timely submitted for a determination letter in
accordance with Revenue Procedure 2007-44. To Energy Steel’s and the Seller’s
knowledge, no event has occurred that will or could give rise to the revocation
of any applicable determination letter or the loss of the right to rely on any
applicable opinion letter, or the disqualification or loss of tax-exempt status
of any such Employee Plan or trust under Sections 401(a) or 501(a) of the Code.
     (g) Energy Steel does not maintain and has not at any time maintained, and
does not and could not have any liability with respect to, any Employee Plan
subject to Title IV of ERISA or Section 412 of the Code. No Employee Plan is or
ever has been a “multiemployer plan” within the meaning of Section 3(37) of
ERISA. Energy Steel does not have and could not have any liability with respect
to a “multiemployer plan” as defined under Section 3(37) of ERISA. No Employee
Plan now holds or has heretofore held any stock or other securities issued by
Energy Steel. Energy Steel has not established or contributed to, is not
required to contribute to, and does not have nor has ever had any liability with
respect to any “voluntary employees’ beneficiary association” within the meaning
of Section 501(c)(9) of the Code, any “welfare benefit fund” within the meaning
of Section 419 of the Code, any “qualified asset account” within the meaning of
Section 419A of the Code, or any “multiple employer welfare arrangement” within
the meaning of Section 3(40) of ERISA.
     (h) Each Employee Plan that constitutes a “welfare benefit plan,” within
the meaning of Section 3(1) of ERISA, and for which contributions are claimed by
Energy Steel as deductions under any provision of the Code, is in compliance
with all applicable requirements pertaining to such deduction. Schedule 3.14(h)
discloses whether each welfare plan is (i) unfunded, (ii) with respect to
welfare plans subject to the provisions of the Code, funded through a “welfare
benefit fund,” as such term is defined in Section 419(e) of the code, or other
funding mechanism, or (iii) insured.
     (i) All group health plans of Energy Steel have been operated in compliance
in all material respects with the group health plan continuation coverage
requirements of Sections 601 through 608 of ERISA and Section 4980B of the Code
or applicable state law, Title XXII of the Public Health Service Act, the Health
Insurance Portability and Accountability Act of 1996, the Medicare Part D
requirements of the Medicare Prescription Drug, Improvement, and Modernization
Act of 2003 and the provisions of the Social Security Act, to the extent such
requirements are applicable. Except to the extent required under Section 4980B
of the Code or applicable state law, no Employee Plan or any other arrangement
provides for or continues medical or health or other welfare benefits (through
the purchase of insurance or otherwise) for or to any retired employee, any
former

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employee or any other individual who is not an employee, and there has been no
communication to any employee, retired employee, former employee or other
individual that could reasonably be expected to promise or guarantee any such
benefits.
     (j) Except with respect to statutory post-termination benefits arising
under non U.S. Laws and except as set forth in Schedule 3.14(j), no provision of
any Employee Plan restricts the ability of Graham or Energy Steel to terminate
the future accruals of obligations thereunder after the Closing Date or requires
the increase or acceleration of benefit entitlements, contributions or
compensation in connection with such termination; provided, however, that no
such representation or warranty is made with respect to the ability to cancel
liabilities already accrued at the time of such termination.
     (k) All reports, returns and similar documents with respect to each
Employee Plan required to be filed with any Governmental Entity or distributed
to any participant of any Employee Plan (including each Form 5500 required to be
filed by Energy Steel) have been duly and timely filed or distributed in
accordance with all applicable Laws. There are no unpaid fees, penalties,
interest or assessments due from the Energy Steel or from any other Person that
are or could become a lien on any asset of Energy Steel or could otherwise
adversely affect the business or assets of Energy Steel. Energy Steel has
collected or withheld all amounts that are required to be collected or withheld
by them to discharge their obligations, and all of those amounts have been paid
to the appropriate Governmental Entities or set aside in appropriate accounts
for future payment when due.
     (l) To Energy Steel’s and the Seller’s knowledge, no condition exists as a
result of which Energy Steel would have any liability, whether absolute or
contingent, including any obligations under any Employee Plan, with respect to
any misclassification of a Person performing services for Energy Steel as an
independent contractor rather than as an employee.
     (m) Except as described in Schedule 3.14(m), the consummation of the
transactions contemplated by this Agreement will not entitle any Person to
severance pay, and will not accelerate the time of payment or vesting, or
increase the amount, of compensation due to any Person. Schedule 3.14(m) lists
all severance obligations of Energy Steel owed to any Person. None of the
Employee Plans obligates Energy Steel to pay separation, severance, termination
or similar benefits solely as a result of any transaction contemplated by this
Agreement or solely as a result of a “change in the ownership or effective
control of the corporation, or in the ownership of a substantial portion of the
assets of the corporation” (as defined in Section 280G of the Code).
     (n) Except as described in Section 3.14(n), each “nonqualified deferred
compensation plan” (as defined in Section 409A(d)(1) of the Code) with respect
to which Energy Steel is a “service recipient” (within the meaning of
Section 409A of the Code) has been operated since January 1, 2005, in compliance
with the applicable provisions of Section 409A of the Code and the treasury
regulations and other official guidance issued thereunder (or similar provision
of state law) (collectively, “Section 409A”), and has been since January 1,
2009, in documentary compliance with the applicable provisions of Section 409A;
and Energy Steel has not been required to report any Taxes due as a result of a
failure of an Employee Plan to comply with Section 409A. With respect to each
Employee Plan, Energy Steel does not have any indemnity obligation for any Taxes
or interest imposed or accelerated under Section 409A.

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     (o) Solely for purposes of this Section 3.14, all references to Energy
Steel includes any Person which, together with Energy Steel, is considered an
affiliated organization within the meaning of Sections 414(b), 414(c), 414(m) or
414(o) of the Code or sections 3(5) or 4001(b)(1) of ERISA.
     (p) Except as described in Schedule 3.14(p), Energy Steel does not provide
to any of its non-U.S. employees any termination, severance, pension, healthcare
or other benefits in excess of statutory requirements.
3.15 Employment Matters.
     (a) Except as disclosed in Schedule 3.15(a), (i) to Energy Steel’s and the
Seller’s knowledge, Energy Steel is, and since January 1, 2005 has been, in
compliance in all material respects with all Laws relating to affirmative
action, employment, equal employment opportunity, nondiscrimination,
immigration, wages, overtime, classification of employees, fringe benefits, wage
supplements, hours or work, benefits, collective bargaining, the withholding and
payment of social security and similar Taxes, occupational safety and health,
employment termination, reductions in force or plant closings (collectively,
“Employment Laws”) and with any contract or subcontract with any Governmental
Entity or other Person; (ii) Energy Steel has not experienced any strikes,
grievances or asserted or threatened Claims of unfair labor practice;
(iii) Energy Steel has no knowledge of any organizational effort being made or
threatened by or on behalf of any labor union with respect to any employees of
Energy Steel; (iv) there has not been, and there is not pending or existing or
to Energy Steel’s and the Seller’s knowledge, threatened, any strike, work
stoppage, labor arbitration or proceeding in respect of the grievance of any
employee, any application, complaint or unfair labor practice charge filed by an
employee, union or works council with the National Labor Relations Board or any
comparable Governmental Entity, organizational activity or other labor dispute
against Energy Steel and the knowledge of Energy Steel and the Seller, there is
no basis for any such grievance, charge or complaint; (v) no application for
certification of a collective bargaining agent is pending or to Energy Steel’s
or the Seller’s knowledge, threatened; (vi) there is no lockout of any employees
by Energy Steel; (vii) Energy Steel has withheld from the wages and salaries of
its employees as is required by law and is not liable for any arrears of wages
or any tax or penalty in connection therewith; (viii) there are no Claims
currently pending or to Energy Steel’s and the Seller’s knowledge threatened,
against Energy Steel alleging the violation of any Employment Laws, or any other
asserted or to Energy Steel’s and the Seller’s knowledge threatened Claim
whatsoever, whether based in tort, contract or Law, arising out of or relating
in any way to any Person’s employment (actual or alleged), application for
employment or termination of employment with Energy Steel and to the knowledge
of Energy Steel, there is no basis for any such Claim; (ix) no current or former
employee of Energy Steel is owed by Energy Steel overtime pay (other than
overtime pay for the current payroll period), wages or salary for any period
other than the current payroll period, vacation, holiday or other time off or
pay in lieu thereof (other than time off or pay in lieu thereof earned in
respect to the current year); (x) Energy Steel is not, nor immediately after the
Closing will be, liable for severance pay or any other payment of monies to any
employee of Energy Steel as a result of the execution of this Agreement or
Energy Steel’s performance of its terms, or for any other reason in any way
related to the consummation of the transactions contemplated hereby, including
any change of ownership of Energy Steel; and (xi) no Governmental Entity has
found Energy Steel to be liable for the payment of Taxes, fines, penalties or
other amounts, however designated, for failure to comply with any of Employment
Laws.

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     (b) Schedule 3.15(b) contains a true and complete list, as of the date
hereof, of all employees employed by Energy Steel, including each such
employee’s (i) name, (ii) title, and (iii) current salary and other compensation
arrangement (i.e. commission rate).
     (c) Schedule 3.15(c) contains a true and complete list, as of the date
hereof of all consultants, non-employed technicians and other independent
contractors who are providing services to Energy Steel (the “Independent
Contractors”), including (i) each such Independent Contractor’s name, (ii) each
Independent Contractor’s license number and expiration date therefore, and
(ii) the type of services being provided by each Independent Contractor.
3.16 Material Agreements.
     (a) Schedule 3.16(a) lists the following Contracts to which Energy Steel is
a party which are or contain provisions relating to any of the following
(hereinafter referred to individually as a “Material Agreement” and collectively
as the “Material Agreements”):
     (i) any Contracts which are Leases of personal property to or from any
Person;
     (ii) any Contract (or group of related Contracts) for the purchase or sale
of products, or other personal property, or for the furnishing or receipt of
services, the performance of which will extend over a period of more than one
year, or involve consideration in excess of $10,000 per annum;
     (iii) any Contract concerning a partnership or joint venture;
     (iv) any Contract (or group of related Contracts) under which it has
created, incurred, assumed, or guaranteed any indebtedness for borrowed money,
or any capitalized lease obligation, in excess of $10,000 or under which it has
imposed a Encumbrances on any of its assets, tangible or intangible;
     (v) any Contract with any officer or director of the Energy Steel and/or
its Affiliates, or any entity in which any officer or director of Energy Steel,
the Seller or any trustee or beneficiary of the Seller holds equity or any other
economic interest;
     (vi) any Contract concerning non-competition, non-solicitation or
confidentiality;
     (vii) collective bargaining agreements or other Contracts to or with any
labor unions or other employee representatives, groups of employees, works
councils or the like;
     (viii) employment Contracts or other Contracts to or with individual
current or prospective employees, consultants or agents (other than Contracts
with Energy Steel’s attorneys, accountants or advertising agencies that are
cancelable without material penalty, cost or expense upon advance notice of
ninety [90] days or less);
     (ix) any Contract concerning a bonus, profit sharing, incentive, deferred
compensation, severance, or change in control (exclusive of generally applicable
severance policy) or other material plan or arrangement for the benefit of any
of Energy Steel’s managers, directors, officers or employees;

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     (x) the Leases;
     (xi) the Licenses;
     (xii) Contracts by which Energy Steel indemnifies any Person;
     (xiii) Contracts by which Energy Steel provides warranties related to any
Product or services which involve consideration in excess of $10,000 or will
extend for a period of more than one (1) year;
     (xiv) Contracts providing for the payment of royalties by Energy Steel
based in any manner on the revenue or profits of Energy Steel;
     (xv) Contracts with obligations to supply parts or replacement parts for a
period after termination of the Contract;
     (xvi) Contracts guaranteeing the debt of any third party;
     (xvii) Contracts requiring the exclusive use of third party goods or
services or containing a right of first refusal to a third party in the supply
of goods or services;
     (xviii) Contracts to acquire stock, merge or consolidate, or to create a
joint venture;
     (xix) Contracts to borrow funds, except for trade payables incurred in the
Ordinary Course of Business;
     (xx) Contracts to lend to officers, employees or other third parties,
except for accounts receivable incurred in the Ordinary Course of Business;
     (xxi) Contracts that require Energy Steel to maintain insurance; and
     (xxii) other Contracts, if any: (A) the default of which could reasonably
be expected to have, individually or in the aggregate, a Material Adverse
Effect; or (B) which require consent or waiver in connection with consummation
of the transactions contemplated herein, and the failure to obtain such consent
or waiver could reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
     (b) All of the Material Agreements are listed in the Disclosure Schedules.
Except for the Material Agreements, Energy Steel is not a party to or bound by
any Contract affecting in any material respect the operation of the Business.
Without limiting the generality of the foregoing, Energy Steel is not a party to
any Contract providing for guaranteed minimum payments in excess of $10,000 for
the twelve (12) month period ending after the Closing Date which are not listed
in the Disclosure Schedules or which is not cancelable without material penalty,
cost or expense upon advance notice of ninety (90) days or less.
     (c) Energy Steel has made available to Graham true and complete copies of
each Material Agreement that is in written form (or, in the case of Material
Agreements that are in standard form, true and complete samples of such standard
forms), and true and complete written summaries of

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each Material Agreement that is oral, in each case as amended to date. To Energy
Steel’s and the Seller’s knowledge, each of the Material Agreements constitutes
the valid and legally binding obligation of Energy Steel and the other parties
thereto, and is enforceable in accordance with its terms, except as the
enforceability thereof may be limited by (i) bankruptcy, insolvency or other
Laws relating to or affecting creditors’ rights generally, and (ii) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law). Each of the Material Agreements (including
any amendments, supplemental or special terms and other modifications)
constitutes the entire agreement of the respective parties thereto relating to
the subject matter thereof. Except as could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect, and except as set
forth in Schedule 3.16(c), to the knowledge of Energy Steel and Seller no act or
omission has occurred or failed to occur which, with the giving of notice, the
lapse of time or both would after notice and lapse of applicable cure period
constitute a default under any of the Material Agreements or permit termination,
modification or acceleration thereunder, and each of the Material Agreements is
in full force and effect without default on the part of Energy Steel and, to the
knowledge of Energy Steel and Seller, any of the other parties thereto. Without
limiting the generality of the foregoing, no written or oral notice of
termination or default has been given or received by Energy Steel with respect
to any Material Agreement.
     (d) Except for the Required Approvals with respect to Material Agreements
set forth in Schedule 3.4, no Contract to which Energy Steel is a party requires
consent or waiver in connection with consummation of the transactions
contemplated herein.
     (e) With respect to each Lease: (i) there are no disputes, oral agreements
or forbearance programs in effect; (ii) Energy Steel has not assigned,
transferred, conveyed, mortgaged, deeded in trust or encumbered any interest in
the leasehold represented by any of the Leases; and (iii) except as could not
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, Energy Steel has obtained all authorizations of Governmental
Entities (including licenses and permits) required to be obtained in connection
with their operation of the Business at the premises leased under any of the
Leases, and have operated and maintained such premises in all material respects
in accordance with applicable Laws.
     (f) Schedule 3.16(f) sets forth in detail Energy Steel’s standard terms and
conditions of sale or lease, purchase orders, contracts or agreements for the
sale of Products or for the performance of any services by Energy Steel or any
Independent Contractor.
     (g) Except as set forth in Schedule 3.16(g), no Material Agreement was
awarded to Energy Steel pursuant to any program (e.g. small business, small
disadvantaged business, woman owned business, etc.) or as a result of Energy
Steel’s “woman owned business” status or “small business” status or other
preferred status under any applicable Law. To Energy Steel’s or the Seller’s
knowledge, no Material Agreement with respect to the provision of any products
or services by Energy Steel is entirely dependent upon Energy Steel being a
small business or woman owned business, whether certified or otherwise.
3.17 Product and Service Warranty and Liability.
     (a) Except as provided on Schedule 3.17(a), to Energy Steel and Seller’s
knowledge, all of the Products and services provided, distributed, manufactured,
sold, licensed or delivered by

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Energy Steel have conformed in all material respects with all applicable
contractual commitments, all applicable Laws, and all express and implied
warranties with respect thereto and Energy Steel has no notice and is not
otherwise aware of any material liability (whether asserted or unasserted,
absolute or contingent, accrued or unaccrued, liquidated or unliquidated, and
due or to become due) for replacement thereof or other damages in connection
therewith. As of the Closing Date, the Business will have no liability for
replacement of any Products (or other damages in connection therewith) or for
the performance of any services except contingent contractual warranty
obligations. Energy Steel has made available to Graham true, correct and
complete copies of the standard terms and conditions of sale and for service
performed by the Business, which contain all (express as opposed to implied)
applicable guaranty, warranty and indemnity provisions and, except as provided
on Schedule 3.17(a), no Products provided or services performed by Energy Steel
are subject to contractual guaranty, warranty or indemnity obligations beyond
the standard terms and conditions.
     (b) Except as disclosed on Schedule 3.17(b), Energy Steel does not have any
continuing Liability for replacement or repair or other damages in connection
with any product manufactured, sold, leased or delivered.
3.18 Litigation.
     Except as set forth on Schedule 3.18, there is no Claim pending or to
Energy Steel’s or the Seller’s knowledge, threatened against or affecting Energy
Steel (or any of their respective officers or directors in connection with the
Business), which if adversely determined could reasonably be expected to have,
individually or in the aggregate, an adverse effect on the consummation of the
transactions contemplated herein, or a Material Adverse Effect, nor is there any
judgment, injunction, decree, rule or order of any Governmental Entity
outstanding against Energy Steel which could reasonably be expected to have,
individually or in the aggregate, any such effect.
3.19 Tax Matters.
     Except as set forth in Schedule 3.19:
     (a) Energy Steel (or affiliated, consolidated, unitary or combined group of
which Energy Steel has been a member) has timely filed all federal, state, local
and foreign Tax returns that are required to be filed by it on or before the
date hereof. All such Tax returns were correct and complete in all respects and
were prepared in compliance with all applicable Laws. All Taxes due and owing by
Energy Steel (whether or not shown on such returns) have been paid. The
Financial Statements reflect an adequate accrual in accordance with GAAP, based
on the facts and circumstances existing as of the respective dates thereof, for
all Taxes payable or accrued by Energy Steel through the respective dates
thereof; the unpaid Taxes of Energy Steel do not exceed that reserve as adjusted
for the passage of time through the Closing Date in accordance with past custom
and practice of Energy Steel in filing its tax returns. Energy Steel is not
currently the beneficiary of any extension of time within which to file any Tax
return. No Claim has ever been made by an authority in a jurisdiction where
Energy Steel does not file Tax Returns that Energy Steel is or may be subject to
taxation by that jurisdiction.

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     (b) as of the date hereof, there are no deficiencies for any Taxes
proposed, asserted or assessed against Energy Steel, and no requests for waivers
of the time to assess any Taxes are pending;
     (c) Energy Steel has complied with all Laws relating to the payment and
withholding of Taxes and has withheld and paid all Taxes required to have been
withheld and paid in connection with amounts paid or owing to any employee,
independent contractor, creditor, stockholder or other Person;
     (d) No federal, state, local, or non-U.S. tax audits or administrative or
judicial Tax proceedings are pending or being conducted with respect to Energy
Steel. Energy Steel has not received from any federal, state, local, or non-U.S.
taxing authority (including jurisdictions where Energy Steel has not filed Tax
returns) any (a) notice indicating an intent to open an audit or other review,
(ii) request for information related to Tax matters, or (iii) notice of
deficiency or proposed adjustment for any amount of Tax proposed, asserted, or
assessed by any taxing authority against Energy Steel. To the extent that the
Tax returns of Energy Steel have been examined by and settled with the IRS or
other relevant taxing authority (or the applicable statue of limitations has
expired), all assessments for Taxes due with respect to such completed and
settled examinations or any concluded litigation have been fully paid;
     (e) as of the date hereof, there are no Encumbrances for Taxes (other than
for current Taxes not yet due and payable) on the assets of Energy Steel;
     (f) Energy Steel is not bound by any Contract with any Person with respect
to Taxes;
     (g) Energy Steel has not constituted either a “distributing corporation” or
a “controlled corporation” (within the meaning of section 355(a)(1)(A) of the
Code) in a distribution of stock qualifying for tax-free treatment under section
355 of the Code (i) in the two (2) years prior to the date of this Agreement or
(ii) in a distribution which could otherwise constitute part of a “plan” or
“series of related transactions” (within the meaning of section 355(e) of the
Code) in conjunction with the closing the transactions contemplated herein;
     (h) Energy Steel has never been a member of an affiliated, unitary or
combined group of corporations (within the meaning of section 1504 of the Code
and any analogous provision of Law) and has no liability for the Taxes of any
Person under Treasury Regulation 1.1502-6, as a transferee or successor, by
contract or otherwise;
     (i) Energy Steel has not waived any statute of limitations in respect of
any Taxes or agreed to any extension of time with respect to a Tax assessment or
deficiency;
     (j) Energy Steel has not agreed to make, or is required to make, any
adjustment under section 481(a) of the Code or any similar provision of Law by
reason of a change in accounting methods or otherwise;
     (k) Energy Steel is not a party to any closing agreement described in
section 7121 of the Code (or any corresponding provision of state, local or
foreign income tax Law) executed on or prior to the Closing Date;

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     (l) no asserted or threatened Claim has been made by a taxing authority in
a jurisdiction where Energy Steel does not file Tax returns that Energy Steel is
or may be subject to taxation in that jurisdiction;
     (m) Energy Steel is not obligated under any Contract that provides for the
payment of any amount which would not be deductible by reason of section 280G of
the Code, nor will Energy Steel make any “excess golden parachute payment” under
sections 280G or 4999 of the Code;
     (n) Energy Steel has delivered or made available to Graham true and
complete copies of (i) all income Tax returns of Energy Steel (or the portion of
any affiliated, unitary or combined Tax return relating to Energy Steel) for the
three taxable years preceding the year of this Agreement, and (ii) any audit
report, statement of deficiency or similar report issued within the last three
(3) years (or otherwise with respect to any audit or proceeding in progress)
relating to Taxes of Energy Steel (or any member of an affiliated, consolidated,
unitary or combined group of which Energy Steel was a member);
     (o) Energy Steel will not be required to include any item of income for any
taxable period (or portion thereof) ending after the Closing Date as a result of
any installment sale or open transaction disposition made on or prior to the
Closing Date or any prepaid amount received on or prior to the Closing Date;
     (p) Energy Steel is not and has never been a party to any reportable
transaction as defined in Section 6707A(c)(1);
     (q) Energy Steel is not a party to any tax-sharing or similar agreements;
and
     (r) Energy Steel (and any predecessor to Energy Steel) has been a validly
electing S corporation within the meaning of Code §1361 and §1362 at all times
since January 1, 2009 and Energy Steel will be an S corporation up to and
including the day before the Closing Date. In addition, Seller was and remains
the sole shareholder of Energy Steel since January 1, 2009. Except for the stock
sale contemplated by this Agreement, no action has been taken by Energy Steel or
the Seller that may result in the revocation of any such election.
3.20 Events Subsequent to October 31, 2010.
     Since October 31, 2010, except as disclosed in Schedule 3.20, Energy Steel
has conducted the Business only in the Ordinary Course of Business and no
Material Adverse Effect has occurred with respect to Energy Steel or the
Business. Without limiting the generality of the foregoing, except as disclosed
in Schedule 3.20, since October 31, 2010, Energy Steel has not:
     (i) sold, leased, transferred, or assigned any of its assets, tangible or
intangible, other than for a fair consideration in the Ordinary Course of
Business;
     (ii) entered into any Contract outside the Ordinary Course of Business;
     (iii) accelerated, terminated, modified, or cancelled any Contract to which
Energy Steel is a party or by which any of them is bound;

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     (iv) imposed any Security Interest upon any of its assets, tangible or
intangible;
     (v) made any Capital Expenditure (or series of related Capital
Expenditures) more than $10,000 in the aggregate;
     (vi) made any capital investment in, any loan to, or any acquisition of the
securities or assets of, any other Person (or series of related capital
investments, loans, and acquisitions) more than $10,000 in the aggregate;
     (vii) issued any note, bond, or other debt security or created, incurred,
assumed, or guaranteed any indebtedness for borrowed money or capitalized lease
obligation either involving more than $5,000 singly or $10,000 in the aggregate;
     (viii) delayed or postponed the payment of accounts payable or any other
Liabilities;
     (ix) cancelled, compromised, waived, or released any right or claim (or
series of related rights and claims) more than $10,000 in the aggregate;
     (x) granted any license or sublicense of any rights under or with respect
to any Intellectual Property;
     (xi) made or authorized any change in the charter or bylaws of Energy
Steel;
     (xii) issued, sold, or otherwise disposed of any of its capital stock, or
granted any options, warrants, or other rights to purchase or obtain (including
upon conversion, exchange, or exercise) any of its capital stock;
     (xiii) declared, set aside, or paid any dividend or made any distribution
with respect to its capital stock (whether in cash or in kind) or redeemed,
purchased, or otherwise acquired any of its capital stock;
     (xiv) experienced any damage, destruction, or loss (whether or not covered
by insurance) to its property more than $10,000 in the aggregate;
     (xv) made any loan to, or entered into any other transaction with, the
Seller, any Affiliate of the Seller or Energy Steel, or any of the directors,
officers, or employees of Energy Steel or any of its Affiliates other than
compensation in the Ordinary Course of Business;
     (xvi) entered into any employment contract or collective bargaining
agreement, written or oral, or modified the terms of any existing such contract
or agreement;
     (xvii) granted any increase in the base compensation of any of its
directors, officers, and employees in excess of three percent (3%) per annum;
     (xviii) adopted, amended, modified, or terminated (nor has any entity
affiliated with Energy Steel within the meaning of Section 3.14(o) adopted,
amended, modified or

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terminated) any Employee Plan or any other bonus, profit sharing, incentive,
severance, or other plan, contract, or commitment for the benefit of any of its
directors, officers, and employees;
     (xix) made any other change in employment terms for any of its directors,
officers, and employees outside the Ordinary Course of Business;
     (xx) made any change in its Tax or accounting principles, practices or
methodologies (including, but not limited to, Tax or accounting elections);
     (xxi) disclosed any material Confidential Information (as defined below) to
any third party without appropriate legal protection;
     (xxii) obtained new revolving loans or caused letters of credit to be
issued, other than for the purchase of inventory or other working capital needs
in the Ordinary Course of Business; and
     (xxiii) legally committed itself to any of the foregoing.
3.21 Insurance.
     Schedule 3.21 sets forth the following information with respect to each
insurance policy (including policies providing property, casualty, liability,
and workers’ compensation coverage and bond and surety arrangements) to which
Energy Steel is a party, a named insured, or otherwise the beneficiary of
coverage or under which Energy Steel has a pending claim or could make a claim:
     (i) the name, address, and telephone number of the agent;
     (ii) the name of the insurer, the name of the policyholder, and the name of
each covered insured;
     (iii) the policy number and the period of coverage; and
     (iv) a description of any retroactive premium adjustments or other
loss-sharing arrangements.
     With respect to each such insurance policy in effect on the date hereof:
(A) the policy is legal, valid, binding, enforceable, and in full force and
effect; (B) nothing exists within the policy or has occurred that would preclude
or interfere with the policy continuing after the consummation of the
transactions contemplated hereby to be legal, valid, binding, enforceable, and
in full force and effect on identical terms as exists prior to the consummation
of the transactions contemplated hereby (based upon the manner in which the
Business is currently operated); (C) neither Energy Steel nor any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and to the knowledge of Energy Steel or
Seller no event has occurred which, with notice or the lapse of time, would
constitute such a breach or default, or permit termination, modification, or
acceleration, under the policy; and (D) no party to the policy has repudiated
any provision thereof. Schedule 3.21 describes any self-insurance arrangements
affecting Energy Steel.

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3.22 Notes Receivable and Accounts Receivable.
     All notes receivable and accounts receivable of Energy Steel are reflected
properly on their books and records, are valid receivables, and are current and
collectible. None of the notes receivables or accounts receivable of Energy
Steel are subject to known pending or threatened Claims by customers for setoffs
or counterclaim. To the knowledge of Energy Steel and Seller, no facts exist
which would entitle any Governmental Entity to exercise any rights of setoff or
counterclaim against any notes receivable or accounts receivable of Energy
Steel.
3.23 Customers; Suppliers; Accounts Payable.
     (i) Energy Steel has made available to Graham a listing backlog of all
pending customer orders or commitments placed as of the Effective Date with
Energy Steel.
     (ii) Neither Energy Steel nor the Seller has any knowledge or reason for
believing any single sales representative, distributor, licensee, licensor,
customer or any group of affiliated sales representatives, distributor,
licensee, licensor or customers who represented five percent (5%) or more of the
consolidated revenues of Energy Steel during the twelve (12) months ended
November 30, 2010, will or to Energy Steel’s or Seller’s knowledge, plans to
terminate or cancel its relationship with Energy Steel. To Energy Steel’s and
the Seller’s knowledge, there does not exist any condition, state of facts or
circumstances that could reasonably be expected to cause any of such sales
representatives, distributors, licensees, licensors or customers to terminate
their relationships or for any prospective customers to refuse to consider a
prospective relationship with Energy Steel. To the knowledge of Energy Steel and
Seller, none of the business or prospective business of Energy Steel is in any
manner dependent upon the making or receipt of any improper payments, discounts
or other inducements to any officers, directors, employees, representatives or
agents of any customer.
     (iii) All accepted and unfulfilled orders for the sale of Products entered
into by Energy Steel and all outstanding contracts or commitments for the
purchase of inventory, supplies and services by or from Energy Steel were made
in bona fide transactions in the Ordinary Course of Business. There are no
material claims against Energy Steel to return products as a result of alleged
over-shipments, defective products or otherwise, or of products in the hands of
customers, retailers, distributors or sales representative under an
understanding that such products would be returnable.
     (iv) To Energy Steel’s and the Seller’s knowledge Energy Steel does not
have any Liability arising out of or related to (i) any injury to individuals or
property as a result of the ownership, possession, or use of any product
manufactured, sold, leased, or delivered by Energy Steel, or (ii) returned
products which were manufactured, sold, leased or delivered by Energy Steel.
3.24 Guaranties.
     Except as set forth on Schedule 3.24, Energy Steel is not a guarantor or
otherwise is liable for any Liability or obligation (including indebtedness) of
any other Person.

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3.25 Brokers or Finders.
     Except for UHY Advisors MI, Inc. (“UHY”), no agent, broker, investment
banker, financial advisor or other Person is or will be entitled to any broker’s
or finder’s fee or any other commission or similar fee from the Seller or Energy
Steel in connection with any of the transactions contemplated by this Agreement.
3.26 Foreign Corrupt Practices Act.
     Neither Energy Steel nor any of its respective officers, directors, nor, to
Energy Steel’s or the Seller’s knowledge, any employees or agents (or
stockholders), distributors, representatives or other persons acting on the
express, implied or apparent authority of Energy Steel, have paid, given or
received or have offered or promised to pay, give or receive, any bribe or other
unlawful payment of money or other thing of value, any unlawful discount, or any
other unlawful inducement, to or from any person or Governmental Authority in
the United States or elsewhere in connection with or in furtherance of the
business of Energy Steel (including, without limitation, any unlawful offer,
payment or promise to pay money or other thing of value (i) to any foreign
official, political party (or official thereof) or candidate for political
office for the purposes of influencing any act, decision or omission in order to
assist Energy Steel in obtaining business for or with, or directing business to,
any person, or (ii) to any person, while knowing that all or a portion of such
money or other thing of value will be offered, given or promised unlawfully to
any such official or party for such purposes). The business of Energy Steel is
not in any manner dependent upon the making or receipt of such unlawful
payments, discounts or other inducements. Energy Steel has not otherwise taken
any action that could cause Energy Steel to be in violation of the Foreign
Corrupt Practices Act or any applicable Laws of similar effect.
3.27 Backlog.
     As of the date specified on Schedule 3.27, Energy Steel has a backlog of
“orders” (meaning a customer has issued a purchase order in respect of the
orders listed, and not necessarily that the order is irrevocable or otherwise
not subject to cancellation in certain circumstances dictated by applicable
terms and conditions) for the sale of its products and services as set forth in
Schedule 3.27. As of the date specified on Schedule 3.27, Energy Steel has not
received notice from a respective customer that any of such orders have been
cancelled or materially reduced, and each of such orders on backlog is at a
price and on terms (including margin) generally consistent with Energy Steel’s
past practices and the Ordinary Course of Business.
3.28 Full Disclosure.
     All documents and other papers delivered by or on behalf of the Seller or
Energy Steel in connection with the transactions contemplated by this Agreement
are accurate and complete, as of the date and for the periods covered or therein
specified, in all material respects, are authentic and to the knowledge of
Energy Steel and Seller copies of originals. To the knowledge of Energy Steel
and Seller, no representation or warranty of the Seller or Energy Steel
contained in this Agreement contains any untrue statement of a fact or omits to
state a fact necessary in order to make such respective representations and
warranties the statements in this Agreement, in light of the circumstances under
which they were made, not misleading.

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3.29 Certain Acts or Omissions.
     Seller has not knowingly, intentionally, or in a grossly negligent manner
committed any act or action or omitted to take any act or action in breach of
her duties to Energy Steel the occurrence of which has or could reasonably be
expected to give rise to a Claim by or against Energy Steel whether based in
contract, tort, breach of fiduciary duty or otherwise.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF GRAHAM AND BUYER
     Graham and Buyer represent and warrant to Energy Steel and Seller as
follows:
4.1 Organization, Standing and Power.
     Graham is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware. Buyer is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Delaware. Each of Graham and Buyer has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to do
business in the State of Michigan and each jurisdiction in which the nature of
its business or the ownership or leasing of its properties makes such
qualification necessary, other than in such jurisdictions where the failure so
to qualify could not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
4.2 Authority; Binding Effect.
     Each of Graham and Buyer has all requisite corporate power and authority to
enter into this Agreement and to consummate the transactions contemplated
hereby. The execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of each of Graham and Buyer. This Agreement has
been duly executed and delivered by each of Graham and Buyer and, assuming the
due execution and delivery hereof by Energy Steel, constitutes the valid and
binding obligation of each of Graham and Buyer, enforceable against each of them
in accordance with its terms, except as the enforceability hereof may be limited
by (a) bankruptcy, insolvency or other Laws relating to or affecting creditors’
rights generally and (b) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law). No vote
of any creditor or security holder of Graham is required in connection with the
execution and delivery of this Agreement by Graham or Buyer, or the consummation
of the transactions contemplated by this Agreement by either. Graham has adopted
this Agreement as the sole stockholder of Buyer and is jointly and severally
liable for all obligations and liabilities of itself and Buyer as a direct party
to this Agreement.
4.3 No Conflict.
     The execution and delivery of this Agreement by each of Graham and Buyer
does not, and the consummation of the transactions contemplated hereby and the
fulfillment of the obligations and

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undertakings hereunder will not, result in any Violation of any provision of:
(a) the certificate of incorporation or bylaws of Graham or of Buyer; (b) any
material Contract applicable to Graham, Buyer or any of their respective assets;
or (c) any Law applicable to Graham, Buyer or any of their respective assets;
except, in the case of Contracts and Laws, for Violations which could not
reasonably be expected to have, individually or in the aggregate, any adverse
effect on the validity or enforceability of this Agreement or a Material Adverse
Effect. No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity is required by or with
respect to Graham or Buyer in connection with the execution and delivery of this
Agreement by Graham or Buyer, or for the consummation by each of Graham and
Buyer of the transactions contemplated hereby, except for: (i) filings and
notices required under Competition Laws; (ii) the filing of such documents with,
and the obtaining of such orders from, state authorities, including state
securities authorities, that are required in connection with the transactions
contemplated by this Agreement; and (iii) such consents, approvals, orders,
authorizations or registrations the failure to obtain which could not reasonably
be expected, individually or in the aggregate, to have any adverse effect on the
validity or enforceability of this Agreement or a Material Adverse Effect.
4.4 Litigation.
     Except as disclosed in Graham’s filings with the SEC, there is no Claim
pending or to Graham’s knowledge threatened against or affecting Graham, which
if adversely determined could reasonably be expected, individually or in the
aggregate, to have an adverse effect on the consummation of the transactions
contemplated herein or a Material Adverse Effect, nor is there any judgment,
injunction, decree, rule or order of any Governmental Entity outstanding against
Graham which could reasonably be expected, individually or in the aggregate, to
have any such effect.
4.5 Brokers or Finders.
     Except for Harvey & Company, LLC, no agent, broker, investment banker,
financial advisor or other Person is or will be entitled to any broker’s or
finder’s fee or any other commission or similar fee from Graham in connection
with any of the transactions contemplated by this Agreement.
4.6 No Breach.
     Neither Buyer nor Graham has knowledge of a breach by Seller or Energy
Steel of any of their representations or warranties made in this Agreement which
are of a nature which entitle Buyer or Graham a right to indemnification under
this Agreement.
4.7 Purchase for Investment.
     Buyer is acquiring the Energy Steel Shares for its own account for
investment purposes and not with a view to the distribution of the Energy Steel
Shares. Buyer has such knowledge and experience in financial and business
matters so as to be capable of evaluating the merits and risks of its investment
in the Energy Steel Shares and has had an adequate opportunity to conduct an
investigation of Energy Steel. Buyer is an “accredited investor” as defined in
Rule 501 under the Securities Act of 1933, as amended. Buyer will not, directly
or indirectly, dispose of the Energy Steel Shares except in compliance with
applicable federal and state securities laws.

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4.8 Financing.
     Graham and/or Buyer have sufficient funds available to satisfy, among other
things, the obligation to pay: (a) the Purchase Price; and (b) all expenses
incurred by Buyer in connection with the transactions contemplated hereby.
ARTICLE 5.
COVENANTS OF EACH PARTY
5.1 Additional Agreements; Commercially Reasonable Efforts.
     Subject to the terms and conditions of this Agreement, each of the parties
agrees to use commercially reasonable efforts to take or cause to be taken all
action, and to do or cause to be done all things necessary, proper or advisable
under applicable Laws, to consummate and make effective the transactions
contemplated by this Agreement, including cooperating fully with the other
parties, providing information, making all necessary filings and giving all
necessary notices in connection with, among other things, Competition Laws, the
Securities Act, the Exchange Act and state securities Laws. Each of the parties
will take or cause to be taken all reasonable actions necessary to obtain (and
will cooperate with each other in obtaining) any consent, authorization, order
or approval of, or any exemption by, any Governmental Entity or other public or
private third party, required to be obtained or made by any of them in order to
consummate the transactions contemplated herein or the taking of any action
contemplated by this Agreement as agreed to be so necessary by the parties,
including without limitation the Required Approvals. In case at any time after
the Closing Date any further action is necessary or desirable to carry out the
purposes of this Agreement, each party will reasonably cooperate to take all
such necessary action.
5.2 Expenses.
     Graham and Seller will each bear their respective legal, accounting and
other expenses in connection with the transactions contemplated hereby, whether
or not the transactions contemplated herein are consummated, except as provided
in Article 7, or as otherwise necessary to enforce this Agreement and the
transactions contemplated hereby.
5.3 Other Actions.
     (a) Energy Steel, the Seller and Graham will refrain from knowingly taking
any action that would or is reasonably likely to cause any of its
representations and warranties set forth in this Agreement to be untrue as of
the date made or any of the conditions to the transactions contemplated herein
set forth in Article 6 not to be satisfied. Prior to the Closing Date, each of
the parties will use commercially reasonable efforts to: (a) obtain the
satisfaction of its conditions to Closing as set forth in Article 6 as soon as
practicable; (b) facilitate contacts, negotiations and communications with any
Persons reasonably necessary to ensure a smooth transition of control of the
Business; and (c) assist one another in obtaining any consents required from any
Person to effect the consummation of the transactions contemplated hereby.

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     (b) Prior to the Closing Date, neither Energy Steel nor the Seller shall
revoke Energy Steel’s election to be taxed as an S corporation within the
meaning of Code §1361 and §1362, nor shall Energy Steel or Seller take or allow
any action (other than the sale of Energy Steel’s stock pursuant to this
Agreement) that would result in the termination of Energy Steel’s status as a
validly electing S corporation within the meaning of Code §1361 and §1362.
5.4 Confidentiality.
     Graham and Buyer (treated as one party for this purpose) and Energy Steel
and the Seller (each, a “Receiving Party”) will, and will use commercially
reasonable efforts to cause its Affiliates, employees, representatives and
agents to, hold in strict confidence all Confidential Information of the other
party (each, the “Disclosing Party”), unless compelled to disclose the same by
judicial or administrative process or, in the opinion of counsel, by other Laws;
provided, however, that in either such case the Receiving Party will provide the
Disclosing Party with prompt prior notice thereof so that the Disclosing Party
may seek a protective order or other appropriate remedy and/or waive compliance
with the provisions of this Section. In the event that such protective order or
other remedy is not obtained, or the Disclosing Party waives compliance with the
provisions hereof, the Receiving Party will furnish only that portion of
Confidential Information which, in the written advice of the Receiving Party’s
counsel, is required, and the Receiving Party will exercise commercially
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded such of the disclosed Confidential Information as the Disclosing
Party so designates. The Receiving Party will not otherwise disclose
Confidential Information to any Person, except with the consent of the
Disclosing Party. In the event that the transactions contemplated herein are not
consummated or this Agreement is terminated, the Receiving Party will promptly
return all Confidential Information to the Disclosing Party. For the purposes
hereof, “Confidential Information” means all information of any kind concerning
the Disclosing Party or any of its Affiliates, obtained directly or indirectly
from the Disclosing Party or any of its Affiliates, employees, representatives
or agents in connection with the transactions contemplated hereby, except
information (a) ascertainable or obtained from public or published sources,
(b) received from a third party not known by the Receiving Party to be under an
obligation to keep such information confidential, (c) which is or becomes known
to the public (other than through a breach of this Agreement), or (d) which was
in the Receiving Party’s possession prior to disclosure thereof to the Receiving
Party and which was not subject to any obligation to keep such information
confidential. The Receiving Party recognizes that any breach of the provisions
of this Section would result in irreparable harm to the Disclosing Party and its
Affiliates and, therefore, that the Disclosing Party will be entitled to an
injunction to prohibit any such breach or anticipated breach, without the
necessity of posting a bond, cash or otherwise, in addition to all of its other
legal and equitable remedies.
5.5 Publicity.
     Neither Energy Steel nor the Seller shall issue any press release or make
any public announcement relating to the subject matter of this Agreement without
the prior written approval of Graham which consent shall not be unreasonably
withheld or delayed after the consummation of the Closing. In addition, Energy
Steel and the Seller covenant and agree to cooperate with Graham in connection
with the preparation and making of any public disclosure by Graham which Graham

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elects to or is required to make by applicable Law or any listing or trading
requirement concerning Graham’s publicly-traded securities.
5.6 Cooperation in Preparation of Audited Financial Statements and SEC Reports.
     Energy Steel and the Seller agree to cooperate with Graham, at Graham’s
expense, in the preparation of all filings with the SEC in connection with this
Agreement and the consummation of the transactions contemplated herein.
5.7 Restrictions on Certain Activities.
     (a) The Seller shall not during the longer period of: (i) one (1) year
after the time in which she may be employed by Graham or any Subsidiary of
Graham; or (ii) for a period of five (5) years after the Closing Date (the
“Restriction Period”), anywhere in the United States, Canada, Germany, Korea,
Slovenia, Brazil and China and if employed by Graham or an Affiliate in any
other country where Graham or any Subsidiary conducts business, directly or
indirectly, as a partner, joint venturer, investor, lender, manager, licensor,
manufacturer, retailer or otherwise, engage in any business that engages in any
activity which is competitive with the Business or the businesses operated by
Graham, or own stock or otherwise have an ownership interest in any person,
corporation, firm, partnership or other entity engaged in any such business
except owning five percent (5%) or less of any publically-traded company engaged
in a competitive business.
     (b) The Seller will not, during the Restriction Period hire or offer to
hire (as an employee, independent contractor or otherwise) any person who on the
date hereof is a director, officer or employee of Graham, including Buyer or
Energy Steel, except Danna Unrue.
     (c) The Seller agrees that a violation of Section 5.7(a) or 5.7(b) will
cause irreparable injury to Graham and Buyer, and Graham and Buyer will be
entitled, in addition to any other rights and remedies it may have at law or in
equity, to apply for an injunction enjoining and restraining the Seller, as the
case may be, from doing or continuing to do any such act and any other
violations or threatened violations of this Section 5.7 hereof without the
necessity of posting a bond or undertaking.
     (d) The Seller acknowledges and agrees that the covenants set forth in this
Section 5.7 are reasonable and valid in geographical and temporal scope and in
all other respects. If any of such covenants are found to be invalid or
unenforceable by a final determination of a court of competent jurisdiction
(i) the remaining terms and provisions hereof shall be unimpaired and (ii) the
invalid or unenforceable term or provision shall be deemed replaced by a term or
provision that is valid and enforceable and that comes closest to expressing the
intention of the invalid or unenforceable term or provision. In the event that,
notwithstanding the first sentence of this Section 5.7(d), any of the provisions
of this Section 5.7 relating to the geographic or temporal scope of the
covenants contained therein or the nature of the business restricted thereby
shall be declared by a court of competent jurisdiction to exceed the maximum
restrictiveness such court deems enforceable, such provision shall be deemed to
be replaced herein by the maximum restriction deemed enforceable by such court.
5.8 Tax Matters

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     (a) Final Tax Returns. All Tax returns for Energy Steel that are to be
filed after Closing and include a period, or part of a period that began before
Closing (each a “Final Tax Return”), will be prepared by UHY and filed by
Seller, at Seller’s sole cost and expense, with opportunity given to Buyer to
first review and provide comments on such Final Tax Return. All Final Tax
Returns shall be prepared by UHY in a manner consistent with prior Tax returns
of Energy Steel, unless otherwise required by Law. At least twenty (20) days
prior to the due date for filing a Final Tax Return, Seller shall deliver a copy
of each such Final Tax Return to Buyer for review and comment. Seller will
accept all reasonable comments of Buyer made to the Final Tax Returns. To the
extent permitted by applicable law, the Seller shall include any income, gain,
loss, deduction or other tax items for such periods on the Seller’s Tax returns
in a manner consistent with the Schedule K-1s furnished by Energy Steel to the
Seller for such periods. The Buyer shall be entitled to retain all refunds
provided, however, that the Seller may retain all refunds with respect to
Pre-Closing Tax Periods.
     (b) Tax Return Preparation. Graham, Buyer, the Seller and Energy Steel
shall cooperate fully, as and to the extent reasonably requested by the other
parties, in connection with the filing of any Tax returns, and any audit,
litigation or other proceeding with respect to Taxes. Graham, Buyer, the Seller
and Energy Steel shall, as soon as practicable, provide the other with written
notice of any audit, litigation or other proceeding with respect to Taxes. Such
cooperation shall include the retention and (upon the other party’s request) the
provision of records and information which are reasonably relevant to any such
Tax return, or any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder. Graham, Buyer,
the Seller and Energy Steel agree (i) to retain or cause to be retained all
books and records with respect to Tax matters pertinent to Energy Steel relating
to any Tax period beginning before the Closing Date until the expiration of the
applicable statute of limitations (and, to the extent notified by Graham or the
Seller, any extensions thereof) of the respective Tax periods, and to abide by
all record retention agreements entered into with any Tax authority, (ii) to
provide to the other party, upon request, all books and records with respect to
Tax matters pertinent to Energy Steel relating to any taxable period beginning
before the Closing Date until the expiration of the statute of limitations (and,
to the extent notified by Graham or the Seller, any extensions thereof) of the
respective periods, and (iii) to give the other parties reasonable written
notice prior to transferring, destroying or discarding any such books and
records and, if any of the other parties so requests, the other parties shall
allow such requesting party to take possession of such books and records.
5.9 Certain Taxes and Fees.
     All transfer, documentary, sales, use, stamp, registration and other such
Taxes, and all conveyance fees, recording charges and other fees and charges
(including any penalties and interest) incurred in connection with the
consummation of the transactions contemplated by this Agreement, other than real
estate Taxes, shall be paid by the Seller when due, and the Seller will, file
all necessary Tax returns and other documentation with respect to all such
Taxes, fees and charges. The expense of such filings shall be paid by the
Seller.
5.10 Termination of Existing Working Capital Line of Credit.

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     The parties agree that effective as of the Closing Date any existing line
of credit or other commercial loan facility of Energy Steel will be terminated.
Buyer shall be obligated to establish new credit facilities as it determines
appropriate on the Closing Date.
5.11 Termination of Energy Steel 401(k) Plan.
     Energy Steel shall have delivered resolutions of its board of directors
terminating the Energy Steel 401(k) Plan and and provide Graham and Buyer with
written evidence of such termination in a form satisfactory to Graham, provided
that such termination shall not be required to become effective until
immediately prior to the Closing Date.
5.12 Section 338(h)(10) Election.
     At the sole discretion of Graham and the Buyer upon written notice
delivered to Seller no later than February 1, 2011, the Seller agrees to make a
timely election under Code Section 338(h)(10) (“338(h)(10) Election”), and
Graham and Buyer shall indemnify and hold harmless Seller from and against any
and all Tax liabilities imposed on Seller (or imposed on Energy Steel and passed
through to Seller) as a result of having made any such 338(h)(10) Election to
the extent that such Tax liabilities exceed the Tax liabilities that the Seller
would incur in the absence of such election (the “Buyer Tax Payments”). In the
event that the Seller incurs any Tax obligations as a result of the 338(h)(10)
Election which are in excess of amounts due had the transactions set forth
herein been taxed as a stock sale, then the amount that Graham and the Buyer
shall be required to reimburse Seller under this Section (1) shall be grossed up
to assure that Seller does not incur any Tax cost as a result of the 338(h)(10)
Election and the reimbursement payments under this Section and (2) shall take
into account the highest marginal income tax rate applicable to payments of this
type at the applicable times as they apply to the Seller. Any Buyer Tax Payments
shall be treated by the parties as additional Purchase Price and shall be paid
to Seller not less than five (5) days prior to the time Seller is required to
pay such amounts with a Federal Tax return or estimate. Any amounts payable
hereunder to the Seller shall be paid in cash unless otherwise agreed to in
writing by the Seller. Graham and Buyer will prepare and timely file with the
appropriate taxing authorities any forms used to make the 338(h)(10) Election.
Buyer and Graham shall pay, as incurred, any and all fees (including fees of
UHY), costs and expenses associated with the 338(h)(10) election. In the event
that the 338(h)(10) election is denied by the IRS, Seller agrees that is shall
refund the amount of any such Buyer Tax Payments paid by Buyer and Graham to
Seller. Such refund amount from Seller shall be paid in cash unless otherwise
agreed in writing or, at Graham’s and Buyer’s election such amount may be setoff
against the Escrow Amount or any payments due to Seller under the Earn Out
Agreement.
ARTICLE 6.
CONDITIONS PRECEDENT TO PARTIES’ OBLIGATIONS
6.1 Conditions to Each Party’s Obligation.
     The respective obligations of Energy Steel, the Seller, Graham and Buyer to
effect the transactions contemplated herein are subject to the satisfaction
prior to the Closing Date of each of the following conditions:

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     (a) Governmental Approvals. All licenses, franchises, certificates,
permits, accreditations, authorizations, consents, orders or approvals of, or
registrations, declarations or filings with, or expirations of waiting periods
imposed by, any Governmental Entity the failure to obtain which would materially
delay, prevent or hinder the consummation of the transactions contemplated
herein, will have occurred, been filed or been obtained, including any
authorizations, filings or notices required under Competition Laws.
     (b) No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order or Law issued by any court of
competent jurisdiction or other Governmental Entity, or other legal restraint or
prohibition, preventing the consummation of the transactions contemplated herein
shall have been issued and pending at the time of Closing.
6.2 Conditions to Obligations of Graham and Buyer.
     The obligations of Graham and Buyer to effect the transactions contemplated
herein are subject to the satisfaction of the following additional conditions,
unless waived by Graham:
     (a) Representations and Warranties. The representations and warranties of
Energy Steel and the Seller set forth in this Agreement will be true and correct
in each case as of the date of this Agreement and as of the Closing Date, with
the same force and effect as if made on and as of the Closing Date, in each case
except for representations and warranties that speak only as of a specific date,
which will have been true and correct as of such date; and Graham will have
received a certificate to such effect signed on behalf of Energy Steel by its
Certifying Officer.
     (b) Performance of Obligations of Energy Steel and Seller. Energy Steel and
the Seller will have performed in all material respects all obligations required
to be performed by them under this Agreement at or prior to the Closing Date,
and Graham will have received a certificate to such effect signed on behalf of
Energy Steel by its Certifying Officers and the Seller.
     (c) No Material Adverse Effect. Between the date hereof and the Closing
Date, there will not have occurred or been discovered one or more events or
conditions which have, or which could be expected to have, individually or in
the aggregate, a Material Adverse Effect, and Graham will have received a
certificate to such effect signed on behalf of Energy Steel by its Certifying
Officers and the Seller.
     (d) No Amendments to Resolutions. Neither the board of directors of Energy
Steel nor the Seller will have amended, modified, rescinded or repealed the
resolutions heretofore adopted by the board of directors which approve this
Agreement, the consummation of the transactions contemplated herein and the
performance of all of Energy Steel’s and the Seller’s obligations hereunder, and
will not have adopted any other resolutions in connection with this Agreement
and the transactions contemplated hereby inconsistent with such resolutions, and
Graham will have received a certificate to such effect signed on behalf of
Energy Steel by its Certifying Officers and the Seller.
     (e) Articles of Incorporation. With respect to Energy Steel, Graham will
have received a copy, certified as of a date reasonably proximate to the Closing
Date by the Secretary of State (or other appropriate Governmental Entity) of its
jurisdiction of organization, of its complete articles of incorporation (or
similar organizational document), including all amendments to date.

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     (f) Consents Under Agreements. Energy Steel will have obtained the consent
or approval of each Person whose consent or approval is required in order to
permit the continuation or succession by Buyer pursuant to the transactions
contemplated herein to any obligation, right or interest of Energy Steel under
any Intellectual Property or Contract which are deemed Required Approvals by the
parties as evidenced by inclusion on Schedule 3.4.
     (g) New Lease Agreement. Buyer and ESSC Investments, L.L.C. shall have
executed and delivered a new lease agreement for the property located at 3123
John Conley Drive, Lapeer, Michigan in substantially the same form as attached
hereto as Exhibit F.
     (h) Escrow Agreement. Graham, Buyer, Seller and Escrow Agent shall have
executed and delivered the Escrow Agreement in substantially the same form as
attached hereto as Exhibit B.
     (i) Pay-Off Letters; Satisfaction of Energy Steel Debt; Release of Energy
Steel Guarantees. Graham and Buyer shall have received letters, in form and
substance reasonably satisfactory to Graham and Buyer, from the lenders of the
Energy Steel Debt and from Mitchell for the Mitchell Note (the “Pay-Off
Letters”) (A) stating the aggregate amount of all the outstanding debt
(including a list of all outstanding letters of credit of Energy Steel, as of
the Closing Date), and (B) agreeing that if such amount so identified is paid
and such letters of credit are terminated at Closing or any time stated
thereafter, such prepayment and terminations shall not be subject to any
prepayment premiums or penalties or any other fees or expenses associated with
payment thereof, and that on such payment and letter of credit terminations all
Encumbrances and liens in assets of Energy Steel or the Energy Steel Shares held
by such lenders or Mitchell shall be terminated effective as of the Closing. The
Seller shall provide satisfactory evidence that the Energy Steel Debt and the
Mitchell Note have been paid in their entirety in accordance with the Pay-Off
Letters. In addition, Energy Steel and the Seller shall deliver releases of all
guarantees of any indebtedness guaranteed by Energy Steel, including without
limitation any indebtedness of ESSC Investments, L.L.C.
     (j) Employees; Seller Employment Agreement. Graham and Buyer will be
satisfied that all Energy Steel employees, who they deem necessary to operate
the Business and to whom Graham or Buyer have offered employment, including
without limitation the Seller (on terms and conditions substantially similar to
her employment terms and work arrangements other than salary, benefit programs
and bonus as of the Closing Date) prior to the anticipated Closing Date, have
agreed to be employed by Graham, Buyer or one of their Affiliates. In addition,
Graham and the Seller shall have entered into an employment agreement on terms
and conditions mutually satisfactory to Graham and the Seller.
     (k) Assignment of Excluded Assets. Energy Steel and Seller shall execute
and deliver an Assignment and Assumption of Excluded Assets in form and
substance satisfactory to Graham and Buyer.
     (l) General Releases. The Seller and each of the officers and directors of
Energy Steel shall have executed and delivered general releases to Energy Steel,
releasing any claim to severance or termination payments and to all other claims
and causes of action which any of them may now or ever have against Energy Steel
other than for accrued compensation, each of which shall be in form and
substance reasonably satisfactory to Graham and Buyer.

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     (m) Resignations. Graham and the Buyer shall have received the
resignations, effective as of the Closing Date, of each director and officer of
Energy Steel.
     (n) Opinion of Counsel to Energy Steel and Seller. Graham and the Buyer
shall have received from Howard and Howard Attorneys PLLC, counsel to Energy
Steel and counsel to the Seller an opinion as of the Closing Date substantially
in the form set forth on Exhibit G, of which shall be addressed to Graham and
the Buyer.
     (o) Mitchell Release. Mitchell shall have executed and delivered to Energy
Steel a General Release in the form of Exhibit H attached hereto and Energy
Steel shall have delivered a copy thereof delivered to Graham and Buyer. This
Release shall contain a waiver and release as to any consideration that is or
may be due as a result of this Agreement and the transactions contemplated
hereby other than any payments due pursuant to the Purchase Agreement between
the Seller and Mitchell dated August 28, 2003, as amended by an amendment dated
September 9, 2003. In addition, the Release will contain restrictive covenants
from Mitchell in favor of Graham, Buyer and their Affiliates.
     (p) Termination of Shareholders Agreements, Purchase Agreement and
Collateral Pledge Agreement. Energy Steel, Seller and Mitchell shall have
executed and delivered a release and termination with respect to that certain
Shareholders Agreement dated as of January 2004, the Purchase Agreement between
Seller and Mitchell dated August 28, 2003, as amended, and the Collateral Pledge
Agreement between Seller and Mitchell dated August 28, 2003, as amended, which
release and termination shall be in form and substance satisfactory to Graham
and Buyer.
     (q) UHY Limited Release and Waiver. UHY shall have executed and delivered
to Energy Steel a waiver and limited release as to any consideration that is or
may be due as a result of this Agreement and the transactions contemplated
hereby other than the amount paid to them at Closing Date, which waiver and
limited release shall be in form and substance satisfactory to Graham and Buyer.
     (r) Direction to Apply Proceeds. Graham and Buyer shall have received from
the Seller instructions and authorization (in form and substance satisfactory to
Graham and Buyer) directing Buyer to pay UHY all amounts due to such parties as
a result of this Agreement and the transactions contemplated hereby.
     (s) Other Closing Deliveries. Graham will have received the following:
     (i) reasonable evidence of satisfaction of the covenants contained in
Article 6;
     (ii) duly executed resignations of all directors and officers of Energy
Steel (in those capacities and not as employees); and
     (iii) certificates of good standing as of a date reasonably proximate to
the Closing Date with respect to Energy Steel from the respective Secretaries of
State (or other appropriate Governmental Entities) of its jurisdiction of
organization and any other jurisdictions in which it conducts business.

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6.3 Conditions to Obligations of Energy Steel and the Seller.
     The obligation of Energy Steel and the Seller to effect the transactions
contemplated herein are subject to the satisfaction of the following additional
conditions, unless waived by Energy Steel:
     (a) Representations and Warranties. The representations and warranties of
Graham set forth in this Agreement will be true and correct in each case as of
the date of this Agreement and as of the Closing Date, with the same force and
effect as if made on and as of the Closing Date, in each case except for
representations and warranties that speak only as of a specific date, which will
have been true and correct as of such date; and Energy Steel will have received
a certificate to such effect signed on behalf of Graham by its Certifying
Officer.
     (b) Performance of Obligations of Graham and Buyer. Graham and Buyer will
have performed in all material respects all obligations required to be performed
by them under this Agreement at or prior to the Closing Date and a covenant to
duly perform all post-closing obligations, and Energy Steel will have received a
certificate to such effect signed on behalf of Graham by its Certifying Officer.
     (c) Seller’s Employment Agreement. Seller and Graham shall have entered
into an employment agreement on terms and conditions mutually satisfactory to
Graham and the Seller.
     (d) New Lease Agreement. Buyer and ESSC Investments, L.L.C. shall have
executed and delivered a new lease agreement for the property located at 3123
John Conley Drive, Lapeer, Michigan in substantially the same form as attached
hereto as Exhibit F.
     (e) Escrow Agreement. Graham, Buyer, Seller and Escrow Agent shall execute
and deliver the Escrow Agreement in substantially the same form as Exhibit B.
     (f) Purchase Price. Graham and Buyer shall have paid the Purchase Price in
accordance with the terms of Section 2.2 above, including delivery of the
fully-executed and enforceable Earn Out Agreement.
ARTICLE 7.
INDEMNIFICATION
7.1 Survival.
     The representations and warranties in this Agreement (other than the
representations and warranties contained in Sections 3.1 (Organization, Standing
and Power), 3.2 (Capital Structure), 3.3 (Authority; Binding Effect), 3.8
(Assets; Title; Absence of Liens and Encumbrances), 3.10 (Intellectual
Property), 3.13 (Environmental Matters), 3.14 (Employee Plans), 3.15 (Employment
Matters), 3.19 (Tax Matters), 3.26 (Foreign Corrupt Practices Act), 4.1
(Organization, Standing and Power), 4.2 (Authority; Binding Effect), and 4.7 (No
Breach) collectively, the “Surviving Representations and Warranties,” which
shall survive the Closing for the applicable statute of limitations) shall
survive the Closing for a period of twenty-one (21) months from the Closing, at
which time they shall terminate; provided that a claim based on the Surviving
Representations and

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Warranties, any claim based on fraud or intentional misrepresentation by the
Seller or Energy Steel in connection with this Agreement or any other agreements
delivered in connection herewith and any claim based on fraud or intentional
misrepresentation by Graham or Buyer in connection with this Agreement shall
survive the Closing indefinitely, subject to any applicable statute of
limitations.
7.2 Indemnification by Energy Steel and the Seller.
     From and after the Closing Date, for the applicable survival period set
forth in Section 7.1, Energy Steel and the Seller shall jointly and severally
indemnify, save and hold harmless Graham and Buyer, and their respective
directors, officers and stockholders and Representatives, or any of them
(collectively, “Graham Indemnitees”) from and against any and all Losses
asserted against, resulting to, imposed on, sustained, incurred or suffered by
any of them based upon, arising out of, related to or otherwise in respect of
any of the following (including any action, suit or proceeding based upon,
arising out of, related to or otherwise in respect of any thereof):
     (a) the inaccuracy in or breach of any representation or warranty of Energy
Steel or the Seller contained in Article 3 or any certificate delivered by
Energy Steel or the Seller to Graham and Buyer in connection with this
Agreement;
     (b) any failure to perform or observe or any breach of any covenant or
agreement made by Energy Steel or the Seller or any of their respective
Affiliates in this Agreement or any other agreement delivered by Energy Steel or
the Seller;
     (c) any undisclosed Liability of Energy Steel or the Seller;
     (d) any Liabilities related, in any way, to (i) the employment of any
employees of Energy Steel on or prior to the Closing Date which are not assumed
by Buyer or Graham, or (ii) employees terminated by Energy Steel or any
Affiliate on or prior to the Closing Date;
     (e) any Liabilities related, in any way, to “deferred compensation
packages” of any Energy Steel employees, including without limitation the
deferred compensation packages with Allan L. Valentine and Robert J. Paton;
     (f) any Pre-Closing Taxes, including, without limitation, (i) any Taxes
incurred during any period prior to the Closing Date when Energy Steel was
taxable as a ‘C’ corporation, and (ii) any Taxes which may be incurred by Energy
Steel, Graham or Buyer for any period prior to the Closing Date as a result of,
relating to or otherwise in respect of the accounting change by Energy Steel to
‘percentage of completion’ (as disclosed on Schedule 3.19) whether or not such
accounting change is approved or denied by the IRS;
     (g) any Liabilities related in any way to the matters described in
Schedules 1.1, 2.2(a), 2.5, 3.2(item 1), (item 2) and (item 3), 3.6, 3.8, 3.13,
3.14(a)(item 10) and (item 11), 3.14(c), 3.14(n), 3.15(a), 3.19(item 1), (item
2) and (item 3), 3.20(item 7) and 3.24;
     (h) any Liabilities related in any way to the use of or operation of the
Business at the facility located at 2715 Paldan Drive, Auburn Hills, Michigan or
any other property or facility utilized by Energy Steel prior to the Closing
Date; and

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     (i) any Liabilities related in any way to Energy Steel’s failure to timely
qualify to do business in any jurisdiction in which Energy Steel operates its
Business prior to the Closing Date.
7.3 Indemnification by Graham.
     From and after the Closing Date, for the applicable survival period set
forth in Section 7.1, Graham shall indemnify, save and hold harmless the Seller
and her heirs (collectively, “Seller Indemnitees”) from and against any and all
Losses asserted against, resulting to, imposed on, sustained, incurred or
suffered by any them based upon, arising out of, related to or otherwise in
respect of any of the following (including any action, suit or proceeding based
upon, arising out of, related to or otherwise in respect of any thereof):
     (a) the inaccuracy in or breach of any representation or warranty by Graham
or Buyer contained in Article 4 or any certificate delivered by Graham in
connection with this Agreement;
     (b) any failure to perform or observe or any breach of any covenant or
agreement made by Graham or Buyer or any of their respective Affiliates in this
Agreement or any other agreement delivered by Graham or Buyer in connection with
this Agreement; and
     (c) any and all liabilities arising out of Graham or Buyer’s ownership or
operation of Energy Steel or the Business after the Closing Date.
7.4 Limitations.
     (a) The Seller shall be required to indemnify and hold harmless pursuant to
Sections 7.2(a) and (b) with respect to Losses incurred by Graham Indemnitees
only to the extent the aggregate Losses exceed One Hundred Fifty Thousand
Dollars ($150,000) (the “Basket”), whereupon the Seller shall be liable for all
such Losses in excess of the Basket; provided, that the maximum aggregate
liability of the Seller to all Graham Indemnitees taken together for all Losses
pursuant to Section 7.2 shall not exceed an amount equal to Five Million Dollars
($5,000,000) (the “Indemnification Cap”). Notwithstanding the foregoing, the
Basket and the Indemnification Cap shall not apply to (a) any claims that relate
to a breach or inaccuracy of the Surviving Representations and Warranties,
(b) any claims resulting from, arising out of, relating to or in the nature of,
or caused by intentional misrepresentations, fraud or willful misconduct by the
Seller or Energy Steel, (c) any claims resulting from, arising out of relating
to or in the nature of, or caused by any matter which required approval by
Energy Steel’s board of directors and/or shareholders and which was not
authorized by resolutions specifically detailing the actions approved, but
rather was approved through an omnibus and general resolution, or (d) any claims
under Sections 7.2(c), (d), (e), (f), (g), (h) and (i).
     (b) Graham shall be required to indemnify and hold harmless pursuant to
Section 7.3(a) and (b) with respect to Losses incurred by Seller Indemnitees
only to the extent the aggregate Losses exceed the Basket, whereupon Graham
shall be liable for all Losses in excess of the Basket; provided that the
maximum aggregate liability of Graham to all Seller Indemnitees taken together
for all Losses pursuant to Section 7.3 shall not exceed the Indemnification Cap.
Notwithstanding the foregoing, the Basket and aforementioned liability limit
shall not apply to any claims resulting from, arising out of, relating to or in
the nature of, or caused by intentional misrepresentations, fraud or

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willful misconduct by Graham and shall not in any manner limit Graham’s and
Buyer’s obligations pursuant to Section 4.5 (Brokers or Finders), Section 4.7
(No Breach), and Section 2.2 (Payment of Purchase Price or Adjustments), the
Earn Out Agreement or the Seller’s Employment Agreement.
7.5 Notice of Claims.
     (a) Except as provided in Section 7.6, if any Graham Indemnitee or the
Seller Indemnitee (an “Indemnified Party”) believes that it has suffered or
incurred any Losses for which it is entitled to indemnification under this
Article 7, such Indemnified Party shall so notify the party from whom
indemnification is being claimed (the “Indemnifying Party”) with reasonable
promptness and reasonable particularity in light of the circumstances then
existing. If any claim is instituted by or against a third party with respect to
which any Indemnified Party intends to claim indemnification under this
Article 7, such Indemnified Party shall promptly notify the Indemnifying Party
of such claim. The notice provided by the Indemnified Party to the Indemnifying
Party shall describe the claim (the “Asserted Liability”) in reasonable detail
and shall indicate the amount (or an estimate) of the Losses that have been or
may be suffered by the Indemnified Party. The failure of an Indemnified Party to
give any notice required by this Section 7.5 shall not affect any of the
Indemnified Party’s rights under this Article 7 or otherwise except and to the
extent that such failure is prejudicial to the rights or obligations of the
Indemnifying Party. Notwithstanding the foregoing, if prior to the stated
expiration of any representation and warranty there shall have been given notice
of an Asserted Liability by an Indemnified Party, such Indemnified Party shall
continue to have the right to such indemnification with respect to such noticed
claim notwithstanding such expiration.
     (b) To the extent a claim for Losses is made by any Graham Indemitees for
indemnification under Section 7.2 and the Seller refuses to provide such
indemnification in reliance on a breach by Buyer or Graham of Section 4.7 (No
Breach), then the burden of proof shall be on the Seller to demonstrate that
such representation and warranty was breached by Buyer or Graham.
7.6 Opportunity to Defend Third Party Claims.
     (a) Any Indemnifying Party will have the right to defend the Indemnified
Party against any third party claim for which it is entitled to indemnification
from such Indemnifying Party under this Article 7 with counsel reasonably
satisfactory to the Indemnified Party so long as (i) any of the Indemnifying
Parties notifies the Indemnified Party in writing within twenty (20) days after
the Indemnified Party has given notice of the third party claim that all of the
Indemnifying Parties will indemnify the Indemnified Party from and against the
entirety of Losses the Indemnified Party may suffer resulting from, arising out
of, relating to, in the nature of or caused by the third party claim, (ii) the
Indemnifying Parties provide the Indemnified Party with evidence reasonably
acceptable to the Indemnified Party that the Indemnifying Parties will have the
financial resources to defend against the third party claim and fulfill their
indemnification obligations hereunder, (iii) the third party claim involves only
money damages and does not seek an injunction or other equitable relief,
(iv) settlement of, or an adverse judgment with respect to, the third party
claim is not, in the good faith judgment of the Indemnified Party, likely to
establish a precedential custom or practice materially adverse to the continuing
business interests of the Indemnified Party, and (v) the Indemnifying Parties
diligently conduct the defense of the third party claim.

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     (b) Notwithstanding the foregoing, without the prior consent of the
Indemnified Party, the Indemnifying Parties shall not settle or compromise any
third party claim or consent to the entry of a judgment in connection therewith
that: (i) does not provide for the claimant to give an unconditional release to
the Indemnified Party in respect of the Asserted Liability; (ii) involves relief
other than monetary damages; (iii) places restrictions or conditions on the
operation of the business of the Indemnified Party or any of its Affiliates; or
(iv) involves any finding or admission of criminal liability or of any Laws.
     (c) So long as the Indemnifying Party has undertaken to conduct the defense
of the third party claim in accordance with Section 7.6(a), (i) the Indemnified
Party may retain separate co-counsel at its sole cost and expense and
participate in the defense of the third party claim, (ii) the Indemnified Party
will not consent to the entry of any judgment or enter into any settlement with
respect to the third party claim without the prior written consent of the
Indemnifying Party, and (iii) the Indemnifying Party shall keep the Indemnified
Party reasonably informed as to the status of the claim for which it is
providing a defense. Notwithstanding the foregoing or Section 7.6(a), in the
event that (w) any of the conditions in Section 7.6(a)(i) is or becomes
unsatisfied or; (x) the Indemnifying Party shall not have employed counsel
reasonably satisfactory to the Indemnified Party to defend such action within
thirty (30) days after the Indemnifying Party notifies the Indemnified Party of
its intent to defend against the Asserted Liability; (y) the Indemnified Party
shall have reasonably concluded, based upon written advice of counsel, that it
has defenses available to it that are different from or additional to those
available to the Indemnifying Party (in which case the Indemnifying Party shall
not have the right to direct the defense of such action on behalf of the
Indemnified Party with respect to such different defenses); or
(z) representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding, then the Indemnified Party may defend against the
third party claim in any manner it may deem appropriate and, the Indemnifying
Parties will be responsible for the Indemnified Party’s costs of defending
against the third party claim (including reasonable attorneys’ fees and
expenses), and the Indemnifying Parties will remain responsible for the entirety
of the Losses the Indemnified Party may suffer resulting from, arising out of or
caused by the third party claim.
7.7 Recoupment and Set-Off.
     (a) With respect to any indemnification to which a Graham Indemnified Party
is entitled under this Agreement as a result of any Losses it may suffer, such
Graham Indemnified Party may offset such Losses from any amounts due under the
Escrow Agreement, Earn Out Agreement or the Graham Indemnified Parties may
recoup such unpaid Losses from the Seller directly. Any indemnification payment
or set-off against the Escrow Amount or Earn Out Agreement made pursuant to this
Section shall be treated, to the extent permitted or required by Laws, by all
parties as an adjustment to the Purchase Price.
     (b) With respect to any indemnification to which Seller is entitled under
this Agreement as a result of any Losses it may suffer, Seller may offset such
Losses from any amounts due under any agreement between Seller and Graham (or
Buyer) or a Seller Indemnified Party may recoup such unpaid Losses from Graham
and/or Buyer directly.

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7.8 Mitigation.
     No Indemnified Party shall be entitled to recover more than the full amount
of any Loss incurred by such Indemnified Party under the provisions of this
Agreement in respect of any such Loss. Without limiting the generality of the
foregoing, the amount of any Losses subject to indemnification under
Sections 7.2 and 7.3 shall be reduced by the amounts actually recovered by the
Indemnified Party incurring such Loss under applicable insurance policies with
respect to claims related to such Losses.
7.9 Exclusive Remedy.
     Except as otherwise expressly provided for in this Agreement following the
Closing, the indemnification provided by this Article 7 shall be the exclusive
remedy for Graham, Buyer or Seller, as the case may be, with respect to this
Agreement and the transactions contemplated by this Agreement; provided,
however, that nothing herein will limit in any way any such Indemnified Party’s
(A) remedies in respect of fraud or willful or intentional breach of any
representation, warranty, covenant or agreement herein, or (B) rights hereunder
to injunctive or other equitable relief to enforce its rights under this
Agreement, the Earn Out Agreement, the Escrow Agreement, the Seller Employment
Agreement, the Lease or in connection with the transactions contemplated
thereby.
ARTICLE 8.
TERMINATION
8.1 Termination.
     This Agreement may be terminated at any time prior to the Closing:
     (a) by mutual written consent of the Seller and Graham;
     (b) by Graham, upon notice to the Seller, if (without any breach by Graham
of any of its obligations hereunder) compliance with any condition set forth in
Sections 6.1 or 6.2 becomes impossible, and such failure of compliance is not
waived by Graham;
     (c) by Energy Steel or Seller, upon notice to Graham, if (without any
breach by Energy Steel or Seller of any of its obligations hereunder) compliance
with any condition set forth in Sections 6.1 or 6.3 becomes impossible, and such
failure of compliance is not waived by Energy Steel or Seller;
     (d) by Graham or by Energy Steel, upon notice to the other, at any time
after December 31, 2010 if Closing has not occurred by that date (except that
the right to terminate under this Section 8.1(d) will not be available to any
party whose failure to perform its obligations hereunder has been the cause of
the failure of Closing to occur by such date);
     (e) by Graham, upon notice to the Seller in the event the Seller or Energy
Steel breach any representation, warranty, or covenant contained in this
Agreement in any respect, Graham has

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notified the Seller of the breach, and the breach has continued without cure for
a period of thirty (30) days after the notice of breach; or
     (f) by Seller, upon notice to Graham in the event Graham or Buyer breach
any representation, warranty, or covenant contained in this Agreement in any
respect, Seller has notified Graham of the breach, and the breach has continued
without cure for a period of thirty (30) days after the notice of breach.
8.2 Effect of Termination.
     In the event of termination of this Agreement by any party, this Agreement
will immediately become void and of no effect, and there will be no liability or
obligation on the part of Graham, Buyer, Energy Steel and the Seller or any of
their respective officers or directors, as applicable, to any other party
hereto, except in the case of willful material breach of this Agreement.
ARTICLE 9.
GENERAL PROVISIONS
9.1 Amendment; Waiver.
     This Agreement may not be amended except by an instrument in writing signed
by each of the parties. No waiver of compliance with any provision or condition
hereof, and no consent provided for herein, will be effective unless evidenced
by an instrument in writing duly executed by the party sought to be charged
therewith. No failure on the part of any party to exercise, and no delay in
exercising, any of its rights hereunder will operate as a waiver thereof, nor
will any single or partial exercise by either party of any right preclude any
other or future exercise thereof or the exercise of any other right.
9.2 Notices.
     Each notice and other communication given hereunder will be in writing and
will be deemed given when delivered personally, sent by telecopier (receipt of
which is confirmed), or mailed, freight prepaid, by internationally recognized
overnight courier (with receipt confirmed) to the party for which it is intended
at the following address (or at such other address for a party as is specified
by like notice):
     (a) if to Seller and Energy Steel, to:
c/o Lisa D. Rice
2647 Invitational Drive
Oakland, Michigan 48363
Fax: (248) 645-1568
     with a copy (which will not constitute notice) to:

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Howard & Howard Attorneys PLLC
450 West Fourth Street
Royal Oak, Michigan 48067
Attention: Joseph J. DeVito
Fax: (248) 645-1568
     (b) if to Graham or Buyer, to:
c/o Graham Corporation
20 Florence Avenue
Batavia, New York 14020
Attention: James R. Lines, President and Chief Executive Officer
Fax: (585) 343-1097
     with a copy (which will not constitute notice) to:
Harter, Secrest & Emery LLP
1600 Bausch & Lomb Place
Rochester, New York 14604-2711
Attention: Daniel Kinel
Fax: (585) 232-2152
9.3 Disclosure Schedules and Other Instruments.
     The Disclosure Schedules, each certificate provided hereunder and each
written disclosure required hereby is incorporated by reference into this
Agreement and will be considered a part hereof as if set forth herein in full;
provided, however, that information set forth in the Disclosure Schedules or in
any certification or written disclosure constitutes a representation and
warranty of the party providing the same, and not the mutual agreement of the
parties as to the facts therein stated. The Disclosure Schedules may not be
amended or updated after the date of its delivery, except by the written
agreement of Graham which shall not be unreasonably withheld or delayed.
9.4 Inferences.
     Inasmuch as this Agreement is the result of negotiations between
sophisticated parties of equal bargaining power represented by counsel, no
inference in favor of or against any party will be drawn from the fact that any
portion of this Agreement has been drafted by or on behalf of such party.
9.5 Governing Law; Jurisdiction and Venue.
     This Agreement will be governed by and construed in accordance with the
Laws of the State of New York without regard to its principles of conflicts of
laws. The parties agree that the sole and exclusive forum for any Claim related
to this Agreement, the interpretation or construction hereof and the
transactions contemplated hereby will be the Supreme Court of and for the County
of Monroe, State of New York. Each party unconditionally and irrevocably agrees
not to bring any Claim in any other forum and not to plead or otherwise attempt
to defeat the trial of such a matter in

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such court whether by asserting that such court is an inconvenient forum, lacks
jurisdiction (personal or other) or otherwise. Each party hereby waives the
right to a trial by jury.
9.6 Assignment.
     Neither this Agreement nor any of the rights, interests or obligations
hereunder may be assigned by any of the parties (whether by operation of Law or
otherwise) without the prior written consent of the other parties, except that
Buyer may assign, in its sole discretion, any or all of its rights, interests
and obligations hereunder to any direct wholly-owned Subsidiary of Graham,
provided such subsidiary assumes all of Buyer’s obligations jointly and
severally and Buyer shall remain liable to Seller hereunder.
9.7 Benefit.
     Subject to express provisions herein to the contrary, this Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective legal representatives, successors and permitted assigns. Nothing
contained herein shall (i) be treated as an amendment to any particular employee
benefit plan of Graham, Buyer, Energy Steel or any Affiliate of any of them,
(ii) obligate Graham, Buyer or any of their Affiliates to (A) maintain any
particular benefit plan or arrangement or (B) retain the employment of any
particular employee, (iii) prevent Graham, Buyer or any of their Affiliates from
amending or terminating any benefit plan or arrangement, or (iv) give any third
party the right to enforce any of the provisions of this Agreement.
9.8 Entire Agreement.
     This Agreement (including the documents and instruments referred to in this
Agreement) constitutes the entire agreement of the parties and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof and is not intended to confer upon any
other Person any rights or remedies hereunder.
9.9 Headings.
     The heading references herein and the tables and indexes hereto are for
convenience purposes only, do not constitute a part of this Agreement and will
not be deemed to limit or affect any of the provisions hereof.
9.10 Counterparts.
     This Agreement, and any document or instrument required or permitted
hereunder, may be executed in counterparts, each of which will be deemed an
original and all of which together will constitute but one and the same
instrument.
9.11 Independent Counsel.
     The parties covenant and agree that they have carefully read this
Agreement, know its contents, and freely and voluntarily agree to all of its
terms and conditions. Each party acknowledges that it has had the opportunity to
engage independent legal counsel of its choice throughout all the negotiations
that preceded the execution of this Agreement, and each party

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acknowledges that it was given the opportunity to seek the consent and advice of
independent legal counsel prior to the execution of this Agreement and
consummation of the transactions contemplated herein. Each party shall bear its
own legal fees incurred as a result of the preparation, review and negotiation
of this Agreement, except that the Seller shall bear responsibility for all
Energy Steel Transaction Expenses.
9.12 Cooperation Following the Closing.
     Following the Closing, each party hereto shall deliver to the other parties
hereto such further information and documents and shall execute and deliver to
the other parties hereto such further instruments and agreements as any other
party hereto shall reasonably request to consummate or confirm the transactions
provided for in this Agreement, to accomplish the purpose of this Agreement or
to assure to any other party hereto the benefits of this Agreement.
[signature page follows]

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IN WITNESS WHEREOF, each of Graham, Buyer, Energy Steel and the Seller have
caused this Agreement to be duly executed and delivered as of the date first
above written.

            GRAHAM CORPORATION
      By:   /s/ James R. Lines        Name:   James R. Lines        Title:  
President and Chief Executive Officer        ES ACQUISITION CORP.
      By:   /s/ Jeffrey F. Glajch        Name:   Jeffrey F. Glajch       
Title:   Chief Financial Officer        ENERGY STEEL & SUPPLY CO.
      By:   /s/ Lisa D. Rice        Name:   Lisa D. Price        Title:  
President           /s/ Lisa D. Rice         LISA D. RICE        Individually
and as sole Trustee of the Lisa D. Rice Revocable Trust dated June 5, 2003    

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Exhibits and Schedules to Stock Purchase Agreement

     
Exhibit A
  Earn Out Agreement
Exhibit B
  Escrow Agreement
Exhibit C
  Estimated Target Working Capital &
Unpaid Transaction Expenses
Exhibit D
  GAAP Departure and IRS Change in Accounting Methods
Exhibit E
  Working Capital Formula Schedule
Schedule 1.1
  Energy Steel Debt
Schedule 2.2(a)
  Estimated Unpaid Transaction Expenses
Schedule 2.5
  Excluded Assets and Claims
Schedule 3.2
  Capital Structure
Schedule 3.2(d)
  Capital Structure
Schedule 3.4
  Required Approvals
Schedule 3.5(a)
  Financial Statements
Schedule 3.6
  Material Liabilities
Schedule 3.7(a)
  Permits
Schedule 3.8
  Encumbrances
Schedule 3.9(a), (b), (c) and (h)
  Real Property
Schedule 3.10(a)(i), (ii), (iii) and (iv)
  Intellectual Property
Schedule 3.10(b), (d), (e) and (f)
  Intellectual Property
Schedule 3.11(b), (c) and (d)
  Tangible Assets
Schedule 3.12(b) and (e)
  Inventory
Schedule 3.13
  Environmental
Schedule 3.14(a), (b), (c), (h), (j), (m), (n) and (p)
  Employee Plans
Schedule 3.15(b) and (c)
  Employment Matters
Schedule 3.16(a), (c), (f) and (g)
  Material Agreements
Schedule 3.17(a) and (b)
  Product and Service Warranty and Liability
Schedule 3.18
  Litigation
Schedule 3.19
  Tax Matters
Schedule 3.20
  Subsequent Events
Schedule 3.21
  Insurance
Schedule 3.24
  Guaranties
Schedule 3.27
  Backlog

     Pursuant to Regulation S-K Item 601(b)(2), the above schedules and exhibits
have been omitted and will be furnished supplementally to the Securities and
Exchange Commission upon request

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