Exhibit 10.1

EXECUTION VERSION

INVESTMENT AGREEMENT

dated as of May 4, 2015

by and between

GrafTech International Ltd.

and

BCP IV GrafTech Holdings LP

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TABLE OF CONTENTS

 

          Page   ARTICLE I    PURCHASE; CLOSING   

1.1

  

Purchase

     1   

1.2

  

Closing

     2   

1.3

  

Closing Conditions

     2    ARTICLE II    REPRESENTATIONS AND WARRANTIES   

2.1

  

Representations and Warranties of the Company

     5   

2.2

  

Representations and Warranties of the Purchaser

     15    ARTICLE III    COVENANTS   

3.1

  

Filings; Other Actions

     17   

3.2

  

Reasonable Best Efforts to Close

     18   

3.3

  

Stockholder Approval; Proxy Statement

     19   

3.4

  

Authorized Common Stock

     19   

3.5

  

Series A Certificate

     20   

3.6

  

Series B Certificate

     20   

3.7

  

Certain Adjustments

     20   

3.8

  

Confidentiality

     20   

3.9

  

NYSE Listing of Shares

     20   

3.10

  

State Securities Laws

     21   

3.11

  

Negative Covenants

     21   

3.12

  

Change of Control

     21    ARTICLE IV    ADDITIONAL AGREEMENTS   

4.1

  

Legend

     22   

4.2

  

Tax Matters

     23   

 

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TABLE OF CONTENTS

(continued)

 

          Page   ARTICLE V    INDEMNITY   

5.1

  

Indemnification by the Company

     23   

5.2

  

Indemnification by the Purchaser

     24   

5.3

  

Indemnification Procedure

     24   

5.4

  

Tax Matters

     25   

5.5

  

Survival

     26   

5.6

  

Limitation on Damages

     26    ARTICLE VI    MISCELLANEOUS   

6.1

  

Expenses

     26   

6.2

  

Amendment; Waiver

     26   

6.3

  

Counterparts; Electronic Transmission

     27   

6.4

  

Governing Law

     27   

6.5

  

WAIVER OF JURY TRIAL

     27   

6.6

  

Notices

     27   

6.7

  

Entire Agreement

     29   

6.8

  

Assignment

     29   

6.9

  

Interpretation; Other Definitions

     29   

6.10

  

Captions

     33   

6.11

  

Severability

     33   

6.12

  

No Third Party Beneficiaries

     34   

6.13

  

Public Announcements

     34   

6.14

  

Specific Performance

     34   

6.15

  

Termination

     34   

6.16

  

Effects of Termination

     35   

6.17

  

Non-Recourse

     35   

 

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INDEX OF DEFINED TERMS

 

Term    Location of Definition Affiliate    6.9(f) Agreement    Preamble Board
of Directors    2.1(c)(1) Brookfield Parties    6.9(g) business day    6.9(d)
Bylaws    2.1(c)(2) Capitalization Date    2.1(b)(1) Certificate of
Incorporation    2.1(c)(2) CFIUS    1.3(a)(3) CFIUS Clearance    1.3(a)(3) CFIUS
Notice    3.1 Closing    1.2(a) Closing Date    1.2(a) Code    4.2(b) Common
Stock    Recitals Company    Preamble Company Material Adverse Effect    6.9(h)
Company Related Parties    5.2 Company Stock Awards    2.1(b)(1) Company Stock
Options    2.1(b)(1) Company Subsidiary    2.1(a)(2) Confidentiality Agreement
   3.8 control/controlled by/under common control with    6.9(f) Credit
Agreement    6.9(i) Draft CFIUS Notice    3.1 Effect    6.9(j) Environmental Law
   6.9(j) Equity Securities    6.9(l) ERISA    6.9(m) Exchange Act    2.1 Exon
Florio    6.9(n) Fund Guarantee    Recitals GAAP    2.1(f)(4) Governmental
Entity    6.9(o) Government Official    2.1(t) herein/hereof/hereunder    6.9(c)
HSR Act    3.1 including/includes/included/include    6.9(b) Indemnified Party
   5.3(b) Indemnifying Party    5.3(b) Information    3.8 Intellectual Property
   6.9(p) Knowledge of the Company    6.9(q) Law    6.9(r)

 

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Term    Location of Definition Letter of Intent    6.9(s) Lien    6.9(t) Losses
   5.1 Materials of Environmental Concern    6.9(u) Non-Recourse Party    6.17
or    6.9(a) person    6.9(e) Permitted Transferee    6.9(v) Plan    6.9(w)
Preferred Shares    1.1 Preferred Stock    2.1(b)(1) Pre-Closing Change of
Control    3.12 Pre-Closing Period    3.1 Proxy Statement    3.3 Purchase Price
   1.1 Purchaser    Preamble Purchaser Related Parties    5.1 Registration
Rights Agreement    6.9(x) SEC    2.1(f)(1) SEC Documents    2.1(f)(1) Senior
Notes    6.9(y) Senior Subordinated Notes    6.9(z) Series A Certificate   
Recitals Series A Number    6.9(aa) Series A Preferred Stock    Recitals Series
B Certificate    Recitals Series B Number    6.9(bb) Series B Preferred Stock   
Recitals Stockholder Approval    3.3 Stockholder Meeting    3.3 Stockholder
Rights Agreement    6.9(cc) Subsidiary    2.1(a)(2) Tax Return    6.9(dd) Taxes
   6.9(ee) Tender Offer Letter of Intent    6.9(h) Third Party Claim    5.3(b)
Transaction Documents    6.9(ff) Treasury Department    3.1 Voting Debt   
2.1(b)(2)

LIST OF SCHEDULES

 

Schedule A:      Form of Series A Convertible Preferred Stock Certificate of
Designations Schedule B:      Form of Series B Convertible Preferred Stock
Certificate of Designations Schedule C:      Form of Registration Rights
Agreement Schedule D:      Form of Stockholder Rights Agreement

 

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INVESTMENT AGREEMENT, dated as of May 4, 2015 (this “Agreement”), by and between
GrafTech International Ltd., a Delaware corporation (the “Company”), and BCP IV
GrafTech Holdings LP, a limited partnership formed under the laws of Delaware
(the “Purchaser”).

RECITALS:

WHEREAS, the Company proposes to issue and sell to the Purchaser (including its
permitted assignees pursuant to Section 6.8) shares of its preferred stock, par
value $0.01 per share, designated as “Series A Convertible Preferred Stock” (the
“Series A Preferred Stock”), having the terms set forth in the Certificate of
Designations (the “Series A Certificate”) in the form attached to this Agreement
as Schedule A, subject to the terms and conditions set forth in this Agreement;

WHEREAS, the Company proposes to issue and sell to the Purchaser (including its
permitted assignees pursuant to Section 6.8) shares of its preferred stock, par
value $0.01 per share, designated as “Series B Convertible Preferred Stock” (the
“Series B Preferred Stock”), having the terms set forth in the Certificate of
Designations (the “Series B Certificate”) in the form attached to this Agreement
as Schedule B, subject to the terms and conditions set forth in this Agreement;

WHEREAS, the Series A Preferred Stock will be convertible into shares of common
stock, par value $0.01 per share, of the Company (the “Common Stock”);

WHEREAS, the Series B Preferred Stock will be conditionally convertible into
shares of Series A Preferred Stock;

WHEREAS, concurrently herewith, and as a condition and inducement to enter into
this Agreement, Brookfield Capital Partners IV L.P. (“Brookfield”) has delivered
a limited guarantee (the “Fund Guarantee”) in favor of the Company, pursuant to
which Brookfield has irrevocably guaranteed the payment, performance and
discharge of the obligations of the Purchaser under this Agreement.

WHEREAS, capitalized terms used in this Agreement have the meanings set forth in
Section 6.9 or such other section indicated in the preceding Index of Defined
Terms.

NOW, THEREFORE, in consideration of the premises, and of the representations,
warranties, covenants and agreements set forth herein, the parties agree as
follows:

ARTICLE I

PURCHASE; CLOSING

1.1 Purchase. On the terms and subject to the conditions herein, on the Closing
Date, the Company agrees to sell and issue to the Purchaser, and the Purchaser
agrees to purchase from the Company (i) the Series A Number of shares of Series
A Preferred Stock, free and clear of any Liens (other than restrictions arising
under applicable securities Laws and the Stockholder Rights Agreement), at a
purchase price of $1,000 per share of Series A Preferred Stock, and (ii)

 

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the Series B Number of shares of Series B Preferred Stock, free and clear of any
Liens (other than restrictions arising under applicable securities Laws and the
Stockholder Rights Agreement), at a purchase price of $1,000 per share of Series
B Preferred Stock, for an aggregate purchase price of $150,000,000 in cash (the
“Purchase Price”). The shares of Series A Preferred Stock and Series B Preferred
Stock to be issued and sold by the Company to the Purchaser pursuant to this
Agreement are collectively referred to as the “Preferred Shares”.

1.2 Closing.

(a) Subject to the satisfaction or waiver of the conditions set forth in this
Agreement, the closing of the purchase and sale by the Purchaser of the
Preferred Shares referred to in Section 1.1 pursuant to this Agreement (the
“Closing”) shall be held at the offices of Weil, Gotshal & Manges LLP, 767 Fifth
Avenue, New York, New York 10153, at 10:00 a.m. New York time on the third
business day after the satisfaction or waiver of the latest to occur of the
conditions set forth in Section 1.3 (other than those conditions that by their
nature are to be satisfied at the Closing, but subject to their satisfaction) or
at such other date, time and place as the Company and the Purchaser agree (the
“Closing Date”).

(b) Subject to the satisfaction or waiver on or prior to the Closing Date of the
applicable conditions to the Closing in Section 1.3, at the Closing:

(1) the Company will deliver to the Purchaser (i) certificates representing the
Series A Preferred Stock being purchased, (ii) certificates representing the
Series B Preferred Stock being purchased, (ii) the executed Registration Rights
Agreement, in the form of Schedule C hereto, (iii) the executed Stockholder
Rights Agreement, in the form of Schedule D hereto and (iv) all other documents,
instruments and writings required to be delivered by the Company to the
Purchaser pursuant to this Agreement or otherwise required in connection
herewith; and

(2) the Purchaser will deliver or cause to be delivered (i) to a bank account
designated by the Company in writing at least two (2) business days prior to the
Closing Date, the Purchase Price by wire transfer of immediately available
funds, (ii) the executed Registration Rights Agreement and (iii) the executed
Stockholder Rights Agreement and all other documents, instruments and writings
required to be delivered by the Purchaser to the Company pursuant to this
Agreement or otherwise required in connection herewith.

1.3 Closing Conditions.

(a) The obligation of the Purchaser, on the one hand, and the Company, on the
other hand, to effect the Closing is subject to the satisfaction or written
waiver by the Purchaser and the Company prior to the Closing of the following
conditions:

(1) no temporary restraining order, preliminary or permanent injunction or other
judgment or order issued by any Governmental Entity, and no Law shall be in
effect restraining, enjoining, making illegal or otherwise prohibiting the
consummation of the transactions contemplated by this Agreement;

 

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(2) all applicable waiting periods (and any extension thereof) prescribed by the
HSR Act and other applicable antitrust Laws agreed to by the Purchaser and the
Company shall have expired or shall have been terminated; and

(3) the receipt by the Purchaser of written notice from the Committee on Foreign
Investment in the United States (“CFIUS”) with (A) its determination that the
transaction contemplated by this Agreement is not subject to Exon-Florio,
(B) its determination following a review or investigation of the transaction
that there are no unresolved national security concerns, or (C) a determination
by the President of the United States not to suspend or prohibit the transaction
contemplated by this Agreement pursuant to his authority under Exon-Florio, and
(ii) CFIUS has not required any condition to mitigate any threat to the national
security of the United States that is unacceptable to the Purchaser
(collectively, “CFIUS Clearance”).

(b) The obligation of the Purchaser to effect the Closing is also subject to the
satisfaction or written waiver by the Purchaser at or prior to the Closing of
the following conditions:

(1) (i) the representations and warranties of the Company set forth in
Section 2.1 hereof (other than Sections 2.1(a)(1), 2.1(b), 2.1(c)(1), 2.1(e) and
2.1(h)) shall be true and correct (disregarding all qualifications or
limitations as to materiality or Company Material Adverse Effect) as of the date
of this Agreement and as of the Closing Date as though made on and as of such
date (except to the extent that such representation or warranty speaks to an
earlier date, in which case such representation or warranty shall be true and
correct as of such earlier date), except where the failure of such
representations and warranties to be so true and correct would not, individually
or in the aggregate, have a Company Material Adverse Effect, and (ii) the
representations and warranties of the Company set forth in Sections 2.1(a)(1),
2.1(b), 2.1(c)(1), 2.1(e) and 2.1(h) shall be true and correct in all material
respects as of the date of this Agreement and as of the Closing Date as though
made on and as of such date;

(2) the Company shall have performed in all material respects all obligations
required to be performed by it pursuant to this Agreement prior to the Closing;

(3) the Purchaser shall have received a certificate signed on behalf of the
Company by a duly authorized person certifying to the effect that the conditions
set forth in Sections 1.3(b)(1), (2), (8) and (9) have been satisfied;

(4) the Company shall have adopted and filed the Series A Certificate with the
Secretary of State of the State of Delaware, and the Series A Certificate shall
be in full force and effect;

(5) the Company shall have adopted and filed the Series B Certificate with the
Secretary of State of the State of Delaware, and the Series B Certificate shall
be in full force and effect;

(6) the shares of Common Stock issuable upon conversion of the Series A
Preferred Stock (including the Series A Preferred Stock issuable upon conversion
of the Series B Preferred Stock) shall have been approved for listing on the New
York Stock Exchange (“NYSE”), subject to official notice of issuance;

 

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(7) substantially contemporaneous with the Closing, the Company shall have
reimbursed the documented, out-of-pocket third-party costs and expenses of the
Purchaser incurred in connection with the transaction contemplated by this
Agreement, including the fees and expenses of Weil, Gotshal & Manges LLP,
counsel to the Purchaser, as well as Purchaser’s financial advisors,
accountants, consultants and other advisors; provided that the aggregate of all
such costs and expenses reimbursable by the Company shall not exceed $500,000;

(8) the Board of Directors shall have taken all actions necessary, without
expanding the Board of Directors beyond eleven (11) directors, to cause to be
elected to the Board of Directors, effective immediately upon the Closing, two
(2) individuals designated by the Purchaser in writing at least three
(3) business days prior to the Closing Date, and the Board of Directors shall
have appointed at least one of such individuals to each committee of the Board
of Directors (other than the special committee formed to handle the 2015 annual
meeting of the stockholders), subject to compliance with the applicable Law and
NYSE rules regarding qualification, the Company’s director qualifications and
completion by such individuals of a D&O questionnaire, and the Purchaser shall
have received evidence reasonably satisfactory to it of the taking of such
actions; and

(9) since March 31, 2015, there shall not have occurred any Company Material
Adverse Effect.

(c) The obligation of the Company to effect the Closing is also subject to the
satisfaction or written waiver by the Company prior to the Closing of the
following conditions:

(1) (i) the representations and warranties of the Purchaser set forth in
Section 2.2 hereof (other than Sections 2.2(a), 2.2(b)(1), 2.2(c) and 2.2(d))
shall be true and correct as of the date of this Agreement and as of the Closing
Date as though made on and as of such date (except to the extent that such
representation or warranty speaks of an earlier date, in which case such
representation or warranty shall be true and correct as of such earlier date),
except where the failure of such representations and warranties to be so true
and correct would not, individually or in the aggregate, prevent or materially
delay the consummation of the transactions contemplated by this Agreement or
have a material adverse effect on the ability of the Purchaser to fully perform
its covenants and obligations under the Transaction Documents and (ii) the
representations and warranties of the Purchaser set forth in Sections 2.2(a),
2.2(b)(1), 2.2(c) and 2.2(d) shall be true and correct in all material respects
as of the date of this Agreement and as of the Closing Date as though made on
and as of such date;

(2) the Purchaser shall have performed in all material respects all obligations
required to be performed by it pursuant to this Agreement prior to the Closing;
and

(3) the Company shall have received a certificate signed on behalf of the
Purchaser by a senior executive officer certifying to the effect that the
conditions set forth in Sections 1.3(c)(1) and (2) have been satisfied.

 

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ARTICLE II

REPRESENTATIONS AND WARRANTIES

2.1 Representations and Warranties of the Company. Except as set forth (x) in
publicly available SEC Documents filed prior to the date of this Agreement,
excluding any disclosures set forth in risk factors or any “forward looking
statements” within the meaning of the Securities Act or the Securities Exchange
Act of 1934, as amended, (the “Exchange Act”) or (y) in a correspondingly
identified schedule attached hereto (provided that any such disclosure shall be
deemed to be disclosed with respect to each other representation and warranty to
which the relevance of such exception is reasonably apparent on the face of such
disclosure), the Company represents and warrants to the Purchaser, as of the
date hereof and as of the Closing Date (except to the extent made only as of a
specified date in which case as of such date), that:

(a) Organization and Authority.

(1) The Company is a corporation duly organized and validly existing under the
laws of the State of Delaware, has all requisite corporate power and authority
to own its properties and conduct its business as presently conducted, is duly
qualified to do business and is in good standing in all jurisdictions where its
ownership or leasing of property or the conduct of its business requires it to
be so qualified, except where failure to be so qualified would not, individually
or in the aggregate, reasonably be expected to have Company Material Adverse
Effect. True and accurate copies of the Certificate of Incorporation and Bylaws,
each as in effect as of the date of this Agreement, have been made available to
the Purchaser prior to the date hereof.

(2) Each material Company Subsidiary is duly organized and validly existing
under the laws of its jurisdiction of organization, has all requisite corporate
or other applicable entity power and authority to own its properties and conduct
its business as presently conducted, is duly qualified to do business and is in
good standing in all jurisdictions where its ownership or leasing of property or
the conduct of its business requires it to be so qualified, except where failure
to be so qualified would not, individually or in the aggregate, reasonably be
expected to have a Company Material Adverse Effect. As used herein, “Subsidiary”
means, with respect to any Person, any corporation, partnership, joint venture,
limited liability company or other entity (x) of which such Person or a
subsidiary of such Person is a general partner or (y) of which a majority of the
voting securities or other voting interests, or a majority of the securities or
other interests of which having by their terms ordinary voting power to elect a
majority of the board of directors or Persons performing similar functions with
respect to such Person, is directly or indirectly owned by such Person and/or
one or more subsidiaries thereof; and “Company Subsidiary” means any Subsidiary
of the Company.

 

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(b) Capitalization.

(1) The authorized capital stock of the Company consists of 225,000,000 shares
of Common Stock and 10,000,000 shares of Preferred Stock, par value $0.01 per
share (the “Preferred Stock”). As of the close of business on April 20, 2015
(the “Capitalization Date”), there were 137,677,872 shares of Common Stock
outstanding and zero shares of Preferred Stock outstanding. As of the close of
business on the Capitalization Date, (i) 1,945,043 shares of Common Stock were
reserved for issuance upon the exercise or payment of stock options outstanding
on such date (“Company Stock Options”) and 4,193,962 shares of Common Stock were
reserved for issuance upon the exercise or payment of stock units (including
restricted stock and restricted stock units) or other equity-based incentive
awards granted pursuant to any plans, agreements or arrangements of the Company
and outstanding on such date), including Company Stock Options (collectively,
the “Company Stock Awards”) and (ii) 15,446,360 shares of Common Stock were held
by the Company in its treasury. All of the issued and outstanding shares of
Common Stock have been duly authorized and validly issued and are fully paid,
nonassessable and free of preemptive rights. From the Capitalization Date
through and as of the date of this Agreement, no other shares of Common Stock or
Preferred Stock have been issued other than shares of Common Stock issued in
respect of the exercise of Company Stock Options or grant or payment of Company
Stock Awards in the ordinary course of business. The Company does not have
outstanding stockholder purchase rights or “poison pill” or any similar
arrangement in effect.

(2) No bonds, debentures, notes or other indebtedness having the right to vote
(or convertible into or exchangeable for, securities having the right to vote)
on any matters on which the stockholders of the Company may vote (“Voting Debt”)
are issued and outstanding. Except (i) pursuant to any cashless exercise
provisions of any Company Stock Options or pursuant to the surrender of shares
to the Company or the withholding of shares by the Company to cover tax
withholding obligations under Company Stock Options or Company Stock Awards, and
(ii) as set forth in Section 2.1(b)(1), the Company does not have and is not
bound by any outstanding options, preemptive rights, rights of first offer,
warrants, calls, commitments or other rights or agreements calling for the
purchase or issuance of, or securities or rights convertible into, or
exchangeable for, any shares of Common Stock or any other equity securities of
the Company or Voting Debt or any securities representing the right to purchase
or otherwise receive any shares of capital stock of the Company (including any
rights plan or agreement).

(c) Authorization.

(1) The Company has the corporate power and authority to enter into this
Agreement and the other Transaction Documents and to carry out its obligations
hereunder and thereunder. The execution, delivery and performance of this
Agreement and the other Transaction Documents by the Company and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by the board of directors of the Company (the “Board of Directors”).
This Agreement has been, and (as of the Closing) the other Transaction Documents
will be, duly and validly executed and delivered by the Company and, assuming
due authorization, execution and delivery by the

 

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Purchaser, is, and (as of the Closing) each of the other Transaction Documents
will be, a valid and binding obligation of the Company enforceable against the
Company in accordance with its terms (except as enforcement may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer and similar laws of general applicability relating to or affecting
creditors’ rights or by general equity principles). No other corporate
proceedings are necessary for the execution and delivery by the Company of this
Agreement or the other Transaction Documents, the performance by it of its
obligations hereunder or thereunder or the consummation by it of the
transactions contemplated hereby or thereby other than the Stockholder Approval
with respect to the exchange of Series B Preferred for Series A Preferred Stock
in accordance with the terms of the Series B Certificate of Designations. The
Board of Directors has taken all necessary actions such that the restrictions
set forth in Section 203 of the Delaware General Corporation Law will not apply
to any acquisition by the Purchaser of the Preferred Shares to be issued
pursuant to this Agreement or upon the conversion of the Preferred Shares issued
pursuant to this Agreement.

(2) Neither the execution and delivery by the Company of this Agreement or the
other Transaction Documents, nor the consummation of the transactions
contemplated hereby or thereby, nor compliance by the Company with any of the
provisions hereof or thereof (including the conversion or exercise provisions of
the Preferred Shares), will (A) violate, conflict with, or result in a breach of
any provision of, or constitute a default (or an event which, with notice or
lapse of time or both, would constitute a default) under, or result in the
termination of, or accelerate the performance required by, or result in a right
of termination or acceleration of, or result in the creation of any Lien upon
any of the material properties or assets of the Company or any Company
Subsidiary under any of the terms, conditions or provisions of (i) the
certificate of incorporation of the Company (as amended or modified from time to
time prior to the date hereof, the “Certificate of Incorporation”) or bylaws of
the Company (as amended or modified from time to time prior to the date hereof,
the “Bylaws”) or the certificate of incorporation, charter, bylaws or other
governing instrument of any Company Subsidiary or (ii) any note, bond, mortgage,
indenture, deed of trust, license, lease, agreement or other instrument or
obligation to which the Company or any Company Subsidiary is a party or by which
it may be bound, or to which the Company or any Company Subsidiary or any of the
properties or assets of the Company or any Company Subsidiary may be subject, or
(B) violate any law, statute, ordinance, rule, regulation, permit, franchise or
any judgment, ruling, order, writ, injunction or decree applicable to the
Company or any Company Subsidiary or any of their respective properties or
assets, except in the case of clauses (A)(ii) and (B) for such violations,
conflicts and breaches as would not, individually or in the aggregate,
reasonably be expected to have a Company Material Adverse Effect.

(3) Other than (A) the securities or blue sky laws of the various states and
Canada, (B) approval or expiration of applicable waiting periods under the HSR
Act and the antitrust laws agreed to by the Purchaser and the Company, (C) the
CFIUS Clearance, (D) the filing with the Secretary of State of the State of
Delaware of the Series A Certificate and the Series B Certificate, (E) the
filing of a Form D, one or more Forms 8-K and the Proxy Statement with the SEC,
and (F) the listing on the NYSE of the shares of Common Stock issuable upon the
conversion of the Series A Preferred Stock, no notice to,

 

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registration, declaration or filing with, exemption or review by, or
authorization, order, consent or approval of any Governmental Entity, nor
expiration or termination of any statutory waiting period, is necessary for the
consummation by the Company of the transactions contemplated by this Agreement
or the other Transaction Documents.

(d) Sale of Securities. Based in part on the Purchaser’s representations in
Section 2.2, the offer and sale of the Preferred Shares is exempt from the
registration and prospectus delivery requirements of the Securities Act and the
rules and regulations promulgated thereunder. Without limiting the foregoing,
neither the Company nor, to the Knowledge of the Company, any other person
authorized by the Company to act on its behalf, has engaged in a general
solicitation or general advertising (within the meaning of Regulation D of the
Securities Act) of investors with respect to offer or sales of the Preferred
Shares and neither the Company nor, to the Knowledge of the Company, any person
acting on its behalf, has made any offers or sales of any security or solicited
any offers to buy any security, under circumstances that would cause the
offering or issuance of the Preferred Shares under this Agreement to be
integrated with prior offerings by the Company for purposes of the Securities
Act that would result in Regulation D or any other applicable exemption from
registration under the Securities Act not being available, nor will the Company
take any action or steps that would cause the offering or issuance of the
Preferred Shares under this Agreement to be integrated with other offerings.

(e) Status of Securities. The Preferred Shares to be issued pursuant to this
Agreement, the shares of Series A Preferred Stock to be issued upon conversion
of the Series B Preferred Stock (subject to the Stockholder Approval), and the
shares of Common Stock to be issued upon conversion of the Series A Preferred
Stock have been duly authorized by all necessary corporate action. When issued
and sold against receipt of the consideration therefor as provided in this
Agreement, the Series A Certificate or the Series B Certificate, such securities
will be validly issued, fully paid and nonassessable, will not be subject to
preemptive rights of any other stockholder of the Company, and will effectively
vest in the Purchaser good title to all such securities, free and clear of all
Liens (other than Liens incurred by the Purchaser and restrictions arising under
applicable securities Laws), except restrictions imposed by the Securities Act,
any applicable state or foreign securities laws and the Stockholder Rights
Agreement. Upon any conversion of any shares of Series A Preferred Stock into
Common Stock pursuant to the Series A Certificate, the shares of Common Stock
issued upon such conversion will be validly issued, fully paid and
nonassessable, and will not be subject to preemptive rights of any other
stockholder of the Company, and will effectively vest in the Purchaser good
title to all such securities, free and clear of all Liens (other than Liens
incurred by the Purchaser, restrictions arising under applicable securities
Laws), except restrictions imposed by the Securities Act, any applicable state
or foreign securities laws and the Stockholder Rights Agreement. The respective
rights, preferences, privileges, and restrictions of the Series A Preferred
Stock, Series B Preferred Stock and the Common Stock are as stated in the
Certificate of Incorporation (including the Series A Certificate and the Series
B Certificate). The shares of Common Stock to be issued upon any conversion of
shares of Preferred Shares into Common Stock have been duly reserved for such
issuance.

 

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(f) SEC Documents; Financial Statements.

(1) The Company has filed all required reports, proxy statements, forms, and
other documents with the Securities and Exchange Commission (the “SEC”) since
December 31, 2012 (collectively, the “SEC Documents”). Each of the SEC
Documents, as of its respective date complied in all material respects with the
requirements of the Securities Act and the Exchange Act, as the case may be, and
the rules and regulations of the SEC promulgated thereunder applicable to such
SEC Documents, and, except to the extent that information contained in any SEC
Document has been revised or superseded by a later filed SEC Document filed and
publicly available prior to the date of this Agreement, none of the SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

(2) The Company (i) has implemented and maintains disclosure controls and
procedures (as defined in Rule 13a-15(e) under the Exchange Act) that are
reasonably designed to ensure that material information relating to the Company,
including its consolidated Subsidiaries, is made known to the individuals
responsible for the preparation of the Company’s filings with the SEC and
(ii) has disclosed, based on its most recent evaluation prior to the date of
this Agreement, to the Company’s outside auditors and the Board of Director’s
audit committee (A) any significant deficiencies and material weaknesses in the
design or operation of internal controls over financial reporting (as defined in
Rule 13a-15(f) under the Exchange Act) that are reasonably likely to adversely
affect the Company’s ability to record, process, summarize and report financial
information and (B) any fraud, whether or not material, that involves management
or other employees who have a significant role in the Company’s internal
controls over financial reporting. As of the date of this Agreement, to the
Knowledge of the Company, there is no reason that its outside auditors and its
chief executive officer and chief financial officer will not be able to give the
certifications and attestations required pursuant to the rules and regulations
adopted pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, without
qualification, when next due.

(3) There is no transaction, arrangement or other relationship between the
Company and/or any of its Subsidiaries and an unconsolidated or other
off-balance sheet entity that is required to be disclosed by the Company in its
SEC Documents and is not so disclosed.

(4) The financial statements of the Company and its consolidated Subsidiaries
included in the SEC Documents (a) complied as to form in all material respects
with applicable accounting requirements and the published rules and regulations
of the SEC with respect thereto, in each case as of the date such SEC Document
was filed, and (b) have been prepared in accordance with generally accepted
accounting principles in the United States (“GAAP”) applied on a consistent
basis during the periods involved (except as may be indicated in such financial
statements or the notes thereto) and fairly present in all material respects the
consolidated financial position of the Company and its consolidated Subsidiaries
as of the dates thereof and the consolidated results of their

 

9

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operations and cash flows of the Company and its consolidated subsidiaries for
the periods then ended (subject, in the case of unaudited statements, to the
absence of footnote disclosures and normal audit adjustments).

(g) Undisclosed Liabilities. Except for (i) those liabilities that are reflected
or reserved for in the consolidated financial statements of the Company included
in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014,
(ii) liabilities incurred since December 31, 2014 in the ordinary course of
business consistent with past practice, (iii) liabilities incurred pursuant to
the transactions contemplated by this Agreement, the Registration Rights
Agreement or the Stockholder Rights Agreement, and (iv) liabilities that would
not, individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect, the Company and its Subsidiaries do not have any
liabilities or obligations of any nature whatsoever (whether accrued, absolute,
contingent or otherwise).

(h) Brokers and Finders. Except for J.P. Morgan Securities LLC pursuant to that
certain engagement letter dated April 20, 2015, the fees and expenses of which
will be paid by the Company, neither the Company nor its Subsidiaries or any of
their respective officers, directors, employees or agents has employed any
broker or finder or incurred any liability for any financial advisory fees,
brokerage fees, commissions or finder’s fees, and no broker or finder has acted
directly or indirectly for the Company in connection with this Agreement or the
transactions contemplated hereby.

(i) Litigation. There is no action, suit, proceeding or investigation pending
or, to the Knowledge of the Company, threatened (including “cease and desist”
letters or invitations to take patent license) against, nor any outstanding
judgment, order, writ or decree against, the Company or any of its Subsidiaries
or any of their respective assets before or by any Governmental Entity, which in
the aggregate have, or if adversely determined, would reasonably be expected to
have, a Company Material Adverse Effect. Except as would not, individually or in
the aggregate, reasonably be expected to have a Company Material Adverse Effect,
neither the Company nor any of its Subsidiaries is in default with respect to
any judgment, order or decree of any Governmental Entity.

(j) Taxes.

(1) Each of the Company and its Subsidiaries has filed all material Tax Returns
required to have been filed, such Tax Returns were accurate in all material
respects, and all material Taxes due and payable (taking into account any
extensions properly obtained) by the Company (whether or not shown on any Tax
Return) have been timely paid, except for those which are being contested in
good faith and by appropriate proceedings and in respect of which adequate
reserves with respect thereto are maintained in accordance with GAAP.

(2) No material examination or audit of any Tax Return relating to any material
Taxes of the Company or any of its Subsidiaries or with respect to any material
Taxes due from or with respect to the Company or any of its Subsidiaries by any
taxing authority is currently in progress or threatened in writing.

 

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(3) Neither the Company nor any of its Subsidiaries has engaged in, or has any
obligation with respect to, any “reportable transaction” within the meaning of
Treasury Regulations Section 1.6011-4.

(4) The Company is not and has not been during the applicable period specified
in Section 897(c)(1)(A)(ii) of the Code, a “United States real property holding
Corporation” within the meaning of Section 897(c)(2) of the Code.

(k) Permits and Licenses. The Company and its Subsidiaries possess all
certificates, authorizations and permits issued by each Governmental Entity
necessary to conduct their respective businesses, except where the failure to
possess such certificates, authorizations and permits would not, individually or
in the aggregate, reasonably be expected to result in a Company Material Adverse
Effect.

(l) Environmental Matters. The Company and its Subsidiaries are in compliance
with all, and since January 1, 2012 have not violated any, applicable
Environmental Laws except where failure to be in such compliance would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect. Neither the Company nor any of its Subsidiaries has
released Materials of Environmental Concern and, to the Knowledge of the
Company, Materials of Environmental Concern are not present at, under, in or
affecting any Property currently or formerly owned, leased or used by the
Company or any of its Subsidiaries, or at any location to which Materials of
Environmental Concern have been sent for re-use or recycling or for treatment,
storage or disposal, except, in each case, as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.

(m) Title. Each of the Company and its Subsidiaries has (i) good and marketable
title to its Property that is owned real property, (ii) to the Knowledge of the
Company, valid leases to its Property that is leased real property, and
(iii) good and valid title to all of its other Property, except as would not,
individually or in the aggregate, reasonably be expected to have a Company
Material Adverse Effect.

(n) Intellectual Property. Except as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect,
(i) the Company or its Subsidiaries exclusively own all (a) Intellectual
Property registrations and applications filed in their names that have not
expired or been abandoned, which such registrations are subsisting and
unexpired, and to the Knowledge of the Company, valid and enforceable and
(b) other proprietary Intellectual Property used in the conduct of the
businesses of the Company or its Subsidiaries that is not used pursuant to a
license; provided, however, the foregoing representation in Section 2.1(n)(i) is
subject to the Knowledge of the Company with respect to patents owned by third
parties under which a license may be needed to practice any such Intellectual
Property; (ii) the conduct of the businesses of Company and its Subsidiaries
does not materially infringe the Intellectual Property of any third party, and
to the Knowledge of the Company, no person is materially infringing any
Intellectual Property owned by the Company or its Subsidiaries; (iii) the
Company and its Subsidiaries take reasonable actions to protect the material
trade secrets and confidential information owned by the Company or its
Subsidiaries and the security and operation of their material software, websites
and systems (and the data therein), and there have been no material breaches or
outages of same; and (iv) there are no

 

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judicial or administrative orders, decrees or judgments to which the Company or
any of the Subsidiaries is a party or by which they are bound which restrict any
rights to any material proprietary Intellectual Property used in the conduct of
the businesses of the Company or its Subsidiaries.

(o) Employee Benefits/Labor.

(1) Except as would not reasonably be expected, individually or in the
aggregate, to result in a Company Material Adverse Effect, (A) each Plan
complies with, and has been operated and administered in compliance with, its
terms and all applicable Laws (including, without limitation ERISA and the
Code), (B) the Company and each of its Subsidiaries have filed all reports,
returns, notices, and other documentation required by ERISA, the Code or other
applicable Law to be filed with any Governmental Entity with respect to each
Plan, (C) with respect to any Plan, no actions, Liens, lawsuits, claims or
complaints (other than routine claims for benefits, appeals of such claims and
domestic relations order proceedings) are pending or, to the Knowledge of the
Company, threatened, and, to the Knowledge of the Company, no facts or
circumstances exist that would reasonably be expected to give rise to any such
actions, Liens, lawsuits, claims or complaints, and (D) to the Knowledge of the
Company, no event has occurred with respect to a Plan which would reasonably be
expected to result in a liability of the Company or any of its Subsidiaries to
any Governmental Entity. Neither the Company, its Subsidiaries, nor any other
entity which, together with the Company or its Subsidiaries, would be treated as
a single employer under Section 4001 of ERISA or Section 414 of the Code, has at
any time during the last six (6) years maintained, sponsored or contributed to
any employee benefit plan that is subject to Title IV of ERISA, including,
without limitation, any “multiemployer plan” (as defined in Section 4001(a)(3)
of ERISA).

(2) Except as would not reasonably be expected, individually or in the
aggregate, to result in a Company Material Adverse Effect, none of the execution
of, or the completion of the transactions contemplated by, this Agreement
(whether alone or in connection with any other event(s)), could result in
(A) severance pay or an increase in severance pay upon termination after Closing
to any current or former employee of the Company or its Subsidiaries, (B) any
payment, compensation or benefit becoming due, or increase in the amount of any
payment, compensation or benefit due, to any current or former employee of the
Company or its Subsidiaries, (C) acceleration of the time of payment or vesting
or result in funding of compensation or benefits to any current or former
employee of the Company or its Subsidiaries, (D) any new material obligation
under any Plan, (E) any limitation or restriction on the right of Company to
merge, amend, or terminate any Plan, or (F) any payments which would not be
deductible under Section 280G of the Code or subject to Tax under Section 4999
of the Code. No Plan provides for reimbursement or gross-up of any excise tax
under Section 409A or Section 4999 of the Code.

(3) Except as would not, individually or in the aggregate, have a Company
Material Adverse Effect, as of the date of this Agreement: (A) the Company and
each of its Subsidiaries is not a party to any collective bargaining agreement
or other contract or agreement with any labor organization or other
representative of any of the employees of

 

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the Company or any Subsidiary, nor is any such contract or agreement presently
being negotiated; (B) to the Knowledge of the Company, no campaigns are being
conducted to solicit cards from any of the employees of the Company or any of
its Subsidiaries to authorize representation by any labor organization, and no
such campaigns have been conducted within the past three years; (C) no labor
strike, slowdown, work stoppage, dispute, lockout or other labor controversy is
in effect or, to the Knowledge of the Company, threatened in writing, and
neither the Company nor any of its Subsidiaries has experienced any such labor
controversy within the past three years; (D) no unfair labor practice charge or
complaint is pending or, to the Knowledge of the Company, threatened in writing
with respect to any employment practices of the Company or any of its
Subsidiaries; (E) no action, complaint, charge, inquiry, proceeding or
investigation by or on behalf of any current or former employee, labor
organization or other representative of the employees of the Company or any of
its Subsidiaries (including persons employed jointly by such entities with any
other staffing or other similar entity) is pending or, to the Knowledge of the
Company, threatened in writing; (F) the Company and each of its Subsidiaries are
in compliance with all applicable laws, agreements, contracts, policies, plans
and programs relating to employment, employment practices, compensation,
benefits, hours, terms and conditions of employment, and the termination of
employment, including any obligations pursuant to the Worker Adjustment and
Retraining Notification Act of 1988, as amended, the classification of employees
as exempt or non-exempt from overtime pay requirements, the provision of meal
and rest breaks and pay for all working time, and the proper classification of
individuals as non-employee contractors or consultants; and (G) the Company and
each of its Subsidiaries is in compliance with all applicable Law relating to
child labor, forced labor and involuntary servitude.

(4) With respect to the Company’s Benefits Protection Trust: (A) the only plan
covered by the Benefits Protection Trust is the Deferred Compensation Plan and
(B) the Company makes contributions to the Benefits Protection Trust so that the
liabilities of the Deferred Compensation Plan are fully funded at March 31, 2015
(with cash and, at March 31, 2015, 72,679 shares of Common Stock valued, at
March 31, 2015, at approximately $700,000).

(p) Indebtedness. Neither the Company nor any of its Subsidiaries is,
immediately prior to the execution and delivery of this Agreement, in default in
the payment of any material indebtedness or in default under any agreement
relating to its material indebtedness.

(q) Registration Rights. Except as provided in the Registration Rights
Agreement, the Company has not granted or agreed to grant, and is not under any
obligation to provide, any rights to register under the Securities Act any of
its presently outstanding securities or any of its securities that may be issued
subsequently.

(r) Compliance with Laws. Neither the Company nor any of its Subsidiaries is, or
since January 1, 2012 has been, in violation of any applicable Law, except where
such violation would not, individually or in the aggregate, reasonably be
expected to have, or has not had, a Company Material Adverse Effect. To the
Knowledge of the Company as of the date of this Agreement, neither the Company
nor any of its Subsidiaries is being investigated with respect to any applicable
Law, except for such of the foregoing as would not, individually or in the
aggregate, reasonably be expected to have a Company Material Adverse Effect.

 

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(s) Absence of Changes. Since December 31, 2014, there has not been any action
or omission of the Company or any of its Subsidiaries that, if such action or
omission occurred between the date of this Agreement and the Closing Date, would
violate Section 3.11.

(t) Illegal Payments; FCPA Violations. None of the Company or its Subsidiaries,
nor any of their respective officers, directors, employees, nor, to the
Knowledge of the Company, any agent, representative or consultant of the Company
or its Subsidiaries have, in connection with the business of the Company:
(i) corruptly offered, paid, promised to pay, or authorized the payment of,
directly or indirectly, anything of value, including, but not limited to, money,
loans, gifts, travel, or entertainment, to any person acting in an official
capacity for any Government Entity, to any political party or official thereof,
or to any candidate for political office (each, a “Government Official”) with
the purpose of (a) influencing any act or decision of such Government Official
in his official capacity; (b) inducing such Government Official to perform or
omit to perform any activity in violation of his legal duties; (c) securing any
improper advantage; or (d) inducing such Government Official to influence or
affect any act or decision of such Government Entity, except as permitted under
the U.S. Foreign Corrupt Practices Act; (ii) made any illegal contribution to
any political party or candidate; (iii) made, offered or promised to pay any
bribe, payoff, influence payment, kickback, unlawful rebate, or other similar
unlawful payment of any nature, directly or indirectly, in connection with the
business of the Company, to any person, including any supplier or customer;
(iv) established or maintained any unrecorded fund or asset or made any false
entries on any books or records for any purpose; or (v) otherwise violated the
U.S. Foreign Corrupt Practices Act of 1977, as amended, the UK Bribery Act of
2010 or any other applicable anti-corruption or anti-bribery law.

(1) For purposes of this Section, “Government Official” means any officer or
employee of a Government Entity or any department, agency, or instrumentality
thereof, or of a public international organization, or any person acting in an
official capacity for or on behalf of any such Government or department, agency,
or instrumentality, or for or on behalf of any such public international
organization, or any political party, party official, or candidate thereof,
excluding officials related to the government of the United States; and

(2) “Government Entity” means any foreign Government, any political subdivision
thereof, or any corporation or other entity owned or controlled in whole or in
part by any Government or any sovereign wealth fund, excluding entities related
to the government of the United States.

(u) Economic Sanctions. Except as would not, individually or in the aggregate,
have a Company Material Adverse Effect, the Company is not in contravention of
and has not engaged in any conduct sanction sanctionable under U.S. economic
sanctions laws, including laws administered and enforced by the U.S. Department
of Treasury’s Office of Foreign Assets Control, 31 C.F.R. Part V, the Iran
Sanctions Act, the Comprehensive Iran Sanctions, Accountability and Divestment
Act, the Iran Threat Reduction and Syria Human Rights Act, the Iran Freedom and
Counter-Proliferation Act of 2012, and any executive order issued pursuant to
any of the foregoing.

 

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(v) Listing and Maintenance Requirements. The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and the Company has taken no
action designed to, or which to the Knowledge of the Company is reasonably
likely to, have the effect of, terminating the registration of the Common Stock
under the Exchange Act nor has the Company received as of the date of this
Agreement any notification that the SEC is contemplating terminating such
registration.

(w) No Restriction on Ability to Pay Cash Dividends. Except as set forth in the
the Credit Agreement, the Company is not party to any contract, agreement,
arrangement or other understanding, oral or written, express or implied, and is
not subject to any provision in its Certificate of Incorporation or Bylaws or
other governing documents or resolutions of the Board of Directors that, in each
case, by its terms restricts, limits, prohibits or prevents the Company from
paying dividends, including in full in cash on the Preferred Shares in the
amounts contemplated by the Series A Certificate and Series B Certificate, as
applicable.

(x) No Additional Representations. Except for the representations and warranties
made by the Company in this Section 2.1, neither the Company nor any other
Person makes any express or implied representation or warranty with respect to
the Company or any Subsidiaries or their respective businesses, operations,
assets, liabilities, employees, employee benefit plans, conditions or prospects,
and the Company hereby disclaims any such other representations or warranties.
In particular, without limiting the foregoing disclaimer, neither the Company
nor any other Person makes or has made any representation or warranty to the
Purchaser, or any of its Affiliates or representatives, with respect to (i) any
financial projection, forecast, estimate, budget or prospect information
relating to the Company or any of its Subsidiaries or their respective business,
or (ii) any oral or written information presented to the Purchaser or any of its
Affiliates or representatives in the course of their due diligence investigation
of the Company, the negotiation of this Agreement or in the course of the
transactions contemplated hereby. Notwithstanding anything to the contrary
herein, nothing in this Agreement shall limit the right of the Purchaser and its
Affiliates to rely on the representations, warranties, covenants and agreements
expressly set forth in this Agreement or in any certificate delivered pursuant
hereto, nor will anything in this Agreement operate to limit any claim by the
Purchaser or any of its Affiliates for fraud.

2.2 Representations and Warranties of the Purchaser. The Purchaser hereby
represents and warrants to the Company, as of the date hereof and as of the
Closing Date (except to the extent made only as of a specified date in which
case as of such date),that:

(a) Organization and Authority. The Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization, is duly qualified to do business and is in good standing in all
jurisdictions where its ownership or leasing of property or the conduct of its
business requires it to be so qualified, except where failure to be so qualified
would not reasonably be expected to materially and adversely affect the
Purchaser’s ability to perform its obligations under this Agreement or
consummate the transactions contemplated hereby on a timely basis, and the
Purchaser has the corporate or other power and authority and governmental
authorizations to own its properties and assets and to carry on its business as
it is now being conducted.

 

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(b) Authorization.

(1) The Purchaser has the corporate or other power and authority to enter into
this Agreement and the other Transaction Documents and to carry out its
obligations hereunder and thereunder. The execution, delivery and performance of
this Agreement and the other Transaction Documents by the Purchaser and the
consummation of the transactions contemplated hereby and thereby have been duly
authorized by all requisite action on the part of the Purchaser, and no further
approval or authorization by any of its stockholders, partners, members or other
equity owners, as the case may be, is required. This Agreement has been and (as
of the Closing) the other Transaction Documents will be, duly and validly
executed and delivered by the Purchaser and assuming due authorization,
execution and delivery by the Company, is, and (as of the Closing) each of the
other Transaction Documents will be, a valid and binding obligation of the
Purchaser enforceable against the Purchaser in accordance with its terms (except
as enforcement may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, fraudulent transfer and similar laws of general
applicability relating to or affecting creditors’ rights or by general equity
principles).

(2) Neither the execution, delivery and performance by the Purchaser of this
Agreement or the other Transaction Documents, nor the consummation of the
transactions contemplated hereby or thereby, nor compliance by the Purchaser
with any of the provisions hereof or thereof, will (A) violate, conflict with,
or result in a breach of any provision of, or constitute a default (or an event
which, with notice or lapse of time or both, would constitute a default) under,
or result in the termination of, or accelerate the performance required by, or
result in a right of termination or acceleration of, or result in the creation
of any Lien upon any of the properties or assets of the Purchaser under any of
the terms, conditions or provisions of (i) its governing instruments or (ii) any
note, bond, mortgage, indenture, deed of trust, license, lease, agreement or
other instrument or obligation to which the Purchaser is a party or by which it
may be bound, or to which the Purchaser or any of the properties or assets of
the Purchaser may be subject, or (B) subject to compliance with the statutes and
regulations referred to in the next paragraph, violate any law, statute,
ordinance, rule or regulation, permit, concession, grant, franchise or any
judgment, ruling, order, writ, injunction or decree applicable to the Purchaser
or any of their respective properties or assets except in the case of clause
(A)(ii) and (B) for such violations, conflicts and breaches as would not
reasonably be expected to prevent or materially delay the consummation of the
transactions contemplated by this Agreement or have a material adverse effect on
the Purchaser’s ability to fully perform its respective covenants and
obligations under this Agreement.

(3) Other than (A) the securities or blue sky laws of the various states and
Canada, (B) approval or expiration of applicable waiting periods under the HSR
Act and the antitrust Laws agreed to by the Purchaser and the Company and
(C) CFIUS Clearance, no notice to, registration, declaration or filing with,
exemption or review by, or authorization, order, consent or approval of, any
Governmental Entity, nor expiration or

 

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termination of any statutory waiting period, is necessary for the consummation
by the Purchaser of the transactions contemplated by this Agreement or the other
Transaction Documents.

(c) Purchase for Investment. The Purchaser acknowledges that the Preferred
Shares have not been registered under the Securities Act or under any state
securities laws. The Purchaser (1) acknowledges that it is acquiring the
Preferred Shares pursuant to an exemption from registration under the Securities
Act solely for investment with no present intention to distribute any of the
Preferred Shares to any person in violation of applicable securities laws,
(2) will not sell or otherwise dispose of any of the Preferred Shares, except in
compliance with the registration requirements or exemption provisions of the
Securities Act, any other applicable securities laws and the Stockholder Rights
Agreement, (3) has such knowledge and experience in financial and business
matters and in investments of this type that it is capable of evaluating the
merits and risks of its investment in the Preferred Shares and of making an
informed investment decision, (4) is an “accredited investor” (as that term is
defined by Rule 501 of the Securities Act), (5) is a “qualified institutional
buyer” (as that term is defined in Rule 144A of the Securities Act), and
(6) (A) has been furnished with or has had full access to all the information
that it considers necessary or appropriate to make an informed investment
decision with respect to the Preferred Shares, (B) has had an opportunity to
discuss with management of the Company the intended business and financial
affairs of the Company and to obtain information (to the extent the Company
possessed such information or could acquire it without unreasonable effort or
expense) necessary to verify any information furnished to it or to which it had
access and (C) can bear the economic risk of (x) an investment in the Preferred
Shares indefinitely and (y) a total loss in respect of such investment. The
Purchaser has such knowledge and experience in business and financial matters so
as to enable it to understand and evaluate the risks of and form an investment
decision with respect to, its investment in the Preferred Shares and to protect
its own interest in connection with such investment.

(d) Financial Capability. The Purchaser at the Closing will have available funds
necessary to consummate the Closing on the terms and conditions contemplated by
this Agreement. The Purchaser is not aware of any reason why the funds
sufficient to fulfill its obligations under Article I will not be available on
the Closing Date.

(e) Brokers and Finders. Neither the Purchaser nor its Affiliates or any of
their respective officers, directors, employees or agents has employed any
broker or finder for which the Company will incur any liability for any
financial advisory fees, brokerage fees, commissions or finder’s fees.

ARTICLE III

COVENANTS

3.1 Filings; Other Actions. During the period commencing on the date hereof and
terminating on the earlier to occur of (a) the Closing and (b) the termination
of this Agreement in accordance with the provisions hereof (the “Pre-Closing
Period”), each of the Purchaser, on the one hand, and the Company, on the other
hand, will cooperate and consult with the other and use reasonable best efforts
to prepare and file all necessary documentation, to effect all necessary

 

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applications, notices, petitions, filings and other documents, and to obtain all
necessary permits, consents, orders, approvals and authorizations of, or any
exemption by, all third parties and Governmental Entities, and the expiration or
termination of any applicable waiting period, necessary or advisable to
consummate the transactions contemplated by this Agreement, and to perform the
covenants contemplated by this Agreement. Each party shall execute and deliver
both before and after the Closing such further certificates, agreements and
other documents and take such other actions as the other party may reasonably
request to consummate or implement such transactions or to evidence such events
or matters. In particular, the Purchaser and the Company shall submit to CFIUS
(i) a draft joint voluntary notice of the transaction contemplated by this
agreement pursuant to 31 C.F.R. § 800.401(f) (the “Draft CFIUS Notice”) within
10 business days of the date hereof; (ii) a joint voluntary notice pursuant to
31 C.F.R. § 800.401(a) (the “CFIUS Notice”) within 20 business days of the date
hereof, unless U.S. Department of the Treasury (“Treasury Department”) comments
on the Draft CFIUS Notice indicate that filing the CFIUS Notice at a later date
would be prudent, in which case the CFIUS Notice shall be filed as soon
thereafter as is practicable in light of the Treasury Department’s comments; and
(iii) any supplemental information requested by CFIUS within any deadline
imposed by CFIUS under Exon-Florio. The Purchaser and the Company shall
cooperate in all respects with each other to provide or cause to be provided to
CFIUS all information requested by CFIUS. In addition, the Purchaser and the
Company shall use all reasonable best efforts to obtain or submit, as the case
may be, as promptly as practicable following the date hereof (and in any event
within fifteen (15) business days of the date hereof), the approvals and
authorizations of, filings and registrations with, and notifications to, or
expiration or termination of any applicable waiting period, under the Hart-Scott
Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”) and other
applicable antitrust Laws, in each case, with respect to the transactions
contemplated hereby, including the issuance of Preferred Shares and Common Stock
to the Purchaser (upon conversion of Series A Preferred Stock). Without limiting
the foregoing, the Purchaser and the Company shall prepare and file a
Notification and Report Form pursuant to the HSR Act in connection with the
transactions contemplated by this Agreement. The Purchaser and the Company will
have the right to review in advance, and to the extent practicable, each will
consult with the other, in each case, subject to applicable laws relating to the
exchange of information, all the information relating to such other party, and
any of their respective Affiliates, which appears in any filing made with, or
written materials submitted to, any third party or any Governmental Entity in
connection with the transactions contemplated by this Agreement. In exercising
the foregoing right, each of the parties hereto agrees to act reasonably and as
promptly as practicable. Each party hereto agrees to keep the other party
apprised of the status of matters referred to in this Section 3.1. The Purchaser
shall promptly furnish the Company, and the Company shall promptly furnish the
Purchaser, to the extent permitted by Law, with copies of written communications
received by it or its Subsidiaries from any Governmental Entity in respect of
the transactions contemplated by this Agreement.

3.2 Reasonable Best Efforts to Close. During the Pre-Closing Period, the Company
and the Purchaser will use reasonable best efforts in good faith to take, or
cause to be taken, all actions, and to do, or cause to be done, all things
necessary under applicable laws so as to permit consummation of the transactions
contemplated hereby as promptly as practicable and otherwise to enable
consummation of the transactions contemplated hereby and shall cooperate
reasonably with the other party hereto to that end, including in relation to the
satisfaction of the conditions to Closing set forth in Sections 1.3(a), (b) and
(c) and cooperating in seeking to obtain any consent required from Governmental
Entities.

 

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3.3 Stockholder Approval; Proxy Statement. The Company agrees to use its
reasonable best efforts to seek the approval of the holders of a majority of the
outstanding Common Stock voting as a single class (which, for this purpose,
shall not include the votes of holders of shares of the Series A Preferred
Stock), in accordance with applicable Law, the By-laws and the NYSE Listed
Company Manual, of the conversion of the Series B Preferred Stock into Series A
Preferred Stock (the “Stockholder Approval”) at the 2015 annual meeting of the
stockholders of the Company (the “Stockholder Meeting”), which shall be held as
soon as reasonably practicable after the consummation of the transactions
contemplated by this Agreement, provided that if the Purchaser or an Affiliate
of the Purchaser commences the tender offer contemplated by the Tender Offer
Letter of Intent, such meeting shall be scheduled promptly following
consummation or termination of such tender offer. The preliminary proxy
statement to be sent to the Company’s stockholders in connection with the
Stockholder Meeting (the “Proxy Statement”) shall include the recommendation of
the Board of Directors that the stockholders vote in favor of the Stockholder
Approval. If the Stockholder Approval is not obtained at the Stockholder
Meeting, then the Company will use its reasonable best efforts to obtain the
Stockholder Approval at the next occurring annual meeting of the stockholders of
the Company. The Company shall use commercially reasonable efforts to solicit
from the stockholders proxies in favor of the Stockholder Approval and to obtain
the Stockholder Approval. The Purchaser agrees to furnish to the Company all
information concerning the Purchaser and its Affiliates as the Company may
reasonably request in connection with any stockholder meeting at which the
Stockholder Approval is sought. The Company shall respond reasonably promptly to
any comments received from the SEC with respect to any preliminary Proxy
Statement. The Company shall provide to the Purchaser, as promptly as reasonably
practicable after receipt thereof, any written comments from the SEC or any
written request from the SEC or its staff for amendments or supplements to the
Proxy Statement or any preliminary proxy statement as it relates to the
Stockholder Approval and shall provide the Purchaser with copies of all
correspondence between the Company, on the one hand, and the SEC and its staff,
on the other hand, relating to the Proxy Statement as it relates to the
Stockholder Approval. Notwithstanding anything to the contrary stated above,
prior to filing or mailing the Proxy Statement (or, in each case, any amendment
or supplement thereto) or responding to any comments of the SEC or its staff
with respect thereto as it relates to the Stockholder Approval, the Company
shall provide the Purchaser with a reasonable opportunity to review and comment
on such document or response.

3.4 Authorized Common Stock. At any time that any Preferred Shares are
outstanding, the Company shall from time to time take all lawful action within
its control to cause the authorized capital stock of the Corporation to include
a sufficient number of authorized but unissued shares of (a) Common Stock to
satisfy the conversion requirements of all shares of the Series A Preferred
Stock then outstanding (assuming full conversion of the Series B Preferred Stock
and giving effect to any adjustment to the Conversion Rate (as defined in the
Series A Certificate) pursuant to Section 9 of the Series A Certificate) and
(b) Series A Preferred Stock to satisfy the conversion requirements of all
shares of the Series B Preferred Stock then outstanding (giving effect to any
adjustment of the Conversion Rate (as defined in the Series B Certificate)
pursuant to Section 9 of the Series B Certificate). All shares of Common Stock

 

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delivered upon conversion of the Series A Preferred Stock shall be newly issued
shares or shares held in treasury by the Company, shall have been duly
authorized and validly issued and shall be fully paid and nonassessable, and
free and clear of any Liens (other than Liens incurred by the Purchaser,
restrictions arising under applicable securities Laws or the Stockholder Rights
Agreement).

3.5 Series A Certificate. Prior to the Closing, the Company shall file in the
office of the Secretary of State of the State of Delaware the Series A
Certificate in the form attached to this Agreement as Schedule A, with such
changes thereto as the parties may agree.

3.6 Series B Certificate. Prior to the Closing, the Company shall file in the
office of the Secretary of State of the State of Delaware the Series B
Certificate in the form attached to this Agreement as Schedule B, with such
changes thereto as the parties may agree.

3.7 Certain Adjustments. If any occurrence from the date hereof until the
Closing would have resulted in an adjustment to the Conversion Rate (as defined
in the Series A Certificate) pursuant to Section 9 of the Series A Certificate
if the Series A Preferred Stock had been issued and outstanding since the date
hereof, the Company shall adjust the Conversion Rate, effective as of the
Closing, in the same manner as would have been required by Section 9 of the
Series A Certificate if the Series A Preferred Stock had been issued and
outstanding since the date hereof.

3.8 Confidentiality. Each party to this Agreement will hold, and will cause its
respective Affiliates and their respective directors, managers, officers,
employees, agents, consultants and advisors to hold, in strict confidence,
unless disclosure to a regulatory authority is necessary in connection with any
necessary regulatory approval, examination or inspection or unless disclosure is
required by judicial or administrative process or by other requirement of law or
the applicable requirements of any regulatory agency or relevant stock exchange
(in which case, other than in connection with a disclosure in connection with a
routine audit or examination by, or document request from, a regulatory or
self-regulatory authority, bank examiner or auditor, the party disclosing such
information shall provide the other party with prior written notice of such
permitted disclosure), all non-public records, books, contracts, instruments,
computer data and other data and information (collectively, “Information”)
concerning the other party hereto furnished to it by or on behalf of such other
party or its representatives pursuant to this Agreement (except to the extent
that such information can be shown to have been (1) previously known by such
party from other sources, provided that such source was not known, after
reasonable inquiry and investigation, by such party to be bound by a
contractual, legal or fiduciary obligation of confidentiality to the other
party, (2) in the public domain through no violation of this Section 3.8 by such
party or (3) later lawfully acquired from other sources by the party to which it
was furnished), and neither party hereto shall release or disclose such
Information to any other person, except its auditors, attorneys, financial
advisors, financing sources and other consultants and advisors. The
Confidentiality Agreement, dated as of March 20, 2015 (the “Confidentiality
Agreement”), by and between GrafTech International Ltd. and Brookfield Capital
Partners LLC shall remain in full force and effect.

3.9 NYSE Listing of Shares. To the extent it has not already done so, the
Company shall promptly apply to cause the shares of Common Stock issuable upon
the conversion of the Series A Preferred Stock to be approved for listing on the
NYSE, subject to official notice of issuance.

 

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3.10 State Securities Laws. During the Pre-Closing Period, the Company shall use
its reasonable best efforts to (a) obtain all necessary permits and
qualifications, if any, or secure an exemption therefrom, required by any state
or country prior to the offer and sale of Common Stock upon the conversion of
the Preferred Shares and/or the Preferred Shares and (b) cause such
authorization, approval, permit or qualification to be effective as of the
Closing and, as to such Common Stock, as of any conversion of the Preferred
Shares.

3.11 Negative Covenants. During the Pre-Closing Period, the Company and its
Subsidiaries shall use their reasonable best efforts to operate their businesses
in the ordinary course, and, without the prior written consent of the Purchaser
(which consent shall not be unreasonably withheld, conditioned or delayed),
shall not:

(a) declare, or make payment in respect of, any dividend or other distribution
upon any shares of capital stock of the Company;

(b) redeem, repurchase or acquire any capital stock of the Company or any of its
Subsidiaries, other than repurchases of capital stock from employees, officers
or directors of the Company or any of its Subsidiaries in the ordinary course of
business pursuant to any of the Company’s agreements or plans in effect as of
the date hereof;

(c) amend the Certificate of Incorporation or Bylaws in a manner that would
adversely affect the Purchaser either as a holder of Series A Preferred Stock or
with respect to the rights of the Purchaser under this Agreement, the
Registration Rights Agreement or the Stockholder Rights Agreement; or

(d) authorize, issue or reclassify any capital stock, or securities exercisable
for, exchangeable for or convertible into capital stock, of the Company other
than (i) the authorization and issuance of the Series A Preferred Stock and the
Series B Preferred Stock and (ii) issuances of capital stock, or securities
exercisable for, exchangeable for or convertible into capital stock, of the
Company to employees, officers and directors of the Company or any of its
Subsidiaries in the ordinary course of business pursuant to any of the Company’s
agreements or plans in effect as of the date hereof.

3.12 Change of Control. The parties agree that in the event a Change of Control
(as defined in the Series A Certificate) occurs on or prior to the Closing Date
(a “Pre-Closing Change of Control”), upon issuance of the Preferred Shares, the
holders of the Preferred Shares shall have the right to require the Company to
repurchase, by irrevocable, written notice to the Company, all or any portion of
such holder’s Preferred Shares at a purchase price per Preferred Share equal to
the amount such holders would have received in the Pre-Closing Change of Control
had they converted such shares into shares of Common Stock immediately prior to
the Pre-Closing Change of Control (i.e., the As-Converted Value of Preferred
Stock per Annex 1 to the Series A Certificate) (the “Repurchase Price”). Within
thirty (30) days following the Pre-Closing Change of Control, the Company shall
send notice by first class mail, postage prepaid, addressed to (a) if the
Closing has occurred, the holders of record of Preferred Shares at their

 

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respective last addresses appearing on the books of the Company or (b) if the
Closing has not occurred, to the Purchaser in accordance with Section 6.6,
stating (i) that a Pre-Closing Change of Control has occurred, (ii) that all
shares of Series A Preferred Stock tendered prior to a specified Business Day no
earlier than thirty (30) days nor later than sixty (60) days from the date such
notice is mailed shall be accepted for repurchase; provided, that if the Closing
has not occurred as of the date such notice is mailed, then such specified
Business Day shall be no earlier than thirty (30) days nor later than sixty
(60) days after the Closing Date, and (iii) the procedures that the holders of
the Preferred Shares must follow in order for their Preferred Shares to be
repurchased, including the place or places where certificates for such shares
are to be surrendered for payment of the Repurchase Price. If such holders have
not timely tendered their shares of Series A Preferred Stock in accordance with
the foregoing sentence, such holders shall be deemed to have waived all rights
to have their Preferred Shares repurchased under this Section 3.12 and under the
Series A Certificate with respect to such Pre-Closing Change of Control.

ARTICLE IV

ADDITIONAL AGREEMENTS

4.1 Legend.

(a) The Purchaser agrees that all certificates or other instruments representing
the Preferred Shares subject to this Agreement (or the shares of Common Stock
issuable upon conversion thereof) will bear a legend substantially to the
following effect:

THE SECURITIES REPRESENTED BY THIS INSTRUMENT HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE AND MAY
NOT BE TRANSFERRED, SOLD OR OTHERWISE DISPOSED OF EXCEPT WHILE A REGISTRATION
STATEMENT RELATING THERETO IS IN EFFECT UNDER SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT OR
SUCH LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO TRANSFER AND OTHER
RESTRICTIONS SET FORTH IN A STOCKHOLDER RIGHTS AGREEMENT, DATED AS OF [●], 2015,
A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE ISSUER.

(b) Upon request of the applicable Brookfield Party (or any Permitted
Transferee), upon receipt by the Company of an opinion of counsel reasonably
satisfactory to the Company to the effect that such legend is no longer required
under the Securities Act and applicable state laws, the Company shall promptly
cause the first paragraph of the legend to be removed from any certificate for
any Preferred Shares to be transferred in accordance with the terms of the
Stockholder Rights Agreement. The Purchaser acknowledges that the Preferred
Shares and Common Stock issuable upon conversion of the Series A Preferred Stock
have not been registered under the Securities Act or under any state securities
laws and agrees that it will not

 

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sell or otherwise dispose of any of the Preferred Shares or Common Stock
issuable upon conversion of the Series A Preferred Stock, except in compliance
with the registration requirements or exemption provisions of the Securities
Act, any other applicable securities laws and the Stockholder Rights Agreement.

4.2 Tax Matters.

(a) The Company and its paying agent shall be entitled to withhold taxes on all
payments on the Preferred Shares or Common Stock or other securities issued upon
conversion of the Series A Preferred Stock to the extent required by law. Prior
to the date of any such payment, the Purchaser (or any transferee) shall deliver
to the Company or its paying agent a duly executed, valid, accurate and properly
completed Internal Revenue Service Form W-9 or an appropriate Internal Revenue
Service Form W-8, as applicable.

(b) Absent a change in law or Internal Revenue Service practice, or a contrary
determination (as defined in Section 1313(a) of the United States Internal
Revenue Code of 1986, as amended (the “Code”)), the Purchaser and the Company
agree not to treat the Preferred Shares (based on their terms as set forth in
the Series A Certificate and Series B Certificate, as applicable) as “preferred
stock” within the meaning of Section 305 of the Code, and Treasury Regulation
Section 1.305-5 for United States federal income tax and withholding tax
purposes and shall not take any position inconsistent with such treatment.

(c) The Company shall pay any and all documentary, stamp and similar issue or
transfer tax due on (x) the issuance of the Preferred Shares, (y) the issuance
of shares of Common Stock upon conversion of the Series A Preferred Stock or
(z) the issuance of shares of Series A Preferred Stock upon conversion of the
Series B Preferred Stock. However, in the case of conversion of Series A
Preferred Stock, the Company shall not be required to pay any tax or duty that
may be payable in respect of any transfer involved in the issuance and delivery
of shares of Common Stock or Series A Preferred Stock in a name other than that
of the holder of the shares to be converted, and no such issuance or delivery
shall be made unless and until the person requesting such issuance has paid to
the Company the amount of any such tax or duty, or has established to the
satisfaction of the Company that such tax or duty has been paid.

(d) The Purchaser and the Company agree to cooperate with each other in
connection with any redemption of part of the Preferred Shares and to use good
faith efforts to structure such redemption so that such redemption may be
treated as a sale or exchange pursuant to Section 302 of the Code; provided that
nothing in this Section 4.2(d) shall require the Company to purchase any of the
Preferred Shares, and provided further that the Company makes no representation
or warranty hereunder regarding the tax treatment of any redemption of the
Preferred Shares.

ARTICLE V

INDEMNITY

5.1 Indemnification by the Company. From and after the Closing, the Company
agrees to indemnify the Purchaser and its Affiliates and its and their officers,
directors, managers, employees and agents (collectively, “Purchaser Related
Parties”) from, and hold each

 

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of them harmless against, any and all losses, damages, actions, suits,
proceedings (including any investigations, litigation or inquiries), demands and
causes of action (“Losses”), and, in connection therewith, and promptly upon
demand, pay or reimburse each of them for all reasonable and documented
out-of-pocket costs, losses, liabilities, damages or expenses of any kind or
nature whatsoever (including the reasonable fees and disbursements of counsel
and all other reasonable and documented out-of-pocket expenses incurred in
connection with investigating, defending or preparing to defend any such matter
that may be incurred by them or asserted against or involve any of them),
whether or not involving a Third Party Claim, incurred by or asserted against
such Purchaser Related Parties, as a result of or arising out of (i) the failure
of the representations or warranties made by the Company contained in
Section 2.1(a), 2.1(b), 2.1(c)(1), 2.1(e), 2.1(f)(1), 2.1(f)(4) or in any
certificate delivered pursuant hereto to be true and correct or (ii) the breach
of any of the covenants of the Company contained herein; provided that in the
case of the immediately preceding clause (i), such claim for indemnification
relating to a breach of any representation or warranty is made prior to the
expiration of such representation or warranty as set forth in Section 5.5;
provided, further, that for purposes of determining when an indemnification
claim has been made, the date upon which a Purchaser Related Party shall have
given written notice (stating in reasonable detail the basis of the claim for
indemnification) to the Company shall constitute the date upon which such claim
has been made.

5.2 Indemnification by the Purchaser. From and after the Closing, the Purchaser
agrees to indemnify the Company and its officers, directors, managers,
employees, and agents (collectively, “Company Related Parties”) from, and hold
each of them harmless against, any and all Losses, and, in connection therewith,
and promptly upon demand, pay or reimburse each of them for all reasonable and
documented out-of-pocket costs, losses, liabilities, damages or expenses of any
kind or nature whatsoever (including the reasonable fees and disbursements of
counsel and all other reasonable and documented out-of-pocket expenses incurred
in connection with investigating, defending or preparing to defend any such
matter that may be incurred by them or asserted against or involve any of them),
whether or not involving a Third Party Claim, incurred by or asserted against
such Company Related Parties as a result of or arising out of (i) the failure of
any of the representations or warranties made by the Purchaser contained in
Section 2.2(a), 2.2(b)(1) or 2.2(c) to be true and correct or (ii) the breach of
any of the covenants of the Purchaser contained herein; provided that in the
case of the immediately preceding clause (i), such claim for indemnification
relating to a breach of any representation or warranty is made prior to the
expiration of such representation or warranty as set forth in Section 5.5;
provided, further, that for purposes of determining when an indemnification
claim has been made, the date upon which a Company Related Party shall have
given written notice (stating in reasonable detail the basis of the claim for
indemnification) to the Purchaser shall constitute the date upon which such
claim has been made.

5.3 Indemnification Procedure.

(a) A claim for indemnification for any matter not involving a Third Party Claim
may be asserted by written notice to the party from whom indemnification is
sought; provided, however, that failure to so notify the indemnifying party
shall not preclude the indemnified party from any indemnification that it may
claim in accordance with this Article V unless and to the extent the
Indemnifying Party is materially prejudiced by such failure, except as otherwise
provided in Sections 5.1 and 5.2.

 

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(b) Promptly after any Company Related Party or Purchaser Related Party
(hereinafter, the “Indemnified Party”) has received notice of any indemnifiable
claim hereunder, or the commencement of any action, suit or proceeding by a
third person, which the Indemnified Party believes in good faith is an
indemnifiable claim under this Agreement (each, a “Third Party Claim”), the
Indemnified Party shall give the indemnitor hereunder (the “Indemnifying Party”)
written notice of such Third Party Claim but failure or delay to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any liability it
may have to such Indemnified Party hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure or delay. Such
notice shall state the nature and the basis of such Third Party Claim to the
extent then known. The Indemnifying Party shall have the right to assume and
control the defense of, and settle, at its own expense and by its own counsel,
any such matter as long as the Indemnifying Party pursues the same diligently
and in good faith. If the Indemnifying Party undertakes to assume and control
the defense or settle such Third Party Claim, it shall promptly, and in no event
later than ten (10) business days after notice of such claim, notify the
Indemnified Party of its intention to do so, and the Indemnified Party shall
cooperate with the Indemnifying Party and its counsel in all reasonable respects
in the defense thereof and/or the settlement thereof. Such cooperation shall
include, but shall not be limited to, furnishing the Indemnifying Party with any
books, records and other information reasonably requested by the Indemnifying
Party and in the Indemnified Party’s possession or control. Such cooperation of
the Indemnified Party shall be at the cost of the Indemnifying Party. After the
Indemnifying Party has notified the Indemnified Party of its intention to
undertake to defend or settle any such asserted liability, and for so long as
the Indemnifying Party diligently pursues such defense, the Indemnifying Party
shall not be liable for any additional legal expenses incurred by the
Indemnified Party in connection with any defense or settlement of such asserted
liability; provided, however, that the Indemnified Party shall be entitled
(i) at its own expense, to participate in the defense of such asserted liability
and any negotiations of the settlement thereof and (ii) if (A) the Indemnifying
Party has, within fifteen (15) business days of when the Indemnified Party
provides written notice of a Third Party Claim, failed to (y) assume the defense
or settlement of such Third Party Claim and (z) notify the Indemnified Party of
such assumption, or (B) the defendants in any such action include both the
Indemnified Party and the Indemnifying Party and counsel to the Indemnified
Party shall have concluded that there may be reasonable defenses available to
the Indemnified Party that are different from or in addition to those available
to the Indemnifying Party or if the interests of the Indemnified Party
reasonably may be deemed to conflict with the interests of the Indemnifying
Party, then, in each case, the Indemnified Party shall have the right to select
one (1) separate counsel and, upon prompt notice to the Indemnifying Party, to
assume such settlement or legal defense and otherwise to participate in the
defense of such action, with the expenses and fees of such separate counsel and
other expenses related to such participation to be reimbursed by the
Indemnifying Party as incurred. Notwithstanding any other provision of this
Agreement, the Indemnifying Party shall not settle any indemnified claim without
the consent of the Indemnified Party, unless the settlement thereof imposes no
liability or obligation on, and includes a complete release from liability of,
and does not contain any admission of wrongdoing by, the Indemnified Party.

5.4 Tax Matters. All indemnification payments under this Article V shall be
treated as adjustments to the Purchase Price for tax purposes, except as
otherwise required by applicable Law.

 

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5.5 Survival. The representations and warranties of the parties contained in
this Agreement shall survive for twelve (12) months following the Closing,
except that (i) the representations and warranties of the Company contained in
Sections 2.1(a), 2.1(b), 2.1(c)(1) and 2.1(e) will survive until the expiration
of the applicable statute of limitations, and (ii) the representations and
warranties of the Purchaser contained in Sections 2.2(a), 2.2(b)(1) or 2.2(c)
will survive until the expiration of the applicable statute of limitations. All
of the covenants or other agreements of the parties contained in this Agreement
shall survive until fully performed or fulfilled, unless and to the extent that
non-compliance with such covenants or agreements is waived in writing by the
party entitled to such performance.

5.6 Limitation on Damages. Notwithstanding any other provision of this
Agreement, except in the case of fraud, no party hereto shall have any liability
to the other party in excess of the Purchase Price, and neither party shall be
liable for any exemplary or punitive damages or any other damages to the extent
not reasonably foreseeable arising out of or in connection with this Agreement
or the transactions contemplated hereby (in each case, unless any such damages
are awarded pursuant to a Third Party Claim).

ARTICLE VI

MISCELLANEOUS

6.1 Expenses. Each of the parties will bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
pursuant to this Agreement; provided that, except as set forth in Section 4.2(c)
that the Company shall, upon the Closing of the transaction contemplated hereby,
or thereafter, reimburse the Purchaser for its reasonable and documented
out-of-pocket third-party costs and expenses incurred in connection with due
diligence, the negotiation and preparation of this Agreement and undertaking of
the transactions contemplated pursuant to this Agreement, including any such
costs and expenses incurred after the Closing (including fees and expenses of
attorneys and accounting and financial advisers in connection with the
transactions contemplated pursuant to this Agreement); provided that the maximum
amount of such reimbursable costs and expenses shall not exceed $500,000 in the
aggregate.

6.2 Amendment; Waiver. No amendment or waiver of any provision of this Agreement
will be effective with respect to any party unless made in writing and signed by
an officer of a duly authorized representative of such party. No failure or
delay by any party in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The conditions to each party’s obligation to
consummate the Closing are for the sole benefit of such party and may be waived
by such party in whole or in part to the extent permitted by applicable law. No
waiver of any party to this Agreement will be effective unless it is in a
writing signed by a duly authorized officer of the waiving party that makes
express reference to the provision or provisions subject to such waiver. The
rights and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.

 

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6.3 Counterparts; Electronic Transmission. For the convenience of the parties
hereto, this Agreement may be executed in any number of separate counterparts,
each such counterpart being deemed to be an original instrument, and all such
counterparts will together constitute the same agreement. Executed signature
pages to this Agreement may be delivered by facsimile or other means of
electronic transmission and such facsimiles or other means of electronic
transmission will be deemed as sufficient as if actual signature pages had been
delivered.

6.4 Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware. The parties hereby
irrevocably and unconditionally consent to submit to the exclusive jurisdiction
of the state and federal courts located in the State of Delaware for any
actions, suits or proceedings arising out of or relating to this Agreement and
the transactions contemplated hereby. The parties hereby irrevocably and
unconditionally consent to the jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such action, suit or proceeding
and irrevocably waive, to the fullest extent permitted by law, any objection
that they may now or hereafter have to the laying of the venue of any such
action, suit or proceeding in any such court or that any such action, suit or
proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such action, suit or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 6.6 shall be deemed
effective service of process on such party.

6.5 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

6.6 Notices. Any notice, request, instruction or other document to be given
hereunder by any party to the other will be in writing and will be deemed to
have been duly given (a) on the date of delivery if delivered personally or by
telecopy or facsimile, upon confirmation of receipt, (b) on the first business
day following the date of dispatch if delivered by a recognized next-day courier
service, or (c) on the third business day following the date of mailing if
delivered by registered or certified mail, return receipt requested, postage
prepaid. All notices hereunder shall be delivered as set forth below, or
pursuant to such other instructions as may be designated in writing by the party
to receive such notice.

 

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  (a) If to Purchaser:

BCP IV GrafTech Holdings LP

c/o Brookfield Capital Partners Ltd.

Brookfield Place

181 Bay Street, Suite 300

Toronto, Ontario M5J 2T3

Attn: David Nowak Peter Gordon E-mail: David.Nowak@brookfield.com
Peter.Gordon@brookfield.com Fax: 416-365-9642

with a copy to (which copy alone shall not constitute notice):

Weil, Gotshal & Manges LLP

767 Fifth Avenue

New York, New York 10153

Attn: Michael J. Aiello Jackie Cohen E-mail: michael.aiello@weil.com
jackie.cohen@weil.com Fax: 212-310-8007

 

  (b) If to the Company:

GrafTech International Ltd.

Suite 300 Park Center I

6100 Oak Tree Boulevard

Independence, Ohio 44131

Attn: General Counsel E-mail: john.moran@graftech.com Fax: 216-676-2526

with copies to (which copy alone shall not constitute notice):

Willkie Farr & Gallagher LLP

787 Seventh Avenue

New York, New York 10019

Attn: Steven A. Seidman Michael A. Schwartz E-mail: sseidman@willkie.com
mschwartz@willkie.com Fax: 212-728-8111

and

Withers Bergman LLP

660 Steamboat Road

Greenwich, Connecticut 06830

Attn: M. Ridgway Barker E-mail: mr.barker@withersworldwide.com Fax: 203-302-6613

 

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6.7 Entire Agreement. This Agreement (including the Schedules hereto and the
documents and instruments referred to in this Agreement), together with the Fund
Guarantee and the Confidentiality Agreement, constitutes the entire agreement
among the parties and supersedes the Letter of Intent and all other prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and transactions contemplated hereby.

6.8 Assignment. Neither this Agreement, nor any of the rights, interests or
obligations hereunder shall be assigned by any of the parties hereto (whether by
operation of Law or otherwise) without the prior written consent of the other
party, provided, however, that (a) the Purchaser or any Brookfield Party may
assign its rights, interests and obligations under this Agreement, in whole or
in part, to one or more Permitted Transferees, after the Closing, subject to any
conditions in the Stockholder Rights Agreement, and (b) in the event of such
assignment, the assignee shall agree in writing to be bound by the provisions of
this Agreement, including the rights, interests and obligations so assigned;
provided that no such assignment will relieve the Purchaser of its obligations
hereunder prior to the Closing; provided, further, that no Brookfield Party
shall assign any of its obligations hereunder with the primary intent of
avoiding, circumventing or eliminating such Brookfield Party’s obligations
hereunder.

6.9 Interpretation; Other Definitions. Wherever required by the context of this
Agreement, the singular shall include the plural and vice versa, and the
masculine gender shall include the feminine and neuter genders and vice versa,
and references to any agreement, document or instrument shall be deemed to refer
to such agreement, document or instrument as amended, supplemented or modified
from time to time. All article, section, paragraph or clause references not
attributed to a particular document shall be references to such parts of this
Agreement, and all exhibit, annex, letter and schedule references not attributed
to a particular document shall be references to such exhibits, annexes, letters
and schedules to this Agreement. In addition, the following terms are ascribed
the following meanings:

(a) the word “or” is not exclusive;

(b) the words “including,” “includes,” “included” and “include” are deemed to be
followed by the words “without limitation”;

(c) the terms “herein,” “hereof” and “hereunder” and other words of similar
import refer to this Agreement as a whole and not to any particular section,
paragraph or subdivision;

(d) the term “business day” means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in the
State of New York or the State of Ohio generally are authorized or required by
law or other governmental action to close; and

 

29

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(e) the term “person” has the meaning given to it in Section 3(a)(9) of the
Exchange Act and as used in Sections 13(d)(3) and 14(d)(2) of the Exchange Act.

(f) “Affiliate” means, with respect to any person, any person directly or
indirectly controlling, controlled by or under common control with, such other
person; provided, however, that (i) portfolio companies in which any person or
any of its Affiliates has an investment shall not be deemed an Affiliate of such
person, or (ii) the Company, any of its Subsidiaries, or any of the Company’s
other controlled Affiliates, in each case, will not be deemed to be Affiliates
of the Purchaser for purposes of this Agreement; provided, however, that for the
purposes of Section 3.8, any portfolio company of the Purchaser or its
Affiliates that (but for clause (i) of this definition) would be an Affiliate of
the Purchaser will be an Affiliate if the Purchaser or any of its Affiliates (or
any representative on behalf of the Purchaser or any of its Affiliates) has
provided, directly or indirectly, such portfolio company with Information
subject to the restrictions in Section 3.8. For purposes of this definition,
“control” (including, with correlative meanings, the terms “controlled by” and
“under common control with”) when used with respect to any person, means the
possession, directly or indirectly, of the power to cause the direction of
management or policies of such person, whether through the ownership of voting
securities, by contract or otherwise.

(g) “Brookfield Parties” means the Purchaser and affiliates of the Purchaser to
whom shares of Series A Preferred Stock, Series B Preferred Stock or Common
Stock are transferred pursuant to the Stockholder Rights Agreement.

(h) “Company Material Adverse Effect” shall mean, with respect to the Company,
any Effect that, individually or taken together with all other Effects that have
occurred prior to the date of determination of the occurrence of the Company
Material Adverse Effect, is or is reasonably likely to be materially adverse to
the business, results of operations or financial condition of the Company and
its Subsidiaries, taken as a whole; provided, however, that in no event shall
any of the following individually or taken together, be deemed to constitute, or
be taken into account in determining whether a Company Material Adverse Effect
has occurred: (A) any change in the Company’s stock price or trading volume on
the NYSE, (B) any failure by the Company to meet internal or analyst revenue,
earnings or other financial projections or expectations for any period, (C) any
default of or acceleration or repurchase obligation under the Credit Agreement,
Senior Notes or Senior Subordinated Notes by the Company as a direct result of
the transactions contemplated by this Agreement or as a result of the tender
offer contemplated by the letter of intent executed on April 29, 2015, by and
between the Company and an Affiliate of the Purchaser (the “Tender Offer Letter
of Intent”) (including any event of default as a result of a cross default),
(D) any Effect that results from changes affecting the industry in which the
Company operates, or the United States economy generally, or any Effect that
results from changes affecting general worldwide economic or United States or
global capital market conditions, (E) any Effect caused by the announcement or
pendency of the transactions contemplated by this Agreement or the other
Transaction Documents, or the identity of the Purchaser or any of its Affiliates
as the purchaser in connection with the transactions contemplated by this
Agreement, (F) political conditions, including acts of war or terrorism or

 

30

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natural disasters, (G) the performance of this Agreement and the transactions
contemplated hereby, including compliance with the covenants set forth herein
and therein, or any action taken or omitted to be taken by the Company at the
written request or with the prior written consent of the Purchaser, (H) changes
in GAAP or other accounting standards (or any interpretation thereof),
(I) changes in any Laws or other binding directives issued by any Governmental
Entity or interpretations or enforcement thereof or (J) the matters set forth in
Schedule 6.9(i); provided, however, that (x) the exceptions in clause (A) and
(B) shall not prevent or otherwise affect a determination that any Effect
underlying such change or failure has resulted in, or contributed to, a Company
Material Adverse Effect, (y) with respect to clauses (D), (F) and (I), such
Effects, alone or in combination, may be deemed to constitute, or be taken into
account in determining whether a Company Material Adverse Effect has occurred,
but only to the extent such Effects disproportionately affect the Company and
its Subsidiaries, taken as a whole, relative to other companies operating in the
same industry as the Company and its Subsidiaries.

(i) “Credit Agreement” means that certain Second Amended and Restated Credit
Agreement, dated as of February 27, 2015, among the Company, GrafTech Finance
Inc., GrafTech Luxembourg I S.a.r.l., GrafTech Luxembourg II S.a.r.l., GrafTech
Switzerland S.A., the LC Subsidiaries (as defined therein) from time to time
party thereto, the lenders from time to time party thereto and JPMorgan Chase
Bank, N.A. as administrative agent (as amended, restated, supplemented or
otherwise modified from time to time).

(j) “Effect” shall mean any change, event, effect, development or circumstance.

(k) “Environmental Law” shall mean any Laws regulating, relating to or imposing
standards of conduct concerning protection of the environment or of human health
and safety.

(l) “Equity Securities” means the equity securities of the Company, including
shares of Common Stock, Series A Preferred Stock and Series B Preferred Stock.

(m) “ERISA” shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and all rules, regulations, rulings and
interpretations adopted by the Internal Revenue Service or the Department of
Labor thereunder.

(n) “Exon Florio” shall mean section 721 of the Defense Production Act of 1950,
codified at 50 U.S.C. App. § 2170, as amended, together with the implementing
regulations set forth at 31 C.F.R. pt. 800.

(o) “Governmental Entity” shall mean any court, administrative or regulatory
agency or commission or other governmental or arbitral body or authority or
instrumentality, including any state-controlled or owned corporation or
enterprise, in each case whether federal, state, local or foreign, and any
applicable industry self-regulatory organization.

(p) “Intellectual Property” means all worldwide intellectual and industrial
property rights, whether or not registered, including patents, utility models,
trademarks, service marks, trade names, corporate names, trade dress, domain
names, and other source indicators (and all goodwill relating thereto),
copyrights and copyrighted works, inventions, know-how, trade secrets, methods,
processes, formulae, technical or proprietary information, and technology and
all registrations, applications, renewals, re-examinations, re-issues,
divisions, continuations, continuations-in part and foreign counterparts
thereof.

 

31

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(q) “Knowledge of the Company” means the actual knowledge after reasonable
inquiry of one or more of Joel L. Hawthorne, Erick R. Asmussen, John D. Moran,
Lionel D. Batty, Darrell Blair, Michael Carr and Tom Jacques.

(r) “Law” means any applicable federal, state, local, municipal, foreign or
other law, statute, constitution, principle of common law, resolution,
ordinance, code, order, edict, decree, rule, regulation, ruling or other legally
binding requirement issued, enacted, adopted, promulgated, implemented or
otherwise put into effect by or under the authority of any Governmental Entity.

(s) “Letter of Intent” means that certain letter agreement, dated as of
April 29, 2015, by and between the Purchaser and the Company, relating to the
purchase of Preferred Shares by the Purchaser from the Company.

(t) “Lien” means any mortgage, pledge, security interest, encumbrance, lien,
charge or other restriction of any kind, whether based on common law, statute or
contract.

(u) “Materials of Environmental Concern” shall mean any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactivity, and any other substances that are regulated
pursuant to or could give rise to liability under any Environmental Law.

(v) “Permitted Transferee” means, with respect to any person, (i) any Affiliate
of such person, (ii) any successor entity of such person and (iii) with respect
to any person that is an investment fund, vehicle or similar entity, any other
investment fund, vehicle or similar entity of which such person or an Affiliate,
advisor or manager of such person serves as the general partner, manager or
advisor.

(w) “Plan” shall mean (i) any employee pension benefit plan (as defined in
Section 3(2)(A) of ERISA) maintained for employees of the Company or of any
member of a “controlled group,” as such term is defined in Section 414 of the
Code, of which the Company or any of its Subsidiaries is a part, or any such
employee pension benefit plan to which the Company or any of its Subsidiaries is
required to contribute on behalf of its employees, and any other employee
benefit plan (as defined in Section 3(3) of ERISA), whether or not subject to
ERISA; or (ii) any compensation or other benefit plan, policy, program,
agreement or arrangement, including any employment, change in control, bonus,
equity-based compensation, retention or other similar agreement, that the
Company or any of its Subsidiaries, maintains, sponsors, is a party to, or as to
which the Company or any of its Subsidiaries otherwise has any material
obligation or material liability.

(x) “Registration Rights Agreement” means that certain Registration Rights
Agreement, the form of which is set forth as Schedule B.

 

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(y) “Senior Notes” means the 6.375% senior promissory notes of the Company,
issued on November 20, 2012, due 2020.

(z) “Senior Subordinated Notes” means the senior subordinated promissory notes
of the Company, issued on November 30, 2010, for an aggregate total face amount
of $200 million, due November 2015.

(aa) “Series A Number” means the number of whole shares of Series A Preferred
Stock that, upon issuance of the Series A Preferred Stock on the Closing Date,
is convertible into an aggregate number of shares of Common Stock that is most
nearly equal to (but not more than) 19.9% of the number of shares of Common
Stock outstanding immediately prior to such issuance of the Series A Preferred
Stock.

(bb) “Series B Number” means a number of whole shares of Series B Preferred
Stock equal to (x) 150,000 minus (y) the number of Series A Shares.

(cc) “Stockholder Rights Agreement” means that certain Stockholder Rights
Agreement, the form of which is attached hereto as Schedule D.

(dd) “Tax Return” means any return, declaration, report, statement or other
document filed or required to be filed in respect of Taxes (including any
attached schedules), including any information return, claim for refund, amended
return and declaration of estimated Tax.

(ee) “Taxes” shall mean all United States federal, state, local or foreign
taxes, charges, fees, levies or other assessments, including, without
limitation, income, gross receipts, excise, real and personal property, profits,
estimated, severance, occupation, production, capital gains, capital stock,
goods and services, environmental, employment, withholding, stamp, value added,
alternative or add-on minimum, sales, transfer, use, license, payroll and
franchise taxes or any other tax, custom, duty or governmental fee, or other
like assessment or charge of any kind whatsoever, imposed by the United States,
or any state, county, local or foreign government or subdivision or agency
thereof, and such term shall include any interest, penalties, fines, related
liabilities or additions to tax attributable to such taxes, charges, fees,
levies or other assessments, and any liability for Taxes (as heretofore defined)
payable by reason of contract, assumption, transferee liability, operation of
Law, Treas. Reg. § 1.1502-6(a) (or any predecessor or successor thereof and any
analogous or similar provision under Law) or otherwise.

(ff) “Transaction Documents” means this Agreement, the Series A Certificate, the
Series B Certificate, the Registration Rights Agreement and the Stockholder
Rights Agreement.

6.10 Captions. The article, section, paragraph and clause captions herein are
for convenience of reference only, do not constitute part of this Agreement and
will not be deemed to limit or otherwise affect any of the provisions hereof.

6.11 Severability. If any provision of this Agreement or the application thereof
to any person (including the officers and directors of the parties hereto) or
circumstance is determined by a court of competent jurisdiction to be invalid,
void or unenforceable, the remaining provisions hereof, or the application of
such provision to persons or circumstances other than those as to which it has
been held invalid or unenforceable, will remain in full force and effect

 

33

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and shall in no way be affected, impaired or invalidated thereby, so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner materially adverse to any party. Upon such determination,
the parties shall negotiate in good faith in an effort to agree upon a suitable
and equitable substitute provision to effect the original intent of the parties.

6.12 No Third Party Beneficiaries. Nothing contained in this Agreement,
expressed or implied, is intended to confer upon any person other than the
parties hereto (and their permitted assigns), any benefit, right or remedies
other than the Indemnified Parties pursuant to Article V.

6.13 Public Announcements. Subject to each party’s disclosure obligations
imposed by law or regulation or the rules of any stock exchange upon which its
securities are listed, each of the parties hereto will cooperate with each other
in the development and distribution of all news releases and other public
information disclosures with respect to this Agreement and any of the
transactions contemplated by this Agreement, and neither the Company nor the
Purchaser will make any such news release or public disclosure without first
consulting with the other, and, in each case, also receiving the other’s consent
(which shall not be unreasonably withheld or delayed) and each party shall
coordinate with the party whose consent is required with respect to any such
news release or public disclosure.

6.14 Specific Performance. The parties agree that irreparable damage would occur
in the event that any of the provisions of this Agreement were not performed in
accordance with their specific terms or were otherwise breached. It is
accordingly agreed that, without the necessity of posting bond or other
undertaking, the parties shall be entitled to specific performance of the terms
hereof, this being in addition to any other remedies to which they are entitled
at law or equity, and in the event that any action or suit is brought in equity
to enforce the provisions of this Agreement, and no party will allege, and each
party hereby waives, the defense or counterclaim that there is an adequate
remedy at law.

6.15 Termination. Prior to the Closing, this Agreement may only be terminated:

(a) by mutual written agreement of the Company and the Purchaser;

(b) by the Company or the Purchaser, upon written notice to the other party if
the Closing has not occurred by the date that is 150 days after the date hereof;
provided, however that the right to terminate this Agreement pursuant to this
Section 6.15(b) shall not be available to any party whose failure to fulfill any
obligations under this Agreement shall have been the cause of, or shall have
resulted in, the failure of the Closing to occur on or prior to such date;

(c) by notice given by the Company to the Purchaser, if there have been one or
more inaccuracies in or breaches of one or more representations, warranties,
covenants or agreements made by the Purchaser in this Agreement such that the
conditions in Section 1.3(c)(1) or (2) would not be satisfied and which have not
been cured by the Purchaser thirty (30) days after receipt by the Purchaser of
written notice from the Company requesting such inaccuracies or breaches to be
cured; or

(d) by notice given by the Purchaser to the Company, if there have been one or
more inaccuracies in or breaches of one or more representations, warranties,
covenants or agreements

 

34

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made by the Company in this Agreement such that the conditions in
Section 1.3(b)(1) or (2) would not be satisfied and which have not been cured by
the Company within thirty (30) days after receipt by the Company of written
notice from the Purchaser requesting such inaccuracies or breaches to be cured.

6.16 Effects of Termination. In the event of any termination of this Agreement
in accordance with Section 6.15, neither party (or any of its Affiliates) shall
have any liability or obligation to the other (or any of its Affiliates) under
or in respect of this Agreement, except to the extent of (A) any liability
arising from any breach by such party of its obligations of this Agreement
arising prior to such termination and (B) any fraud or intentional or willful
breach of this Agreement. In the event of any such termination, this Agreement
shall become void and have no effect, and the transactions contemplated hereby
shall be abandoned without further action by the parties hereto, in each case,
except (x) as set forth in the preceding sentence and (y) that the provisions of
Sections 3.5 (Confidentiality), 6.2 to 6.14 (Amendment, Waiver; Counterparts,
Electronic Transmission; Governing Law; Waiver of Jury Trial; Notices; Entire
Agreement, Assignment; Interpretation; Other Definitions; Captions;
Severability; No Third Party Beneficiaries; Public Announcements; and Specific
Performance) and Section 6.17 (Non-Recourse) shall survive the termination of
this Agreement.

6.17 Non-Recourse. Subject to the Fund Guarantee, this Agreement may only be
enforced against, and any claims or causes of action that may be based upon,
arise out of or relate to this Agreement, or the negotiation, execution or
performance of this Agreement may only be made against the entities that are
expressly identified as parties hereto, including entities that become parties
hereto after the date hereof, including permitted assignees and successors, or
that agree in writing for the benefit of the Company to be bound by the terms of
this Agreement applicable to the Purchaser, and no former, current or future
equityholders, controlling persons, directors, officers, employees, agents or
Affiliates of any party hereto or any former, current or future equityholder,
controlling person, director, officer, employee, general or limited partner,
member, manager, advisor, agent or Affiliate of any of the foregoing (each, a
“Non-Recourse Party”) shall have any liability for any obligations or
liabilities of the parties to this Agreement or for any claim (whether in tort,
contract or otherwise) based on, in respect of, or by reason of, the
transactions contemplated hereby or in respect of any representations made or
alleged to be made in connection herewith. Subject to the Fund Guarantee,
without limiting the rights of any party against the other parties hereto, in no
event shall any party or any of its Affiliates seek to enforce this Agreement
against, make any claims for breach of this Agreement against, or seek to
recover monetary damages from, any Non-Recourse Party.

 

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IN WITNESS WHEREOF, this Agreement has been duly executed and delivered by the
duly authorized officers of the parties hereto as of the date first herein above
written.

 

GRAFTECH INTERNATIONAL LTD. By:

/s/ Joel Hawthorne

Name:  Joel Hawthorne Title: Chief Executive Officer

 

[Signature Page to Investment Agreement]

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BCP IV GRAFTECH HOLDINGS LP By:  BPE IV (Non-Cdn) GP LP, its general partner
By: 

Brookfield Capital Partners Ltd.,

its general partner

/s/ David Nowak

Name:  David Nowak Title: Managing Partner

/s/ J. Peter Gordon

Name:  J. Peter Gordon Title: Managing Partner

 

[Signature Page to Investment Agreement]

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SCHEDULE A

CERTIFICATE OF DESIGNATIONS

OF THE

SERIES A CONVERTIBLE PREFERRED STOCK,

PAR VALUE $0.01 PER SHARE,

OF

GRAFTECH INTERNATIONAL LTD.

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors (the “Board”) of GrafTech International Ltd.,
a Delaware corporation (hereinafter called the “Corporation”), with the
designations, powers, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof,
having been fixed by the Board pursuant to authority granted to it under Article
Sixth of the Corporation’s Amended and Restated Certificate of Incorporation, as
amended (the “Certificate”) and in accordance with the provisions of Section 151
of the General Corporation Law of the State of Delaware:

RESOLVED: That, pursuant to authority conferred upon the Board by the
Certificate, the Board hereby authorizes the issuance of up to 150,000 shares of
Series A Convertible Preferred Stock, par value $0.01 per share, of the
Corporation and hereby fixes the designations, powers, preferences and relative,
participating, optional or other special rights, and the qualifications,
limitations or restrictions thereof, of such shares, in addition to those set
forth in the Certificate, as follows:

Section 1. Designation. The shares of such series shall be designated “Series A
Convertible Preferred Stock,” and the number of shares constituting such series
shall be 150,000 (the “Series A Preferred Stock”). The number of shares of
Series A Preferred Stock may be increased or decreased by resolution of the
Board and the approval by the holders of a majority of the outstanding shares of
the Series A Preferred Stock, voting as a separate class; provided that no
decrease shall reduce the number of shares of Series A Preferred Stock to a
number less than the number of shares of such series then outstanding.

Section 2. Currency. All Series A Preferred Stock shall be denominated in United
States currency, and all payments and distributions thereon or with respect
thereto shall be made in United States currency. All references herein to “$” or
“dollars” refer to United States currency.

Section 3. Ranking. The Series A Preferred Stock shall, with respect to dividend
rights and rights upon liquidation, winding up or dissolution, rank senior to
each other class or series of shares of the Corporation that the Corporation may
issue in the future the terms of which do not expressly provide that such class
or series ranks equally with, or senior to, the Series A Preferred Stock, with
respect to dividend rights and/or rights upon liquidation, winding up or
dissolution, including, without limitation, the common stock of the Corporation,
par value $0.01 per share (the “Common Stock”) (such junior stock being referred
to hereinafter collectively as “Junior Stock”).

--------------------------------------------------------------------------------

The Series A Preferred Stock shall, with respect to dividend rights and rights
upon liquidation, winding up or dissolution, rank equally with each other class
or series of shares of the Corporation that the Corporation may issue in the
future the terms of which expressly provide that such class or series shall rank
equally with the Series A Preferred Stock with respect to dividend rights and
rights upon liquidation, winding up or dissolution (“Parity Stock”).

The Series A Preferred Stock shall, with respect to dividend rights and rights
upon liquidation, winding up or dissolution, rank junior to each other class or
series of shares of the Corporation that the Corporation may issue in the
future, the terms of which expressly provide that such class or series shall
rank senior to the Series A Preferred Stock with respect to dividend rights and
rights upon liquidation, winding up or dissolution. The Series A Preferred Stock
shall also rank junior to the Corporation’s existing and future Indebtedness.

For the avoidance of doubt, the Series B Convertible Preferred Stock of the
Company (the “Series B Preferred Stock”) shall, with respect to dividend rights
and rights upon liquidation, winding up or dissolution, rank equally with the
Series A Preferred Stock.

Section 4. Dividends.

(a) The holders of Series A Preferred Stock shall be entitled to receive, when,
as and if declared by the Board, out of any funds legally available therefor,
dividends per share of Series A Preferred Stock of an amount equal to
(i) 7.0% per annum of the Stated Value (as herein defined) of each share of such
Series A Preferred Stock then in effect, before any dividends shall be declared,
set apart for or paid upon the Junior Stock (the “Regular Dividends”), and
(ii) the aggregate amount of any dividends or other distributions, whether cash,
in kind or other property, paid on outstanding shares of Common Stock on a per
share basis based on the number of shares of Common Stock into which such share
of Series A Preferred Stock could be converted on the applicable record date for
such dividends or other distributions, assuming such shares of Common Stock were
outstanding on the applicable record date for such dividend or other
distributions (the “Participating Dividends” and, together with the Regular
Dividends, the “Dividends”). For purposes hereof, the term “Stated Value” shall
mean $1,000.00 per share of Series A Preferred Stock, as adjusted as described
in Section 4(c) below.

(b) Regular Dividends shall be payable quarterly in arrears on [January
1, April 1, July 1 and October 1] of each year (unless any such day is not a
Business Day, in which event such Regular Dividends shall be payable on the next
succeeding Business Day, without accrual to the actual payment date), commencing
on [July 1], 2015 (each such payment date being a “Regular Dividend Payment
Date,” and the period from the date of issuance of the Series A Preferred Stock
to the first Regular Dividend Payment Date and each such quarterly period
thereafter being a “Regular Dividend Period”). The amount of Regular Dividends
payable on the Series A Preferred Stock for any period shall be computed on the
basis of a 365-day year and the actual number of days elapsed. Participating
Dividends shall be payable as and when paid to the holders of shares of Common
Stock (each such date being a “Participating Dividend Payment Date,” and,
together with each Regular Dividend Payment Date, a “Dividend Payment Date”).

(c) Regular Dividends shall begin to accrue from the Issue Date and, if not
declared, shall be cumulative. Any Regular Dividend or portion thereof
undeclared and accrued but

 

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unpaid on any Regular Dividend Payment Date shall, (i) so long as Stockholder
Approval (as defined in the Investment Agreement) has been obtained, be added to
the Stated Value until, but only until, such Regular Dividend or portion thereof
is paid in cash in full or (ii) shall remain outstanding as accrued but unpaid
dividends until, but only until, such Regular Dividend or portion thereof is
paid in cash in full. If at any time the Corporation does not pay any Regular
Dividend in full on any scheduled Regular Dividend Payment Date, such Regular
Dividends will accrue at an annual rate of 8.0% of the Stated Value from such
scheduled Regular Dividend Payment Date to the date that all accumulated Regular
Dividends on the Series A Preferred Stock have been paid in cash in full, and
thereafter will accrue at an annual rate of 7.0%. For the avoidance of doubt,
Regular Dividends shall accumulate whether or not in any Regular Dividend Period
there have been funds of the Corporation legally available for the payment of
such dividends. Participating Dividends are payable on a cumulative basis once
declared, whether or not there shall be funds legally available for the payment
thereon.

(d) Except as otherwise provided herein, if at any time the Corporation pays
less than the total amount of Dividends then accrued but unpaid with respect to
the Series A Preferred Stock, such payment shall be distributed pro rata among
the holders thereof based upon the Stated Value on all shares of Series A
Preferred Stock held by each such holder as of the record date for such payment.
When Dividends are not paid in full upon the shares of Series A Preferred Stock,
all Dividends declared on Series A Preferred Stock and any other Parity Stock
shall be paid pro rata so that the amount of Dividends so declared on the shares
of Series A Preferred Stock and each such other class or series of Parity Stock
shall in all cases bear to each other the same ratio as accrued but unpaid
Dividends (for the full amount of dividends that would be payable for the most
recently payable dividend period if dividends were declared in full on
non-cumulative Parity Stock) on the shares of Series A Preferred Stock and such
other class or series of Parity Stock bear to each other.

(e) When and if declared, the Regular Dividends shall be paid in cash.

(f) The Corporation shall not declare or pay any dividends on shares of Common
Stock unless the holders of the Series A Preferred Stock then outstanding shall
simultaneously receive Participating Dividends on a pro rata basis as if the
shares of Series A Preferred Stock had been converted into shares of Common
Stock pursuant to Section 7 immediately prior to the record date for determining
the stockholders eligible to receive such dividends.

(g) Each Dividend shall be payable to the holders of record of shares of Series
A Preferred Stock as they appear on the stock records of the Corporation at the
Close of Business on such record dates (each, a “Dividend Payment Record Date”),
which (i) with respect to Regular Dividends, shall be not more than thirty
(30) days nor less than ten (10) days preceding the applicable Regular Dividend
Payment Date, and (ii) with respect to Participating Dividends, shall be the
same day as the record date for the payment of dividends or distributions to the
holders of shares of Common Stock.

(h) From and after the time, if any, that the Corporation shall have failed to
pay all accrued but unpaid Regular Dividends for all prior Regular Dividend
Periods and/or declared and unpaid Participating Dividends in accordance with
this Section 4, no dividends shall be declared or paid or set apart for payment,
or other distribution declared or made, upon any Junior

 

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Stock, nor shall any Junior Stock be redeemed, purchased or otherwise acquired
for any consideration (nor shall any moneys be paid to or made available for a
sinking fund for the redemption of any shares of any such Junior Stock) by the
Corporation, directly or indirectly until all such Regular Dividends and/or
Participating Dividends have been paid in full, without the consent of the
holders of a majority of the outstanding shares of Series A Preferred Stock;
provided, however, that the foregoing limitation shall not apply to:

(1) purchases, redemptions or other acquisitions of shares of Junior Stock in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors, managers or consultants of or to the Corporation or any of its
Subsidiaries;

(2) an exchange, redemption, reclassification or conversion of any class or
series of Junior Stock for any class or series of Junior Stock; or

(3) any dividend in the form of stock, warrants, options or other rights where
the dividended stock or the stock issuable upon exercise of such warrants,
options or other rights is the same stock as that on which the dividend is being
paid or ranks equal or junior to that stock.

Section 5. Liquidation, Dissolution or Winding Up.

(a) Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation (each, a “Liquidation”), after satisfaction of all liabilities
and obligations to creditors of the Corporation and before any distribution or
payment shall be made to holders of any Junior Stock, each holder of Series A
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation or proceeds thereof (whether capital or surplus) legally available
therefor, an amount per share of Series A Preferred Stock equal to the greater
of:

(1) the Stated Value per share, plus an amount equal to any Regular Dividends
accrued but unpaid thereon (whether or not declared) plus declared but unpaid
Participating Dividends, in each case, through the date of Liquidation; and

(2) the payment such holders would have received had such holders, immediately
prior to such Liquidation converted their shares of Series A Preferred Stock
into shares of Common Stock (at the then applicable Conversion Rate) pursuant to
Section 7 immediately prior to such Liquidation, plus declared but unpaid
Participating Dividends through the date of Liquidation.

(the greater of (1) and (2) is referred to herein as the “Liquidation
Preference”). Holders of Series A Preferred Stock will not be entitled to any
other amounts from the Corporation after they have received the full amounts
provided for in this Section 5(a) and will have no right or claim to any of the
Corporation’s remaining assets.

(b) If, in connection with any distribution described in Section 5(a) above, the
assets of the Corporation or proceeds thereof are not sufficient to pay in full
the Liquidation Preference payable on the Series A Preferred Stock and the
corresponding amounts payable on the Parity Stock, then such assets, or the
proceeds thereof, shall be paid pro rata in accordance with the full respective
amounts which would be payable on such shares if all amounts payable thereon
were paid in full.

 

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(c) For purposes of this Section 5, the merger or consolidation of the
Corporation with or into any other corporation or other entity, or the sale,
conveyance, lease or other disposition of all or substantially all of the assets
of the Corporation, shall not constitute a liquidation, dissolution or winding
up of the Corporation.

Section 6. Voting Rights.

(a) Except as otherwise required by law, the holders of the shares of Series A
Preferred Stock shall be entitled to (i) vote as a class on all matters
adversely affecting the rights of holders of Series A Preferred Stock, (ii) vote
with the holders of the Common Stock on all matters submitted for a vote of
holders of Common Stock (subject to the Stockholder Rights Agreement, dated as
of [●], 2015, by and between the Corporation and BCP IV Graftech Holdings LP (as
may be amended from time to time, the “Stockholder Rights Agreement”) with
respect to the election of directors), (iii) a number of votes per share of
Series A Preferred Stock equal to the number of shares of Common Stock into
which each such share of Series A Preferred Stock is then convertible at the
time of the related record date, (iv) notice of all stockholders’ meetings (or
pursuant to any action by written consent) in accordance with the Certificate
and the Amended and Restated By-laws of the Corporation (the “By-Laws”) as if
the holders of Series A Preferred Stock were holders of Common Stock and (v) so
long as (i) the Approved Holders (as defined in the Stockholder Rights
Agreement) have the right to designate a director pursuant to the Stockholder
Rights Agreement and (ii) the Approved Holders are the holders of a majority of
the outstanding shares of Series A Preferred Stock, vote as a class on the
election of directors as described in Section 6(c).

(b) For so long as the Outstanding Preferred Percentage is at least 25%, the
Corporation shall not and shall not permit any direct or indirect Subsidiary of
the Corporation to, without first obtaining the written consent or affirmative
vote at a meeting called for that purpose of holders of a majority of
outstanding shares of Series A Preferred Stock (the “Majority Holders”), take
any of the following actions:

(1) Any change, amendment, alteration or repeal (including as a result of a
merger, consolidation, or other similar or extraordinary transaction) of any
provisions of the Certificate or By-Laws that adversely amends, modifies or
affects the rights, preferences, privileges or voting powers of the Series A
Preferred Stock; or

(2) Any authorization, issuance or reclassification of stock (other than the
conversion of the Series B Preferred Stock into the Series A Preferred Stock)
that would rank equal or senior to the Series A Preferred Stock with respect to
the redemption, liquidation, dissolution or winding up of the Corporation or
with respect to dividend rights.

(c) (i) For so long as the Majority Approved Holders (as defined in the
Stockholder Rights Agreement) have the right to designate one director pursuant
to the Stockholder Rights Agreement, the Majority Holders shall have the right
to elect one member of the board of

 

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directors of the Company at any meeting of stockholders of the Company at which
directors are to be elected, designated or appointed, except such meetings for
the purpose of filling vacancies or newly created directorships, voting as a
separate class or by execution of a written consent in lieu of such meeting, and
(ii) for so long as the Majority Approved Holders have the right to designate
two directors pursuant to the Stockholder Rights Agreement, the Majority Holders
shall have the right to elect two members of the board of directors of the
Company at any meeting of stockholders of the Company at which directors are to
be elected, designated or appointed, except such meetings for the purpose of
filling vacancies or newly created directorships, voting as a separate class or
by execution of a written consent in lieu of such meeting.

(d) In the event of the death, disability, resignation or removal of a director
elected, designated or appointed by the Majority Holders, the Majority Holders
may, to the extent the Majority Approved Holders (as defined in the Stockholder
Rights Agreement) have the right to designate a director pursuant to the
Stockholder Rights Agreement, elect or appoint a replacement director to fill
the resulting vacancy; provided that if a director elected by the Majority
Holders is removed for cause, the replacement director will not be the same
person who was removed. Other than for cause, a director elected, designated or
appointed by the Majority Holders may not be removed by the Board or the
stockholders of the Corporation without the prior written consent of the
Majority Holders.

(e) The Corporation will at all times provide the directors elected by the
Majority Holders with the same rights to indemnification that it provides to the
other members of the Board. The directors elected by the Majority Holders shall
each receive director fees and rights to expense reimbursement that are no less
favorable to them than the fees and reimbursement provided to any other
non-management director (in their capacity as directors).

Section 7. Conversion.

(a) Conversion. At any time, each holder of Series A Preferred Stock shall have
the right, at such holder’s option, to convert any or all of such holder’s
shares of Series A Preferred Stock, and the shares of Series A Preferred Stock
to be converted shall be converted into (i) a number of shares of Common Stock
equal to the product of the aggregate Stated Value of the shares of Series A
Preferred Stock to be converted divided by $1,000 multiplied by the Conversion
Rate then in effect, plus (ii) cash in lieu of fractional shares, as set out in
Section 9(i), plus an amount in cash per share of Series A Preferred Stock equal
to accrued but unpaid dividends on such share from and including the immediately
preceding Dividend Payment Date to but excluding the applicable Conversion Date
to the extent not added to Stated Value, out of funds legally available
therefor.

(b) Conversion Rate. The “Conversion Rate” means 200 shares, subject to
adjustment in accordance with the provisions of this Certificate of
Designations.

(c) Conversion Procedures. A holder must do each of the following in order to
convert its shares of Series A Preferred Stock pursuant to this Section 7:

(1) complete and manually sign the conversion notice provided by the Conversion
Agent, and deliver such notice to the Conversion Agent;

 

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(2) deliver to the Conversion Agent the certificate or certificates representing
the shares of Series A Preferred Stock to be converted (or, if such certificate
or certificates have been lost, stolen or destroyed, a lost certificate
affidavit and indemnity in form and substance reasonably acceptable to the
Corporation);

(3) if required, furnish appropriate endorsements and transfer documents in form
and substance reasonably acceptable to the Corporation; and

(4) if required, pay any stock transfer, documentary, stamp or similar taxes not
payable by the Corporation pursuant to Section 7(g).

The “Conversion Date” means the date on which a holder complies in all respects
with the procedures set forth in this Section 7(c).

(d) Effect of Conversion. Effective immediately prior to the Close of Business
on the Conversion Date applicable to any shares of Series A Preferred Stock,
dividends shall no longer accrue or be declared on any such shares of Series A
Preferred Stock and such shares of Series A Preferred Stock shall cease to be
outstanding.

(e) Record Holder of Underlying Securities as of Conversion Date. The Person or
Persons entitled to receive the Common Stock and, to the extent applicable,
cash, issuable upon conversion of Series A Preferred Stock on a Conversion Date
shall be treated for all purposes as the record holder(s) of such shares of
Common Stock and/or cash as of the Close of Business on such Conversion Date. As
promptly as practicable on or after the Conversion Date and compliance by the
applicable holder with the relevant conversion procedures contained in
Section 7(c) (and in any event no later than three Trading Days thereafter), the
Corporation shall issue the number of whole shares of Common Stock issuable upon
conversion (and deliver payment of cash in lieu of fractional shares). Such
delivery of shares of Common Stock and, if applicable, cash, shall be made, at
the option of the applicable holder, in certificated form or by book-entry. Any
such certificate or certificates shall be delivered by the Corporation to the
appropriate holder on a book-entry basis or by mailing certificates evidencing
the shares to the holders at their respective addresses as set forth in the
conversion notice. If fewer than all of the shares of Series A Preferred Stock
held by any holder hereto are converted pursuant to Section 7(b), then a new
certificate representing the unconverted shares of Series A Preferred Stock
shall be issued to such holder concurrently with the issuance of the
certificates (or book-entry shares) representing the applicable shares of Common
Stock. In the event that a holder shall not by written notice designate the name
in which shares of Common Stock and, to the extent applicable, cash to be
delivered upon conversion of shares of Series A Preferred Stock should be
registered or paid, or the manner in which such shares and, if applicable, cash
should be delivered, the Corporation shall be entitled to register and deliver
such shares and, if applicable, cash in the name of the holder and in the manner
shown on the records of the Corporation.

(f) Status of Converted or Acquired Shares. Shares of Series A Preferred Stock
duly converted in accordance with this Certificate of Designations, or otherwise
acquired by the

 

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Corporation in any manner whatsoever, shall be retired promptly after the
acquisition thereof. All such shares shall upon their retirement and any filing
required by the Delaware General Corporation Law become authorized but unissued
shares of Preferred Stock, without designation as to series until such shares
are once more designated as part of a particular series by the Board pursuant to
the provisions of the Certificate of Incorporation.

(g) Taxes.

(1) The Corporation and its paying agent shall be entitled to withhold taxes on
all payments on the Series A Preferred Stock or Common Stock or other securities
issued upon conversion of the Series A Preferred Stock to the extent required by
law. Prior to the date of any such payment, the Corporation shall request and,
upon request, each holder of Series A Preferred Stock shall deliver to the
Corporation or its paying agent a duly executed, valid, accurate and properly
completed Internal Revenue Service Form W-9 or an appropriate Internal Revenue
Service Form W-8, as applicable.

(2) Absent a change in law or Internal Revenue Service practice, or a contrary
determination (as defined in Section 1313(a) of the United States Internal
Revenue Code of 1986, as amended (the “Code”)), each holder of Series A
Preferred Stock and the Corporation agree not to treat the Series A Preferred
Stock (based on their terms as set forth in this Certificate of Designations) as
“preferred stock” within the meaning of Section 305 of the Code, and Treasury
Regulation Section 1.305-5 for United States federal income tax and withholding
tax purposes and shall not take any position inconsistent with such treatment.

(3) The Corporation shall pay any and all documentary, stamp and similar
issuance or transfer tax due on (x) the issuance of the Series A Preferred Stock
and (y) the issuance of shares of Common Stock upon conversion of the Series A
Preferred Stock. However, in the case of conversion of Series A Preferred Stock,
the Corporation shall not be required to pay any tax or duty that may be payable
in respect of any transfer involved in the issuance and delivery of shares of
Common Stock or Series A Preferred Stock in a name other than that of the holder
of the shares to be converted, and no such issuance or delivery shall be made
unless and until the person requesting such issuance has paid to the Corporation
the amount of any such tax or duty, or has established to the satisfaction of
the Corporation that such tax or duty has been paid.

(4) Each holder of Series A Preferred Stock and the Corporation agree to
cooperate with each other in connection with any redemption of part of the
shares of Series A Preferred Stock and to use good faith efforts to structure
such redemption so that such redemption may be treated as a sale or exchange
pursuant to Section 302 of the Code; provided that nothing in this Section 7(g)
shall require the Corporation to purchase any shares of Series A Preferred
Stock, and provided further that the Corporation makes no representation or
warranty in this Section 7(g) regarding the tax treatment of any redemption of
Series A Preferred Stock.

 

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Section 8. Redemption and Repurchase.

(a) Optional Redemption.

(1) The Series A Preferred Stock may be redeemed, in whole or in part, at any
time on or after the seventh anniversary of the Issue Date, at the option of the
Corporation, upon giving notice of redemption pursuant to Section 8(d), at a
redemption price per share equal to the sum of the Stated Value per share of the
Series A Preferred Stock to be redeemed plus an amount per share equal to
accrued but unpaid dividends on such share of Series A Preferred Stock from and
including the immediately preceding Dividend Payment Date to but excluding the
date of redemption.

(2) The Series A Preferred Stock may be redeemed in whole or in part, if, at any
time after the fourth anniversary of the Issue Date, the daily volume weighted
average price (“VWAP”) of the Common Stock equals or exceeds 175.0% of the
Conversion Price then in effect for at least 40 Trading Days during a period of
60 consecutive Trading Days, at the option of the Corporation, upon giving
notice of redemption pursuant to Section 8(d), at a redemption price per share
equal to the sum of the Stated Value per share of the Series A Preferred Stock
to be redeemed plus an amount per share equal to accrued but unpaid dividends on
such share of Series A Preferred Stock from and including the immediately
preceding Dividend Payment Date to but excluding the date of redemption.

(3) For the avoidance of doubt, holders of Series A Preferred Stock shall have
the right to convert all or a portion of the Series A Preferred Stock pursuant
to Section 7(a) at any time prior to the date fixed for redemption.

(b) Repurchase at the Option of the Holder Upon a Change of Control. Upon the
occurrence of a Change of Control, each holder of shares of Series A Preferred
Stock shall have the right to require the Corporation to repurchase, by
irrevocable, written notice to the Corporation, all or any portion of such
holder’s shares of Series A Preferred Stock at a purchase price per share equal
to the value calculated in accordance with the applicable formula as set forth
on Annex 1 (the “Fair Value”).

Within thirty (30) days of the occurrence of a Change of Control, the
Corporation shall send notice by first class mail, postage prepaid, addressed to
the holders of record of the shares of Series A Preferred Stock at their
respective last addresses appearing on the books of the Corporation stating
(1) that a Change of Control has occurred, (2) that all shares of Series A
Preferred Stock tendered prior to a specified Business Day no earlier than
thirty (30) days nor later than sixty (60) days from the date such notice is
mailed shall be accepted for repurchase and (3) the procedures that holders of
the Series A Preferred Stock must follow in order for their shares of Series A
Preferred Stock to be repurchased, including the place or places where
certificates for such shares are to be surrendered for payment of the repurchase
price. Any notice mailed as provided in this subsection shall be conclusively
presumed to have been duly given, whether or not the holder receives such
notice, but failure duly to give such notice by mail, or any defect in such
notice or in the mailing thereof, to any holder of shares of Series A Preferred
Stock designated for repurchase shall not affect the validity of the proceedings
for the redemption of any other shares of Series A Preferred Stock.

 

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(c) Mandatory Redemption. For a six (6)-month period (the “Mandatory Redemption
Period”) beginning on the seventh anniversary of the Issue Date (the “Initial
Mandatory Redemption Date”), a holder of shares of Series A Preferred Stock may
irrevocably elect to require the Corporation to repurchase all or any portion of
such holder’s shares of Series A Preferred Stock in accordance with the next
succeeding sentence by giving irrevocable, written notice to the Corporation at
a repurchase price per share, payable in cash, equal to the sum of (1) the
Stated Value per share of the Series A Preferred Stock plus (2) an amount per
share equal to accrued but unpaid dividends from and including the immediately
preceding Dividend Payment Date to but excluding the date of repurchase;
provided that the Corporation shall provide written notice of the Initial
Mandatory Redemption Date to each holder of record of Series A Convertible
Preferred Stock not more than thirty (30) days in advance of the Initial
Mandatory Redemption Date; provided further, that if the Corporation fails to
provide such notice in a timely manner, the Mandatory Redemption Period shall be
extended until the date which is the six-month anniversary of the delivery of
such notice but in no event earlier than the Initial Mandatory Redemption Date.
Such notice shall state the number of shares of Series A Preferred Stock to be
repurchased and the date of repurchase, which shall be at least five (5) but no
more than twenty (20) Business Days following the delivery of such notice. Any
notice mailed as provided in this subsection shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice, but
failure duly to give such notice by mail, or any defect in such notice or in the
mailing thereof, to any holder of shares of Series A Preferred Stock designated
for repurchase shall not affect the validity of the proceedings for the
redemption of any other shares of Series A Preferred Stock.

(d) Notice of Redemption at the Option of the Corporation. Notice of every
redemption of shares of Series A Preferred Stock pursuant to Section 8(a) shall
be given by first class mail, postage prepaid, addressed to the holders of
record of the shares to be redeemed at their respective last addresses appearing
on the books of the Corporation. Such mailing shall be at least thirty (30) days
and not more than sixty (60) days before the date fixed for redemption. Any
notice mailed as provided in this Section 8(d) shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice, but
failure duly to give such notice by mail, or any defect in such notice or in the
mailing thereof, to any holder of shares of Series A Preferred Stock designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other shares of Series A Preferred Stock. Each notice of
redemption given to a holder shall state: (1) the redemption date; (2) the
number of shares of the Series A Preferred Stock to be redeemed and, if less
than all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) the redemption price; and (4) the
place or places where certificates for such shares are to be surrendered for
payment of the redemption price. For the avoidance of doubt, holders of Series A
Preferred Stock shall have the right to convert all or a portion of the Series A
Preferred Stock at any time prior to the date fixed for redemption.

(e) Partial Redemption. In case of any redemption of part of the shares of
Series A Preferred Stock at the time outstanding pursuant to Section 8(a), the
shares to be redeemed shall be selected pro rata. Subject to the provisions
hereof, the Corporation shall have full power and

 

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authority to prescribe the terms and conditions upon which shares of Series A
Preferred Stock shall be redeemed from time to time. If fewer than all the
shares represented by any certificate are redeemed, a new certificate shall be
issued representing the unredeemed shares without charge to the holder thereof.

(f) Effectiveness of Redemption. If notice of redemption has been duly given
under Section 8(d) and if on or before the redemption date specified in the
notice all funds necessary for the redemption have been deposited by the
Corporation, in trust for the pro rata benefit of the holders of the shares
called for redemption, with a bank or trust company doing business in the
Borough of Manhattan, The City of New York, and having a capital and surplus of
at least $500 million and selected by the Board, so as to be and continue to be
available solely therefor, then, notwithstanding that any certificate for any
share so called for redemption has not been surrendered for cancellation, on and
after the redemption date specified in the notice dividends shall cease to
accrue on all shares so called for redemption, all shares so called for
redemption shall no longer be deemed outstanding and all rights with respect to
such shares (including voting and consent rights) shall forthwith on such
redemption date specified in the notice cease and terminate, except that the
right of the holders thereof to receive the amount payable on such redemption
from such bank or trust company, without interest shall survive such cessation
and termination. Any funds unclaimed at the end of three years from the
redemption date specified in the notice shall, to the extent permitted by law,
be released to the Corporation, after which time the holders of the shares so
called for redemption shall look only to the Corporation for payment of the
redemption price of such shares.

Section 9. Anti-Dilution Provisions.

(a) Adjustments. The Conversion Rate will be subject to adjustment, without
duplication, under the following circumstances:

(1) the issuance of Common Stock as a dividend or distribution to all or
substantially all holders of Common Stock, to the extent that an equivalent
Participating Dividend was not distributed to the holders of Series A Preferred
Stock, or a subdivision or combination of Common Stock or a reclassification of
Common Stock into a greater or lesser number of shares of Common Stock, in which
event the Conversion Rate will be adjusted based on the following formula:

 

 

LOGO [g918108ex10_1pg48.jpg]

where,

CR0 = the Conversion Rate in effect immediately prior to the Close of Business
on (i) the Record Date for such dividend or distribution, or (ii) the effective
date of such subdivision, combination or reclassification;

CR1 = the new Conversion Rate in effect immediately after the Close of Business
on (i) the Record Date for such dividend or distribution, or (ii) the effective
date of such subdivision, combination or reclassification;

 

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OS0 = the number of shares of Common Stock outstanding immediately prior to the
Close of Business on (i) the Record Date for such dividend or distribution or
(ii) the effective date of such subdivision, combination or reclassification;
and

OS1 = the number of shares of Common Stock that would be outstanding immediately
after, and solely as a result of, the completion of such event.

Any adjustment made pursuant to this clause (1) shall be effective immediately
prior to the Open of Business on the Trading Day immediately following the
Record Date, in the case of a dividend or distribution, or the effective date in
the case of a subdivision, combination or reclassification. If any such event is
declared but does not occur, the Conversion Rate shall be readjusted, effective
as of the date the Board announces that such event shall not occur, to the
Conversion Rate that would then be in effect if such event had not been
declared.

(b) Calculation of Adjustments. All adjustments to the Conversion Rate shall be
calculated by the Corporation to the nearest 1/10,000th of one share of Common
Stock (or if there is not a nearest 1/10,000th of a share, to the next lower
1/10,000th of a share). No adjustment to the Conversion Rate will be required
unless such adjustment would require an increase or decrease of at least one
percent of the Conversion Rate; provided, however, that any such adjustment that
is not required to be made will be carried forward and taken into account in any
subsequent adjustment; provided, further that any such adjustment of less than
one percent that has not been made will be made upon any Conversion Date.

(c) When No Adjustment Required.

(1) Except as otherwise provided in this Section 9, the Conversion Rate will not
be adjusted for the issuance of Common Stock or any securities convertible into
or exchangeable for Common Stock or carrying the right to purchase any of the
foregoing, or for the repurchase of Common Stock.

(2) No adjustment of the Conversion Rate shall be made as a result of the
issuance of, the distribution of separate certificates representing, the
exercise or redemption of, or the termination or invalidation of, rights
pursuant to any stockholder rights plans.

(3) Notwithstanding the foregoing, no adjustment to the Conversion Rate shall be
made:

(A) if such adjustment would cause the outstanding Series A Preferred Stock to
be convertible in the aggregate into more than 19.9% of the shares of Common
Stock outstanding on the date hereof unless Stockholder Approval (as defined in
the Investment Agreement) has been obtained;

(B) upon the issuance of any shares of Common Stock pursuant to any present or
future plan providing for the reinvestment of dividends or interest payable on
securities of the Corporation and the investment of additional optional amounts
in

 

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Common Stock under any plan in which purchases are made at market prices on the
date or dates of purchase, without discount, and whether or not the Corporation
bears the ordinary costs of administration and operation of the plan, including
brokerage commissions;

(C) upon the issuance of any shares of Common Stock or options or rights to
purchase such shares pursuant to any present or future employee, director,
manager or consultant benefit plan or program of or assumed by the Corporation
or any of its Subsidiaries or of any employee agreements or arrangements or
programs;

(D) upon the issuance of any shares of Common Stock pursuant to any option,
warrant, right, or exercisable, exchangeable or convertible security outstanding
as of the Issue Date;

(E) for a change in the par value of the Common Stock; or

(F) for accrued and unpaid dividends on the Series A Preferred Stock.

(d) Successive Adjustments. After an adjustment to the Conversion Rate under
this Section 9, any subsequent event requiring an adjustment under this
Section 9 shall cause an adjustment to each such Conversion Rate as so adjusted.

(e) Multiple Adjustments. For the avoidance of doubt, if an event occurs that
would trigger an adjustment to the Conversion Rate pursuant to this Section 9
under more than one subsection hereof (other than where holders of Series A
Preferred Stock are entitled to elect the applicable adjustment, in which case
such election shall control), such event, to the extent fully taken into account
in a single adjustment, shall not result in multiple adjustments hereunder;
provided, however, that if more than one subsection of this Section 9 is
applicable to a single event, the subsection shall be applied that produces the
largest adjustment.

(f) Other Adjustments. The Corporation may, but shall not be required to, make
such increases in the Conversion Rate, in addition to those required by this
Section 9, as the Board considers to be advisable in order to avoid or diminish
any income tax to any holders of shares of Common Stock resulting from any
dividend or distribution of stock or issuance of rights or warrants to purchase
or subscribe for stock or from any event treated as such for income tax purposes
or for any other reason.

(g) Notice of Adjustments. Whenever the Conversion Rate is adjusted as provided
under this Section 9, the Corporation shall as soon as reasonably practicable
following the occurrence of an event that requires such adjustment (or if the
Corporation is not aware of such occurrence, as soon as reasonably practicable
after becoming so aware) or the date the Corporation makes an adjustment
pursuant to Section 9(f):

(1) compute the adjusted applicable Conversion Rate in accordance with this
Section 9 and prepare and transmit to the Conversion Agent an officer’s
certificate setting forth the applicable Conversion Rate, the method of
calculation thereof in reasonable detail, and the facts requiring such
adjustment and upon which such adjustment is based; and

(2) provide a written notice to the holders of the Series A Preferred Stock of
the occurrence of such event and a statement in reasonable detail setting forth
the method by which the adjustment to the applicable Conversion Rate was
determined and setting forth the adjusted applicable Conversion Rate.

 

13

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(h) Conversion Agent. The Conversion Agent shall not at any time be under any
duty or responsibility to any holder of Series A Preferred Stock to determine
whether any facts exist that may require any adjustment of the applicable
Conversion Rate or with respect to the nature or extent or calculation of any
such adjustment when made, or with respect to the method employed in making the
same. The Conversion Agent shall be fully authorized and protected in relying on
any officer’s certificate delivered pursuant to Section 9(h) and any adjustment
contained therein and the Conversion Agent shall not be deemed to have knowledge
of any adjustment unless and until it has received such certificate. The
Conversion Agent shall not be accountable with respect to the validity or value
(or the kind or amount) of any shares of Common Stock, or of any securities or
property, that may at the time be issued or delivered with respect to any Series
A Preferred Stock; and the Conversion Agent makes no representation with respect
thereto. The Conversion Agent, if other than the Corporation, shall not be
responsible for any failure of the Corporation to issue, transfer or deliver any
shares of Common Stock pursuant to the conversion of Series A Preferred Stock or
to comply with any of the duties, responsibilities or covenants of the
Corporation contained in this Section 9.

(i) Fractional Shares. No fractional shares of Common Stock will be delivered to
the holders of Series A Preferred Stock upon conversion. In lieu of fractional
shares otherwise issuable, holders of Series A Preferred Stock will be entitled
to receive an amount in cash equal to the fraction of a share of Common Stock,
multiplied by the Closing Price of the Common Stock on the Trading Day
immediately preceding the applicable Conversion Date. In order to determine
whether the number of shares of Common Stock to be delivered to a holder of
Series A Preferred Stock upon the conversion of such holder’s shares of Series A
Preferred Stock will include a fractional share (in lieu of which cash would be
paid hereunder), such determination shall be based on the aggregate number of
shares of Series A Preferred Stock of such holder that are being converted on
any single Conversion Date.

(j) Reorganization Events. In the event of:

(1) any reclassification, statutory exchange, merger, consolidation or other
similar business combination of the Corporation with or into another Person, in
each case, pursuant to which the Common Stock (but not the Series A Preferred
Stock) is changed or converted into, or exchanged for, cash, securities or other
property of the Corporation or another person;

(2) any sale, transfer, lease or conveyance to another Person of all or
substantially all the property and assets of the Corporation, in each case
pursuant to which the Common Stock (but not the Series A Preferred Stock) is
converted into cash, securities or other property; or

(3) any statutory exchange of securities of the Corporation with another Person
(other than in connection with a merger or acquisition) or reclassification,
recapitalization or reorganization of the Common Stock (but not the Series A
Preferred Stock) into other securities,

 

14

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(each of which is referred to as a “Reorganization Event”), each share of Series
A Preferred Stock outstanding immediately prior to such Reorganization Event
will, without the consent of the holders of Series A Preferred Stock and subject
to Section 9(k), remain outstanding but shall become convertible into, out of
funds legally available therefor, the number, kind and amount of securities,
cash and other property (the “Exchange Property”) (without any interest on such
Exchange Property and without any right to dividends or distribution on such
Exchange Property which have a record date that is prior to the applicable
Conversion Date) that the holder of such share of Series A Preferred Stock would
have received in such Reorganization Event had such holder converted its share
of Series A Preferred Stock into the applicable number of shares of Common Stock
immediately prior to the effective date of the Reorganization Event, assuming
that such holder is not a Person with which the Corporation consolidated or into
which the Corporation merged or which merged into the Corporation or to which
such sale or transfer was made, as the case may be (any such Person, a
“Constituent Person”), or an Affiliate of a Constituent Person to the extent
such Reorganization Event provides for different treatment of Common Stock held
by Affiliates of the Corporation and non-Affiliates; provided that if the kind
or amount of securities, cash and other property receivable upon such
Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by a Person other than a
Constituent Person or an Affiliate thereof, then for the purpose of this
Section 9(j), the kind and amount of securities, cash and other property
receivable upon such Reorganization Event will be deemed to be the weighted
average, as determined by the Corporation in good faith, of the types and
amounts of consideration received by the holders of Common Stock. Any notice
mailed as provided in this subsection shall be conclusively presumed to have
been duly given, whether or not the holder receives such notice, but failure
duly to give such notice by mail, or any defect in such notice or in the mailing
thereof, to any holder of shares of Series A Preferred Stock designated for
repurchase shall not affect the validity of the proceedings for the redemption
of any other shares of Series A Preferred Stock.

(k) Exchange Property Election. In the event that the holders of the shares of
Common Stock have the opportunity to elect the form of consideration to be
received in such transaction, the Exchange Property that the holders of Series A
Preferred Stock shall be entitled to receive shall be determined by the holders
of a majority of the outstanding shares of Series A Preferred Stock on or before
the earlier of (i) the deadline for elections by holders of Common Stock and
(ii) two Business Days before the anticipated effective date of such
Reorganization Event. The number of units of Exchange Property for each share of
Series A Preferred Stock converted following the effective date of such
Reorganization Event shall be determined from among the choices made available
to the holders of the Common Stock and based on the per share amount as of the
effective date of the Reorganization Event, determined as if the references to
“share of Common Stock” in this Certificate of Designations were to “units of
Exchange Property.”

(l) Successive Reorganization Events. The above provisions of Section 9(j) and
Section 9(k) shall similarly apply to successive Reorganization Events and the
provisions of Section 9 shall apply to any shares of Capital Stock (or capital
stock of any other issuer) received by the holders of the Common Stock in any
such Reorganization Event.

 

15

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(m) Reorganization Event Notice. The Corporation (or any successor) shall, no
less than twenty (20) Business Days prior to the occurrence of any
Reorganization Event, provide written notice to the holders of Series A
Preferred Stock of such occurrence of such event and of the kind and amount of
the cash, securities or other property that constitutes the Exchange Property.
Failure to deliver such notice shall not affect the operation of this Section 9.

(n) The Corporation shall not enter into any agreement for a transaction
constituting a Reorganization Event unless (i) such agreement provides for or
does not interfere with or prevent (as applicable) conversion of the Series A
Preferred Stock into the Exchange Property in a manner that is consistent with
and gives effect to this Section 9, and (ii) to the extent that the Corporation
is not the surviving corporation in such Reorganization Event or will be
dissolved in connection with such Reorganization Event, proper provision shall
be made in the agreements governing such Reorganization Event for the conversion
of the Series A Preferred Stock into stock of the Person surviving such
Reorganization Event or such other continuing entity in such Reorganization
Event, or in the case of a Reorganization Event described in Section 9(j)(2), an
exchange of Series A Preferred Stock for the stock of the Person to whom the
Corporation’s assets are conveyed or transferred, having voting powers,
preferences, and relative, participating, optional or other special rights as
nearly equal as possible to those provided in this Certificate of Designations.

Section 10. Reservation of Shares. The Corporation shall at all times when the
Series A Preferred Stock shall be outstanding reserve and keep available, free
from preemptive rights, for issuance upon the conversion of Series A Preferred
Stock, such number of its authorized but unissued Common Stock as will from time
to time be sufficient to permit the conversion of all outstanding Series A
Preferred Stock. Prior to the delivery of any securities which the Corporation
shall be obligated to deliver upon conversion of the Series A Preferred Stock,
the Corporation shall comply with all applicable laws and regulations which
require action to be taken by the Corporation.

Section 11. Notices. Except as otherwise provided herein, any and all notices or
other communications or deliveries hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified in this Section prior to or at the Close of Business on a Business Day
and electronic confirmation of receipt is received by the sender, (ii) the next
Business Day after the date of transmission, if such notice or communication is
delivered via facsimile at the facsimile number specified in this Section on a
day that is not a Business Day or later than the Close of Business on any
Business Day, (iii) the Business Day following the date of mailing, if sent by
nationally recognized overnight courier service, or (iv) upon actual receipt by
the party to whom such notice is required to be given. The addresses for such
communications shall be: (i) if to the Corporation, attention: Chief Executive
Officer and General Counsel, or (ii) if to a holder of Series A Preferred Stock,
to the address or facsimile number appearing on the Corporation’s stockholder
records or such other address or facsimile number as such holder may provide to
the Corporation in accordance with this Section 11.

 

16

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Section 12. Certain Definitions. As used in this Certificate of Designations,
the following terms shall have the following meanings, unless the context
otherwise requires:

“Affiliate” with respect to any person, any person directly or indirectly
controlling, controlled by or under common control with, such other person;
provided, however, that (i) portfolio companies in which any person or any of
its Affiliates has an investment shall not be deemed an Affiliate of such
person, or (ii) the Corporation, any of its Subsidiaries, or any of the
Corporation’s other controlled Affiliates, in each case, will not be deemed to
be Affiliates of the Brookfield Group for purposes of this Certificate of
Designations. For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management or policies of
such person, whether through the ownership of voting securities, by contract or
otherwise.

“Beneficially Own” shall mean “beneficially own” as defined in Rule 13d-3 of the
Exchange Act or any successor provision thereto.

“Brookfield Group” means Brookfield Capital Partners Ltd. and any of its
Affiliates, any successor entity and any other investment fund, vehicle or
similar entity of which such person or an Affiliate, advisor or manager of such
person serves as the general partner, manager or advisor.

“Board” shall have the meaning ascribed to it in the recitals.

“Business Day” shall mean a day that is a Monday, Tuesday, Wednesday, Thursday
or Friday and is not a day on which banking institutions in New York, New York,
or Cleveland, Ohio, generally are authorized or obligated by law, regulation or
executive order to close.

“Capital Stock” shall mean any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) stock issued by the Corporation.

“Certificate of Designations” shall mean this Certificate of Designations
relating to the Series A Preferred Stock, as it may be amended from time to
time.

“Change of Control” shall mean the occurrence of any of the following on or
after May 4, 2015:

(1) any Person (other than a member of the Brookfield Group) shall Beneficially
Own, directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, shares of the Corporation’s Capital Stock
entitling such Person to exercise 35% or more of the total voting power of all
classes of Voting Stock of the Corporation, other than an acquisition by the
Corporation, any of the Corporation’s Subsidiaries or any of the Corporation’s
employee benefit plans (for purposes of this clause (1), “Person” shall include
any syndicate or group that would be deemed to be a “person” under
Section 13(d)(3) of the Exchange Act);

 

17

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(2) the Corporation (i) merges or consolidates with or into any other Person,
another Person merges with or into the Corporation, or the Corporation conveys,
sells, transfers or leases all or substantially all of the Corporation’s assets
to another Person or (ii) engages in any recapitalization, reclassification or
other transaction in which all or substantially all of the Common Stock is
exchanged for or converted into cash, securities or other property, in each case
other than a merger, consolidation or sale:

1. that does not result in a reclassification, conversion, exchange or
cancellation of the Corporation’s outstanding Common Stock; or

2. which is effected solely to change the Corporation’s jurisdiction of
incorporation and results in a reclassification, conversion or exchange of
outstanding shares of the Common Stock solely into shares of common stock of the
surviving entity; or

3. where the Voting Stock outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
issuance); or

(3) the Common Stock ceases to be listed or quoted on any of the New York Stock
Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market (or any of
their respective successors),

provided, that (x) transfers by any holder of any shares of Series A Preferred
Stock (or shares of Common Stock converted therefrom) to any Person shall not be
taken into account for purposes of determining whether or not a Change of
Control has occurred and (y) notwithstanding the foregoing, a transaction or
transactions will not constitute a Change of Control if at least 90% of the
consideration received or to be received by holders of Common Stock (other than
cash payments for fractional shares or pursuant to statutory appraisal rights)
in connection with such transaction or transactions consists of common stock,
ordinary shares, American depositary receipts or American depositary shares and
any associated rights listed and traded on the New York Stock Exchange or
another U.S. national securities exchange or automated inter-dealer quotation
system (or which will be so listed and traded when issued or exchanged in
connection with such consolidation or merger).

“Close of Business” shall mean 5:00 p.m., New York City time, on any Business
Day.

“Closing Price” shall means the price per share of the final trade of the Common
Stock on the applicable Trading Day on the principal national securities
exchange on which the Common Stock is listed or admitted to trading.

“Common Stock” shall have the meaning ascribed to it in Section 3.

“Constituent Person” shall have the meaning ascribed to it in Section 9(j).

 

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“Conversion Rate” shall have the meaning ascribed to it in Section 7(c).

“Corporation” shall have the meaning ascribed to it in the recitals.

“Dividend” shall have the meaning ascribed to it in Section 4(a).

“Dividend Payment Date” shall have the meaning ascribed to it in Section 4(b).

“Exchange Property” shall have the meaning ascribed to it in Section 9(j).

“Fair Value” shall have the meaning ascribed to it in Section 8(b).

“Indebtedness” shall mean any indebtedness (including principal and premium) in
respect of borrowed money.

“Investment Agreement” shall mean that certain Investment Agreement, dated as of
May 4, 2015, by and between GrafTech International Ltd. and BCP IV Graftech
Holdings LP.

“Issue Date” shall mean [●], 2015.

“Junior Stock” shall have the meaning ascribed to it in Section 3.

“Liquidation” shall have the meaning ascribed to it in Section 5(a).

“Liquidation Preference” shall have the meaning ascribed to it in Section 5(a).

“Majority Holders” shall have the meaning ascribed to it in Section 6(b).

“Open of Business” shall mean 9:00 a.m., New York City time, on any Business
Day.

“Outstanding Preferred Percentage” means, as of any date, the percentage equal
to (i) the aggregate number of shares of Series A Preferred Stock then
outstanding divided by (ii) the total number of shares of Series A Preferred
Stock issued pursuant to the Investment Agreement.

“Parity Stock” shall have the meaning ascribed to it in Section 3.

“Participating Dividend” shall have the meaning ascribed to it in Section 4(a).

“Person” shall mean any individual, company, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization, government or agency or political subdivision thereof or any other
entity.

“Preferred Stock” shall mean any and all series of preferred stock of the
Corporation, including the Series A Preferred Stock.

 

19

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“Record Date” shall mean, with respect to any dividend, distribution or other
transaction or event in which the holders of Common Stock have the right to
receive any cash, securities or other property or in which the Common Stock (or
other applicable security) is exchanged for or converted into any combination of
cash, securities or other property, the date fixed for determination of
shareholders entitled to receive such cash, securities or other property
(whether such date is fixed by the Board or by statute, contract, this
Certificate of Designations or otherwise).

“Regular Dividend” shall have the meaning ascribed to it in Section 4(a).

“Regular Dividend Payment Date” shall have the meaning ascribed to it in
Section 4(b).

“Regular Dividend Period” shall have the meaning ascribed to it in Section 4(b).

“Reorganization Event” shall have the meaning ascribed to it in Section 9(j).

“Series A Preferred Stock” shall have the meaning ascribed to it in Section 1.

“Stated Value” shall have the meaning ascribed to it in Section 4(a).

“Stockholder Rights Agreement” shall have the meaning ascribed to it in
Section 6(a).

“Subsidiary” means any company or corporate entity for which the Corporation
owns, directly or indirectly, an amount of the voting securities, other voting
rights or voting partnership interests of which is sufficient to elect at least
a majority of its board of directors or other governing body (or, if there are
no such voting interests, more than 50% of the equity interests of such company
or corporate entity).

“Trading Day” shall mean any Business Day on which the Common Stock is traded,
or able to be traded, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading.

“Voting Stock” shall mean Capital Stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances (determined without regard to any classification of directors) to
elect one or more members of the Board of Directors of the Corporation (without
regard to whether or not, at the relevant time, Capital Stock of any other class
or classes (other than Common Stock) shall have or might have voting power by
reason of the happening of any contingency).

“VWAP” shall have the meaning ascribed to it in Section 7(a).

Section 13. Headings. The headings of the paragraphs of this Certificate of
Designations are for convenience of reference only and shall not define, limit
or affect any of the provisions hereof.

 

20

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Section 14. Record Holders. To the fullest extent permitted by applicable law,
the Corporation may deem and treat the record holder of any share of the Series
A Preferred Stock as the true and lawful owner thereof for all purposes, and the
Corporation shall not be affected by any notice to the contrary.

Section 15. Notices. All notices or communications in respect of the Series A
Preferred Stock shall be sufficiently given if given in writing and delivered in
person or by first class mail, postage prepaid, or if given in such other manner
as may be permitted in this Certificate of Designations, in the Certificate of
Incorporation or By-laws or by applicable law or regulation. Notwithstanding the
foregoing, if the Series A Preferred Stock is issued in book-entry form through
The Depository Trust Corporation or any similar facility, such notices may be
given to the holders of the Series A Preferred Stock in any manner permitted by
such facility.

Section 16. Replacement Certificates. The Corporation shall replace any
mutilated certificate at the holder’s expense upon surrender of that certificate
to the Corporation. The Corporation shall replace certificates that become
destroyed, stolen or lost at the holder’s expense upon delivery to the
Corporation of reasonably satisfactory evidence that the certificate has been
destroyed, stolen or lost, together with any indemnity that may be required by
the Corporation.

Section 17. Transfer Agent, Conversion Agent, Registrar and Paying Agent. The
duly appointed Transfer Agent, Conversion Agent, Registrar and Paying Agent for
the Series A Preferred Stock shall be the Corporation. The Corporation may, in
its sole discretion, resign from its position as Transfer Agent or remove a
successor Transfer Agent in accordance with the agreement between the
Corporation and such Transfer Agent; provided that the Corporation shall appoint
a successor transfer agent who shall accept such appointment prior to the
effectiveness of any such resignation or removal. Upon any such removal,
resignation or appointment, the Corporation shall send notice thereof by
first-class mail, postage prepaid, to the holders of the Series A Preferred
Stock.

Section 18. Severability. If any term of the Series A Preferred Stock set forth
herein is invalid, unlawful or incapable of being enforced by reason of any rule
of law or public policy, all other terms set forth herein which can be given
effect without the invalid, unlawful or unenforceable term will, nevertheless,
remain in full force and effect, and no term herein set forth will be deemed
dependent upon any other such term unless so expressed herein.

Section 19. Other Rights. The shares of Series A Preferred Stock shall not have
any rights, preferences, privileges or voting powers or relative, participating,
optional or other special rights, or qualifications, limitations or restrictions
thereof, other than as set forth herein or in the Certificate of Incorporation
or as provided by applicable law and regulation.

Section 20. Transfer Rights. The shares of Series A Preferred Stock may be sold
or otherwise transferred except as prohibited in the Stockholder Rights
Agreement.

 

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IN WITNESS WHEREOF, GrafTech International Ltd. has caused this Certificate of
Designations to be duly executed by its authorized corporate officer this
[●] day of [●], 2015.

 

GRAFTECH INTERNATIONAL LTD. By

 

Name: Title:

 

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Annex 1

Fair Value Calculations

Annex 1

 

The basis for the Fair Value Top-Up Payment will be the Black Scholes Option
Valuation methodology as described below:

Call Value (CV) = SN (d1) – Ke–rtN(d2)

where by,

S = The Change of Control price

K = The conversion price

t = The time to option expiration (put date)

r = ln(1+r’) where r’ = US Treasury with closest maturity to option expiration
(put date)

N = The Normal Distribution of d1 amd d2 where, as defined below,

 

LOGO [g918108ex10_1pg60b.jpg]

s = Volatility of the underlying security

The Fair Value Top-Up Payment will then be calculated as follows:

Fair Value Top-Up Payment = Net Option Value * Conversion Ratio * Preferred
Shares Outstanding

* (% of Fair Value Top – Up Applicable Percentage)

where by,

Net Option Value = Call Value – In the Money Value where,

In the Money Value = S – K

 

LOGO [g918108ex10_1pg60cnew.jpg]

Fair Value Top – Up Applicable Percentage = one of the following scenarios:

 

(i) Change of Control on or after 2nd anniversary of the date of the Investment
Agreement:

Fair Value Top – Up Applicable Percentage = 100%

 

(ii) Change of Control before 2nd anniversary of the date of the Investment
Agreement not initiated by an Approved Holder (as defined in the Investment
Agreement) or any of their respective Affiliates (as defined in the Investment
Agreement):

Fair Value Top – Up Applicable Percentage = 100%

 

(iii) Change of Control before 2nd anniversary of the date of the Investment
Agreement initiated by Approved Holder (as defined in the Investment Agreement)
or any of their respective Affiliates (as defined in the Investment Agreement):

Fair Value Top – Up Applicable Percentage = 25%

 

(iv) Change of Control during Go-Shop Period (or Go-Shop Extension) (each as
defined in that certain letter of intent, dated as of April 29, 2015, by and
between the Company and Brookfield Capital Partners Ltd. regarding a proposed
tender offer for the outstanding shares of the Common Stock)

Fair Value Top – Up Applicable Percentage = 0%

A holder of shares of Series A Preferred Stock would be entitled to the amount
such holder would have received had they converted such shares into shares of
Common Stock immediately prior to such transaction.

 

- 23 -

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An illustrative example of the Fair Value is as follows:

Assumptions

 

          

Source:

Market Assumptions

    

Issue Date

     30-Apr-15     

US Treasury1

     1.29 %    Bloomberg

Change of Control Price

   $ 5.50     

Options Assumptions

    

Put Date

     30-Apr-22     

Change of Control Date

     30-Apr-18     

Strike Price

   $ 5.00     

Volatility

     35.00 %    Fixed

 

1. Liquid US Treasury with closest maturity to Put Date from Bloomberg

US$ Option Value Calculation

 

Expiry Date (Put Date)

        30-Apr-22   

Change of Control Price

   S=    $ 5.50   

Strike Price

   K=    $ 5.00   

Time to Expiration (years)

   t=      4 years   

US Govt’ Risk Free Rate

   r’=      1.29 % 

Continuous Risk Free Rate = r = ln(1 + r’) =

        0.013  

Volatility

   s=      35 % 

Normal Distribution of d1

        0.712  

Normal Distribution of d2

        0.444  

[A] Call Value = SN(d1) - Ke-rtN(d2) =

      $ 1.81   

LOGO [g918108ex10_1pg61.jpg]

            

0.392 

  =    0.559     0.700               

d2= d1 - s *  Öt =

    (0.141)     

N(d1) =

    0.712      

N(d2) =

    0.444                        

 

 

Fair Value in Change of Control

US$

 

Par Value per Share of Preferred Stock

   $ 1,000.00   

Strike Price of Conversion Option

   $ 5.00      

 

 

 

Shares of Common Equity per share of Preferred Stock

  200   

[A] Call Value of Conversion Option per share of Common Stock

$ 1.81   

Less: In-the-money Value of Conversion Option

($ 0.50 )    

 

 

 

Net Fair Value Payment per share of Common Stock (as-converted basis)

$ 1.31   

Shares of Common Stock per share of Preferred Stock

  200      

 

 

 

Fair Value of Top-Up Payment per share of Preferred Stock

$ 261.37   

Shares of Preferred Stock Issued

  150,000      

 

 

 

Fair Value Top-Up Payment in Change of Control

$ 39,204,791   

Fair Value Top-up Applicable Percentage

  100 %    

 

 

 

Adjusted Fair Value Top-Up Payment in Change of Control

$ 39,204,791   

Adjusted Fair Value Top-Up Payment in Change of Control per Share of Preferred
Stock

$ 261.37   

Shares of Common Stock per share of Preferred Stock

  200   

Change of Control Price

$ 5.50      

 

 

 

As-Converted Value of a Share of Preferred Stock

$ 1,100.00   

Adjusted Fair Value Top-Up Payment in Change of Control per Share of Preferred
Stock

$ 261.37      

 

 

 

Fair Value per share of Preferred Stock

$ 1,361.37   

In addition, an illustrative example of Fair Value Top-Up Payment under several
Change of Control outcomes is provided below, noting that such outcomes do not
intend to demonstrate an exhaustive set of potential outcomes. The values in the
below tables are calculated using the US Treasury rate from the above example
for simplicity (i.e. 4 year) and are not intended to govern the agreement.

 

(i) Change of Control on or after 2nd anniversary of the date of the Investment
Agreement

Change of Control on or after 2nd anniversary of the date of the 
Investment Agreement

US$

 

Time of   Time to   Change of Control Price   CoC   Expiration   $5.00     $5.25
    $5.50     $5.75     $6.00     $6.25     $6.50   2.0 yrs   5.0 yrs   $
49,044,551      $ 46,742,523      $ 44,598,312      $ 42,599,769      $
40,735,714      $ 38,995,872      $ 37,370,804    3.0 yrs   4.0 yrs   $
43,875,023      $ 41,449,736      $ 39,204,791      $ 37,126,081      $
35,200,522      $ 33,416,021      $ 31,761,423    4.0 yrs   3.0 yrs   $
37,952,855      $ 35,387,837      $ 33,035,583      $ 30,879,008      $
28,902,078      $ 27,089,842      $ 25,428,428    5.0 yrs   2.0 yrs   $
30,885,686      $ 28,158,618      $ 25,697,547      $ 23,480,019      $
21,484,511      $ 19,690,665      $ 18,079,438   

 

- 24 -

--------------------------------------------------------------------------------

(ii) Change of Control before 2nd anniversary of the date of the Investment
Agreement not initiated by an Approved Holder (as defined in the Investment
Agreement) or any of their respective Affiliates (as defined in the Investment
Agreement):

Change of Control before 2nd anniversary of the date of the Investment 
Agreement not Initiated by Investor or Holder

US$

 

Time of   Time to   Change of Control Price   CoC   Expiration   $5.00     $5.25
    $5.50     $5.75     $6.00     $6.25     $6.50   0.0 yrs   7.0 yrs   $
57,860,533      $ 55,769,503      $ 53,806,092      $ 51,960,656      $
50,224,403      $ 48,589,314      $ 47,048,063    0.5 yrs   6.5 yrs   $
55,810,421      $ 53,670,321      $ 51,664,133      $ 49,781,699      $
48,013,746      $ 46,351,799      $ 44,788,108    1.0 yrs   6.0 yrs   $
53,665,431      $ 51,473,976      $ 49,423,449      $ 47,503,117      $
45,703,159      $ 44,014,582      $ 42,429,157    1.5 yrs   5.5 yrs   $
51,414,613      $ 49,169,276      $ 47,072,767      $ 45,113,694      $
43,281,609      $ 41,566,926      $ 39,960,859   

 

(iii) Change of Control before 2nd anniversary of the date of the Investment
Agreement initiated by Approved Holder (as defined in the Investment Agreement)
or any of their respective Affiliates (as defined in the Investment Agreement):

Change of Control before 2nd anniversary of the date of the Investment 
Agreement Initiated by Investor or Holder

US$

 

Time of   Time to   Change of Control Price   CoC   Expiration   $5.00     $5.25
    $5.50     $5.75     $6.00     $6.25     $6.50   0.0 yrs   7.0 yrs   $
14,465,133      $ 13,942,376      $ 13,451,523      $ 12,990,164      $
12,556,101      $ 12,147,329      $ 11,762,016    0.5 yrs   6.5 yrs   $
13,952,605      $ 13,417,580      $ 12,916,033      $ 12,445,425      $
12,003,437      $ 11,587,950      $ 11,197,027    1.0 yrs   6.0 yrs   $
13,416,358      $ 12,868,494      $ 12,355,862      $ 11,875,779      $
11,425,790      $ 11,003,646      $ 10,607,289    1.5 yrs   5.5 yrs   $
12,853,653      $ 12,292,319      $ 11,768,192      $ 11,278,424      $
10,820,402      $ 10,391,731      $ 9,990,215   

 

- 25 -

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SCHEDULE B

CERTIFICATE OF DESIGNATIONS

OF THE

SERIES B CONVERTIBLE PREFERRED STOCK,

PAR VALUE $0.01 PER SHARE,

OF

GRAFTECH INTERNATIONAL LTD.

Pursuant to Section 151 of the

General Corporation Law of the State of Delaware

The undersigned DOES HEREBY CERTIFY that the following resolution was duly
adopted by the Board of Directors (the “Board”) of GrafTech International Ltd.,
a Delaware corporation (hereinafter called the “Corporation”), with the
designations, powers, preferences and relative, participating, optional or other
special rights, and the qualifications, limitations or restrictions thereof,
having been fixed by the Board pursuant to authority granted to it under Article
Sixth of the Corporation’s Amended and Restated Certificate of Incorporation, as
amended (the “Certificate”) and in accordance with the provisions of Section 151
of the General Corporation Law of the State of Delaware:

RESOLVED: That, pursuant to authority conferred upon the Board by the
Certificate, the Board hereby authorizes the issuance of [●]1 shares of Series B
Convertible Preferred Stock, par value $0.01 per share, of the Corporation and
hereby fixes the designations, powers, preferences and relative, participating,
optional or other special rights, and the qualifications, limitations or
restrictions thereof, of such shares, in addition to those set forth in the
Certificate, as follows:

Section 1. Designation. The shares of such series shall be designated “Series B
Convertible Preferred Stock,” and the number of shares constituting such series
shall be [●] (the “Series B Preferred Stock”). The number of shares of Series B
Preferred Stock may be increased or decreased by resolution of the Board and the
approval by the holders of a majority of the outstanding shares of the Series B
Preferred Stock, voting as a separate class; provided that no decrease shall
reduce the number of shares of Series B Preferred Stock to a number less than
the number of shares of such series then outstanding.

Section 2. Currency. All Series B Preferred Stock shall be denominated in United
States currency, and all payments and distributions thereon or with respect
thereto shall be made in United States currency. All references herein to “$” or
“dollars” refer to United States currency.

Section 3. Ranking. The Series B Preferred Stock shall, with respect to dividend
rights and rights upon liquidation, winding up or dissolution, rank senior to
each other class or series of shares of the Corporation that the Corporation may
issue in the future the terms of which do not expressly provide that such class
or series ranks equally with, or senior to, the Series B Preferred Stock, with
respect to dividend rights and/or rights upon liquidation, winding up or
dissolution, including, without limitation, the common stock of the Corporation,
par value $0.01 per share (the “Common Stock”) (such junior stock being referred
to hereinafter collectively as “Junior Stock”).

 

1  NTD: The number of shares shall equal the difference between 150,000 and the
number of shares of Series A Preferred Stock issued.

--------------------------------------------------------------------------------

The Series B Preferred Stock shall, with respect to dividend rights and rights
upon liquidation, winding up or dissolution, rank equally with each other class
or series of shares of the Corporation that the Corporation may issue in the
future the terms of which expressly provide that such class or series shall rank
equally with the Series B Preferred Stock with respect to dividend rights and
rights upon liquidation, winding up or dissolution (“Parity Stock”).

The Series B Preferred Stock shall, with respect to dividend rights and rights
upon liquidation, winding up or dissolution, rank junior to each other class or
series of shares of the Corporation that the Corporation may issue in the
future, the terms of which expressly provide that such class or series shall
rank senior to the Series B Preferred Stock with respect to dividend rights and
rights upon liquidation, winding up or dissolution. The Series B Preferred Stock
shall also rank junior to the Corporation’s existing and future Indebtedness.

For the avoidance of doubt, the Series A Convertible Preferred Stock of the
Corporation (the “Series A Preferred Stock”) shall, with respect to dividend
rights and rights upon liquidation, winding up or dissolution, rank equally with
the Series B Preferred Stock.

Section 4. Dividends.

(a) The holders of Series B Preferred Stock shall be entitled to receive, when,
as and if declared by the Board, out of any funds legally available therefor,
dividends per share of Series B Preferred Stock of an amount equal to
(i) 7.0% per annum of the Stated Value (as herein defined) of each share of such
Series B Preferred Stock then in effect, before any dividends shall be declared,
set apart for or paid upon the Junior Stock (the “Regular Dividends”), and
(ii) the aggregate amount of any dividends or other distributions, whether cash
or other property (but excluding dividends in kind), paid on outstanding shares
of Common Stock on a per share basis based on the number of shares of Common
Stock a share of Series A Preferred Stock could be converted into on the
applicable record date for such dividends or other distributions, assuming such
shares of Common Stock were outstanding on the applicable record date for such
dividend or other distributions (the “Participating Dividends” and, together
with the Regular Dividends, the “Dividends”). For purposes hereof, the term
“Stated Value” shall mean $1,000.00 per share of Series B Preferred Stock, as
adjusted as described in Section 4(c) below.

(b) Regular Dividends shall be payable quarterly in arrears on [January
1, April 1, July 1 and October 1] of each year (unless any such day is not a
Business Day, in which event such Regular Dividends shall be payable on the next
succeeding Business Day, without accrual to the actual payment date), commencing
on [July 1], 2015 (each such payment date being a “Regular Dividend Payment
Date”, and the period from the date of issuance of the Series B Preferred Stock
to the first Regular Dividend Payment Date and each such quarterly period
thereafter being a “Regular Dividend Period”). The amount of Regular Dividends
payable on the Series B Preferred Stock for any period shall be computed on the
basis of a 365-day year and the actual number of days elapsed. Participating
Dividends shall be payable as and when paid to the holders of shares of Common
Stock (each such date being a “Participating Dividend Payment Date,” and,
together with each Regular Dividend Payment Date, a “Dividend Payment Date”).

 

2

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(c) Regular Dividends shall begin to accrue from the Issue Date and, if not
declared, shall be cumulative. Any Regular Dividend or portion thereof
undeclared and accrued but unpaid on any Regular Dividend Payment Date shall be
added to the Stated Value until, but only until, such Regular Dividend or
portion thereof is paid in cash in full. If at any time the Corporation does not
pay any Regular Dividend in full on any scheduled Regular Dividend Payment Date,
such Regular Dividends will accrue at an annual rate of 8.0% of the Stated Value
from such scheduled Regular Dividend Payment Date to the date that all
accumulated Regular Dividends on the Series B Preferred Stock have been paid in
cash in full, and thereafter will accrue at an annual rate of 7.0%. For the
avoidance of doubt, Regular Dividends shall accumulate whether or not in any
Regular Dividend Period there have been funds of the Corporation legally
available for the payment of such dividends. Participating Dividends are payable
on a cumulative basis once declared, whether or not there shall be funds legally
available for the payment thereon.

(d) Except as otherwise provided herein, if at any time the Corporation pays
less than the total amount of Dividends then accrued but unpaid with respect to
the Series B Preferred Stock, such payment shall be distributed pro rata among
the holders thereof based upon the Stated Value on all shares of Series B
Preferred Stock held by each such holder as of the record date for such payment.
When Dividends are not paid in full upon the shares of Series B Preferred Stock,
all Dividends declared on Series B Preferred Stock and any other Parity Stock
shall be paid pro rata so that the amount of Dividends so declared on the shares
of Series B Preferred Stock and each such other class or series of Parity Stock
shall in all cases bear to each other the same ratio as accrued but unpaid
Dividends (for the full amount of dividends that would be payable for the most
recently payable dividend period if dividends were declared in full on
non-cumulative Parity Stock) on the shares of Series B Preferred Stock and such
other class or series of Parity Stock bear to each other.

(e) When and if declared, the Regular Dividends shall be paid in cash.

(f) The Corporation shall not declare or pay any dividends on shares of Common
Stock unless the holders of the Series B Preferred Stock then outstanding, other
than in the case of a dividend payable on the Common Stock in shares of Common
Stock, shall simultaneously receive Participating Dividends on a pro rata basis
as if the shares of Series B Preferred Stock had been converted into shares of
Series A Preferred Stock pursuant to Section 7 immediately prior to the record
date for determining the stockholders eligible to receive such dividends.

(g) Each Dividend shall be payable to the holders of record of shares of Series
A Preferred Stock as they appear on the stock records of the Corporation at the
Close of Business on such record dates (each, a “Dividend Payment Record Date”),
which (i) with respect to Regular Dividends, shall be not more than thirty
(30) days nor less than ten (10) days preceding the applicable Regular Dividend
Payment Date, and (ii) with respect to Participating Dividends, shall be the
same day as the record date for the payment of dividends or distributions to the
holders of shares of Common Stock.

(h) From and after the time, if any, that the Corporation shall have failed to
pay all accrued but unpaid Regular Dividends for all prior Regular Dividend
Periods and/or declared and unpaid Participating Dividends in accordance with
this Section 4, no dividends shall be

 

3

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declared or paid or set apart for payment, or other distribution declared or
made, upon any Junior Stock, nor shall any Junior Stock be redeemed, purchased
or otherwise acquired for any consideration (nor shall any moneys be paid to or
made available for a sinking fund for the redemption of any shares of any such
Junior Stock) by the Corporation, directly or indirectly until all such Regular
Dividends and/or Participating Dividends have been paid in full, without the
consent of the holders of a majority of the outstanding shares of Series B
Preferred Stock; provided, however, that the foregoing limitation shall not
apply to:

(1) purchases, redemptions or other acquisitions of shares of Junior Stock in
connection with any employment contract, benefit plan or other similar
arrangement with or for the benefit of any one or more employees, officers,
directors, managers or consultants of or to the Corporation or any of its
Subsidiaries;

(2) an exchange, redemption, reclassification or conversion of any class or
series of Junior Stock for any class or series of Junior Stock; or

(3) any dividend in the form of stock, warrants, options or other rights where
the dividended stock or the stock issuable upon exercise of such warrants,
options or other rights is the same stock as that on which the dividend is being
paid or ranks equal or junior to that stock.

Section 5. Liquidation, Dissolution or Winding Up.

(a) Upon any voluntary or involuntary liquidation, dissolution or winding up of
the Corporation (each, a “Liquidation”), after satisfaction of all liabilities
and obligations to creditors of the Corporation and before any distribution or
payment shall be made to holders of any Junior Stock, each holder of Series B
Preferred Stock shall be entitled to receive, out of the assets of the
Corporation or proceeds thereof (whether capital or surplus) legally available
therefor, an amount per share of Series B Preferred Stock equal to the greater
of:

(1) the Stated Value per share, plus an amount equal to any Regular Dividends
accrued but unpaid thereon (whether or not declared) plus declared but unpaid
Participating Dividends, in each case, through the date of Liquidation; and

(2) the payment such holders would have received had their shares of Series B
Preferred Stock been converted into Series A Preferred Stock (at the then
applicable Conversion Rate), pursuant to Section 7, immediately prior to such
Liquidation, plus declared but unpaid Participating Dividends through the date
of Liquidation.

(the greater of (1) and (2) is referred to herein as the “Liquidation
Preference”). Holders of Series B Preferred Stock will not be entitled to any
other amounts from the Corporation after they have received the full amounts
provided for in this Section 5(a) and will have no right or claim to any of the
Corporation’s remaining assets.

(b) If, in connection with any distribution described in Section 5(a) above, the
assets of the Corporation or proceeds thereof are not sufficient to pay in full
the Liquidation Preference payable on the Series B Preferred Stock and the
corresponding amounts payable on the Parity Stock, then such assets, or the
proceeds thereof, shall be paid pro rata in accordance with the full respective
amounts which would be payable on such shares if all amounts payable thereon
were paid in full.

 

4

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(c) For purposes of this Section 5, the merger or consolidation of the
Corporation with or into any other corporation or other entity, or the sale,
conveyance, lease or other disposition of all or substantially all of the assets
of the Corporation, shall not constitute a liquidation, dissolution or winding
up of the Corporation.

Section 6. Voting Rights.

(a) The holders of shares of Series B Preferred Stock will not have any voting
rights, including the right to elect any directors, except (i) the right to vote
as a class on all matters adversely affecting the rights of holders of Series B
Preferred Stock or (ii) any other voting rights required by law.

(b) For so long as the Outstanding Preferred Percentage is at least 50%, the
Corporation shall not and shall not permit any direct or indirect Subsidiary of
the Corporation to, without first obtaining the written consent or affirmative
vote at a meeting called for that purpose of holders of a majority of
outstanding shares of Series B Preferred Stock and Series A Preferred Stock,
voting together as a single class, take any of the following actions:

(1) Any change, amendment, alteration or repeal (including as a result of a
merger, consolidation, or other similar or extraordinary transaction) of any
provisions of the Certificate or By-Laws that adversely amends, modifies or
affects the rights, preferences, privileges or voting powers of the Series B
Preferred Stock; or

(2) Any authorization, issuance or reclassification of stock that would rank
equal or senior to the Series B Preferred Stock with respect to the redemption,
liquidation, dissolution or winding up of the Corporation or with respect to
dividend rights.

Section 7. Conversion.

(a) Mandatory Conversion. Effective as of the close of business on the
Stockholder Approval Date, each share of Series B Preferred Stock shall
automatically, without any action of the holder, convert into one share of
Series A Preferred Stock, plus an amount in cash per share of Series B Preferred
Stock equal to accrued but unpaid dividends on such share from and including the
immediately preceding Dividend Payment Date to but excluding the date of such
conversion, out of funds legally available therefor. No Holder may convert
shares of Series B Preferred Stock other than pursuant to this Section 7(a).

(b) Conversion Procedures.

(1) In the event of conversion pursuant to Section 7(a), the Corporation shall
deliver as promptly as practicable written notice to each holder specifying
(A) the Stockholder Approval Date; and (B) the place or places where
certificates or evidence of book-entry notation for such shares of Series B
Preferred Stock are to be surrendered for issuance of certificates or evidence
of book-entry notation representing shares of Series A Preferred Stock; and

 

5

--------------------------------------------------------------------------------

Unless the shares of Series A Preferred Stock issuable upon conversion are to be
issued in the same name as the name in which such shares of Series B Preferred
Stock are registered, each share surrendered for mandatory conversion shall be
accompanied by instruments of transfer, in form satisfactory to the Corporation,
duly executed by the holder thereof or such holder’s duly authorized attorney
and an amount sufficient to pay any transfer or similar tax in accordance with
Section 7(f).

The “Conversion Date” shall be the Stockholder Approval Date.

(c) Effect of Conversion. Effective immediately prior to the Close of Business
on the Conversion Date applicable to any shares of Series B Preferred Stock,
dividends shall no longer accrue or be declared on any such shares of Series B
Preferred Stock and such shares of Series B Preferred Stock shall cease to be
outstanding.

(d) Record Holder of Underlying Securities as of Conversion Date. The Person or
Persons entitled to receive the Series A Preferred Stock and, to the extent
applicable, cash, issuable upon conversion of Series B Preferred Stock on a
Conversion Date shall be treated for all purposes as the record holder(s) of
such shares of Series A Preferred Stock and/or cash as of the Close of Business
on such Conversion Date. As promptly as practicable on or after the Conversion
Date (and in any event no later than three Trading Days thereafter), the
Corporation shall issue the number of shares of Series A Preferred Stock
issuable upon conversion. Such delivery of shares of Series A Preferred Stock
and, if applicable, cash, shall be made in certificated form or by book-entry.
Any such certificate or certificates shall be delivered by the Corporation to
the appropriate holder on a book-entry basis or by mailing certificates
evidencing the shares to the holders at their respective addresses as set forth
in the conversion notice. In the event that a holder shall not by written notice
designate the name in which shares of Series A Preferred Stock to be delivered
upon conversion of shares of Series B Preferred Stock should be registered or
paid, or the manner in which such shares and, if applicable, cash, should be
delivered, the Corporation shall be entitled to register and deliver such shares
and, if applicable, cash, in the name of the holder and in the manner shown on
the records of the Corporation.

(e) Status of Converted or Acquired Shares. Shares of Series B Preferred Stock
duly converted in accordance with this Certificate of Designations, or otherwise
acquired by the Corporation in any manner whatsoever, shall be retired promptly
after the acquisition thereof. All such shares shall upon their retirement and
any filing required by the Delaware General Corporation Law become authorized
but unissued shares of Preferred Stock, without designation as to series until
such shares are once more designated as part of a particular series by the Board
pursuant to the provisions of the Certificate of Incorporation.

(f) Taxes.

(1) The Corporation and its paying agent shall be entitled to withhold taxes on
all payments on the Series B Preferred Stock or the Series A Preferred Stock or
other securities issued upon conversion of the Series B Preferred Stock to the
extent required

 

6

--------------------------------------------------------------------------------

by law. Prior to the date of any such payment, the Corporation shall request
and, upon request, each holder of Series B Preferred Stock shall deliver to the
Corporation or its paying agent a duly executed, valid, accurate and properly
completed Internal Revenue Service Form W-9 or an appropriate Internal Revenue
Service Form W-8, as applicable.

(2) Absent a change in law or Internal Revenue Service practice, or a contrary
determination (as defined in Section 1313(a) of the United States Internal
Revenue Code of 1986, as amended (the “Code”)), each holder of Series B
Preferred Stock and the Corporation agree not to treat the Series B Preferred
Stock (based on their terms as set forth in this Certificate of Designations) as
“preferred stock” within the meaning of Section 305 of the Code, and Treasury
Regulation Section 1.305-5 for United States federal income tax and withholding
tax purposes and shall not take any position inconsistent with such treatment.

(3) The Corporation shall pay any and all documentary, stamp and similar
issuance or transfer tax due on (x) the issuance of the Series B Preferred Stock
and (y) the issuance of shares of Series A Preferred Stock upon conversion of
the Series B Preferred Stock. However, in the case of conversion of Series B
Preferred Stock, the Corporation shall not be required to pay any tax or duty
that may be payable in respect of any transfer involved in the issuance and
delivery of shares of Series A Preferred Stock in a name other than that of the
holder of the shares to be converted, and no such issuance or delivery shall be
made unless and until the person requesting such issuance has paid to the
Corporation the amount of any such tax or duty, or has established to the
satisfaction of the Corporation that such tax or duty has been paid.

(4) Each holder of Series B Preferred Stock and the Corporation agree to
cooperate with each other in connection with any redemption of part of the
shares of Series B Preferred Stock and to use good faith efforts to structure
such redemption so that such redemption may be treated as a sale or exchange
pursuant to Section 302 of the Code; provided that nothing in this Section 7(f)
shall require the Corporation to purchase any shares of Series B Preferred
Stock, and provided further that the Corporation makes no representation or
warranty in this Section 7(f) regarding the tax treatment of any redemption of
Series B Preferred Stock.

Section 8. Redemption and Repurchase.

(a) Optional Redemption.

(1) The Series B Preferred Stock may be redeemed, in whole or in part, at any
time on or after the seventh anniversary of the Issue Date, at the option of the
Corporation, upon giving notice of redemption pursuant to Section 8(d), at a
redemption price per share equal to the sum of the Stated Value per share of the
Series B Preferred Stock to be redeemed plus an amount per share equal to
accrued but unpaid dividends on such share of Series B Preferred Stock from and
including the immediately preceding Dividend Payment Date to but excluding the
date of redemption.

 

7

--------------------------------------------------------------------------------

(2) The Series B Preferred Stock may be redeemed in whole or in part, if, at any
time after the fourth anniversary of the Issue Date, the daily volume weighted
average price (“VWAP”) of the Common Stock equals or exceeds 175.0% of the
Conversion Price then in effect for at least 40 Trading Days during a period of
60 consecutive Trading Days, at the option of the Corporation, upon giving
notice of redemption pursuant to Section 8(d), at a redemption price per share
equal to the sum of the Stated Value per share of the Series B Preferred Stock
to be redeemed plus an amount per share equal to accrued but unpaid dividends on
such share of Series B Preferred Stock from and including the immediately
preceding Dividend Payment Date to but excluding the date of redemption.

(3) For the avoidance of doubt, the Series B Preferred Stock shall convert into
Series A Preferred Stock pursuant to Section 7(a) upon occurrence of the
Stockholder Approval Date prior to any date fixed for redemption.

(b) Repurchase at the Option of the Holder Upon a Change of Control. Upon the
occurrence of a Change of Control, each holder of shares of Series B Preferred
Stock shall have the right to require the Corporation to repurchase, by
irrevocable, written notice to the Corporation, all or any portion of such
holder’s shares of Series B Preferred Stock at a purchase price per share equal
to the value calculated in accordance with the applicable formula as set forth
on Annex 1 (the “Fair Value”).

Within thirty (30) days of the occurrence of a Change of Control, the
Corporation shall send notice by first class mail, postage prepaid, addressed to
the holders of record of the shares of Series B Preferred Stock at their
respective last addresses appearing on the books of the Corporation stating
(1) that a Change of Control has occurred, (2) that all shares of Series B
Preferred Stock tendered prior to a specified Business Day no earlier than
thirty (30) days nor later than sixty (60) days from the date such notice is
mailed shall be accepted for repurchase and (3) the procedures that holders of
the Series B Preferred Stock must follow in order for their shares of Series B
Preferred Stock to be repurchased, including the place or places where
certificates for such shares are to be surrendered for payment of the repurchase
price. Any notice mailed as provided in this subsection shall be conclusively
presumed to have been duly given, whether or not the holder receives such
notice, but failure duly to give such notice by mail, or any defect in such
notice or in the mailing thereof, to any holder of shares of Series B Preferred
Stock designated for repurchase shall not affect the validity of the proceedings
for the redemption of any other shares of Series B Preferred Stock.

(c) Mandatory Redemption. If the Stockholder Approval is not obtained by the
date that is the later of (i) the date that is 180 days from the date of the
Investment Agreement and (ii) the date that is 90 days from the Tender Offer
Closing, a holder of shares of Series B Preferred Stock may thereafter
irrevocably elect to require the Corporation to repurchase all or any portion of
such holder’s shares of Series B Preferred Stock by giving irrevocable, written
notice to the Corporation (a “Redemption Notice”) at a repurchase price per
share, payable in cash, equal to the greater of (x) the Stated Value and (y) the
average trading price of the Common Stock for the 20 Trading Days immediately
preceding the date of the Redemption Notice multiplied by (ii) the number of
shares of Common Stock into which a share of Series A Preferred Stock would have
been convertible.

 

8

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(d) Notice of Redemption at the Option of the Corporation. Notice of every
redemption of shares of Series B Preferred Stock pursuant to Section 8(a) shall
be given by first class mail, postage prepaid, addressed to the holders of
record of the shares to be redeemed at their respective last addresses appearing
on the books of the Corporation. Such mailing shall be at least thirty (30) days
and not more than sixty (60) days before the date fixed for redemption. Any
notice mailed as provided in this Section 8(d) shall be conclusively presumed to
have been duly given, whether or not the holder receives such notice, but
failure duly to give such notice by mail, or any defect in such notice or in the
mailing thereof, to any holder of shares of Series B Preferred Stock designated
for redemption shall not affect the validity of the proceedings for the
redemption of any other shares of Series B Preferred Stock. Each notice of
redemption given to a holder shall state: (1) the redemption date; (2) the
number of shares of the Series B Preferred Stock to be redeemed and, if less
than all the shares held by such holder are to be redeemed, the number of such
shares to be redeemed from such holder; (3) the redemption price; and (4) the
place or places where certificates for such shares are to be surrendered for
payment of the redemption price.

(e) Partial Redemption. In case of any redemption of part of the shares of
Series B Preferred Stock at the time outstanding pursuant to Section 8(a), the
shares to be redeemed shall be selected pro rata. Subject to the provisions
hereof, the Corporation shall have full power and authority to prescribe the
terms and conditions upon which shares of Series B Preferred Stock shall be
redeemed from time to time. If fewer than all the shares represented by any
certificate are redeemed, a new certificate shall be issued representing the
unredeemed shares without charge to the holder thereof.

(f) Effectiveness of Redemption. If notice of redemption has been duly given
under Section 8(d) and if on or before the redemption date specified in the
notice all funds necessary for the redemption have been deposited by the
Corporation, in trust for the pro rata benefit of the holders of the shares
called for redemption, with a bank or trust company doing business in the
Borough of Manhattan, The City of New York, and having a capital and surplus of
at least $500 million and selected by the Board, so as to be and continue to be
available solely therefor, then, notwithstanding that any certificate for any
share so called for redemption has not been surrendered for cancellation, on and
after the redemption date specified in the notice dividends shall cease to
accrue on all shares so called for redemption, all shares so called for
redemption shall no longer be deemed outstanding and all rights with respect to
such shares (including voting and consent rights) shall forthwith on such
redemption date specified in the notice cease and terminate, except that the
right of the holders thereof to receive the amount payable on such redemption
from such bank or trust company, without interest shall survive such cessation
and termination. Any funds unclaimed at the end of three years from the
redemption date specified in the notice shall, to the extent permitted by law,
be released to the Corporation, after which time the holders of the shares so
called for redemption shall look only to the Corporation for payment of the
redemption price of such shares.

 

9

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Section 9. Anti-Dilution Provisions.

(a) Reorganization Events. In the event of:

(1) any reclassification, statutory exchange, merger, consolidation or other
similar business combination of the Corporation with or into another Person, in
each case, pursuant to which the Series A Preferred Stock is changed or
converted into, or exchanged for, cash, securities or other property of the
Corporation or another person;

(2) any sale, transfer, lease or conveyance to another Person of all or
substantially all the property and assets of the Corporation, in each case
pursuant to which the Series A Preferred Stock is converted into cash,
securities or other property; or

(3) any statutory exchange of securities of the Corporation with another Person
(other than in connection with a merger or acquisition) or reclassification,
recapitalization or reorganization of the Series A Preferred Stock into other
securities,

(each of which is referred to as a “Reorganization Event”), each share of Series
B Preferred Stock outstanding immediately prior to such Reorganization Event
will, without the consent of the holders of Series B Preferred Stock and subject
to Section 9(b), remain outstanding but shall become convertible into, out of
funds legally available therefor, the number, kind and amount of securities,
cash and other property (the “Exchange Property”) (without any interest on such
Exchange Property and without any right to dividends or distribution on such
Exchange Property which have a record date that is prior to the applicable
Conversion Date) that the holder of such share of Series B Preferred Stock would
have received in such Reorganization Event had such holder converted its share
of Series B Preferred Stock into the applicable number of shares of Series A
Preferred Stock immediately prior to the effective date of the Reorganization
Event, assuming that such holder is not a Person with which the Corporation
consolidated or into which the Corporation merged or which merged into the
Corporation or to which such sale or transfer was made, as the case may be (any
such Person, a “Constituent Person”), or an Affiliate of a Constituent Person to
the extent such Reorganization Event provides for different treatment of Series
A Preferred Stock held by Affiliates of the Corporation and non-Affiliates;
provided that if the kind or amount of securities, cash and other property
receivable upon such Reorganization Event is not the same for each share of
Series A Preferred Stock held immediately prior to such Reorganization Event by
a Person other than a Constituent Person or an Affiliate thereof, then for the
purpose of this Section 9(j), the kind and amount of securities, cash and other
property receivable upon such Reorganization Event will be deemed to be the
weighted average, as determined by the Corporation in good faith, of the types
and amounts of consideration received by the holders of Common Stock. Any notice
mailed as provided in this subsection shall be conclusively presumed to have
been duly given, whether or not the holder receives such notice, but failure
duly to give such notice by mail, or any defect in such notice or in the mailing
thereof, to any holder of shares of Series B Preferred Stock designated for
repurchase shall not affect the validity of the proceedings for the redemption
of any other shares of Series B Preferred Stock.

(b) Exchange Property Election. In the event that the holders of the shares of
Series A Preferred Stock have the opportunity to elect the form of consideration
to be received in such transaction, the Exchange Property that the holders of
Series B Preferred Stock shall be entitled

 

10

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to receive shall be determined by the holders of a majority of the outstanding
shares of Series B Preferred Stock on or before the earlier of (i) the deadline
for elections by holders of Series A Preferred Stock and (ii) two Business Days
before the anticipated effective date of such Reorganization Event. The number
of units of Exchange Property for each share of Series B Preferred Stock
converted following the effective date of such Reorganization Event shall be
determined from among the choices made available to the holders of the Series A
Preferred Stock and based on the per share amount as of the effective date of
the Reorganization Event, determined as if the references to “share of Series A
Preferred Stock” in this Certificate of Designations were to “units of Exchange
Property.”

(c) Successive Reorganization Events. The above provisions of Sections 9(a) and
Section 9(b) shall similarly apply to successive Reorganization Events and the
provisions of Section 9 shall apply to any shares of Capital Stock (or capital
stock of any other issuer) received by the holders of the Series A Preferred
Stock in any such Reorganization Event.

(d) Reorganization Event Notice. The Corporation (or any successor) shall, no
less than twenty (20) Business Days prior to the occurrence of any
Reorganization Event, provide written notice to the holders of Series B
Preferred Stock of such occurrence of such event and of the kind and amount of
the cash, securities or other property that constitutes the Exchange Property.
Failure to deliver such notice shall not affect the operation of this Section 9.

(e) The Corporation shall not enter into any agreement for a transaction
constituting a Reorganization Event unless (i) such agreement provides for or
does not interfere with or prevent (as applicable) conversion of the Series B
Preferred Stock into the Exchange Property in a manner that is consistent with
and gives effect to this Section 9, and (ii) to the extent that the Corporation
is not the surviving corporation in such Reorganization Event or will be
dissolved in connection with such Reorganization Event, proper provision shall
be made in the agreements governing such Reorganization Event for the conversion
of the Series B Preferred Stock into stock of the Person surviving such
Reorganization Event or such other continuing entity in such Reorganization
Event, or in the case of a Reorganization Event described in Section 9(a)(2), an
exchange of Series B Preferred Stock for the stock of the Person to whom the
Corporation’s assets are conveyed or transferred, having voting powers,
preferences, and relative, participating, optional or other special rights as
nearly equal as possible to those provided in this Certificate of Designations.

Section 10. Reservation of Shares. The Corporation shall at all times when the
Series B Preferred Stock shall be outstanding reserve and keep available, free
from preemptive rights, for issuance upon the conversion of Series B Preferred
Stock, such number of its authorized but unissued Series A Preferred Stock as
will from time to time be sufficient to permit the conversion of all outstanding
Series B Preferred Stock. Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of the Series B
Preferred Stock, the Corporation shall comply with all applicable laws and
regulations which require action to be taken by the Corporation.

Section 11. Notices. Except as otherwise provided herein, any and all notices or
other communications or deliveries hereunder shall be in writing and shall be
deemed given and effective on the earliest of (i) the date of transmission, if
such notice or communication is

 

11

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delivered via facsimile at the facsimile number specified in this Section prior
to or at the Close of Business on a Business Day and electronic confirmation of
receipt is received by the sender, (ii) the next Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number specified in this Section on a day that is not a Business Day
or later than the Close of Business on any Business Day, (iii) the Business Day
following the date of mailing, if sent by nationally recognized overnight
courier service, or (iv) upon actual receipt by the party to whom such notice is
required to be given. The addresses for such communications shall be: (i) if to
the Corporation, attention: Chief Executive Officer and General Counsel, or
(ii) if to a holder of Series B Preferred Stock, to the address or facsimile
number appearing on the Corporation’s stockholder records or such other address
or facsimile number as such holder may provide to the Corporation in accordance
with this Section 11.

Section 12. Certain Definitions. As used in this Certificate of Designations,
the following terms shall have the following meanings, unless the context
otherwise requires:

“Affiliate” with respect to any person, any person directly or indirectly
controlling, controlled by or under common control with, such other person;
provided, however, that (i) portfolio companies in which any person or any of
its Affiliates has an investment shall not be deemed an Affiliate of such
person, or (ii) the Corporation, any of its Subsidiaries, or any of the
Corporation’s other controlled Affiliates, in each case, will not be deemed to
be Affiliates of the Brookfield Group for purposes of this Certificate of
Designations. For purposes of this definition, “control” (including, with
correlative meanings, the terms “controlled by” and “under common control with”)
when used with respect to any person, means the possession, directly or
indirectly, of the power to cause the direction of management or policies of
such person, whether through the ownership of voting securities, by contract or
otherwise.

“Beneficially Own” shall mean “beneficially own” as defined in Rule 13d-3 of the
Exchange Act or any successor provision thereto.

“Brookfield Group” means Brookfield Capital Partners Ltd. and any of its
Affiliates, any successor entity and any other investment fund, vehicle or
similar entity of which such person or an Affiliate, advisor or manager of such
person serves as the general partner, manager or advisor.

“Board” shall have the meaning ascribed to it in the recitals.

“Business Day” shall mean a day that is a Monday, Tuesday, Wednesday, Thursday
or Friday and is not a day on which banking institutions in New York, New York,
or Cleveland, Ohio, generally are authorized or obligated by law, regulation or
executive order to close.

“Capital Stock” shall mean any and all shares, interests, rights to purchase,
warrants, options, participations or other equivalents of or interests in
(however designated) stock issued by the Corporation.

“Certificate of Designations” shall mean this Certificate of Designations
relating to the Series B Preferred Stock, as it may be amended from time to
time.

 

12

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“Change of Control” shall mean the occurrence of any of the following on or
after May [●], 2015:

(1) any Person (other than a member of the Brookfield Group) shall Beneficially
Own, directly or indirectly, through a purchase, merger or other acquisition
transaction or series of transactions, shares of the Corporation’s Capital Stock
entitling such Person to exercise 35% or more of the total voting power of all
classes of Voting Stock of the Corporation, other than an acquisition by the
Corporation, any of the Corporation’s Subsidiaries or any of the Corporation’s
employee benefit plans (for purposes of this clause (1), “Person” shall include
any syndicate or group that would be deemed to be a “person” under
Section 13(d)(3) of the Exchange Act);

(2) the Corporation (i) merges or consolidates with or into any other Person,
another Person merges with or into the Corporation, or the Corporation conveys,
sells, transfers or leases all or substantially all of the Corporation’s assets
to another Person or (ii) engages in any recapitalization, reclassification or
other transaction in which all or substantially all of the Common Stock is
exchanged for or converted into cash, securities or other property, in each case
other than a merger, consolidation or sale:

1. that does not result in a reclassification, conversion, exchange or
cancellation of the Corporation’s outstanding Common Stock; or

2. which is effected solely to change the Corporation’s jurisdiction of
incorporation and results in a reclassification, conversion or exchange of
outstanding shares of the Common Stock solely into shares of common stock of the
surviving entity; or

3. where the Voting Stock outstanding immediately prior to such transaction is
converted into or exchanged for Voting Stock of the surviving or transferee
Person constituting a majority of the outstanding shares of such Voting Stock of
such surviving or transferee Person (immediately after giving effect to such
issuance); or

(3) the Common Stock ceases to be listed or quoted on any of the New York Stock
Exchange, the Nasdaq Global Select Market or the Nasdaq Global Market (or any of
their respective successors),

provided, that (x) transfers by any holder of any shares of Series B Preferred
Stock (or shares of Series A Preferred Stock converted therefrom) to any Person
shall not be taken into account for purposes of determining whether or not a
Change of Control has occurred and (y) notwithstanding the foregoing, a
transaction or transactions will not constitute a Change of Control if at least
90% of the consideration received or to be received by holders of Common Stock
(other than cash payments for fractional shares or pursuant to statutory
appraisal rights) in connection with such transaction or transactions consists
of common stock, ordinary shares, American depositary receipts or American
depositary shares and any associated rights listed and traded on the New York
Stock Exchange or another U.S. national securities exchange or automated
inter-dealer quotation system (or which will be so listed and traded when issued
or exchanged in connection with such consolidation or merger).

 

13

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“Close of Business” shall mean 5:00 p.m., New York City time, on any Business
Day.

“Closing Price” shall means the price per share of the final trade of the Common
Stock on the applicable Trading Day on the principal national securities
exchange on which the Common Stock is listed or admitted to trading.

“Common Stock” shall have the meaning ascribed to it in Section 3.

“Constituent Person” shall have the meaning ascribed to it in Section 9(j).

“Conversion Rate” shall have the meaning ascribed to it in Section 7(c).

“Corporation” shall have the meaning ascribed to it in the recitals.

“Dividend” shall have the meaning ascribed to it in Section 4(a).

“Dividend Payment Date” shall have the meaning ascribed to it in Section 4(b).

“Exchange Property” shall have the meaning ascribed to it in Section 9(j).

“Fair Value” shall have the meaning ascribed to it in Section 8(b).

“Indebtedness” shall mean any indebtedness (including principal and premium) in
respect of borrowed money.

“Investment Agreement” shall mean that certain Investment Agreement, dated as of
May 4, 2015, by and between GrafTech International Ltd. and BCP IV Graftech
Holdings LP.

“Issue Date” shall mean [●], 2015.

“Junior Stock” shall have the meaning ascribed to it in Section 3.

“Liquidation” shall have the meaning ascribed to it in Section 5(a).

“Liquidation Preference” shall have the meaning ascribed to it in Section 5(a).

“Open of Business” shall mean 9:00 a.m., New York City time, on any Business
Day.

“Outstanding Preferred Percentage” means, as of any date, the percentage equal
to (i) the aggregate number of shares of Series B Preferred Stock then
outstanding divided by (ii) the total number of shares of Series B Preferred
Stock issued pursuant to the Investment Agreement.

 

14

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“Parity Stock” shall have the meaning ascribed to it in Section 3.

“Participating Dividend” shall have the meaning ascribed to it in Section 4(a).

“Person” shall mean any individual, company, partnership, limited liability
company, joint venture, association, joint stock company, trust, unincorporated
organization, government or agency or political subdivision thereof or any other
entity.

“Preferred Stock” shall mean any and all series of preferred stock of the
Corporation, including the Series B Preferred Stock.

“Record Date” shall mean, with respect to any dividend, distribution or other
transaction or event in which the holders of Common Stock have the right to
receive any cash, securities or other property or in which the Common Stock (or
other applicable security) is exchanged for or converted into any combination of
cash, securities or other property, the date fixed for determination of
shareholders entitled to receive such cash, securities or other property
(whether such date is fixed by the Board or by statute, contract, this
Certificate of Designations or otherwise).

“Regular Dividend” shall have the meaning ascribed to it in Section 4(a).

“Regular Dividend Payment Date” shall have the meaning ascribed to it in
Section 4(b).

“Regular Dividend Period” shall have the meaning ascribed to it in Section 4(b).

“Reorganization Event” shall have the meaning ascribed to it in Section 9(j).

“Series B Preferred Stock” shall have the meaning ascribed to it in Section 1.

“Stated Value” shall have the meaning ascribed to it in Section 4(a).

“Stockholder Approval” means the stockholder approval of the proposal to issue
Series A Preferred Stock upon conversion of the Series B Preferred Stock
pursuant to the terms of this Certificate of Designation in compliance with Rule
312 of the NYSE Listed Company Manual.

“Stockholder Approval Date” means the date on which the Stockholder Approval is
obtained.

“Stockholder Rights Agreement” shall have the meaning ascribed to it in
Section 6(a).

“Subsidiary” means any company or corporate entity for which the Corporation
owns, directly or indirectly, an amount of the voting securities, other voting
rights or voting partnership interests of which is sufficient to elect at least
a majority of its board of directors or other governing body (or, if there are
no such voting interests, more than 50% of the equity interests of such company
or corporate entity).

 

15

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“Tender Offer Closing” means the closing of the tender offer contemplated by
that certain letter of intent, dated as of April 29, 2015, by and between the
Corporation and Brookfield Capital Partners Ltd. regarding a proposed tender
offer for the outstanding shares of the Common Stock.

“Trading Day” shall mean any Business Day on which the Common Stock is traded,
or able to be traded, on the principal national securities exchange on which the
Common Stock is listed or admitted to trading.

“Voting Stock” shall mean Capital Stock of the class or classes pursuant to
which the holders thereof have the general voting power under ordinary
circumstances (determined without regard to any classification of directors) to
elect one or more members of the Board of Directors of the Corporation (without
regard to whether or not, at the relevant time, Capital Stock of any other class
or classes (other than Common Stock) shall have or might have voting power by
reason of the happening of any contingency).

“VWAP” shall have the meaning ascribed to it in Section 7(a).

Section 13. Headings. The headings of the paragraphs of this Certificate of
Designations are for convenience of reference only and shall not define, limit
or affect any of the provisions hereof.

Section 14. Record Holders. To the fullest extent permitted by applicable law,
the Corporation may deem and treat the record holder of any share of the Series
B Preferred Stock as the true and lawful owner thereof for all purposes, and the
Corporation shall not be affected by any notice to the contrary.

Section 15. Notices. All notices or communications in respect of the Series B
Preferred Stock shall be sufficiently given if given in writing and delivered in
person or by first class mail, postage prepaid, or if given in such other manner
as may be permitted in this Certificate of Designations, in the Certificate of
Incorporation or By-laws or by applicable law or regulation. Notwithstanding the
foregoing, if the Series B Preferred Stock is issued in book-entry form through
The Depository Trust Corporation or any similar facility, such notices may be
given to the holders of the Series B Preferred Stock in any manner permitted by
such facility.

Section 16. Replacement Certificates. The Corporation shall replace any
mutilated certificate at the holder’s expense upon surrender of that certificate
to the Corporation. The Corporation shall replace certificates that become
destroyed, stolen or lost at the holder’s expense upon delivery to the
Corporation of reasonably satisfactory evidence that the certificate has been
destroyed, stolen or lost, together with any indemnity that may be required by
the Corporation.

Section 17. Transfer Agent, Conversion Agent, Registrar and Paying Agent. The
duly appointed Transfer Agent, Conversion Agent, Registrar and Paying Agent for
the Series B Preferred Stock shall be the Corporation. The Corporation may, in
its sole discretion, resign from its position as Transfer Agent or remove a
successor Transfer Agent in accordance with the agreement between the
Corporation and such Transfer Agent; provided that the Corporation shall appoint
a successor transfer agent who shall accept such appointment prior to the
effectiveness of

 

16

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any such resignation or removal. Upon any such removal, resignation or
appointment, the Corporation shall send notice thereof by first-class mail,
postage prepaid, to the holders of the Series B Preferred Stock.

Section 18. Severability. If any term of the Series B Preferred Stock set forth
herein is invalid, unlawful or incapable of being enforced by reason of any rule
of law or public policy, all other terms set forth herein which can be given
effect without the invalid, unlawful or unenforceable term will, nevertheless,
remain in full force and effect, and no term herein set forth will be deemed
dependent upon any other such term unless so expressed herein.

Section 19. Other Rights. The shares of Series B Preferred Stock shall not have
any rights, preferences, privileges or voting powers or relative, participating,
optional or other special rights, or qualifications, limitations or restrictions
thereof, other than as set forth herein or in the Certificate of Incorporation
or as provided by applicable law and regulation.

Section 20. Transfer Rights. The shares of Series B Preferred Stock may not be
sold or otherwise transferred.

 

17

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IN WITNESS WHEREOF, GrafTech International Ltd. has caused this Certificate of
Designations to be duly executed by its authorized corporate officer this [●]
day of [●], 2015.

 

GRAFTECH INTERNATIONAL LTD. By

 

Name: Title:

 

18

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Annex 1

Fair Value Calculations

Annex 1

 

The basis for the Fair Value Top-Up Payment will be the Black Scholes Option
Valuation methodology as described below:

Call Value (CV) = SN(d1) – Ke–rtN(d2)

where by,

S = The Change of Control price

K = The conversion price

t = The time to option expiration (put date)

r = ln(1+r’) where r’ = US Treasury with closest maturity to option expiration
(put date)

N = The Normal Distribution of d1 amd d2 where, as defined below,

 

LOGO [g918108ex10_1pg81a.jpg]

s = Volatility of the underlying security

The Fair Value Top-Up Payment will then be calculated as follows:

Fair Value Top-Up Payment = Net Option Value * Conversion Ratio * Preferred
Shares Outstanding

* (% of Fair Value Top – Up Applicable Percentage)

where by,

Net Option Value = Call Value – In the Money Value where,

In the Money Value = S – K

 

LOGO [g918108ex10_1pg81b.jpg]

Fair Value Top – Up Applicable Percentage = one of the following scenarios:

 

(i) Change of Control on or after 2nd anniversary of the date of the Investment
Agreement:

Fair Value Top – Up Applicable Percentage = 100%

 

(ii) Change of Control before 2nd anniversary of the date of the Investment
Agreement not initiated by an Approved Holder (as defined in the Investment
Agreement) or any of their respective Affiliates (as defined in the Investment
Agreement):

Fair Value Top – Up Applicable Percentage = 100%

 

(iii) Change of Control before 2nd anniversary of the date of the Investment
Agreement initiated by Approved Holder (as defined in the Investment Agreement)
or any of their respective Affiliates (as defined in the Investment Agreement):

Fair Value Top – Up Applicable Percentage = 25%

 

(iv) Change of Control during Go-Shop Period (or Go-Shop Extension) (each as
defined in that certain letter of intent, dated as of April 29, 2015, by and
between the Company and Brookfield Capital Partners Ltd. regarding a proposed
tender offer for the outstanding shares of the Common Stock)

Fair Value Top – Up Applicable Percentage = 0%

A holder of shares of Series A Preferred Stock would be entitled to the amount
such holder would have received had they converted such shares into shares of
Common Stock immediately prior to such transaction.

 

19

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An illustrative example of the Fair Value is as follows:

Assumptions

 

          

Source:

Market Assumptions

    

Issue Date

     30-Apr-15     

US Treasury1

     1.29 %    Bloomberg

Change of Control Price

   $ 5.50     

Options Assumptions

    

Put Date

     30-Apr-22     

Change of Control Date

     30-Apr-18     

Strike Price

   $ 5.00     

Volatility

     35.00 %    Fixed

 

1. Liquid US Treasury with closest maturity to Put Date from Bloomberg

US$ Option Value Calculation

 

Expiry Date (Put Date)

        30-Apr-22   

Change of Control Price

   S=    $ 5.50   

Strike Price

   K=    $ 5.00   

Time to Expiration (years)

   t=      4 years   

US Govt’ Risk Free Rate

   r’=      1.29 % 

Continuous Risk Free Rate = r = ln(1 + r’) =

        0.013  

Volatility

   s=      35 % 

Normal Distribution of d1

        0.712  

Normal Distribution of d2

        0.444  

[A] Call Value = SN(d1) - Ke-rtN(d2) =

      $ 1.81   

         LOGO [g918108ex10_1pg82.jpg]    

0.392 

  =    0.559     0.700               

d2= d1 - s * Öt =

    (0.141)     

N(d1) =

    0.712      

N(d2) =

    0.444                        

 

 

Fair Value in Change of Control

US$

 

Par Value per Share of Preferred Stock

   $ 1,000.00   

Strike Price of Conversion Option

   $ 5.00      

 

 

 

Shares of Common Equity per share of Preferred Stock

  200   

[A] Call Value of Conversion Option per share of Common Stock

$ 1.81   

Less: In-the-money Value of Conversion Option

($ 0.50 )    

 

 

 

Net Fair Value Payment per share of Common Stock (as-converted basis)

$ 1.31   

Shares of Common Stock per share of Preferred Stock

  200      

 

 

 

Fair Value of Top-Up Payment per share of Preferred Stock

$ 261.37   

Shares of Preferred Stock Issued

  150,000      

 

 

 

Fair Value Top-Up Payment in Change of Control

$ 39,204,791   

Fair Value Top-up Applicable Percentage

  100 %    

 

 

 

Adjusted Fair Value Top-Up Payment in Change of Control

$ 39,204,791   

Adjusted Fair Value Top-Up Payment in Change of Control per Share of Preferred
Stock

$ 261.37   

Shares of Common Stock per share of Preferred Stock

  200   

Change of Control Price

$ 5.50      

 

 

 

As-Converted Value of a Share of Preferred Stock

$ 1,100.00   

Adjusted Fair Value Top-Up Payment in Change of Control per Share of Preferred
Stock

$ 261.37      

 

 

 

Fair Value per share of Preferred Stock

$ 1,361.37   

In addition, an illustrative example of Fair Value Top-Up Payment under several
Change of Control outcomes is provided below, noting that such outcomes do not
intend to demonstrate an exhaustive set of potential outcomes. The values in the
below tables are calculated using the US Treasury rate from the above example
for simplicity (i.e. 4 year) and are not intended to govern the agreement.

 

(i) Change of Control on or after 2nd anniversary of the date of the Investment
Agreement

Change of Control on or after 2nd anniversary of the date of the 
Investment Agreement

US$

 

Time of   Time to   Change of Control Price   CoC   Expiration   $5.00     $5.25
    $5.50     $5.75     $6.00     $6.25     $6.50   2.0 yrs   5.0 yrs   $
49,044,551      $ 46,742,523      $ 44,598,312      $ 42,599,769      $
40,735,714      $ 38,995,872      $ 37,370,804    3.0 yrs   4.0 yrs   $
43,875,023      $ 41,449,736      $ 39,204,791      $ 37,126,081      $
35,200,522      $ 33,416,021      $ 31,761,423    4.0 yrs   3.0 yrs   $
37,952,855      $ 35,387,837      $ 33,035,583      $ 30,879,008      $
28,902,078      $ 27,089,842      $ 25,428,428    5.0 yrs   2.0 yrs   $
30,885,686      $ 28,158,618      $ 25,697,547      $ 23,480,019      $
21,484,511      $ 19,690,665      $ 18,079,438   

 

20

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(ii) Change of Control before 2nd anniversary of the date of the Investment
Agreement not initiated by an Approved Holder (as defined in the Investment
Agreement) or any of their respective Affiliates (as defined in the Investment
Agreement):

Change of Control before 2nd anniversary of the date of the Investment 
Agreement not Initiated by Investor or Holder

US$

 

Time of   Time to   Change of Control Price   CoC   Expiration   $5.00     $5.25
    $5.50     $5.75     $6.00     $6.25     $6.50   0.0 yrs   7.0 yrs   $
57,860,533      $ 55,769,503      $ 53,806,092      $ 51,960,656      $
50,224,403      $ 48,589,314      $ 47,048,063    0.5 yrs   6.5 yrs   $
55,810,421      $ 53,670,321      $ 51,664,133      $ 49,781,699      $
48,013,746      $ 46,351,799      $ 44,788,108    1.0 yrs   6.0 yrs   $
53,665,431      $ 51,473,976      $ 49,423,449      $ 47,503,117      $
45,703,159      $ 44,014,582      $ 42,429,157    1.5 yrs   5.5 yrs   $
51,414,613      $ 49,169,276      $ 47,072,767      $ 45,113,694      $
43,281,609      $ 41,566,926      $ 39,960,859   

 

(iii) Change of Control before 2nd anniversary of the date of the Investment
Agreement initiated by Approved Holder (as defined in the Investment Agreement)
or any of their respective Affiliates (as defined in the Investment Agreement):

Change of Control before 2nd anniversary of the date of the Investment 
Agreement Initiated by Investor or Holder

US$

 

Time of   Time to   Change of Control Price   CoC   Expiration   $5.00     $5.25
    $5.50     $5.75     $6.00     $6.25     $6.50   0.0 yrs   7.0 yrs   $
14,465,133      $ 13,942,376      $ 13,451,523      $ 12,990,164      $
12,556,101      $ 12,147,329      $ 11,762,016    0.5 yrs   6.5 yrs   $
13,952,605      $ 13,417,580      $ 12,916,033      $ 12,445,425      $
12,003,437      $ 11,587,950      $ 11,197,027    1.0 yrs   6.0 yrs   $
13,416,358      $ 12,868,494      $ 12,355,862      $ 11,875,779      $
11,425,790      $ 11,003,646      $ 10,607,289    1.5 yrs   5.5 yrs   $
12,853,653      $ 12,292,319      $ 11,768,192      $ 11,278,424      $
10,820,402      $ 10,391,731      $ 9,990,215   

 

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SCHEDULE C

REGISTRATION RIGHTS AGREEMENT

This REGISTRATION RIGHTS AGREEMENT (this “Agreement”), dated as of [●], 2015, is
by and between GrafTech International Ltd., a Delaware corporation (the
“Company”), and BCP IV GrafTech Holdings LP, its wholly-owned designee (the
“Purchaser”). The Purchaser and any other Person who may become a party hereto
pursuant to Section 11(c) are referred to individually as a “Shareholder” and
collectively as the “Shareholders.”

WHEREAS, the Company and the Purchaser are parties to the Investment Agreement,
dated as of May 4, 2015 (as the same may be amended, supplemented or otherwise
modified from time to time, the “Investment Agreement”); and

WHEREAS, the Purchaser desires to have, and the Company desires to grant,
certain registration and other rights with respect to the Registrable Securities
on the terms and subject to the conditions set forth in this Agreement.

NOW, THEREFORE, for and in consideration of the mutual agreements contained
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto, intending to be
legally bound hereby, agree as follows:

Section 1. Definitions. As used in this Agreement, the following terms shall
have the following meanings, and terms used herein but not otherwise defined
herein shall have the meanings assigned to them in the Investment Agreement:

“Adverse Disclosure” means public disclosure of material non-public information
that the Company has determined in good faith (after consultation with legal
counsel): (i) would be required to be made in any Registration Statement filed
with the SEC by the Company so that such Registration Statement or report would
not be materially misleading; (ii) would not be required to be made at such time
but for the filing, effectiveness or continued use of such Registration
Statement or report; and (iii) the Company has a bona fide business purpose for
not disclosing publicly.

“Agreement” shall have the meaning set forth in the preamble.

“Automatic Shelf Registration Statement” shall have the meaning set forth in
Rule 405 (or any successor provision) of the Securities Act.

“Certificate of Designations” shall mean that certain Certificate of
Designations of the Company, setting forth the rights, privileges, preferences
and restrictions of the Series A Convertible Preferred Stock, dated as of the
date hereof, as the same may be amended from time to time.

“Common Stock” shall mean all shares currently or hereafter existing of Common
Stock, par value $0.01 per share, of the Company.

“Convertible Preferred Stock” shall mean all shares currently or hereafter
existing of Series A Preferred Stock.

 

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“Demand Notice” shall have the meaning set forth in Section 3(a).

“Demand Registration” shall have the meaning set forth in Section 3(a).

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended, and
any successor statute thereto, and the rules and regulations of the SEC
promulgated thereunder.

“Indemnified Party” shall have the meaning set forth in Section 8(c).

“Indemnifying Party” shall have the meaning set forth in Section 8(c).

“Investment Agreement” shall have the meaning set forth in the recitals.

“Long-Form Registration” shall have the meaning set forth in Section 3(a).

“Losses” shall have the meaning set forth in Section 8(a).

“Marketed Offering” shall mean a registered underwritten offering of Registrable
Securities (including any registered underwritten Shelf Offering) that is
consummated, withdrawn or abandoned by the applicable Shareholders following
formal participation by the Company’s management in a customary “road show”
(including an “electronic road show”) or other similar marketing effort by the
Company.

“Person” shall mean any natural person, corporation, limited partnership,
general partnership, limited liability company, joint stock company, joint
venture, association, company, estate, trust, bank trust company, land trust,
business trust, or other organization, whether or not a legal entity, custodian,
trustee-executor, administrator, nominee or entity in a representative capacity
and any government or agency or political subdivision thereof.

“Piggyback Notice” shall have the meaning set forth in Section 4(a).

“Piggyback Registration” shall have the meaning set forth in Section 4(a).

“Piggyback Request” shall have the meaning set forth in Section 4(a).

“Proceeding” shall mean an action, claim, suit, arbitration or proceeding
(including an investigation or partial proceeding, such as a deposition),
whether commenced or threatened.

“Prospectus” shall mean the prospectus included in any Registration Statement
(including a prospectus that discloses information previously omitted from a
prospectus filed as part of an effective Registration Statement in reliance upon
Rule 430A or Rule 430B promulgated under the Securities Act), as amended or
supplemented by any prospectus supplement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference or deemed to be incorporated by reference in
such prospectus.

 

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“Public Offering” shall mean the sale of Common Stock to the public pursuant to
an effective Registration Statement (other than Form S-4 or Form S-8 or any
successor form) filed under the Securities Act or any comparable law or
regulatory scheme of any foreign jurisdiction.

“Registrable Securities” shall mean, as of any date of determination, any shares
of Common Stock that the Shareholders have acquired or have the right to acquire
upon conversion of the Convertible Preferred Stock, and any other securities
issued or issuable with respect to any such shares by way of share split, share
dividend, distribution, recapitalization, merger, exchange, replacement or
similar event or otherwise acquired from time to time. As to any particular
Registrable Securities, once issued, such securities shall cease to be
Registrable Securities when (i) they are sold pursuant to an effective
Registration Statement under the Securities Act, (ii) the holder thereof,
together with its, his or her affiliates, beneficially owns less than 1.0% of
the shares of Common Stock (including all shares issuable upon the conversion of
all Convertible Preferred Stock) at such time and such holder is able to dispose
of all of its, his or her Registrable Securities pursuant to Rule 144 without
any volume limitations or manner of sale limitations thereunder, provided that
at such time such Registrable Securities are not required to bear any legend
restricting the transfer thereof, or (iii) they shall have ceased to be
outstanding.

“Registration Statement” shall mean any registration statement of the Company
under the Securities Act which covers any of the Registrable Securities pursuant
to the provisions of this Agreement, including the Prospectus, amendments and
supplements to such registration statement, including post-effective amendments,
all exhibits and all material incorporated by reference or deemed to be
incorporated by reference in such registration statement.

“Rule 144” shall mean Rule 144 under the Securities Act, as such Rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the SEC.

“SEC” shall mean the Securities and Exchange Commission or any successor agency
having jurisdiction under the Securities Act.

“Securities Act” shall mean the Securities Act of 1933, as amended, and any
successor statute thereto, and the rules and regulations of the SEC promulgated
thereunder.

“Shareholders” shall have the meaning set forth in the preamble.

“Shelf Offering” shall have the meaning set forth in Section 4(c).

“Short-Form Registration” shall have the meaning set forth in Section 3(a).

“Take-Down Notice” shall have the meaning set forth in Section 4(c).

“underwritten registration” or “underwritten offering” shall mean a registration
in which securities of the Company are sold to an underwriter for reoffering to
the public.

 

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“Well-Known Seasoned Issuer” shall have the meaning set forth in Rule 405 (or
any successor provision) of the Securities Act.

Section 2. Holders of Registrable Securities. A Person is deemed, and shall only
be deemed, to be a holder of Registrable Securities if such Person owns
Registrable Securities or has a right to acquire such Registrable Securities and
such Person is a Shareholder.

Section 3. Demand Registrations.

(a) Requests for Registration. Subject to the following paragraphs of this
Section 3(a), one or more Shareholders shall have the right, by delivering or
causing to be delivered a written notice to the Company, to require the Company
to register pursuant to the terms of this Agreement, under and in accordance
with the provisions of the Securities Act, the offer, sale and distribution of
the number of Registrable Securities requested to be so registered pursuant to
the terms of this Agreement on Form S-3 (which, unless all Shareholders
delivering such notice request otherwise, shall be (i) filed pursuant to Rule
415 under the Securities Act and (ii) if the Company is a Well-Known Seasoned
Issuer at the time of filing such registration statement with the SEC,
designated by the Company as an Automatic Shelf Registration Statement), if the
Company is then eligible for such short-form, or any similar or successor
short-form registration (“Short-Form Registrations”) or, if the Company is not
then eligible for such short form registration, on Form S-1 or any similar or
successor long-form registration (“Long-Form Registrations”) (any such written
notice, a “Demand Notice” and any such registration, a “Demand Registration”),
as soon as reasonably practicable after delivery of such Demand Notice, but, in
any event, the Company shall be required to make the initial filing of the
Registration Statement within 30 days following receipt of such Demand Notice in
the case of a Short-Form Registration or within 90 days following receipt of
such Demand Notice in the case of a Long-Form Registration; provided, however,
that, unless a Shareholder requests to have registered all of its Registrable
Securities, a Demand Notice for a Marketed Offering may only be made if the sale
of the Registrable Securities requested to be registered by such Shareholders is
reasonably expected to result in aggregate gross cash proceeds in excess of
$50,000,000 (without regard to any underwriting discount or commission).
Following receipt of a Demand Notice for a Demand Registration in accordance
with this Section 3(a), the Company shall use its reasonable best efforts to
file a Registration Statement in accordance with such Demand Notice as promptly
as reasonably practicable and shall use its reasonable best efforts to cause
such Registration Statement to be declared effective under the Securities Act as
promptly as practicable after the filing thereof.

No Demand Registration shall be deemed to have occurred for purposes of this
Section 3(a), and any Demand Notice delivered in connection therewith shall not
count as a Demand Notice for purposes of Section 3(e), if (x) the Registration
Statement relating thereto (and covering not less than all Registrable
Securities specified in the applicable Demand Notice for sale in accordance with
the intended method or methods of distribution specified in such Demand Notice)
(i) does not become effective, or (ii) is not maintained effective for the
period required pursuant to this Section 3 or (y) the offering of the
Registrable Securities pursuant to such Registration Statement is subject to a
stop order, injunction, or similar order or requirement of the SEC during such
period or (z) the conditions to closing specified in any underwriting agreement,
purchase agreement, or similar agreement entered into in connection with the
registration relating to such request are not satisfied other than as a result
of the Shareholders’ actions.

 

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All requests made pursuant to this Section 3 will specify the number of
Registrable Securities to be registered and the intended method(s) of
disposition thereof.

Except as otherwise agreed by all Shareholders with Registrable Securities
subject to a Demand Registration, the Company shall maintain the continuous
effectiveness of the Registration Statement with respect to any Demand
Registration until such securities cease to be Registrable Securities or such
shorter period upon which all Shareholders with Registrable Securities included
in such Registration Statement have notified the Company that such Registrable
Securities have actually been sold.

Within five business days after receipt by the Company of a Demand Notice
pursuant to this Section 3(a), the Company shall deliver a written notice of any
such Demand Notice to all other holders of Registrable Securities, and the
Company shall, subject to the provisions of Section 3(b), include in such Demand
Registration all such Registrable Securities with respect to which the Company
has received written requests for inclusion therein (whether or not any of the
Shareholders have exercised its, his or her conversion rights) within 10
business days after the date that such notice has been delivered; provided that
such holders must agree to the method of distribution proposed by the
Shareholders who delivered the Demand Notice and, in connection with any
underwritten registration, such holders (together with the Company and the other
holders including securities in such underwritten registration) must enter into
an underwriting agreement in the form reasonably approved by the Company and the
Shareholders holding the majority of the Registrable Securities.

(b) Priority on Demand Registration. If any of the Registrable Securities
registered pursuant to a Demand Registration are to be sold in an underwritten
offering, and the managing underwriter(s) advise the holders of such securities
in writing that in its good faith opinion the total number or dollar amount of
Registrable Securities proposed to be sold in such offering is such as to
adversely affect the price, timing or distribution of such offering (including
securities proposed to be included by other holders entitled to include such
securities in such Registration Statement pursuant to incidental or piggyback
registration rights), then there shall be included in such underwritten offering
the number or dollar amount of Registrable Securities that in the opinion of
such managing underwriter(s) can be sold without adversely affecting such
offering, and such number of Registrable Securities shall be allocated as
follows:

(i) first, pro-rata among the Shareholders of Registrable Securities that have
requested to participate in such Demand Registration on the basis of the
percentage of the Registrable Securities requested to be included in such
Registration Statement by such holders;

(ii) second, pro-rata among any other holders entitled to include such
securities in such Registration Statement pursuant to piggyback registration
rights; and

(iii) third, the securities for which inclusion in such Demand Registration, as
the case may be, was requested by the Company.

 

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No Securities excluded from the underwriting by reason of the managing
underwriter’s marketing limitations shall be included in such offering.

(c) Postponement of Demand Registration. The Company shall be entitled to
postpone (but not more than once in any 12-month period), for a reasonable
period of time not in excess of 75 days, the filing (but not the preparation) of
a Registration Statement if the Company delivers to the Shareholders requesting
registration a certificate signed by an executive officer certifying that such
registration and offering would (i) require the Company to make an Adverse
Disclosure or (ii) materially interfere with any bona fide material financing,
acquisition, disposition or other similar transaction involving the Company or
any of its Subsidiaries then under consideration. Such certificate shall contain
a statement of the reasons for such postponement and an approximation of the
anticipated delay. The Shareholders receiving such certificate shall keep the
information contained in such certificate confidential subject to the same terms
set forth in Section 6(o). If the Company shall so postpone the filing of a
Registration Statement, the Shareholders requesting such registration shall have
the right to withdraw the request for registration by giving written notice to
the Company within 10 days of the anticipated termination date of the
postponement period, as provided in the certificate delivered to the applicable
Shareholders and, for the avoidance of doubt, upon such withdrawal, the
withdrawn request shall not constitute a Demand Notice; provided that in the
event such Shareholders do not so withdraw the request for registration, the
Company shall continue to prepare a Registration Statement during such
postponement such that, if it exercises its rights under this Section 3(c), it
shall be in a position to and shall, as promptly as practicable following the
expiration of the applicable deferral or suspension period, file or update and
use its reasonable efforts to cause the effectiveness of the applicable deferred
or suspended Registration Statement.

(d) Cancellation of a Demand Registration. Holders of a majority of the
Registrable Securities that are to be registered in a particular offering
pursuant to this Section 3 shall have the right to notify the Company that they
have determined that the registration statement be abandoned or withdrawn, in
which event the Company shall abandon or withdraw such registration statement;
provided, that such Demand Notice underlying such abandonment or withdrawal
shall not be deemed to be a Demand Notice for purposes of Section 3(e) if such
Demand Notice is abandoned or withdrawn in response to a material adverse change
regarding the Company or a material adverse change in the financial markets
generally.

(e) Number of Demand Notices. In connection with the provisions of this
Section 3, the Shareholders collectively shall have (i) three Demand Notices in
connection with Marketed Offerings, which they are permitted to deliver (or
cause to be delivered) to the Company hereunder; provided, that in connection
therewith the Company shall cause its officers to use their reasonable best
efforts to support the marketing of the Registrable Securities covered by the
Registration Statement (including participation in “road shows”), and (ii) three
additional Demand Notices (other than in connection with a Marketed Offering),
which they are permitted to deliver (or cause to be delivered) to the Company
hereunder; provided, that (A) in connection therewith the Company shall not be
obligated to cause its officers to support the marketing of the Registrable
Securities covered by the Registration Statement and such officers will not be
obligated to participate in any “road shows,” and (B) the Shareholders may not
make more than two Demand Registration requests in any 365-day period.

 

6

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Section 4. Piggyback Registration; Shelf Take Down.

(a) Right to Piggyback. Except with respect to a Demand Registration, the
procedures for which are addressed in Section 3, if the Company proposes to file
a registration statement under the Securities Act with respect to an offering of
Common Stock, whether or not for sale for its own account and whether or not an
underwritten offering or an underwritten registration (other than a registration
statement (i) on Form S-4, Form S-8 or any successor forms thereto or (ii) filed
to effectuate an exchange offer or any employee benefit or dividend reinvestment
plan), then the Company shall give prompt written notice of such filing no later
than five business days prior to the filing date (the “Piggyback Notice”) to all
of the holders of Registrable Securities. The Piggyback Notice shall offer such
holders the opportunity to include (or cause to be included) in such
registration statement the number of Registrable Securities as each such holder
may request (each, a “Piggyback Registration”). Subject to Section 4(b), the
Company shall include in each such Piggyback Registration all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein (each a “Piggyback Request”) within 10 business days after
notice has been given to the applicable holder. The Company shall not be
required to maintain the effectiveness of the Registration Statement for a
Piggyback Registration beyond the earlier to occur of (x) 180 days after the
effective date thereof and (y) consummation of the distribution by the holders
of the Registrable Securities (other than those making Piggyback Requests)
included in such Registration Statement.

(b) Priority on Piggyback Registrations. If any of the Registrable Securities to
be registered pursuant to the registration giving rise to the rights under this
Section 4 are to be sold in an underwritten offering, the Company shall use
reasonable best efforts to cause the managing underwriter(s) of a proposed
underwritten offering to permit holders of Registrable Securities who have
timely submitted a Piggyback Request in connection with such offering to include
in such offering all Registrable Securities included in each holder’s Piggyback
Request on the same terms and subject to the same conditions as any other shares
of capital stock, if any, of the Company included in the offering.
Notwithstanding the foregoing, if the managing underwriter(s) of such
underwritten offering advise the Company in writing that it is their good faith
opinion the total number or dollar amount of securities that such holders, the
Company and any other Persons having rights to participate in such registration,
intend to include in such offering is such as to adversely affect the price,
timing or distribution of the securities in such offering, then there shall be
included in such underwritten offering the number or dollar amount of securities
that in the opinion of such managing underwriter(s) can be sold without so
adversely affecting such offering, and such number of Registrable Securities
shall be allocated as follows: (i) first, all securities proposed to be sold by
the Company for its own account; (ii) second, all Registrable Securities
requested to be included in such registration by the Shareholders pursuant to
Section 4, pro rata among such holders on the basis of the percentage of the
Registrable Securities requested to be included in such Registration Statement
by such holders; and (iii) third, all other securities requested to be included
in such Registration Statement by other holders of securities entitled to
include such securities in such Registration Statement pursuant to piggyback
registration rights; provided that any Shareholder may, prior to the earlier of
the (i) effectiveness of the Registration Statement and (ii) time at which the
offering price and/or underwriter’s discount are determined with the managing
underwriter(s), withdraw its request to be included in such registration
pursuant to this Section 4.

 

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(c) Shelf-Take Downs. At any time that a shelf registration statement covering
Registrable Securities pursuant to Section 3 or Section 4 (or otherwise) is
effective, if any Shareholder delivers a notice to the Company (each, a
“Take-Down Notice”) stating that it intends to sell all or part of its
Registrable Securities included by it on the shelf registration statement (each,
a “Shelf Offering”), then, the Company shall amend or supplement the shelf
registration statement as may be necessary in order to enable such Registrable
Securities to be distributed pursuant to the Shelf Offering (taking into account
the inclusion of Registrable Securities by any other holders pursuant to this
Section 4(c)). In connection with any Shelf Offering, including any Shelf
Offering that is a Marketed Offering:

(i) such proposing holder(s) shall also deliver the Take-Down Notice to all
other holders of Registrable Securities included on such shelf registration
statement and permit each such holder to include its Registrable Securities
included on the shelf registration statement in the Shelf Offering if such
holder notifies the proposing holder(s) and the Company within five days after
delivery of the Take-Down Notice to such holder; and

(ii) if the Shelf Offering is underwritten, in the event that the managing
underwriter(s) of such Shelf Offering advise such holders in writing that it is
their good faith opinion the total number or dollar amount of securities
proposed to be sold exceeds the total number or dollar amount of such securities
that can be sold without having an adverse effect on the price, timing or
distribution of the Registrable Securities to be included, then the managing
underwriter(s) may limit the number of Registrable Securities which would
otherwise be included in such Shelf Offering in the same manner as described in
Section 3(b) with respect to a limitation of shares to be included in a
registration;

provided, however, that each Shelf Offering that is a Marketed Offering
initiated by a Shareholder shall be deemed to be a demand subject to the
provisions of Section 3(a) (subject to Section 3(d)), and shall decrease by one
the number of Demand Notices the Shareholders are entitled to pursuant to
Section 3(e)(i).

Section 5. Restrictions on Public Sale by Holders of Registrable Securities.

(a) If any registration pursuant to Section 3 or Section 4 of this Agreement
shall be in connection with any: (i) Marketed Offering (including with respect
to a Shelf Offering pursuant to Section 4(c) hereof), the Company will cause
each of its executive officers and directors to sign a customary “lock-up”
agreement containing provisions consistent with those contemplated pursuant to
Section 5(b); and (ii) underwritten offering (including with respect to a Shelf
Offering pursuant to Section 4(c) hereof), the Company will also not effect any
public sale or distribution of any common equity (or securities convertible into
or exchangeable or exercisable for common equity) (other than a registration
statement (A) on Form S-4, Form S-8 or any successor forms thereto or (B) filed
solely in connection with an exchange offer or any employee benefit or dividend
reinvestment plan) for its own account, within 90 days (plus, a then customary
“booster shot” extension to the extent required to permit research analysts to
publish research reports compliant with Rule 139 under the Securities Act
pursuant to FINRA Rule 2711 (or a successor thereto)) after the date of the
Prospectus for such offering except as may otherwise be agreed with the holders
of the Registrable Securities in such offering.

 

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(b) Each holder of Registrable Securities agrees with all other holders of
Registrable Securities and the Company in connection with any underwritten
offering made pursuant to a Registration Statement filed pursuant to Section 3
or Section 4, as applicable, if requested in writing by the managing underwriter
or underwriters in such offering, it will not (i) subject to customary
exceptions, effect any public sale or distribution of any of the Company’s
securities (except as part of such underwritten offering), including a sale
pursuant to Rule 144 or any swap or other economic arrangement that transfers to
another Person any of the economic consequences of owning Common Stock, or
(ii) give any Demand Notice during the period commencing on the date of the
Prospectus pursuant to which such underwritten public offering may be made and
continuing for not more than 90 days after the date of such Prospectus (or
Prospectus supplement if the offering is made pursuant to a “shelf”
registration), plus a then customary “booster shot” extension to the extent
required to permit research analysts to publish research reports compliant with
Rule 139 under the Securities Act pursuant to FINRA Rule 2711 (or a successor
thereto). In connection with any underwritten offering made pursuant to a
Registration Statement filed pursuant to Section 3 or Section 4, the Company,
or, if Shareholders will be selling more Registrable Securities in the offering
than the Company, Shareholders holding a majority of the Registrable Securities
shall be responsible for negotiating all “lock-up” agreements with the
underwriters and, in addition to the foregoing provisions of this Section 5, the
Shareholders agree to execute the form so negotiated; provided, that the form so
negotiated is reasonably acceptable to the Company or the Shareholders, as
applicable, and consistent with the agreement set forth in this Section 5 and
that the Company’s executive officers and directors shall also have executed a
form of agreement substantially similar to the agreement so negotiated, subject
to customary exceptions applicable to natural persons.

Section 6. Registration Procedures. If and whenever the Company is required to
effect the registration of any Registrable Securities under the Securities Act
as provided in Section 3 or Section 4, the Company shall use its reasonable best
efforts to effect such registration to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company shall cooperate in the sale of the
securities and shall use its reasonable best efforts, as promptly as practicable
to the extent applicable, to:

(a) prepare and file with the SEC a Registration Statement or Registration
Statements on such form as shall be available for the sale of the Registrable
Securities by the holders thereof or by the Company in accordance with the
intended method or methods of distribution thereof and in accordance with this
Agreement, and use its reasonable best efforts to cause such Registration
Statement to become effective and to remain effective as provided herein;
provided, however, that before filing a Registration Statement or Prospectus or
any amendments or supplements thereto (including documents that would be
incorporated or deemed to be incorporated therein by reference), the Company
shall furnish or otherwise make available to the holders of the Registrable
Securities covered by such Registration Statement, their counsel and the
managing underwriters, if any, copies of all such documents proposed to be
filed, which documents will be subject to the reasonable review and comment of
such counsel, and such other documents reasonably requested by such counsel,
including any comment letter from the SEC,

 

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and, if requested by such counsel, provide such counsel reasonable opportunity
to participate in the preparation of such Registration Statement and each
Prospectus included therein and such other opportunities to conduct a reasonable
investigation within the meaning of the Securities Act, including reasonable
access to the Company’s books and records, officers, accountants and other
advisors. The Company shall not file any such Registration Statement or
Prospectus or any amendments or supplements thereto (including such documents
that, upon filing, would be incorporated or deemed to be incorporated by
reference therein) with respect to a Demand Registration to which the holders of
a majority of the Registrable Securities covered by such Registration Statement,
their counsel, or the managing underwriters, if any, shall reasonably object, in
writing, on a timely basis, unless, in the opinion of the Company’s counsel,
such filing is necessary to comply with applicable law;

(b) prepare and file with the SEC such amendments and post-effective amendments
to each Registration Statement as may be necessary to keep such Registration
Statement continuously effective during the period provided herein and comply in
all material respects with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration Statement; and
cause the related Prospectus to be supplemented by any Prospectus supplement as
may be necessary to comply with the provisions of the Securities Act with
respect to the disposition of the securities covered by such Registration
Statement, and as so supplemented to be filed pursuant to Rule 424 (or any
similar provisions then in force) under the Securities Act;

(c) notify each selling holder of Registrable Securities, its counsel and the
managing underwriters, if any, promptly, and (if requested by any such Person)
confirm such notice in writing, (i) when a Prospectus or any Prospectus
supplement or post-effective amendment has been filed, and, with respect to a
Registration Statement or any post-effective amendment, when the same has become
effective, (ii) of any request by the SEC or any other federal or state
governmental authority for amendments or supplements to a Registration Statement
or related Prospectus or for additional information, (iii) of the issuance by
the SEC of any stop order suspending the effectiveness of a Registration
Statement or the initiation of any proceedings for that purpose, (iv) if at any
time the Company has reason to believe that the representations and warranties
of the Company contained in any agreement (including any underwriting agreement)
contemplated by Section 6(n) below cease to be true and correct, (v) of the
receipt by the Company of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction, or the initiation or threatening of any
proceeding for such purpose, and (vi) if the Company has knowledge of the
happening of any event that makes any statement made in such Registration
Statement or related Prospectus or any document incorporated or deemed to be
incorporated therein by reference untrue in any material respect or that
requires the making of any changes in such Registration Statement, Prospectus or
documents so that, in the case of the Registration Statement, it will not
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
not misleading, and that in the case of the Prospectus, it will not contain any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading (which notice shall notify the selling
holders only of the occurrence of such an event and shall provide no additional
information regarding such event to the extent such information would constitute
material non-public information);

 

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(d) prevent the issuance or obtain the withdrawal of any order suspending the
effectiveness of a Registration Statement, or the lifting of any suspension of
the qualification (or exemption from qualification) of any of the Registrable
Securities for sale in any jurisdiction at the earliest date reasonably
practicable;

(e) if requested by the managing underwriters, if any, or the holders of a
majority of the then outstanding Registrable Securities being sold in connection
with an underwritten offering, promptly include in a Prospectus supplement or
post-effective amendment such information as the managing underwriters, if any,
and such holders may reasonably request in order to permit the intended method
of distribution of such securities and make all required filings of such
Prospectus supplement or such post-effective amendment as soon as practicable
after the Company has received such request; provided, however, that the Company
shall not be required to take any actions under this Section 6(e) that are not,
in the opinion of counsel for the Company, in compliance with applicable law;

(f) furnish or make available to each selling holder of Registrable Securities,
its counsel and each managing underwriter, if any, without charge, at least one
conformed copy of the Registration Statement, the Prospectus and Prospectus
supplements, if applicable, and each post-effective amendment thereto, including
financial statements (but excluding schedules, all documents incorporated or
deemed to be incorporated therein by reference, and all exhibits, unless
requested in writing by such holder, counsel or underwriter); provided that the
Company may furnish or make available any such documents in electronic format;

(g) deliver to each selling holder of Registrable Securities, its counsel, and
the underwriters, if any, without charge, as many copies of the Prospectus or
Prospectuses (including each form of Prospectus) and each amendment or
supplement thereto as such Persons may reasonably request from time to time in
connection with the distribution of the Registrable Securities; provided that
the Company may furnish or make available any such documents in electronic
format (other than, in the case of a Marketed Offering, upon the request of the
managing underwriters thereof for printed copies of any such Prospectus or
Prospectuses); and the Company, subject to the last paragraph of this Section 6,
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling holders of Registrable Securities and the
underwriters, if any, in connection with the offering and sale of the
Registrable Securities covered by such Prospectus and any such amendment or
supplement thereto;

(h) prior to any public offering of Registrable Securities, register or qualify
or cooperate with the selling holders of Registrable Securities, the
underwriters, if any, and their respective counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or “blue sky” laws of such jurisdictions within the United States as
any seller or underwriter reasonably requests in writing and to keep each such
registration or qualification (or exemption therefrom) effective during the
period such Registration Statement is required to be kept effective pursuant to
this Agreement and to take any other action that may be necessary or advisable
to enable such holders of Registrable Securities to consummate the disposition
of such Registrable Securities in such jurisdiction; provided, however, that the
Company will not be required to (i) qualify generally to do business in any
jurisdiction where would not otherwise be

 

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required to qualify but for this Agreement or (ii) take any action that would
subject it to general service of process in any such jurisdiction where it would
not otherwise be subject but for this Agreement;

(i) cooperate with, and direct the Company’s transfer agent to cooperate with,
the selling holders of Registrable Securities and the managing underwriters, if
any, to facilitate the timely settlement of any offering or sale of Registrable
Securities, including the preparation and delivery of certificates (not bearing
any legends) or book-entry (not bearing stop transfer instructions) representing
Registrable Securities to be sold after receiving written representations from
each holder of such Registrable Securities that the Registrable Securities
represented by the certificates so delivered by such holder will be transferred
in accordance with the Registration Statement and, in connection therewith, if
reasonably required by the Company’s transfer agent, the Company shall promptly
after the effectiveness of the registration statement cause an opinion of
counsel as to the effectiveness of any Registration Statement to be delivered to
and maintained with its transfer agent, together with any other authorizations,
certificates and directions required by the transfer agent which authorize and
direct the transfer agent to issue such Registrable Securities without
restriction upon sale by the holder of such shares of Registrable Securities
under the Registration Statement;

(j) upon the occurrence of, and its knowledge of, any event contemplated by
Section 6(c)(vi) above, prepare a supplement or post-effective amendment to the
Registration Statement or a supplement to the related Prospectus or any document
incorporated or deemed to be incorporated therein by reference, or file any
other required document so that, as thereafter delivered to the Purchaser of the
Registrable Securities being sold thereunder, such that the Registration
Statement will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein, not misleading, and the Prospectus will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;

(k) prior to the effective date of the Registration Statement relating to the
Registrable Securities, provide a CUSIP number for the Registrable Securities;

(l) provide and cause to be maintained a transfer agent and registrar for all
Registrable Securities covered by such Registration Statement from and after a
date not later than the effective date of such Registration Statement;

(m) cause all shares of Registrable Securities covered by such Registration
Statement to be listed on a national securities exchange if shares of the
particular class of Registrable Securities are at that time listed on such
exchange, as the case may be, prior to the effectiveness of such Registration
Statement;

(n) enter into such agreements (including underwriting agreements in form, scope
and substance as is customary in underwritten offerings and such other documents
reasonably required under the terms of such underwriting agreements, including
customary legal opinions and auditor “comfort” letters) and take all such other
actions reasonably requested by the holders of a majority of the Registrable
Securities being sold in connection therewith (including those reasonably
requested by the managing underwriters, if any) to expedite or facilitate the
disposition of such Registrable Securities;

 

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(o) in connection with a customary due diligence review, make available for
inspection by a representative of the selling holders of Registrable Securities,
any underwriter participating in any such disposition of Registrable Securities,
if any, and any counsel or accountants retained by such selling holders or
underwriter (collectively, the “Offering Persons”), at the offices where
normally kept, during reasonable business hours, all financial and other
records, pertinent corporate documents and properties of the Company and its
subsidiaries, and cause the officers, directors and employees of the Company and
its subsidiaries to supply all information and participate in customary due
diligence sessions in each case reasonably requested by any such representative,
underwriter, counsel or accountant in connection with such Registration
Statement, provided, however, that any information that is not generally
publicly available at the time of delivery of such information shall be kept
confidential by such Offering Persons unless (i) disclosure of such information
is required by court or administrative order or in connection with an audit or
examination by, or a blanket document request from, a regulatory or
self-regulatory authority, bank examiner or auditor, (ii) disclosure of such
information, in the reasonable judgment of the Offering Persons, is required by
law or applicable legal process (including in connection with the offer and sale
of securities pursuant to the rules and regulations of the SEC), (iii) such
information is or becomes generally available to the public other than as a
result of a non-permitted disclosure or failure to safeguard by such Offering
Persons in violation of this Agreement or (iv) such information (A) was known to
such Offering Persons (prior to its disclosure by the Company) from a source
other than the Company when such source, to the knowledge of the Offering
Persons, was not bound by any contractual, legal or fiduciary obligation of
confidentiality to the Company with respect to such information, (B) becomes
available to the Offering Persons from a source other than the Company when such
source, to the knowledge of the Offering Persons, is not bound by any
contractual, legal or fiduciary obligation of confidentiality to the Company
with respect to such information or (C) was developed independently by the
Offering Persons or their respective representatives without the use of, or
reliance on, information provided by the Company. In the case of a proposed
disclosure pursuant to (i) or (ii) above, such Person shall be required to give
the Company written notice of the proposed disclosure prior to such disclosure
(except in the case of (ii) above when a proposed disclosure was or is to be
made in connection with a Registration Statement or Prospectus under this
Agreement and except in the case of clause (i) above when a proposed disclosure
is in connection with a routine audit or examination by, or a blanket document
request from, a regulatory or self-regulatory authority, bank examiner or
auditor); and

(p) cooperate with each seller of Registrable Securities and each underwriter or
agent participating in the disposition of such Registrable Securities and their
respective counsel in connection with any filings required to be made with the
FINRA, including the use reasonable best efforts to obtain FINRA’s pre-clearance
or pre-approval of the Registration Statement and applicable Prospectus upon
filing with the SEC.

Each holder of Registrable Securities as to which any registration is being
effected shall furnish to the Company in writing such information required in
connection with such registration regarding such seller and the distribution of
such Registrable Securities as the Company may, from time to time, reasonably
request in writing as a condition for any

 

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Registrable Securities to be included in the applicable registration hereunder.
For the avoidance of doubt, failure of any holder of Registrable Securities to
furnish the Company with such information as requested by the Company pursuant
to the preceding sentence shall relieve the Company of any obligation hereunder
to include the applicable Registrable Securities in the Registration Statement
with respect to which such information was requested.

Each holder of Registrable Securities agrees if such holder has Registrable
Securities covered by such Registration Statement that, upon receipt of any
written notice from the Company of the happening of any event of the kind
described in Section 6(c) (ii), (iii), (iv) or (v), such holder will forthwith
discontinue disposition of such Registrable Securities pursuant to such
Registration Statement or Prospectus until such holder’s receipt of the copies
of the supplemented or amended Prospectus contemplated by Section 6(j), or until
it is advised in writing by the Company that the use of the applicable
Prospectus may be resumed, and has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus; provided, however, that the time periods under
Section 3 with respect to the length of time that the effectiveness of a
Registration Statement must be maintained shall automatically be extended by the
amount of time the holder is required to discontinue disposition of such
securities.

Section 7. Registration Expenses. All fees and expenses incurred by the Company
and incident to the performance of or compliance with this Agreement by the
Company (including without limitation (i) all registration and filing fees
(including fees and expenses with respect to (A) all SEC, stock exchange or
trading system and FINRA registration, listing, filing and qualification and any
other fees associated with such filings, including with respect to counsel for
the underwriters and any qualified independent underwriter in connection with
FINRA qualifications, (B) rating agencies and (C) compliance with securities or
“blue sky” laws, including any fees and disbursements of counsel for the
underwriters in connection with “blue sky” qualifications of the Registrable
Securities pursuant to Section 6(h)), (ii) fees and expenses of the financial
printer, (iii) messenger, telephone and delivery expenses of the Company,
(iv) fees and disbursements of counsel for the Company, (v) fees and
disbursements of all independent certified public accountants, including the
expenses of any special audits and/or “comfort letters” required by or incident
to such performance and compliance) and all reasonable fees and expenses of one
counsel retained by the holders of Registrable Securities, shall be borne by the
Company, whether or not any Registration Statement is filed or becomes
effective. All underwriters’ discounts and selling commissions, in each case
related to Registrable Securities registered in accordance with this Agreement,
shall be borne by the holders of Registrable Securities included in such
registration pro rata among each other on the basis of the number of Registrable
Securities so registered. In addition, the Company shall be responsible for all
of its internal expenses incurred in connection with the consummation of the
transactions contemplated by this Agreement (including, without limitation, all
salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit and the fees and expenses
incurred in connection with the listing of the Registrable Securities on any
securities exchange as required hereunder.

 

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Section 8. Indemnification.

(a) Indemnification by the Company. The Company shall, without limitation as to
time, indemnify and hold harmless, to the fullest extent permitted by law, each
holder of Registrable Securities whose Registrable Securities are covered by a
Registration Statement or Prospectus, the officers, directors, partners,
members, managers, shareholders, accountants, attorneys, agents and employees of
each of them, each Person who controls each such holder (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) and the
officers, directors, partners, members, managers, shareholders, accountants,
attorneys, agents and employees of each such controlling person, each
underwriter, if any, and each Person who controls (within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act) such
underwriter, from and against any and all reasonably foreseeable losses, claims,
damages, liabilities, costs (including costs of preparation and reasonable
attorneys’ fees and any legal or other fees or expenses actually incurred by
such party in connection with any investigation or Proceeding), expenses,
judgments, fines, penalties, charges and amounts paid in settlement
(collectively, “Losses”), as incurred, in each case arising out of or based upon
any untrue statement (or alleged untrue statement) of a material fact contained
in any Prospectus, offering circular, any amendments or supplements thereto,
“issuer free writing prospectus” (as such term is defined in Rule 433 under the
Securities Act) or other document (including any related Registration Statement,
notification, or the like) incident to any such registration, qualification, or
compliance, or based on any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Company of the Securities Act,
the Exchange Act, any state securities law, or any rule or regulation thereunder
applicable to the Company and (without limitation of the preceding portions of
this Section 8(a)) will reimburse each such holder, each of its officers,
directors, partners, members, managers, shareholders, accountants, attorneys,
agents and employees and each Person who controls each such holder and the
officers, directors, partners, members, managers, shareholders, accountants,
attorneys, agents and employees of each such controlling person, each such
underwriter, and each Person who controls any such underwriter, for any
reasonable and documented out-of-pocket legal and any other expenses actually
incurred in connection with investigating and defending or, subject to the last
sentence of this Section 8(a), settling any such Loss or action, provided that
the Company will not be liable in any such case to the extent that any such Loss
arises out of or is based on any untrue statement or omission by such holder or
underwriter, but only if such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such Registration Statement,
Prospectus, offering circular, or other document in reliance upon and in
conformity with written information regarding such holder of Registrable
Securities furnished to the Company by such holder of Registrable Securities or
its authorized representatives expressly for inclusion therein. It is agreed
that the indemnity agreement contained in this Section 8(a) shall not apply to
amounts paid in settlement of any such Loss or action if such settlement is
effected without the prior written consent of the Company (which consent shall
not be unreasonably withheld).

(b) Indemnification by Holder of Registrable Securities. Each holder of
Registrable Securities shall indemnify, to the fullest extent permitted by law,
severally and not jointly with any other holders of Registrable Securities, the
Company, its Subsidiaries, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of

 

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the Exchange Act) and each their respective officers, directors, partners,
members, managers, shareholders, accountants, attorneys, agents and employees
from and against all Losses arising out of or based on any untrue statement of a
material fact contained in such Registration Statement, Prospectus, offering
circular, any amendments or supplements thereto, “issuer free writing
prospectus” (as such term is defined in Rule 433 under the Securities Act) or
other document, or any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
to reimburse the Company, its Subsidiaries, each Person who controls the Company
(within the meaning of Section 15 of the Securities Act and Section 20 of the
Exchange Act) and each their respective officers, directors, partners, members,
managers, shareholders, accountants, attorneys, agents and employees for any
reasonable and documented out-of-pocket legal or any other expenses actually
incurred in connection with investigating or defending any such Loss or action,
subject to the immediately following proviso, settling any such Loss or action,
in each case to the extent, but only to the extent, that such untrue statement
or omission is made in such Registration Statement, Prospectus, offering
circular, any amendments or supplements thereto, “issuer free writing
prospectus” (as such term is defined in Rule 433 under the Securities Act) or
other document in reliance upon and in conformity with written information
regarding such holder of Registrable Securities furnished to the Company by such
holder of Registrable Securities or its authorized representatives expressly for
inclusion therein; provided, however, that the foregoing obligations shall not
apply to amounts paid in settlement of any such Losses (or actions in respect
thereof) if such settlement is effected without the consent of such holder
(which consent shall not be unreasonably withheld); and provided, further, that
the liability of such holder of Registrable Securities shall be limited to the
net proceeds received by such selling holder from the sale of Registrable
Securities covered by such Registration Statement.

(c) Conduct of Indemnification Proceedings. If any Person shall be entitled to
indemnity hereunder (each, an “Indemnified Party”), such Indemnified Party shall
give prompt notice to the party from which such indemnity is sought (each, an
“Indemnifying Party”) of any claim or of the commencement of any Proceeding with
respect to which such Indemnified Party seeks indemnification or contribution
pursuant hereto; provided, however, that the delay or failure to so notify the
Indemnifying Party shall not relieve the Indemnifying Party from any obligation
or liability except to the extent that the Indemnifying Party has been
materially prejudiced by such delay or failure. The Indemnifying Party shall
have the right, exercisable by giving written notice to an Indemnified Party
promptly after the receipt of written notice from such Indemnified Party of such
claim or Proceeding, to, unless in the Indemnified Party’s reasonable judgment a
conflict of interest between such indemnified and indemnifying parties may exist
in respect of such claim, assume, at the Indemnifying Party’s expense, the
defense of any such claim or Proceeding, with counsel reasonably satisfactory to
such Indemnified Party; provided, however, that an Indemnified Party shall have
the right to employ separate counsel in any such claim or Proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless: (i) the Indemnifying
Party agrees to pay such fees and expenses; or (ii) the Indemnifying Party fails
promptly to assume, or in the event of a conflict of interest cannot assume, the
defense of such claim or Proceeding or fails to employ counsel reasonably
satisfactory to such Indemnified Party in any such Proceeding, in which case the
Indemnified Party shall have the right to employ separate counsel and to assume
the defense of such claim or proceeding at the Indemnifying Party’s expense;
provided, further, however, that the Indemnifying Party shall not, in connection
with

 

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any one such claim or Proceeding or separate but substantially similar or
related claims or Proceedings in the same jurisdiction, arising out of the same
general allegations or circumstances, be liable for the fees and expenses of
more than one firm of attorneys (together with appropriate local counsel) at any
time for all of the Indemnified Parties. Whether or not such defense is assumed
by the Indemnifying Party, such Indemnifying Party will not be subject to any
liability for any settlement made without its consent (but such consent will not
be unreasonably withheld). The Indemnifying Party shall not consent to entry of
any judgment or enter into any settlement that does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release, in form and substance reasonably satisfactory to
the Indemnified Party, from all liability in respect of such claim or litigation
for which such Indemnified Party would be entitled to indemnification hereunder.
All fees and expenses of the Indemnified Party (including reasonable fees and
expenses to the extent incurred in connection with investigating or preparing to
defend such proceeding in a manner not inconsistent with this Section 8) shall
be paid to the Indemnified Party, as incurred, promptly upon receipt of written
notice thereof to the Indemnifying Party (regardless of whether it is ultimately
determined that an Indemnified Party is not entitled to indemnification
hereunder, provided, that the Indemnifying Party may require such Indemnified
Party to undertake to reimburse all such fees and expenses to the extent it is
finally judicially determined that such Indemnified Party is not entitled to
indemnification under this Section 8).

(d) Contribution. If the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party in respect of any Losses (other than in
accordance with its terms), then each applicable Indemnifying Party, in lieu of
indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Losses, in such proportion
as is appropriate to reflect the relative fault of the Indemnifying Party, on
the one hand, and such Indemnified Party, on the other hand, in connection with
the actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party, on the one hand, and Indemnified Party, on the other hand, shall be
determined by reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact, has been made (or omitted) by, or
relates to information supplied by, such Indemnifying Party or Indemnified
Party, and the parties’ relative intent, knowledge, access to information and
opportunity to correct or prevent any such action, statement or omission.

The parties hereto agree that it would not be just and equitable if contribution
pursuant to this Section 8(d) were determined by pro rata allocation or by any
other method of allocation that does not take account of the equitable
considerations referred to in the immediately preceding paragraph.
Notwithstanding the provisions of this Section 8(d), an Indemnifying Party that
is a selling holder of Registrable Securities shall not be required to
contribute any amount in excess of the amount that such Indemnifying Party has
otherwise been, or would otherwise be, required to pay pursuant to Section 8(b)
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.

 

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(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.

Section 9. Rule 144. The Company shall use reasonable best efforts to: (i) file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner, to the extent required from time to time to enable all
holders to sell Registrable Securities without registration under the Securities
Act within the limitations of the exemption provided by Rule 144; and (ii) so
long as any Registrable Securities are outstanding, furnish holders thereof upon
request (A) a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 under the Securities Act, and of the Exchange
Act and (B) a copy of the most recent annual or quarterly report of the Company
(except to the extent the same is available on EDGAR).

Section 10. Underwritten Registrations. In connection with any underwritten
offering, the investment banker or investment bankers and managers shall be
selected by the Shareholders holding the majority of Registrable Securities
included in any Demand Registration, including any Shelf Offering, initiated by
such Shareholders, subject to the reasonable satisfaction of the Company.

Section 11. Miscellaneous.

(a) Amendments and Waivers. The provisions of this Agreement, including the
provisions of this sentence, may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given
without the written consent of the Shareholders holding a majority of the
Registrable Securities. Notwithstanding the foregoing, a waiver or consent to
depart from the provisions hereof with respect to a matter that relates
exclusively to the rights of holders of Registrable Securities whose securities
are being sold pursuant to a Registration Statement and that does not directly
or indirectly affect the rights of other holders of Registrable Securities may
be given by holders of at least a majority of the Registrable Securities being
sold by such holders pursuant to such Registration Statement.

(b) Notices. All notices required to be given hereunder shall be in writing and
shall be deemed to be duly given if personally delivered, telecopied and
confirmed, or mailed by certified mail, return receipt requested, or overnight
delivery service with proof of receipt maintained, at the following address (or
any other address that any such party may designate by written notice to the
other parties): If to the Company, to the address of its principal executive
offices. If to any Shareholder, at such Shareholder’s address as set forth on
the records of the Company. Any such notice shall, if delivered personally, be
deemed received upon delivery; shall, if delivered by telecopy, be deemed
received on the first business day following confirmation; shall, if delivered
by overnight delivery service, be deemed received the first business day after
being sent; and shall, if delivered by mail, be deemed received upon the earlier
of actual receipt thereof or five business days after the date of deposit in the
United States mail.

(c) Successors and Assigns; Shareholder Status. This Agreement shall inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties,

 

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including subsequent holders of Registrable Securities acquired, directly or
indirectly, from the Shareholders in compliance with any restrictions on
transfer or assignment; provided, however, that (x) the Company may not assign
this Agreement (in whole or in part) without the prior written consent of the
holders of a majority of the Registrable Securities and (y) such successor or
assign shall not be entitled to such rights unless the successor or assign shall
have executed and delivered to the Company an Addendum Agreement substantially
in the form of Exhibit A hereto (which shall also be executed by the Company)
promptly following the acquisition of such Registrable Securities, in which
event such successor or assign shall be deemed a Shareholder for purposes of
this Agreement; provided, however, that a Shareholder may assign its rights and
obligations under this Agreement upon written notice to the Company (i) if such
assignment is in connection with (1) a transfer or sale of all or substantially
all of the Registrable Securities held by such Shareholder or (2) a transfer or
sale of at least one million shares of Common Stock or Registrable Securities
that represent at least one million shares of Common Stock on an “as-converted
basis” (as adjusted after the date hereof for stock splits, stock dividends,
recapitalizations and similar transactions) or (ii) to any of its partners,
members, equityholders, or Affiliates or one or more private equity funds
sponsored or managed by an Affiliate. For the avoidance of doubt, if any
Shareholder assigns some or all of its rights hereunder to deliver a Demand
Notice or a Take-Down Notice to any permitted assignee, such Shareholder shall,
if such rights to deliver Demand Notices or Take-Down Notices are subject to
limitations pursuant to this Agreement, including Section 3(e) and the provisos
to Section 4(c), no longer be entitled to exercise such rights, but only to the
extent not assigned, and the exercise of such Demand Notice or Take-Down Notice
by such assignee shall be subject to the provisions of this Agreement, including
Section 3(e) and the provisos to Section 4(c). Except as provided in Section 8
with respect to an Indemnified Party, nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any Person other than the
parties hereto and their respective successors and permitted assigns any legal
or equitable right, remedy or claim under, in or in respect of this Agreement or
any provision herein contained.

(d) Counterparts. This Agreement may be executed in two or more counterparts and
delivered by facsimile, pdf or other electronic transmission with the same
effect as if all signatory parties had signed and delivered the same original
document, each of which shall be deemed an original, but all of which together
shall constitute one and the same instrument.

(e) Headings; Construction. The section and paragraph headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. Unless the context requires
otherwise: (i) pronouns in the masculine, feminine and neuter genders shall be
construed to include any other gender, and words in the singular form shall be
construed to include the plural and vice versa; (ii) the term “including” shall
be construed to be expansive rather than limiting in nature and to mean
“including, without limitation,”; (iii) references to sections and paragraphs
refer to sections and paragraphs of this Agreement; and (iv) the words “this
Agreement,” “herein,” “hereof,” “hereby,” “hereunder” and words of similar
import refer to this Agreement as a whole, including Exhibit A hereto, and not
to any particular subdivision unless expressly so limited.

(f) Governing Law. This Agreement shall be governed by and construed in
accordance with, the laws of the State of New York.

 

19

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(g) Severability. If any term, provision, covenant or restriction of this
Agreement is held by a court of competent jurisdiction to be invalid, illegal,
void or unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their reasonable best efforts to find and employ an alternative means to achieve
the same or substantially the same result as that contemplated by such term,
provision, covenant or restriction. It is hereby stipulated and declared to be
the intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.

(h) Entire Agreement. This Agreement, that certain Confidentiality Agreement,
dated as of March 20, 2015, by and between the Company and Brookfield Capital
Partners LLC, that certain Stockholder Rights Agreement, dated as of the date
hereof, by and between the Company and the Purchaser, the Investment Agreement,
the Certificate of Designations and that certain Certificate of Designations of
the Company, setting forth the rights, privileges, preferences and restrictions
of the Series B Convertible Preferred Stock, dated as of the date hereof, are
intended by the parties as a final expression of their agreement, and are
intended to be a complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject matter contained
herein and therein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein and therein, with
respect to the registration rights granted by the Company with respect to
Registrable Securities. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject matter.
Notwithstanding the foregoing, this Agreement shall not supersede the transfer
restrictions in that certain Stockholder Rights Agreement, dated as of the date
hereof, by and between the Company and the Purchaser.

(i) Securities Held by the Company or its Subsidiaries. Whenever the consent or
approval of holders of a specified percentage of Registrable Securities is
required hereunder, Registrable Securities held by the Company or its
subsidiaries shall not be counted in determining whether such consent or
approval was given by the holders of such required percentage.

(j) Specific Performance; Further Assurances. The parties hereto recognize and
agree that money damages may be insufficient to compensate the holders of any
Registrable Securities for breaches by the Company of the terms hereof and,
consequently, that the equitable remedy of specific performance of the terms
hereof will be available in the event of any such breach. The parties hereto
agree that in the event the registrations and sales of Registrable Securities
are effected pursuant to the laws of any jurisdiction outside of the United
States, such parties shall use their respective reasonable best efforts to give
effect as closely as possible to the rights and obligations set forth in this
Agreement, taking into account customary practices of such foreign jurisdiction,
including executing such documents and taking such further actions as may be
reasonably necessary in order to carry out the foregoing.

(k) Term. This Agreement shall terminate with respect to a Shareholder on the
date on which such Shareholder ceases to hold Registrable Securities; provided,
that, such Shareholder’s rights and obligations pursuant to Section 8, as well
as the Company’s obligations to pay expenses pursuant to Section 7, shall
survive with respect to any registration statement in

 

20

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which any Registrable Securities of such Shareholders were included. From and
after the date of this Agreement, the Company shall not, without the consent of
the Shareholders holding a majority of the Registrable Securities, enter into
any agreement with any Person giving, including any holder or prospective holder
of any securities of the Company, any registration rights (i) the terms of which
are more favorable than, senior to or conflict with, the registration rights
granted to the Shareholders hereunder or (ii) permitting such Person to exercise
a demand registration right during the period expiring on the second anniversary
of the date hereof; provided, that, the Company may enter into an agreement
granting such rights if such agreement provides the Shareholders with piggyback
rights consistent with those granted to the Shareholders pursuant to Section 4,
and, if such agreement contains any underwriter cutbacks consistent with
Section 4(b), then the Shareholders shall participate with such other holders on
a pro rata basis; and provided, further, that the Company may enter into an
agreement granting such demand rights in connection with the issuance of
securities of the Company pursuant to (i) a bona fide material acquisition,
disposition or other similar transaction involving the Company or any of its
Subsidiaries, (ii) the terms of any employment agreement or arrangement or
employee benefit plan of the Company or any of its Subsidiaries, (iii) an
exchange of indebtedness of the Company into equity and (iv) a proposed resale
of convertible securities of the Company by any holder thereof, in each case, to
the extent that the entering into of such an agreement is customary in a
transaction of the type contemplated.

(l) Consent to Jurisdiction; Waiver of Jury Trial. The parties hereto hereby
irrevocably submit to the non-exclusive jurisdiction of the courts of the State
of New York located in New York County and the federal courts of the United
States of America located in New York County, and appropriate appellate courts
therefrom, over any dispute arising out of or relating to this Agreement or any
of the transactions contemplated hereby, and each party hereby irrevocably
agrees that all claims in respect of such dispute or proceeding may be heard and
determined in such courts. The parties hereby irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of venue of any dispute arising out of or relating
to this Agreement or any of the transactions contemplated hereby brought in such
court or any defense of inconvenient forum for the maintenance of such dispute.
Each of the parties hereto agrees that a judgment in any such dispute may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. This consent to jurisdiction is being given solely for purposes
of this Agreement and is not intended to, and shall not, confer consent to
jurisdiction with respect to any other dispute in which a party to this
Agreement may become involved.

Each of the parties hereto hereby consents to process being served by any party
to this Agreement in any suit, action, or proceeding of the nature specified in
the paragraph above by the mailing of a copy thereof in the manner specified by
the provisions of Section 11(b).

EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY
IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS
AGREEMENT.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Registration Rights
Agreement to be duly executed as of the date first above written.

 

GRAFTECH INTERNATIONAL LTD. By:

 

Name: Title:

[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

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BCP IV GRAFTECH HOLDINGS LP By its general partner, BPE IV (Non-Cdn) GP LP, By
its general partner, Brookfield Capital Partners Ltd.,

 

Name: David Nowak Title: Managing Partner

 

Name: J. Peter Gordon Title: Managing Partner

[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]

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EXHIBIT A

ADDENDUM AGREEMENT

This Addendum Agreement is made this day of , 20 , by and between (the “New
Shareholder”) and GrafTech International Ltd. (the “Company”), pursuant to a
Registration Rights Agreement dated as of [●], 2015 (the “Agreement”), by and
between the Company and the Purchaser. Capitalized terms used herein but not
otherwise defined herein shall have the meanings ascribed to them in the
Agreement.

W I T N E S S E T H:

WHEREAS, the Company has agreed to provide registration rights with respect to
the Registrable Securities as set forth in the Agreement; and

WHEREAS, the New Shareholder has acquired Registrable Securities directly or
indirectly from a Shareholder; and

WHEREAS, the Company and the Shareholders have required in the Agreement that
all persons desiring registration rights pursuant to the Agreement must enter
into an Addendum Agreement binding the New Shareholder to the Agreement to the
same extent as if it were an original party thereto;

NOW, THEREFORE, in consideration of the mutual promises of the parties, the New
Shareholder acknowledges that it has received and read the Agreement and that
the New Shareholder shall be bound by, and shall have the benefit of, all of the
terms and conditions set out in the Agreement to the same extent as if it were
an original party to the Agreement (or as otherwise provided therein) and shall
be deemed to be a Shareholder thereunder.

 

 

New Shareholder

 

Address:

 

 

 

Agreed to on behalf of GrafTech International Ltd. pursuant to Section 11(c) of
the Agreement.

 

GRAFTECH INTERNATIONAL LTD. By:

 

Printed Name and Title

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SCHEDULE D

 

 

STOCKHOLDER RIGHTS AGREEMENT

by and between

GRAFTECH INTERNATIONAL LTD.

and

BCP IV GRAFTECH HOLDINGS LP

Dated as of [●], 2015

 

 

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TABLE OF CONTENTS

 

         Page  

ARTICLE I

 

GOVERNANCE

     1   

1.1

 

Board of Directors

     1   

ARTICLE II

 

OTHER COVENANTS

     4   

2.1

 

Preemptive Rights

     4   

2.2

 

Information Rights

     5   

2.3

 

Transfer Restrictions

     6   

ARTICLE III

 

REPRESENTATIONS AND WARRANTIES

     6   

3.1

 

Representations and Warranties of the Stockholders

     6   

3.2

 

Representations and Warranties of the Company

     7   

ARTICLE IV

 

DEFINITIONS

     7   

4.1

 

Defined Terms

     7   

4.2

 

Terms Generally

     11   

ARTICLE V

 

MISCELLANEOUS

     11   

5.1

 

Term

     11   

5.2

 

Amendments and Waivers

     11   

5.3

 

Successors and Assigns

     11   

5.4

 

Confidentiality

     12   

5.5

 

Severability

     12   

5.6

 

Counterparts

     12   

5.7

 

Entire Agreement

     12   

5.8

 

Governing Law; Jurisdiction

     12   

5.9

 

WAIVER OF JURY TRIAL

     13   

5.10

 

Specific Performance

     13   

5.11

 

No Third-Party Beneficiaries

     13   

5.12

 

Notices

     13   

 

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STOCKHOLDER RIGHTS AGREEMENT, dated as of [●], 2015 (as may be amended from time
to time, this “Agreement”), by and between GrafTech International Ltd., a
Delaware corporation (the “Company”) and BCP IV GrafTech Holdings LP, a limited
partnership formed under the laws of Delaware (the “Initial Stockholder”).

W I T N E S S E T H:

WHEREAS, the Company and the Initial Stockholder have entered into an Investment
Agreement, dated as of May [●], 2015 (as may be amended from time to time, the
“Investment Agreement”), pursuant to which, among other things, the Company is
issuing to the Initial Stockholder shares of Series A Preferred Stock and Series
B Preferred Stock (together, “Convertible Preferred Stock”);

WHEREAS, simultaneously with the execution and delivery of this Agreement by the
parties hereto, the Company and the Initial Stockholder have entered into a
Registration Rights Agreement, dated as of [●], 2015 (as may be amended from
time to time, the “Registration Rights Agreement”), pursuant to which, among
other things, the Company grants the Initial Stockholder certain registration
and other rights with respect to the Convertible Preferred Stock and Common
Stock; and

WHEREAS, each of the parties hereto wishes to set forth in this Agreement
certain terms and conditions regarding the Initial Stockholder’s ownership of
the Securities.

NOW, THEREFORE, in consideration of the mutual covenants, representations,
warranties and agreements contained in this Agreement, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, the parties agree as
follows:

ARTICLE I

GOVERNANCE

1.1 Board of Directors.

(a) (i) For so long as the Approved Holders hold at least twenty-five percent
(25%) but less than seventy-five percent (75%) of the Original Preferred Shares,
the Majority Approved Holders shall have the right to designate for nomination
one (1) member of the board of directors of the Company (the “Board”); provided,
that if the holders of the shares of Series A Preferred Stock are entitled
pursuant to Section 6 of the Series A Certificate to elect one (1) director, the
designee provided for herein shall be the nominee for such position and (ii) for
so long as the Approved Holders hold at least seventy-five percent (75%) or more
of the Original Preferred Shares, the Majority Approved Holders shall have the
right to designate for nomination two (2) members of the Board; provided, that
if the holders of the shares of Series A Preferred Stock are entitled pursuant
to Section 6 of the Series A Certificate to elect two (2) directors, the
designees provided for herein shall be the nominees for such positions. In the
event the Approved Holders do not hold at least twenty-five percent (25%) or
seventy-five percent (75%) of the Original Preferred Shares, as applicable,
(i) the Approved Holders shall promptly (x) cause

 

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all members of the Board designated by the Majority Approved Holders for
nomination to the Board (or one (1) member of the Board, if the Approved Holders
hold at least twenty-five percent (25%) but less than seventy-five percent
(75%) of the Original Preferred Shares) to immediately tender their resignations
from the Board, and (y) if such member or members of the Board do not resign,
take all actions necessary to remove the member or members from the Board to the
extent permitted by applicable Law and (ii) the Approved Holders hereby
expressly authorize the Company to remove such members (or one (1) member chosen
by the Majority Approved Holders, if the Approved Holders hold at least
twenty-five percent (25%) but less than seventy-five percent (75%) of the
Original Preferred Shares), to the extent permitted by applicable Law.

(b) The Board shall recommend that such designees be included in the slate of
nominees in the class to be elected or appointed to the Board at the next (and
each applicable subsequent) annual or special meeting of stockholders by (i) the
Preferred Stockholders pursuant to Section 6(a)(v) of the Series A Certificate
so long as such class vote exists and thereafter, (ii) such other class to be
elected or appointed to the Board at the next (and each applicable subsequent)
annual or special meeting of the stockholders, subject in each case to such
designee’s satisfaction of all applicable requirements regarding service as a
director of the Company under applicable Law and NYSE rules (or the rules of the
principal market on which the Common Stock is then listed) regarding service as
a director and such other criteria and qualifications for service as a director
applicable to all directors of the Company as in effect on the date thereof;
provided, however, that in no event shall any such designee’s relationship with
the Approved Holders or their Affiliates (or any other actual or potential lack
of independence resulting therefrom) be considered to disqualify such designee
from being a member of the Board pursuant to this Section 1.1.

(c) For so long as the Majority Approved Holders have the right to designate
directors for nomination pursuant to Section 1.1(a):

(i) the Company or the Board shall (i) to the extent necessary cause the Board
to have sufficient vacancies to permit such persons to be added as members of
the Board, (ii) nominate such persons for election to the Board and
(iii) recommend that the Company’s stockholders vote in favor of the persons
designated for nomination by the Majority Approved Holders in all subsequent
stockholder meetings. In the event of the death, disability, resignation or
removal of any person designated by the Majority Approved Holders as a member of
the Board, subject to the continuing satisfaction of the applicable threshold
set forth in Sections 1.1(a), the Majority Approved Holders may designate a
person satisfying the criteria and qualifications set forth in Section 1.1(b) to
replace such person and the Company shall cause such newly designated person to
fill such resulting vacancy. So long as any person designated by the Majority
Approved Holders as a member of the Board is eligible to be so designated in
accordance with this Section 1.1, the Company shall not take any action to
remove such person as such a director without cause without the prior written
consent of the Majority Approved Holders;

(ii) the Board shall appoint at least one (1) of such designees as a member of
each committee of the Board (excluding the special committee formed to handle
the 2015 annual meeting of stockholders and any committee formed to review or
approve of transactions or matters involving conflicts of interest with a
Holder), subject to compliance with NYSE

 

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(or the rules of the principal market on which the Common Stock is then listed)
and U.S. Securities and Exchange Commission rules regarding qualification and
independence and the publicly disclosed qualifications of such committee
established by the Board prior to the date of this Agreement;

(iii) the Company or the Board shall not delegate the general powers of the
Board to any committee that does not include at least one (1) of the Majority
Approved Holders’ designees to the Board as a member except the special
committee formed to handle the 2015 annual meeting of stockholders and any
committee formed to review or approve of transactions or matters involving
conflicts of interest with a Holder.

(iv) each of the Majority Approved Holders’ designees for the Board shall be
entitled to compensation consistent with the compensation received by other
members of the Board, including any fees and equity awards, and reimbursement
for reasonable, out-of-pocket and documented expenses incurred in attending
meetings of the Board and its committees; and

(v) the Company shall provide the Majority Approved Holders’ designees for the
Board with the same rights to indemnification and advancement that it provides
to the other members of the Board.

(d) For as long as the Approved Holders hold more than zero percent (0%) but
less than twenty-five percent (25%) of the Original Preferred Shares, the
Majority Approved Holders shall have the right to designate one (1) observer to
the Board, with the person so designated subject to the approval of the Board,
which approval shall not be unreasonably withheld, who shall have (i) the right
to attend all meetings of the Board as an observer (but whose presence shall not
be counted towards the Board’s quorum), (ii) the right to receive advance notice
of each meeting, including such meeting’s time and place, at the same time and
in the same manner as such notice is provided to the members of the Board and
(iii) the right to receive copies of all materials, including notices, minutes,
consents and regularly compiled financial and operating data distributed to the
members of the Board at the same time as such materials are distributed to the
Board; provided, however, the Company shall have the right to exclude such
observer or withhold such information to the extent such observer’s presence or
receipt of such information could reasonably be expected to result in the loss
of attorney-client privilege or any other privilege or a violation of antitrust,
export control or other Laws, breach of any confidentiality agreement or any
other adverse consequence to the Company. The Board observer shall be bound by
all applicable fiduciary duties and confidentiality, conflicts of interests,
trading and disclosure and other governance requirements of a director on the
Board.

(e) For so long as twenty-five percent (25%) of the Original Preferred Shares
remain outstanding, the Company shall not, without the prior written approval of
the holders of a majority of the outstanding shares of Series A Preferred Stock,
increase the size of the Board in excess of eleven (11).

 

-3-

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ARTICLE II

OTHER COVENANTS

2.1 Preemptive Rights.

(a) So long as a Stockholder and its Affiliates who are Permitted Transferees,
collectively, hold at least twenty-five percent (25%) of the shares of the
Series A Preferred Stock (including Series A Preferred Stock issued upon
conversion of Series B Preferred Stock), the Stockholders shall be entitled to
the preemptive rights set forth in this Section 2.1 with respect to any issuance
of Common Stock or Equity-based Securities by the Company and, with respect to
an issuance in connection with the sale of Equity-based Securities in an initial
public offering, its current and future Subsidiaries (each a “Group Company” and
collectively, the “Group Companies”), other than a Permitted Issuance (a
“Preemptive Rights Issuance”).

(b) If the Company at any time or from time to time effects a Preemptive Rights
Issuance, the Company shall give written notice to the Stockholders a reasonable
period in advance of such issuance (but in no event later than ten (10) days
prior to such issuance), which notice shall set forth the number and type of the
securities to be issued, the issuance date, the offerees or transferees, the
price per security, and all of the other material terms and conditions of such
issuance, which shall be deemed updated by delivery or filing of documentation
with such material terms and conditions for such issuance to the Stockholders
(including a pricing term sheet or free writing prospectus, in the case of a
public offering). Each Stockholder may, by irrevocable written notice to the
Company (a “Preemptive Rights Notice”) delivered no later than five (5) days
after delivery of such Company notice, commit itself to purchase (or designate
an Affiliate thereof to purchase) up to such number of securities as necessary
to maintain such Stockholder’s Percentage Ownership of the Company as of
immediately prior to such Preemptive Rights Issuance, in the amount specified in
such Preemptive Rights Notice (which amount shall not exceed the number of
securities necessary to maintain the Stockholder’s Percentage Ownership of the
Company as of immediately prior to such Preemptive Rights Issuance), on the same
terms and conditions as such Preemptive Rights Issuance (it being understood and
agreed that the price per security that such Stockholder shall pay shall be the
same as the price per security set forth in the Preemptive Rights Notice). If a
Stockholder exercises its preemptive rights hereunder with respect to such
Preemptive Rights Issuance, the Company shall issue to such Stockholder (or its
designated Affiliates) the number of securities specified in such Preemptive
Rights Notice in accordance with the terms of the issuance, but in no event
earlier than fifteen (15) days after delivery of the Preemptive Rights Notice.
For the avoidance of doubt, in the event that the issuance of Common Stock or
Equity-based Securities in a Preemptive Rights Issuance involves the purchase of
a package of securities that includes Common Stock or Equity-based Securities
and other securities in the same Preemptive Rights Issuance, each Stockholder
shall only have the right to acquire its applicable pro rata portion of such
other securities, together with its applicable pro rata portion of such Common
Stock or Equity-based Securities, in the same manner described above (as to
amount, price and other terms).

(c) The election by a Stockholder not to exercise its preemptive rights
hereunder in any one instance shall not affect its right as to any future
Preemptive Rights Issuances.

(d) Notwithstanding anything contained in this Section 2.1, to the extent a
Preemptive Rights Issuance is being made only to investors that are “accredited
investors” within the meaning of Rule 501 under Regulation D promulgated under
the Securities Act, then,

 

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at the option of the Board, in its sole discretion, any Stockholder may be
excluded from the offer to purchase any securities pursuant to this Section 2.1
and shall have no rights under this Section 2.1 with respect to such Preemptive
Rights Issuance to the extent it is not an “accredited investor”.

(e) If the Board determines in good faith that circumstances require the Company
to effect a Preemptive Rights Issuance without first complying with the terms
set forth in this Section 2.1, the Company shall be permitted to do so without
complying with the terms set forth in this Section 2.1 in connection with such
Preemptive Rights Issuance; provided, that as promptly as practicable following
such Preemptive Rights Issuance, the Company permits each Stockholder to
purchase its proportionate amount of the applicable securities in the manner
contemplated by this Section 2.1.

(f) If the underwriter or placement agent with respect to a Preemptive Rights
Issuance advises the Board that, in its or their opinion, a Stockholder’s
purchase of a portion of the securities that are to be issued in such Preemptive
Rights Issuance is likely to adversely affect such offering, including, but not
limited to, with respect to the price, timing or distribution of the securities
offered or the market for the securities offered, then the Company shall be
permitted to effect such Preemptive Rights Issuance without complying with the
terms of this Section 2.1 with respect to such Stockholder and such Stockholder
shall not have any preemptive rights with respect thereto.

(g) Notwithstanding anything to the contrary contained herein, the Company shall
not be required to issue any securities pursuant to this Section 2.1, and may
modify the voting or other rights of such securities, in each case to the extent
that the issuance of such securities to a Stockholder would constitute
noncompliance with NYSE rules (or the rules of the principal market on which the
Common Stock is then listed) regarding approval by stockholders or would require
such approval.

2.2 Information Rights.

(a) Following the Closing and for as long as the Majority Approved Holders have
the right to designate at least one (1) director for nomination pursuant to
Section 1.1(a), and subject to Section 5.4, (i) the Company shall provide the
Approved Holders with unaudited monthly (as soon as reasonably possible after
they become available but in no event before they are sent to the Board)
management financial statements, quarterly (as soon as reasonably possible after
they become available but in no event before they are sent to the Board)
financial statements and audited (by a nationally recognized accounting firm)
annual (as soon as reasonably possible after they become available but in no
event before they are sent to the Board) financial statements, in each case,
prepared in accordance with GAAP as in effect from time to time, which
statements shall include the consolidated balance sheets of the Company and its
Subsidiaries and the related consolidated statements of income, shareholders’
equity and cash flows and (ii) subject to reasonable restrictions imposed by the
Company to comply with antitrust, export control and other Laws and to avoid
disclosure to competitors, suppliers and vendors, the Company shall permit the
Approved Holders or any authorized representatives designated by the Approved
Holders reasonable access to visit and inspect any of the properties of the
Company or any of its Subsidiaries, including its and their books of accounting
and other records,

 

-5-

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and to discuss its and their affairs, finances and accounts with its and their
officers, all upon reasonable notice and at such reasonable times and as often
as the Approved Holders may reasonably request. Any investigation pursuant to
this Section 2.2 shall be conducted during normal business hours and in such
manner as not to interfere unreasonably with the conduct of the Company and its
Subsidiaries.

(b) Following the Closing and for as long as the Approved Holders have the right
to designate at least one (1) director for nomination pursuant to
Section 1.1(a), subject to Section 5.4, the Company shall provide to the
Approved Holders all written information that is provided to the Board at
substantially the same time at which such information is first delivered or
otherwise made available in writing to the Board; provided, however, that the
Company shall not be required to provide information to the extent it could
reasonably be expected to result in the loss of privilege or a violation of
antitrust, export control or other Laws.

(c) Nothing herein shall require the Company or any of its Subsidiaries to
disclose any information to the extent (i) prohibited by applicable Law,
(ii) that the Company reasonably believes such information to be competitively
sensitive or proprietary information or (iii) that such disclosure would
reasonably be expected to cause a violation of any agreement to which the
Company or any of its Subsidiaries is a party or would cause a risk of loss of
privilege to the Company or any of its Subsidiaries (provided that the Company
shall use reasonable best efforts to make appropriate substitute arrangements
under circumstances where the restrictions in clauses (i), (ii) and/or
(iii) apply).

2.3 Transfer Restrictions. Without the prior written consent of the Company in
its sole discretion, no Stockholder may Transfer any shares of Convertible
Preferred Stock or any shares of Common Stock issued or issuable upon conversion
of the Convertible Preferred Stock to any Persons listed on Exhibit A attached
hereto (“Prohibited Transferees”); provided that no such restriction shall apply
to a Transfer in a widely distributed registered public offering. Prohibited
Transferees shall also include the Subsidiaries and Affiliates of each person
listed on Exhibit A.

ARTICLE III

REPRESENTATIONS AND WARRANTIES

3.1 Representations and Warranties of the Stockholders. The Initial Stockholder,
as of the date hereof, and each other Stockholder, as of the date such
Stockholder becomes a party to this Agreement, hereby represent and warrant to
the Company as follows:

(a) Such Stockholder has been duly formed, is validly existing and is in good
standing under the laws of its jurisdiction of organization. Such Stockholder
has all requisite power and authority to execute and deliver this Agreement and
to perform its obligations under this Agreement.

(b) The execution and delivery by such Stockholder of this Agreement and the
performance by such Stockholder of its obligations under this Agreement does not
and will not conflict with, violate any provision of, or require the consent or
approval of any Person under, Applicable Law, the organizational documents of
such Stockholder, or any Contract to which such Stockholder is a party or to
which any of its assets are subject.

 

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(c) The execution, delivery and performance of this Agreement by the such
Stockholder has been duly authorized by all necessary corporate (or similar)
action on the part of such Stockholder. This Agreement has been duly executed
and delivered by such Stockholder and, assuming the due authorization, execution
and delivery by the Company, constitutes a legal, valid and binding obligation
of such Stockholder, enforceable against such Stockholder in accordance with its
terms, subject to bankruptcy, insolvency and other laws of general applicability
relating to or affecting creditors’ rights and to general principles of equity.

3.2 Representations and Warranties of the Company. The Company hereby represents
and warrants to the Initial Stockholder as of the date hereof as follows:

(a) The Company is a duly incorporated and validly existing corporation in good
standing under the laws of the State of Delaware. The Company has all requisite
power and authority to execute and deliver this Agreement and to perform its
obligations under this Agreement.

(b) The execution and delivery by the Company of this Agreement and the
performance of the obligations of the Company under this Agreement do not and
will not conflict with, violate any provision of, or require any consent or
approval of any Person under, (i) Applicable Law, (ii) the organizational
documents of the Company, or (iii) any Contract to which the Company is a party
or to which any assets of the Company and its Subsidiaries are subject, in case
of clauses (i) and (iii), except as would not be reasonably expected to have a
Company Material Adverse Effect (as defined in the Investment Agreement).

(c) The execution, delivery and performance of this Agreement by the Company has
been duly authorized by all necessary corporate action on the part of the
Company. This Agreement has been duly executed and delivered by the Company and,
assuming the due authorization, execution and delivery by the Stockholders,
constitutes a legal, valid and binding obligation of the Company, enforceable
against the Company in accordance with its terms, subject to bankruptcy,
insolvency and other laws of general applicability relating to or affecting
creditors’ rights and to general principles of equity.

ARTICLE IV

DEFINITIONS

4.1 Defined Terms. Capitalized terms when used in this Agreement have the
following meanings:

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, “control,”
as used with respect to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms

 

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“controlling,” “controlled by” and “under common control with” have correlative
meanings. For purposes of this Agreement, none of the Stockholders and their
respective Affiliates shall be deemed to be Affiliates of the Company or any of
its subsidiaries.

“Agreement” has the meaning set forth in the Preamble.

“Applicable Law” means all applicable provisions of (i) constitutions, statutes,
laws, rules, regulations, ordinances, codes or orders of any Governmental
Entity, and (ii) any orders, decisions, injunctions, judgments, awards or
decrees of any Governmental Entity.

“Approved Holders” means the Initial Stockholder and any Permitted Transferees.

“Board” has the meaning set forth in Section 1.1.

“Closing” has the meaning set forth in the Investment Agreement.

“Common Stock” means the common stock, par value $0.01 of the Company.

“Company” has the meaning set forth in the Preamble.

“Confidential Information” means any and all confidential or proprietary
information pertaining to (i) the Company or its Affiliates, or the respective
businesses and operations thereof, furnished or made available by the Company
to, any Stockholder; provided, that “Confidential Information” shall not include
information that (A) is, at the time of disclosure, already in such
Stockholder’s possession (provided, however, that such information is not known
by the Stockholder to be subject to an obligation of confidentiality owed to the
Company or any other Person), (B) is or becomes generally available to the
public other than as a result of a disclosure by such Stockholder or any of its
Representatives in violation of this Agreement or any applicable confidentiality
or non-disclosure agreement, (C) becomes available to such Stockholder on a
non-confidential basis from a source other than the Company or its
Representatives (provided, however, that such source is not known by the
Stockholder to be bound by an obligation of confidentiality owed to the Company
or any other Person) or (D) such Stockholder can demonstrate was independently
developed by such Stockholder or its Affiliates without reference to,
incorporation of or other use of any Confidential Information or information
from any source that is known by the Stockholder to be bound by an obligation of
confidentiality owed to the Company or any other Person.

“Confidentiality Agreement” means that certain Confidentiality Agreement, dated
as of March 20, 2015, by and between GrafTech International Ltd. and Brookfield
Capital Partners LLC.

“Contract” means any contract, agreement, obligation, note, bond, mortgage,
indenture, guarantee, agreement, subcontract, lease or undertaking (whether
written or oral and whether express or implied).

“Convertible Preferred Stock” has the meaning set forth in the Recitals.

 

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“Equity-based Security” means capital stock (including a new class of common
stock of the Company other than Common Stock), any preferred stock or any other
equity-like or hybrid securities (including debt securities with equity
components), including options, warrants, convertibles, exchangeable or
exercisable securities, stock appreciation rights or any other security or
arrangement whose economic value is derived for the value of the equity of the
Group Companies.

“Exchange Act” means the U.S. Securities and Exchange Act of 1934, as amended,
and the rules and regulations promulgated thereunder.

“Governmental Entity” means any foreign, federal or local government, or
regulatory or enforcement authority of any such government or any court,
administrative agency or commission or other authority or instrumentality of any
such government.

“Initial Stockholder” has the meaning set forth in the Preamble.

“Investment Agreement” has the meaning set forth in the Recitals.

“Law” means any applicable federal, state, local, municipal, foreign or other
law, statute, constitution, principle of common law, resolution, ordinance,
code, order, edict, decree, rule, regulation, ruling or other legally binding
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity.

“Majority Approved Holders” means, as of any date, the Approved Holders holding
a majority of the Original Preferred Shares then held by all Approved Holders.

“Majority Stockholders” means, as of any date, the Stockholders holding a
majority of the Common Stock of the Company on a fully-diluted, as converted
basis then held by all Stockholders.

“Original Preferred Shares” means, as of any date, the Common Stock issuable
upon conversion of the Series A Preferred Stock issued pursuant to the
Investment Agreement on the date hereof plus the shares of Common Stock that
were converted from shares of Series A Preferred Stock issued pursuant to the
Investment Agreement as of the date hereof (excluding, for the avoidance of
doubt, all shares of Series A Preferred Stock issued upon the conversion of the
Series B Preferred Stock and all shares of Common Stock issued upon conversion
of such shares of Series A Preferred Stock.

“Percentage Ownership” means, as to any Stockholder and as of any date, the
percentage equal to (i) the aggregate number of shares of Common Stock held by
such Stockholder on a fully diluted as-converted basis divided by (ii) the total
number of outstanding shares of Common Stock of the Company on a fully diluted,
as-converted basis.

“Permitted Issuance” means any issuance of Common Stock or Equity-based
Securities in connection with (i) stock dividends, (ii) stock splits or
subdivisions, (iii) reclassifications, redomestications and similar transactions
(except to the extent that new capital is raised in connection therewith),
(iv) equity kickers to bona fide lenders, (v)

 

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issuances in respect of any equity incentive, stock option, restricted stock or
similar plan approved by the Board, (vi) issuances in respect of acquisitions,
(vii) issuances in respect of any shareholder rights plan or (viii) issuances in
respect of conversion of the Convertible Preferred Stock.

“Permitted Transferee” means a Person (other than a Prohibited Transferee) to
which the Initial Stockholder has Transferred Original Preferred Shares
following written approval thereof by the Board, which approval shall not be
unreasonably withheld, and that executes a joinder agreement substantially in
the form attached hereto as Exhibit B; provided, that controlled Affiliates of
Brookfield Asset Management Inc. shall be deemed approved by the Board for the
purposes of this definition.

“Person” means any natural person, corporation, partnership, limited liability
company, firm, association, trust, government, governmental agency or other
entity, whether acting in an individual, fiduciary or other capacity.

“Preemptive Rights Issuance” has the meaning set forth in Section 2.1(a).

“Preemptive Rights Notice” has the meaning set forth in Section 2.1(b).

“Prohibited Transferee” has the meaning set forth in Section 2.3.

“Representative” means, with respect to any Person, any director, officer,
employee, Affiliate, advisor (including any financial advisor, legal counsel,
accountant or consultant), agent or other representative of such Person.

“Securities” shall mean the Convertible Preferred Stock, including the Common
Stock underlying the Convertible Preferred Stock.

“Securities Act” means the U.S. Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.

“Series A Preferred Stock” means shares of preferred stock, par value $0.01 per
share, designated as “Series A Convertible Preferred Stock”, of the Company
issued pursuant to the Investment Agreement.

“Series B Preferred Stock” means shares of preferred stock, par value $0.01 per
share, designated as “Series B Convertible Preferred Stock”, of the Company
issued pursuant to the Investment Agreement.

“Stockholders” means the Initial Stockholder and any Person (i) (x) who acquires
Convertible Preferred Stock (or to whom Convertible Preferred Stock is
transferred), whether from a Stockholder or, (y) to whom any rights, interests
or obligations hereunder are assigned pursuant to Section 5.3 and (ii) in the
case of both (i)(x) and (i)(y), who executes a written joinder agreement
substantially in the form attached hereto as Exhibit B.

 

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“Transfer” by any person means directly or indirectly, to sell, transfer,
assign, pledge, encumber, hypothecate or similarly dispose of, either
voluntarily or involuntarily, or to enter into any contract, option or other
arrangement or understanding with respect to the sale, transfer, assignment,
pledge, encumbrance, hypothecation or similar disposition of, any securities
owned by such person or of any interest (including any voting interest) in any
securities owned by such person.

4.2 Terms Generally. The words “hereby,” “herein,” “hereof,” “hereunder” and
words of similar import refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which such word appears. All references
herein to “Articles” and “Sections” shall be deemed references to Articles and
Sections of this Agreement unless the context shall otherwise require. The words
“include,” “includes” and “including” shall be deemed to be followed by the
phrase “without limitation.” References to “$” or “dollars” means United States
dollars. The definitions given for terms in this Article IV and elsewhere in
this Agreement shall apply equally to both the singular and plural forms of the
terms defined. Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. References herein to any
agreement or letter shall be deemed references to such agreement or letter as it
may be amended, restated or otherwise revised from time to time.

ARTICLE V

MISCELLANEOUS

5.1 Term. This Agreement will be effective as of the Closing and, except as
otherwise set forth herein, will continue in effect thereafter until the mutual
written agreement of the Company and the Majority Stockholders.

5.2 Amendments and Waivers. Except as otherwise provided herein, the provisions
of this Agreement may be amended or waived only upon the prior written consent
of the Company and the Majority Stockholders. No failure or delay by any party
in exercising any right, power or privilege hereunder shall operate as a waiver
thereof nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not exclusive of
any rights or remedies provided by Applicable Law.

5.3 Successors and Assigns. Except as otherwise provided below, neither this
Agreement nor any of the rights, interests or obligations hereunder shall be
assigned by any of the parties hereto, in whole or in part (whether by operation
of law or otherwise), without the prior written consent of the Company and the
Majority Stockholders. Notwithstanding the foregoing, (i) subject to the
execution of a joinder agreement substantially in the form set forth as
Exhibit B, a Stockholder may assign all or any portion of its rights, interests
or obligations under this Agreement to any Person (other than a Prohibited
Transferee) to which such Stockholder assigns or transfers Securities and
(ii) this Agreement may be assigned by operation of law by the Company. This
Agreement will be binding upon, inure to the benefit of, and be enforceable by
the parties and their respective permitted successors and assigns. Any attempted
assignment in violation of this Section 5.3 shall be void.

 

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5.4 Confidentiality. The parties recognize that, in connection with the
performance of this Agreement, the Company may provide the Stockholders with
access to, or otherwise furnish the Stockholders with, certain Confidential
Information. The Stockholders shall keep all Confidential Information strictly
confidential and not disclose any such Confidential Information to any other
Person, except as may be required by applicable Law, or at the request of any
applicable Governmental Entity; provided, however, that each Stockholder may
disclose such Confidential Information to its Representatives who need to know
such Confidential Information for purposes of such Stockholder’s investment in
the Company and who agree to be bound by the terms of this Section 5.4.
Furthermore, each Stockholder shall not, and shall cause its Representatives not
to, use any Confidential Information for any purpose whatsoever other than to
evaluate its investment in the Company. Each Stockholder shall take precautions
that are reasonable, necessary and appropriate to guard the confidentiality of
the Confidential Information and shall treat such Confidential Information with
at least the same degree of care which it applies to its own confidential and
proprietary information. In the event that any Stockholder (or any Affiliates
thereof) is required by applicable Law, or at the request of any applicable
Governmental Entity, to disclose any Confidential Information, it shall, to the
extent permitted by applicable Law, provide prompt written notice to the Company
to enable the Company to seek an appropriate protective order or remedy. Each
Stockholder hereby acknowledges and agrees that all Confidential Information is
and shall at all times remain the sole and exclusive property of the Company or
its Affiliates. For the avoidance of doubt, the terms of this Section 5.4 shall
survive the termination of this Agreement.

5.5 Severability. Whenever possible, each provision of this Agreement will be
interpreted in such manner as to be effective and valid under Applicable Law,
but if any provision of this Agreement is held to be invalid, illegal or
unenforceable in any respect under any Applicable Law or rule in any
jurisdiction, such invalidity, illegality or unenforceability will not affect
any other provision or the effectiveness or validity of any provision in any
other jurisdiction, and this Agreement will be reformed, construed and enforced
in such jurisdiction as if such invalid, illegal or unenforceable provision had
never been contained herein.

5.6 Counterparts. This Agreement may be executed in two (2) or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when counterparts have been signed by each of the parties
and delivered to the other parties, it being understood that each party need not
sign the same counterpart.

5.7 Entire Agreement. This Agreement (including the documents and the
instruments referred to in this Agreement), together with the Confidentiality
Agreement, the Investment Agreement and the Registration Rights Agreement,
constitutes the entire agreement among the parties or to which they are subject
and supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter of the transactions
contemplated hereby and thereby.

5.8 Governing Law; Jurisdiction. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware
(excluding choice-of-law principles of the laws of such State that would permit
the application of the laws of a jurisdiction other than such State), without
regard to any applicable conflicts-of-law principles. The parties hereto agree
that any suit, action or proceeding brought by any party to enforce any
provision of,

 

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or based on any matter arising out of or in connection with, this Agreement or
the transactions contemplated hereby shall be brought exclusively in the federal
courts of the United States of America located in the State of Delaware. Each of
the parties hereto submits to the exclusive jurisdiction of any such court in
any suit, action or proceeding seeking to enforce any provision of, or based on
any matter arising out of, or in connection with, this Agreement or the
transactions contemplated hereby and hereby irrevocably waives the benefit of
jurisdiction derived from present or future domicile or otherwise in such action
or proceeding. Each party hereto irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.

5.9 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

5.10 Specific Performance. The parties hereto agree that irreparable damage may
occur if any provision of this Agreement is not performed in accordance with the
terms hereof and that the parties shall be entitled to seek an injunction or
injunctions or other equitable relief to prevent breaches of this Agreement or
to enforce specifically the performance of the terms and provisions hereof in
any court set forth in Section 5.8, in addition to any other remedy to which
they are entitled at law or in equity.

5.11 No Third-Party Beneficiaries. Nothing in this Agreement shall confer any
rights upon any Person other than the parties hereto and each such party’s
respective heirs, successors and permitted assigns, all of whom shall be
third-party beneficiaries of this Agreement.

5.12 Notices. All notices and other communications in connection with this
Agreement shall be in writing and shall be deemed given if delivered personally,
sent via facsimile (with confirmation), mailed by registered or certified mail
(return receipt requested) or delivered by an express courier (with
confirmation) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice):

If to the Company, to:

GrafTech International Ltd.

Suite 300 Park Center I

6100 Oak Tree Boulevard

Independence, Ohio 44131

Attn: General Counsel E-mail: john.moran@graftech.com Fax: 216-676-2526

 

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with copies (which shall not constitute notice) to:

 

Willkie Farr & Gallagher LLP 787 Seventh Avenue New York, New York 10019 Attn:
Steven A. Seidman Michael A. Schwartz E-mail: sseidman@willkie.com
mschwartz@willkie.com Fax: 212-728-8111

and

 

Withers Bergman LLP 660 Steamboat Road Greenwich, Connecticut 06830 Attn: M.
Ridgway Barker E-mail: mr.barker@withersworldwide.com Fax: 203-302-6613

If to the Initial Stockholder, to:

 

BCP IV GrafTech Holdings LP c/o: Brookfield Capital Partners Ltd. Brookfield
Place 181 Bay Street, Suite 300 Toronto, Ontario M5J 2T3 Attn: David Nowak Peter
Gordon E-mail: David.Nowak@brookfield.com Peter.Gordon@brookfield.com Fax:
416-365-9642

with a copy (which shall not constitute notice) to:

 

Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attn:
Michael J. Aiello Jackie Cohen E-mail: michael.aiello@weil.com
jackie.cohen@weil.com Fax: 212-310-8007

[Signature pages follow]

 

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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement by
their authorized representatives as of the date first above written.

 

GRAFTECH INTERNATIONAL LTD. By:

 

Name: Title:

[Signature page to Stockholder Rights Agreement]

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BCP IV GRAFTECH HOLDINGS LP By its general partner, BPE IV (Non-Cdn) GP LP, By
its general partner, Brookfield Capital Partners Ltd.,

 

Name: David Nowak Title: Managing Partner

 

Name: J. Peter Gordon Title: Managing Partner

[Signature page to Stockholder Rights Agreement]

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EXHIBIT A

PROHIBITED TRANSFEREES

The following names are based on information available and minor discrepancies
shall not be deemed to exclude such entities from the definition of Prohibited
Transferees.

Energoprom Group

Graphite India Limited

Electrocarbon S.A. (also known as Slatina)

HEG Limited

Henan Sanli Carbon Products Co., Ltd.

Hunan Yinguang Carbon Co., Ltd.

Xuzhou Jiang Long Carbon Co., Ltd.

Jinneng Datong Carbon Co., Ltd.

Kaifeng Carbon Company Limited

Hebei Shuntian Electrode Co. Ltd, fka (Laishui Long Great Wall Electrode Co.,
Ltd.)

Fangda Group (Fushun, Chengdu, Hefei and Lanzhou)

Liaoyang Carbon Co., Ltd.

Liaoyang Shoushan Carbon Factory

Linyi County Lubei Carbon Co., Ltd.

Linzhou Electrical Carbon Co., Ltd

Linzhou Hongqiqu Electrical Carbon Co., Ltd.

Nantong Yangzi Carbon Co., Ltd. (also known as Nantong River-East Carbon Joint
Stock Co., Ltd.)

Nippon Carbon Company, Co., Ltd.

SEC Carbon Limited

SGL Group

Shandong Basan Carbon Co., Ltd.

Shijiazhuang Huanan Carbon Factory

Showa Denko K.K.

Sinosteel Carbon Co., Ltd. (Jilin, Songjiang)

Showa Denko Sichuan Carbon Co., Ltd.

Superior Graphite

Tokai Carbon Co., Ltd.

Ukrainian Graphite Pubjsc (also known as Ukrainsky Grafit Company)

Henglongjiang Xinyuan Carbon Co., Ltd.

Pingdingshan Sanji Carbon Co., Ltd.

Dandong Xinxing Carbon Co., Ltd.

Neimeng Xinghe Xingyong Carbon

Fushun Jinli Petrochemical Co., Ltd.

Linghai Hongfeng Carbon Co., Ltd.

Shanxi Zhiyao Carbon Co., Ltd.

Xinghe Muzi Carbon Co., Ltd.

Xuzhou Jinno Graphite Co., Ltd.

Datong Xincheng Carbon Co., Ltd.

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Shanxi Hongte - SGL JV

Xinzhengshi Yudian Carbon Co., Ltd.

Handan Huayuan Carbon Co., Ltd.

Mersen S.A.

Toyo Tanso Co. Ltd.

Ibiden Co., Ltd.

Phillips 66 Company

C-Chem Co., Ltd.

Mitsubishi

Nippon Steel Chemical Co.

Sumitomo Corporation

Koch Industries, Inc.

The Morgan Crucible Company PLC

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EXHIBIT B

JOINDER AGREEMENT

GrafTech International Ltd.

Suite 300 Park Center Drive

6100 Oak Tree Boulevard

Independence, Ohio 44131

Attention: General Counsel

Ladies and Gentlemen:

Reference is made to the Stockholder Rights Agreement, dated as of [●], 2015 (as
such agreement may have been or may be amended from time to time) (the
“Agreement”), by and among GrafTech International Ltd., a Delaware corporation,
BCP IV GrafTech Holdings LP, a limited partnership formed under the laws of
Delaware and any other parties identified on the signature pages of any joinder
agreements substantially similar to this joinder agreement executed and
delivered in accordance with the Agreement. Capitalized terms used but not
otherwise defined herein have the meanings set forth in the Agreement.

The undersigned agrees that, as of the date written below, the undersigned shall
become a party to the Agreement, and shall be fully bound by, and subject to,
all of the covenants, terms and conditions of the Agreement as a “Stockholder,”
as though an original party thereto. The undersigned represents and warrants
that the representations and warranties set forth in Section 3.1 of the
Agreement are true and correct in all respects as of the date hereof.

[SIGNATURE PAGE FOLLOWS]

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IN WITNESS WHEREOF, the undersigned has executed this Joinder as of the [    ]th
day of [            ], [        ].

 

[                                         ] By:

 

Name: Title: