Document:

<PAGE>   1
                                                                    Exhibit 10.7

                                SUPPLY AGREEMENT

                            MADE AS OF AUGUST 5, 1999

                                     BETWEEN

                            UCAR CARBON COMPANY INC.

                                       AND

                           BALLARD POWER SYSTEMS INC.

<PAGE>   2

                                SUPPLY AGREEMENT

THIS AGREEMENT is made the _____ day of _________, 1999

BETWEEN:

          UCAR CARBON COMPANY INC., a Delaware corporation having an office at
          3102 West End Avenue, Suite 1100, Nashville, Tennessee, 37203, USA

          ("UCAR CARBON")

AND:

         BALLARD POWER SYSTEMS INC., a company organized and existing under the
         laws of Canada, the main office of which is at 9000 Glenlyon Parkway,
         Burnaby, British Columbia, Canada V5J 5J9

         ("BPS")

WHEREAS:

A)    UCAR CARBON and BPS have entered into the Collaboration Agreement for the
development of Target Products;

(B)   BPS seeks an assured source of supply of the Materials in connection with
the development and manufacture of electrically conductive fuel cell separator
plates;

(C)   BPS wishes to purchase from UCAR CARBON, and UCAR CARBON wishes to supply
to BPS, the Materials, on the terms and subject to the conditions set forth in
this Agreement;

NOW THEREFORE the parties covenant and agree as follows:

<PAGE>   3

                                    PART 1

                         DEFINITIONS AND INTERPRETATION

DEFINITIONS

1.1   In this Agreement, including the recitals and schedules, except as
expressly provided or unless the context otherwise requires,

      AFFILIATE, in relation to a specified Person, means a Person that
      directly or indirectly controls, is under common control with, or is
      controlled by the specified Person, and for the purposes hereof, a Person
      will be deemed to CONTROL a corporation if

           (a)     securities of the corporation to which are attached more
           than 50% of the votes that may be cast to elect directors of the
           specified corporation or other rights to elect a majority of the
           directors are held, other than by way of security only, by or for
           the benefit of the Person, and

           (b)     the votes attached to those securities are sufficient, if
           exercised, to elect a majority of the directors of the corporation,

      BUSINESS DAY means a day that is not a Saturday, a Sunday or a British
      Columbia provincial, Canadian federal, United States national or
      Tennessee state, holiday,

      CHIEF EXECUTIVE OFFICER means, in the case of BPS, BPS's Chief Operating
      Officer and in the case of UCAR CARBON, UCAR CARBON's President,

      COLLABORATION has the meaning ascribed to it in the Collaboration
      Agreement,

      COLLABORATION AGREEMENT means the Collaboration Agreement between UCAR
      CARBON and BPS made May 3, 1999,

      COMMENCEMENT DATE means the date of execution of this Agreement,

      CONFIDENTIAL INFORMATION means, in relation to a Person, information
      known or used by such Person in connection with its business or
      technology, including, but not limited to, such Person's Intellectual
      Property, customer information, financial information, marketing
      information, and information as to business opportunities and research
      and development,

      DISCLOSING PARTY has the meaning ascribed to it in Section 6.1,

      EVENT OF DEFAULT in relation to a party means an event of default arising
      as a result of a party being subject to one or more of the following
      circumstances:

           (a)     an order is made or a resolution is passed or a petition is
           filed by such party for the liquidation, dissolution or winding-up
           of such party,

                                       2
<PAGE>   4

           (b)     such party is in material breach of its obligations under
           Part 6,

           (c)     such party commits a material default in observing or
           performing any other material covenant, agreement or condition of
           this Agreement on its part to be observed or performed and, where
           such breach is curable, does not rectify or cure such breach within
           30 days after receipt of written notice from the other party to this
           Agreement specifying such breach;

           (d)     an execution, sequestration or any other process of any
           court becomes enforceable against such party or any distress or
           analogous process is levied upon any material part of the property,
           assets or undertaking of such party and any such process or distress
           is not stayed or otherwise suspended by a court of competent
           jurisdiction within 30 days and has, or could have, a material
           adverse effect on the business or condition, financial or otherwise,
           of such party;

           (e)     such party applies to be put in bankruptcy, takes any action
           that would permit its creditors to make an application to put such
           party in bankruptcy, is adjudged or declared bankrupt or makes an
           assignment for the benefit of creditors, consents to a proposal or
           similar action under any bankruptcy or insolvency legislation
           applicable to it, or commences any other proceedings relating to it
           under any reorganization, arrangement, readjustment of debt,
           dissolution or liquidation law or statute of any jurisdiction
           whether now or hereafter in effect, or consents to any such
           proceeding;

           (f)     a custodian, liquidator, receiver, receiver and manager,
           receiver-manager, trustee or any other person with similar powers is
           appointed for such party or in respect of any material property or
           assets or material part of the property or assets of such party and
           not discharged within 30 days after its appointment and before any
           action is taken by it in respect of such property or assets which
           will materially affect the rights of the parties to this Agreement
           thereto;

           (g)     a final, non-appealable, decision of any judicial,
           administrative, governmental or other authority or arbitrator is
           made which enjoins or restrains or renders illegal or unenforceable,
           the performance or observance by such party of any material term of
           this Agreement;

      EXCLUSIVE LICENSE means the exclusive license granted by UCAR to BPS
      under Section 2.9 of the Collaboration Agreement,

      FIRST YEAR MATERIALS FORECAST means BPS's preliminary forecast of its
      requirements for the Materials for the first Year of this Agreement as
      set forth in Schedule B,

      FIRST YEAR MATERIALS PRICING means the pricing of the Materials described
      in Schedule C based on and applicable to the First Year Materials
      Forecast,

      FORCE MAJEURE means an act of God, strike, lockout or other industrial
      disturbance, war, blockade, insurrection, riot, earthquake, typhoon,
      hurricane, flood, fire, explosion or other

                                       3
<PAGE>   5

      similar occurrence beyond the reasonable control of a party which
      prevents such party from performing its obligations under the Agreement,

      INTELLECTUAL PROPERTY means in relation to a Person, each patent, patent
      application, industrial design, invention, design, trade secret, idea,
      work, methodology, technology, innovation, creation, concept, moral
      right, development drawing, research, analysis, know-how, experiment,
      copyright, data, formula, method, procedure, process, system or technique
      of such Person, but does not include trademarks or tradenames,

      LICENSE has the meaning ascribed to it in Section 5.1,

      MATERIALS means any one or more of treated graphite flakes, expanded
      graphite flakes and flexible graphite (commonly referred to as graphite
      sheet or foil) [text redacted] as well as such materials developed by UCAR
      CARBON before the Effective Date (as defined in the Collaboration
      Agreement), including, but not limited to the materials listed in Schedule
      A to the Collaboration Agreement,

      MUTUAL SECRECY AGREEMENT has the meaning ascribed to it in the
      Collaboration Agreement,

      NOTICE has the meaning ascribed to it in Section 9.4,

      PERSON means an individual, corporation, body corporate, firm, limited
      liability company, partnership, syndicate, joint venture, society,
      association, trust or unincorporated organization or trustee or other
      such legal representative,

      PEM FUEL CELL means a solid polymer fuel cell and includes a direct
      oxidation fuel cell,

      RECIPIENT has the meaning ascribed to it in Section 6.1,

      RECIPIENT'S AGENTS has the meaning ascribed to it in Section 6.1(a),

      SPECIFICATIONS means BPS's specifications for the Materials as set forth
      in Schedule A or such other specifications for the same as the parties
      may agree from time to time,

      SUPPLIER EVALUATION SYSTEM means at any particular time, BPS's then
      existing standard of evaluating supplier performance and product quality,
      the current criteria in respect of which is set forth in Schedule D,

      TARGET PRODUCT means an electrically conductive fuel cell separator plate
      developed pursuant to the Collaboration utilizing any of the Materials,

      TERMS AND CONDITIONS means the terms and conditions of purchase set forth
      in Section 3.1 as may be amended from time to time by the parties, and

                                       4
<PAGE>   6

      YEAR means the period of 12 months commencing on the Commencement Date
      and where applicable, each consecutive period of 12 months thereafter
      during the term of this Agreement.

INTERPRETATION

1.2   In this Agreement, except as otherwise expressly provided or unless the
context otherwise requires,

      (a)  "this Agreement" means this Supply Agreement, including the
      Schedules hereto, as from time to time supplemented or amended by one or
      more agreements entered into pursuant to the applicable provisions
      hereof,

      (b)  the headings in this Agreement are inserted for convenience only and
      do not form a part of this Agreement and are not intended to interpret,
      define or limit the scope, extent or intent of this Agreement or any
      provision hereof,

      (c)  the word "including", when following any general statement or term,
      is not to be construed as limiting the general statement or term to the
      specific items or matters set forth or to similar items or matters, but
      rather as permitting the general statement or term to refer to all other
      items or matters that could reasonably fall within its broadest possible
      scope,

      (d)  all accounting terms not otherwise defined herein have the meanings
      assigned to them in accordance with Canadian generally accepted
      accounting principles applied on a consistent basis,

      (e)  except where otherwise specified, all references to currency mean
      currency of the United States of America,

      (f)  a reference to a statute includes all regulations made thereunder,
      all amendments to the statute or regulations in force from time to time,
      and any statute or regulation that supplements or supersedes such statute
      or regulations,

      (g)  a reference to an entity includes any successor to that entity,

      (h)  words importing the masculine gender include the feminine or neuter,
      words in the singular include the plural, words importing a corporate
      entity include individuals, and vice versa,

      (i)  a reference to "approval", "authorization" or "consent" means
      written approval, authorization or consent,

      (j)  a reference to a Part is to a Part of this Agreement and the symbol
      Section followed by a number or some combination of numbers and letters
      refers to the section, paragraph, subparagraph, clause or subclause of
      this Agreement so designated.

                                       5
<PAGE>   7

SCHEDULES

1.3   The following are the schedules attached and incorporated in this
Agreement by reference and are deemed to form a part hereof:

<TABLE>
<S>                               <C>
              Schedule A             Materials Specifications
              Schedule B             First Year Products Forecast
              Schedule C             First Year Products Pricing
              Schedule D             Supplier Evaluation System Criteria
</TABLE>

                                    PART 2

                                SALE OF MATERIALS

MATERIALS SALE

2.1   During the term of this Agreement, BPS will purchase from UCAR CARBON,
and UCAR CARBON will sell to BPS, all of BPS's requirements of the Materials in
connection with the development and manufacture of electrically conductive fuel
cell separator plates. Notwithstanding the foregoing, BPS may acquire treated
graphite flakes, expanded graphite flakes and flexible graphite from sources
other than UCAR CARBON, but solely for benchmarking purposes. BPS's obligations
under this Section 2.1 are subject to BPS qualifying the Materials according to
the quality assurance procedures as defined in BPS's quality assurance manual
and UCAR CARBON being able, on a consistent basis, to meet BPS's requirements
as to pricing, delivery, quality and service in respect of the Materials from
time to time.

SUPPLIER EVALUATION SYSTEM

2.2   In evaluating whether or not UCAR CARBON is meeting BPS's requirements as
to pricing, delivery, quality and service, BPS will utilize its Supplier
Evaluation System. BPS will provide UCAR CARBON with, and train UCAR CARBON as
to its then current criteria in respect of, its Supplier Evaluation System. No
change to the Supplier Evaluation System will be effective as to UCAR CARBON
until the parties have agreed to such change. If UCAR CARBON is unable to meet
BPS's requirements as aforesaid or any agreed changes thereto within six months
after being requested to do [text redacted] so for such time as UCAR CARBON
remains in non-compliance and BPS may acquire the Materials from one or more
alternative sources without prejudice to its rights to continue acquiring the
Materials from UCAR CARBON under this Agreement. UCAR CARBON may revoke the
[text redacted] granted pursuant to this Section 2.2 at such time as it becomes
compliant under this section. Upon revocation of the [text redacted]

                                       6
<PAGE>   8

MOST FAVOURED CUSTOMER

2.3   If after termination of the Exclusive Period as defined in Section 2.9 of
the Collaboration Agreement, UCAR CARBON sells or supplies or offers to sell or
supply to another Person a like quantity of like Materials under like
circumstances at a price or on other terms that are more favourable to such
Person than the price or other terms offered to BPS, UCAR CARBON will so inform
BPS promptly. [text redacted] Where applicable, the parties will make such
adjustments to payments or otherwise as may be necessary to fulfill the intent
of this Section 2.3.

FIRST YEAR FORECAST AND PRICING

2.4   During the first year of this Agreement BPS agrees to buy at a minimum
the quantities set out in BPS's First Year Materials Forecast as set forth in
Schedule B and UCAR CARBON agrees to sell Materials at the prices set forth in
UCAR CARBON'S First Year Materials Pricing as set forth in Schedule C. UCAR
CARBON's pricing and delivery schedule for the first year is subject to change
if BPS makes a material change in its First Year Materials Forecast.

FUTURE FORECASTS AND PRICING

2.5   Future forecasts, pricing and production for the Materials will be dealt
with as follows:

      (a)    commencing no later than 60 days before the expiry of the first
      year of this Agreement, and thereafter no later than the end of each
      quarter, BPS will provide UCAR CARBON with a rolling three-year forecast
      of its yearly requirements of the Materials from UCAR CARBON, which
      forecast will not be binding upon BPS;

      (b)    within 30 days after receipt of each Anniversary Forecast (being
      that three-year forecast that is provided for the quarter which begins on
      each one-year anniversary date of this Agreement, i.e. the first being
      produced at the end of the first year), UCAR CARBON will provide BPS in
      writing with its pricing of the quantity or volume of the Materials
      forecast as required by BPS for the first year of each Anniversary
      Forecast and account for minor variations from quantities forecast for
      such year together with a delivery schedule that reflects such forecast;

      (c)    no later than 30 days after receipt of UCAR CARBON's quote for
      such Materials, BPS will provide UCAR CARBON with a written binding
      commitment to purchase a specified quantity or volume of Materials during
      each first year of the Anniversary Forecast, which commitment may vary
      from the forecast given by BPS for such year ("Annual Commitment");

                                       7
<PAGE>   9

      (d)    if the quantity, timing or volume of the Materials set out in the
      Annual Commitment is substantially different from the first year of BPS's
      Anniversary Forecast, UCAR CARBON will no longer be bound to its original
      price and delivery quote but must, within 30 days after receipt of such
      Annual Commitment, provide BPS with new quotes and delivery schedules
      that take into account such difference. The parties will make the
      appropriate adjustments to the pricing and delivery schedules to reflect
      the new quotes and delivery schedules; and

      (e)    in addition to the foregoing, UCAR CARBON will, from time to time
      at the request of BPS, provide BPS with firm fixed quotes governing
      volumes of Materials for such periods of time above and beyond the Annual
      Commitment as may, from time to time, be specified by BPS.

DELIVERY OF MATERIALS

2.6   Without derogating from its obligations to supply the Materials on a
timely basis, UCAR CARBON must achieve, in any eight-week period

      (a)    during the first three months after the date of execution of this
      Agreement, greater than an [text redacted] on-time delivery rate for the
      Materials with a variance from the agreed delivery date of such Materials
      during the period of no more than two days,

      (b)    subject to Section (c), after the first three months after the date
      of execution of this Agreement, greater than an [text redacted] on-time
      delivery rate for the Materials with a variance from the agreed delivery
      date of the Materials during such period of no more than two days, and

      (c)    after the first nine months after the date of execution of this
      Agreement, greater than an [text redacted] on-time delivery rate for the
      Materials with a variance from the agreed delivery date of the Materials
      of two days or such lesser period as is acceptable by competitive industry
      standards or as agreed to by the parties.

For the purposes hereof, in determining on-time delivery dates, Materials that
do not meet the agreed Specifications will be deemed not to have been
delivered.

LICENSE TO USE OF MATERIALS

2.7   Subject to Section 2.9 of the Collaboration Agreement, UCAR CARBON hereby
grants to BPS a perpetual, irrevocable, worldwide, non-exclusive, royalty-free
and paid-up right and license under UCAR CARBON's Intellectual Property rights
to use the Materials supplied by UCAR CARBON to BPS in connection with the
development, manufacture, use or sale of electrically conductive fuel cell
separator plates.

IMPROVEMENTS TO MATERIALS

2.8   If during the term of this Agreement but after the term of the
Collaboration, UCAR CARBON develops material or technology which is relevant
for the development or manufacture of electrically conductive fuel cell
separator plates, UCAR CARBON will, to the extent that it is

                                       8
<PAGE>   10

not otherwise prohibited from disclosing the information, advise BPS of the new
developments, subject to the standards of confidentiality established in the
Mutual Secrecy Agreement. UCAR CARBON will, to the extent that it is not
otherwise prohibited from selling the materials or technology, offer to sell to
BPS the new materials or to grant to BPS a new license in respect of the new
technology, subject to the further agreement of the parties.

2.9   If during the term of this Agreement but after the term of the
Collaboration, BPS develops material or technology which is relevant for the
development or manufacture of flexible graphite materials, articles made
from/of flexible graphite materials (other than electrically conductive fuel
cell separator plates), or compositions which include flexible graphite
materials, BPS will, to the extent that it is not otherwise prohibited from
disclosing the information, advise UCAR CARBON of the new developments subject
to the standards of confidentiality established in the Mutual Secrecy
Agreement. BPS will, to the extent that it is not otherwise prohibited from
selling the new material or technology, offer to sell to UCAR CARBON the new
materials or to grant to UCAR CARBON a new license in respect of the new
technology, subject to further agreement of the parties.

                                    PART 3

                               CONDITIONS OF SALE

SALES/PURCHASE ORDER CONDITIONS

3.1   All sales of Materials and all purchase orders issued and acknowledged
under this Agreement will be subject to the Terms and Conditions set forth
below:

      (a)    ACCEPTANCE

      A purchase order is not binding on BPS until accepted by UCAR CARBON.
      Acceptance of a purchase order and all terms and conditions as set out in
      this Section 3.1 will take place when (i) BPS receives UCAR CARBON's
      acknowledgement by electronic mail, fax or other agreed form, or (ii)
      UCAR CARBON delivers to BPS the materials or items ordered, whichever is
      earlier.

      (b)    PRICE

      The price for the materials or items ordered will be paid by BPS in
      cleared funds to the bank nominated by UCAR CARBON within 30 days after
      the later of

             (a)       receipt by BPS of the ordered goods, and

             (b)       the date of the applicable invoice,

      such payment to be made by check, credit transfer or irrevocable
      confirmed letter of credit; provided that, subject to BPS's rights under
      Section 3.1(h) and in the purchase order, BPS will only be obligated to
      pay for materials or items that are actually received by it. In addition,
      to the purchase price, BPS will pay to UCAR CARBON the amount of all
      taxes, excises or other governmental charges (except taxes on or measured
      by income)

                                       9
<PAGE>   11

      that UCAR CARBON may be required to pay with respect to the production,
      sale or transportation of any materials or items delivered to BPS under
      the purchase order.

      (c)    OVERSHIPMENTS, INSTALLMENTS

      BPS will pay only for the maximum quantities ordered. Overshipments will
      be held at UCAR CARBON's risk and expense for a reasonable time while
      awaiting shipping instructions from UCAR CARBON. Return shipping charges
      for excess quantities will be at UCAR CARBON's expense. Any provision
      herein for delivery of materials or items by installment will not be
      construed as rendering the obligations of UCAR CARBON severable and BPS
      will only be obliged to pay the price of the materials or items included
      in such installment after such installment is actually received by BPS.

      (d)    PACKING AND SHIPMENT

      Unless otherwise specified in the purchase order, if the price of the
      ordered materials or items is based on the weight thereof, such price
      must reflect the net weight of the materials or items ordered only, and
      no charges will be allowed for boxing, crating, handling damage, carting,
      drayage, storage or other packing requirements. Unless otherwise
      specified in the purchase order, all ordered materials or items must be
      securely packed in cartons, boxes or other containers, and marked and
      otherwise prepared for shipment in a manner which is

             (i)        in accordance with good commercial practice,

             (ii)       acceptable to common carriers for shipment at the
             lowest rate for the particular materials or items, and

             (iii)      adequate to ensure safe arrival of the ordered
             materials or items at the named destination.

      UCAR CARBON must mark all containers with necessary lifting, handling and
      shipping information, purchase order numbers, date of shipment and the
      names of the consignee and consignor, if applicable. An itemized
      packaging sheet must accompany each shipment. No partial or complete
      delivery will be permitted hereunder before the date or dates specified
      for delivery without BPS's prior written consent thereto. If the ordered
      materials or items are improperly delivered for shipment, any additional
      cost thereby incurred will be for the account of, and will be paid by,
      UCAR CARBON, and may be deducted by BPS from the payment of the price for
      such materials or items.

      (e)    DELIVERY

      Unless otherwise directed by BPS or specifically provided in the purchase
      order, the materials or items called for hereunder will be delivered on a
      FCA origin basis. The term "FCA" has the meaning ascribed thereto in, and
      is to be interpreted in accordance with, the Incoterms 1990 published by
      the International Chamber of Commerce. Notwithstanding the shipping terms
      contained in the purchase order, title to the materials

                                      10
<PAGE>   12

      or items and risk will remain with UCAR CARBON and not pass to BPS until
      delivery to BPS's named destination for importation.

      (f)    WARRANTIES

      UCAR CARBON warrants, represents, covenants and agrees as follows:

             (i)      the materials or items supplied pursuant to the purchase
             order will

                      (A)   be in full compliance with BPS's Specifications,
                      blueprints, drawings and data,

                      (B)   be in conformity with samples approved by BPS,

                      (C)   not infringe any patent, copyright, trade secret,
                      mask work right, trademark or other intellectual property
                      right of any person covering the material or item itself
                      but UCAR CARBON does not warrant against infringement by
                      reason of the use of such material or item in combination
                      with other articles or material or in the practice of any
                      process other than a process for which such item has been
                      expressly manufactured by UCAR CARBON,

                      (D)   be so supplied, and BPS will have title thereto,
                      free and clear of all liens, charges, encumbrances and
                      security interests;

             (ii)     THERE ARE NO EXPRESS WARRANTIES BY UCAR CARBON OTHER THAN
             THOSE SPECIFIED IN THIS SECTION. NO WARRANTIES BY UCAR CARBON
             (OTHER THAN WARRANTY OF TITLE AS PROVIDED BY THE UNIFORM
             COMMERCIAL CODE) SHALL BE IMPLIED OR OTHERWISE CREATED AT LAW OR
             IN EQUITY, INCLUDING, BUT NOT LIMITED TO, WARRANTY OF
             MERCHANTABILITY AND WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE.
             Without limiting the generality of the foregoing, BPS assumes all
             risk and liability for the results obtained by the use of any
             products delivered hereunder in combination with other articles or
             material or in the practice of any process other than a process
             for which such item has been expressly manufactured by UCAR
             CARBON.

             (iii)    BPS's receipt of any products delivered hereunder shall
             be an unqualified acceptance of, and a waiver by BPS of any and
             all claims (including claims arising under the warranties
             specified in this Section 3.1(f)) with respect to, such products
             unless BPS gives UCAR CARBON notice of claim within 150 days after
             such receipt or within ten days after BPS shall have received
             written notice of any claim of infringement covered by clause (i)
             above,

             (iv)     if any materials or items delivered hereunder do not meet
             the warranties specified herein, BPS may, at its option

                                      11
<PAGE>   13

                      (A)   require the UCAR CARBON to correct, at no cost to
                      BPS, any defective or non-conforming materials or items
                      by repair or replacement, or

                      (B)   return such defective or non-conforming materials
                      or items at UCAR CARBON's expense to the UCAR CARBON and
                      recover from the UCAR CARBON the purchase order price
                      thereof, or

                      (C)   correct the defective or non-conforming materials
                      or items itself and charge UCAR CARBON with the cost of
                      such correction.

             The foregoing remedies are exclusive to BPS.

             (v)      No waiver by BPS of any drawing or specification
             requirement for one or more of the materials or items ordered will
             constitute a waiver of such requirements for the remaining
             materials or items to be delivered hereunder, unless specified by
             BPS in writing. The provisions of this Section 3.1(f) will not
             limit or affect the rights of BPS under Section 3.1(h).

      (g)    INVOICES

      Each invoice issued as a result of the purchase order must

             (i)        be rendered separately for each delivery,

             (ii)       not cover more than one purchase order,

             (iii)      contain the purchase order number under which it is
             issued, and

             (iv)       be rendered to the proper Accounts Payable Department
             of BPS as set forth in the purchase order.

             Invoice payment terms will be calculated from the date the invoice
             is received by the proper Accounts Payable Department of BPS by
             electronic mail, fax or other agreed form.

      (h)    INSPECTION

      Materials or items purchased pursuant to the purchase order are subject
      to BPS's inspection and approval at any place BPS may reasonably
      designate. BPS may, without liability hereunder or otherwise and without
      prejudice to any other rights or remedies available to it, reject and
      refuse acceptance of any materials or items, which do not conform in all
      respects to

             (i)      any instructions contained in the purchase order,

             (ii)     BPS's Specifications, drawings, blueprints and data, or

             (iii)    UCAR CARBON's warranties.

                                      12
<PAGE>   14

      With respect to any materials or items which do not so conform, BPS may,
      in BPS's sole discretion, hold such materials or items for UCAR CARBON's
      inspection at UCAR CARBON's risk upon notification to UCAR CARBON, or
      return such materials or items to UCAR CARBON at UCAR CARBON's expense.
      BPS's rejection of any materials or items subject to the purchase order
      will be without prejudice to its rights to require UCAR CARBON to perform
      its obligations in respect of the balance of the purchase order. Payment
      for any item will not be deemed to be an acceptance thereof.

      (i)    CHANGES

      BPS may, with reasonable notice to UCAR CARBON, at any time change

             (i)      the Specifications, drawings, blue prints and data
             concerning the ordered materials or items where such materials or
             items are to be specifically manufactured for BPS,

             (ii)     the method of packaging, packing or shipment of the
             ordered materials or items, and

             (iii)    the place and/or time of delivery of such materials or
             items.

      If any such change causes an increase or decrease in the cost (including
      any unusable work in progress) or the time required for the delivery of
      the materials or items ordered, UCAR CARBON will claim an equitable
      adjustment in the price or delivery schedule, or both within 30 days
      after receipt by UCAR CARBON of the requested change.

      (j)    INDEMNIFICATION

      Each party will indemnify and hold the other harmless from and against
      any claim, demand, cause of action, damage, costs and expenses which the
      other might sustain or become liable for arising from or in connection
      with that party's performance or nonperformance hereunder. No claims of
      any kind, with the exception of those claims arising out of Section
      3.1(f)(i)(C), Section 3.1(f)(i)(D), Section 3.1(k) or Part 6 of the
      Agreement with respect to any material or item covered by this document,
      whether as to materials or items delivered or for delayed delivery or
      non-delivery of the material or item and whether or not based on
      negligence or warranty, shall be greater in aggregate amount than the
      purchase price of the materials or items in respect of which such claims
      are made. In no event, with the exception of those claims arising out of
      Section 3.1(f)(i)(C), Section 3.1(f)(i)(D), Section 3.1(k) or Part 6 of
      the Agreement shall either party be liable for special, indirect or
      consequential damages, whether or not caused by or resulting from the
      negligence of such party.

      (k)    PATENTS

      UCAR CARBON will defend, at UCAR CARBON's own expense, all suits, actions
      or proceedings in which BPS, or any of the BPS's distributees or dealers,
      or the users, lessees or customers of any of BPS's products, are made
      defendants for actual or alleged infringement of any copyright,
      trademark, trade secret, mask work right, Canadian, U.S.

                                      13

<PAGE>   15

      or other foreign patent or other intellectual property right resulting
      from the possession, use, sale or resale of any material or item
      purchased hereunder. If by virtue of a patent infringement suit an
      injunction is issued against BPS which prohibits or limits the use of any
      materials or items ordered or purchased hereunder or UCAR CARBON notifies
      BPS to cease use of any materials or items purchased hereunder, UCAR
      CARBON, at BPS's request, will supply BPS with non-infringing replacement
      materials or items of a similar kind, quality and quantity. BPS will
      cease use of materials or items purchased hereunder which are subject to
      an infringement action upon receipt of notice of such action and upon
      request by UCAR CARBON. UCAR CARBON's obligations under this Section
      3.1(k) or Section 3.1(j) do not apply to any suits, actions or
      proceedings in which the actual or alleged infringement results from the
      use of such material or item in combination with other articles or
      material or in the practice of any process other than a process for which
      such item has been expressly manufactured by UCAR CARBON.

      (l)    COMPLIANCE WITH LAW

      UCAR CARBON warrants and represents that it has complied with, and will
      continue, during the performance of its obligations hereunder, to comply
      with, all laws and conform to all requirements of each applicable
      governmental authority with respect to the supply of the ordered
      materials or items, including those concerning the packaging, storage,
      shipment and exportation of all or any part thereof, and will ensure that
      no chemical substance delivered to BPS is on the list of prohibited
      substances described in applicable environmental laws. UCAR CARBON will
      obtain all federal, provincial, state, municipal and other government or
      regulatory licenses, permits or other documents or permissions that are
      required by BPS that are incidental to the sale or shipment of the
      ordered materials or items to BPS.

      BPS warrants and represents that it has complied with, and will continue,
      during the performance of its obligations hereunder, to comply with, all
      laws and conform to all requirements of each applicable governmental
      authority with respect to the ordered materials or items and payment
      therefor and importation thereof.

      (m)    NON-PUBLICITY

      Except as may be required by law or applicable governmental regulatory
      authorities, neither party will, without the prior written consent of the
      other party

             (i)      make any news release, public announcement, denial or
             confirmation of any purchase order or its subject matter, or

             (ii)     in any manner advertise or publish the fact that BPS has
             placed any purchase order with UCAR CARBON.

      (n)    PROPERTY

      All tooling, equipment or material of every description owned by a party
      to this Agreement (the "Owner") and furnished to the other party or
      specifically paid for by the Owner, and any replacement thereof, will
      remain the property of the Owner. Such

                                      14
<PAGE>   16

      property, and whenever practical, each individual item thereof, will be
      plainly marked or otherwise properly identified as the "Property of the
      Owner." and will be safely stored. The party will not substitute any
      property for the Owner's property and will not use such property except
      in fulfilling the purchase order. Such property, while in the party's
      custody or control, will be held at that party's expense, and will be
      insured by that party in an amount equal to its replacement cost with
      loss payable to Owner. Such property will be prepared for shipment and
      delivered in good condition, normal wear and tear excepted, to the Owner
      on a FCA origin basis immediately upon request by the Owner.

      (o)    TERMINATION

      BPS may require UCAR CARBON to terminate work under any purchase order in
      whole or in part at any time by notice to UCAR CARBON in writing,
      whereupon UCAR CARBON will immediately stop work on the purchase order,
      or the terminated portion thereof, and notify its subcontractors to do
      likewise. Except for such termination as is caused by a default or delay
      of UCAR CARBON, UCAR CARBON will be entitled to reimbursement for its
      actual costs applicable to the termination incurred up to and including
      the date of termination. UCAR CARBON will also be entitled to reasonable
      profit on the work done before such termination at a rate not exceeding
      the rate used in establishing the original purchase price. The total
      amount of such claim will not exceed the cancelled commitment value of
      the purchase order.

      (p)    TERMINATION FOR DEFAULT

      The BPS and UCAR CARBON covenant and agree as follows:

             (i)      BPS may, by written notice, terminate any purchase order
             in whole or in part if UCAR CARBON fails

                      (A)   to make delivery of the ordered materials or items
                      or to perform the services in the manner and within the
                      time specified therefor or any extension thereof by
                      written change order or amendment, or

                      (B)   to replace or correct defective materials or items
                      in accordance with Section 3.1(f) and Section 3.1(h), or

                      (C)   to perform any other provision of the purchase
                      order, or

                      (D)   to make progress so as to endanger performance of
                      its obligations under the purchase order;

             (ii)     if a purchase order is terminated by reason of UCAR
             CARBON's default, UCAR CARBON will transfer title and deliver to
             BPS, promptly at BPS's request, in the manner and to the extent
             directed by BPS,

                      (A)   any completed materials or items, and

                                      15
<PAGE>   17

                      (B)   such particularly completed materials or items as
                      UCAR CARBON has produced or acquired for the performance
                      of the terminated part of the purchase order.

             UCAR CARBON will protect and preserve such property in the
             possession of UCAR CARBON. Payment for completed materials or
             items delivered to and accepted by BPS will be in an amount agreed
             upon by UCAR CARBON and BPS, which amount must not exceed the
             contract price therefor; and

             (iii)    failure by BPS to enforce any of its rights under the
             purchase order will not be deemed a waiver thereof.

      (q)    ATTORNEY'S FEES

             If UCAR CARBON and BPS are unable to resolve any dispute arising
             under the purchase order and any suit or other judicial proceeding
             is instituted with reference thereto, the successful party in any
             such suit or other judicial proceeding will be paid promptly by
             the other party an additional amount equal to the successful
             party's reasonable attorney's fees and costs incurred.

      (r)    GENERAL

      The following general provisions will apply to all purchase orders:

             (i)      time will be of the essence hereof;

             (ii)     the purchase order is given pursuant to this Agreement
             and will be subject to the terms of this Agreement and in the
             event of any conflict between the terms of this Agreement and the
             terms of the purchase order, the terms of this Agreement will
             govern;

             (iii)    waiver by a party of any of its rights or default by the
             other hereunder will not be deemed a waiver by such party of any
             other right or default;

             (iv)     UCAR CARBON will not change a purchase order or ship
             non-conforming items without first obtaining the written consent
             of BPS;

             (v)      UCAR CARBON will, from time to time upon request by BPS,
             do, execute, acknowledge, deliver, or cause to be done, executed,
             acknowledged and delivered, all and every such further acts, bills
             of sale, bills of lading, deeds, transfers and assurances as BPS
             may reasonably request to evidence or protect BPS's ownership
             interest in the ordered items or to carry into effect the
             intentions of the parties as set out in this purchase order.

             (vi)     UCAR CARBON will, at BPS's request, make available to
             BPS's Affiliates those items or materials of the kind that are the
             subject matter of the purchase order at prices payable by BPS
             under the purchase order. UCAR CARBON may but is not required, at
             BPS's request, to make available to BPS

                                      16
<PAGE>   18

             licensees and customers those items or materials of the kind that
             are the subject matter of the purchase order at prices payable by
             BPS under the purchase order.

      (s)    ASSIGNMENTS

      Neither party may assign any rights or obligations under a purchase order
      (including the right to receive monies due hereunder) without the prior
      written consent of the other party, and any purported assignment without
      such consent will be void. No assignment will relieve the assigning party
      from its obligations under the purchase order.

      (t)    NOTICE OF LABOR DISPUTE

      Whenever an actual or potential labor dispute is delaying or threatens to
      delay the timely performance of a purchase order, the affected party
      will, as soon as practicable, notify the other party of such dispute and
      furnish all relevant details. Receipt by the other party of such notice
      will not constitute a waiver by that party of the affected party's
      obligation to meet the delivery schedule; however, such dispute may
      constitute an event of Force Majeure as governed by this Agreement.

      (u)    DISPUTE RESOLUTION AND APPLICABLE LAW

      The Dispute Resolution and Applicable Law provisions set out in Parts 7
      and Section 9.8 of this Agreement shall apply to all purchase orders.

EFFECT OF PURCHASE ORDER TERMS AND CONDITIONS

3.2   The terms and conditions set forth in this Part 3 apply only as to
individual purchase orders issued and accepted in the sale of materials under
this Agreement. In no way should any term contained in Section 3.1 be construed
to give greater rights to a party or alter or amend the obligations of BPS or
UCAR CARBON under the other terms of this Agreement. While a breach of the
individual terms of a purchase order may give rise to a remedy under that
particular purchase order, as set out in this Part 3, in no event will such
breach of an individual purchase order be considered an Event of Default under
this Agreement.

REVISED PURCHASE ORDER TERMS AND CONDITIONS

3.3   BPS will notify UCAR CARBON as soon as reasonably practicable of any
proposed changes to, or substitutions of, the Terms and Conditions. No change
to the Terms and Conditions will be effective as to UCAR CARBON until the
parties have agreed to such change in writing as provided for in this
Agreement.

                                    PART 4

                              PRICE OF THE PRODUCTS

PRICE

4.1   Subject to Section 2.3, the price payable by BPS for the Materials will
be as follows:

                                      17
<PAGE>   19

      (a)    UCAR CARBON will provide, at no cost to BPS, other than the costs
      associated with shipping, insurance and other miscellaneous expense
      related to packing or transportation not already assumed by BPS, those
      minimal amounts of Materials that are necessary for the performance of
      the work under the Collaboration or to be incorporated into PEM Fuel
      Cells as a part of a developmental program of BPS or any of its
      Affiliates or licensees. The maximum amount of materials provided under
      this Section 4.1(a) will be determined subject to UCAR CARBON's sole
      discretion;

      (b)    for all other Material supplied by UCAR CARBON and purchased by
      BPS the price will be as may be agreed upon by the parties pursuant to
      Section 2.4 and Section 2.5.

                                    PART 5

                                GRANT OF LICENSE

      [text redacted]

5.1   Subject to Part 8 and during the term of the Exclusive Period as defined
in Section 2.9 of the Collaboration Agreement, UCAR CARBON may only elect to
cease supply of Materials to BPS if UCAR CARBON has elected to cease supplying
like Materials or like materials to all other persons for use in electrically
conductive fuel cell separator plates. If UCAR CARBON determines to make such an
election, UCAR CARBON will promptly notify BPS of its intention to cease the
supply [text redacted] for so long as BPS is not in material default with regard
to its obligations under this Agreement, and for so long as UCAR CARBON does not
supply such Material(s). [text redacted] In any event, UCAR CARBON agrees to
continue to supply the Materials for a one-year period following the date on
which UCAR CARBON gives notice of its intent to cease to supply the Material(s).

GRANT OF DEFAULT LICENSE

5.2   Should BPS provide notice of default to UCAR CARBON as a result of UCAR
CARBON being the subject of an Event of Default that has occurred and is
continuing to occur for reasons other than UCAR CARBON's election to cease to
supply a Material(s) as the result of a dispute between the parties as to price
or terms (regardless of whether the dispute was arbitrated), UCAR CARBON will
be deemed to have granted to BPS for the original term of this Agreement, or if
the term has been renewed, as renewed, an irrevocable, worldwide,
non-exclusive, royalty-free and paid-up right and license (the "Default
License") sublicensable by BPS, to use the Intellectual Property rights of UCAR
CARBON to enable BPS to make, have made, use or sell the Materials in
connection with the development, manufacture or sale of electrically conductive
fuel cell separator plates.

                                      18
<PAGE>   20

LICENSE RESTRICTIONS

5.3   Any licenses granted pursuant to this Part 5 will be in addition to, not
in substitution for, and without prejudice to, the Exclusive License or any
other license granted by UCAR CARBON to BPS under the Collaboration Agreement
or otherwise and includes the right by BPS to disclose UCAR CARBON's
Confidential Information to BPS's sublicensees only to the extent necessary and
in connection with the production, use or sale of the Materials licensed under
this Part 5. With regard to any license granted by UCAR CARBON under this
Agreement, BPS shall obtain from each of its sublicensees or other third
parties from whom it may obtain the Material(s) a contractual obligation which
shall subject the sublicensee or third party to obligations of confidentiality
at least as restrictive as that established in this Agreement and require a
commitment that the sublicensee or third party shall use the license, Materials
and technology solely for the production of Materials for BPS and for no other
purpose. In addition to all other remedies available under this Agreement, at
law or in equity, UCAR CARBON may notify BPS that BPS's sublicensee or third
party appears to be in breach of these requirements. Upon receipt of UCAR
CARBON's notice, BPS shall immediately, and at its own expense, take all
necessary action to require and insure that its sublicensee or third party
complies with these requirements including but not limited to termination of
the sublicense or third party contract, legal action to enforce the sublicense
or third party contract, and assistance to UCAR CARBON in the prosecution of
any action UCAR CARBON may wish to pursue.

TECHNOLOGY TRANSFER

5.4   UCAR CARBON will, promptly upon the grant of either a [text redacted] or a
Default License, transfer to and provide BPS on a one-time basis all then
available and relevant technology, information, training and technical
assistance as may be necessary for the exploitation of the license for a
reasonable fee to be determined by the parties reflecting the reasonable cost of
effecting such technology transfer, training and technical assistance. If the
parties are unable to agree on a reasonable fee the matter will be referred to
the Dispute Resolution Procedures outlined in Part 7 of this Agreement.

FURTHER ASSURANCES FOR LICENSED MATERIALS

5.5   UCAR CARBON will execute such further assurances and other documents and
instruments and do such further and other things as may be necessary to
implement and carry out the intent of the provisions of this Part 5.

SURVIVAL OF PART 5 PROVISIONS

5.6   Notwithstanding anything in this Agreement and subject to the limitations
set out in Section 5.3, any license granted pursuant to the provisions of this
Part 5 prior to the termination of this Agreement, will survive and continue to
apply after any early termination of this Agreement for the original term of
the Agreement, or if the term has been renewed, as renewed, and any reference
in this Agreement to termination will not affect this Part 5 unless
specifically agreed to in writing by the parties.

                                      19
<PAGE>   21

                                    PART 6

                                 CONFIDENTIALITY

CONFIDENTIALITY OBLIGATIONS

6.1   Each party (for purposes of this Part 6, the "Recipient"), at all times
during this Agreement and for a period of ten years after the expiry hereof,

      (a)    will, and will ensure that each of its directors, officers,
      employees, Affiliates, licensees, including sublicensees (collectively,
      the "Recipient's Agents") will, hold in confidence and keep confidential
      the Confidential Information of a party (the "Disclosing Party")
      disclosed to it by the Disclosing Party,

      (b)    will not, and will use reasonable efforts to ensure that the
      Recipient's Agents will not, directly or indirectly, use or disclose any
      such Confidential Information except to the extent that it is strictly
      necessary under this Agreement or the Collaboration Agreement,

      (c)    will cause the Recipient's Agents that are recipients of or
      exposed to such Confidential Information, to execute confidentiality
      agreements to protect the same,

      (d)    will not, and will ensure that the Recipient's Agents will not,
      except to the extent necessary for the purposes of this Agreement, make
      copies of or otherwise reproduce such Confidential Information, and

      (e)    will, and will ensure that each of the Recipient's Agents will,
      use commercially reasonable best efforts to maintain all such
      Confidential Information in a manner so as to protect the same against
      wrongful disclosure, misuse, espionage and theft.

EXCEPTIONS FOR CONFIDENTIALITY

6.2   The Confidentiality obligations set out in Section 6.1 shall not apply to
any Confidential Information:

      (a)    which is or becomes generally available to the public through no
      breach of this Agreement or any other obligation of the Recipient or the
      Recipient's Agents to the Disclosing Party,

      (b)    of which the Recipient or the Recipient's Agents had knowledge
      before the date of this Agreement, as evidenced by competent proof,
      unless the same was disclosed to the Recipient or the Recipient's Agents
      by the Disclosing Party,

      (c)    of which the Recipient or the Recipient's Agents obtained
      knowledge from a third party, as evidenced by competent proof, unless
      such third party obtained such Confidential Information in violation of
      any duty of confidence owed to the Disclosing Party, or

                                      20
<PAGE>   22

      (d)    which is required to be disclosed pursuant to law or a rule,
      regulation, policy or order of a governmental authority having
      jurisdiction or pursuant to a final order or judgment of a court of
      competent jurisdiction and in such case the parties will cooperate with
      one another to obtain an appropriate protective order or other reliable
      assurance that confidential treatment will be afforded to such
      Confidential Information.

EMPLOYMENT RELATIONS

6.3   Neither party will, during the term of this Agreement and for a period of
two years next after the expiry or termination hereof, solicit for employment
any individual who is, at the time of such solicitation, employed by the other
party or its Affiliates nor will such party, directly or indirectly, induce any
such individual to leave his or her employment. Nothing herein will prevent a
party from employing any such employee so long as no solicitation or inducement
has been made to such employee by or on behalf of such party.

REASONABLE RESTRICTION

6.4   Each party agrees that the restrictions contained in this Part 6 are
reasonable for the protection of the respective legitimate business interests
of the parties.

MUTUAL SECRECY AGREEMENT AND COLLABORATION AGREEMENT

6.5   The provisions of

      (a)    the Mutual Secrecy Agreement (and not Section 6.1 and Section 6.2
      hereof) will apply to all "Proprietary Information" (as defined in such
      agreement) disclosed by the parties to one another before the Effective
      Date (as defined in the Collaboration Agreement) notwithstanding that the
      same Proprietary Information is disclosed again as Confidential
      Information under this Agreement, and

      (b)    the provisions of the Collaboration Agreement (and not Section 6.1
      and Section 6.2) will apply to all Confidential Information disclosed by
      the parties to one another during the term of the Collaboration
      notwithstanding that the same Confidential Information is disclosed again
      during the term of this Agreement.

SURVIVAL OF PART 6 PROVISIONS

6.6   Notwithstanding anything in this Agreement, the provisions of this Part 6
will be separate and distinct covenants and agreements enforceable after the
termination of this Agreement in accordance with the terms of this Part 6, and
any reference in this Agreement to termination will not affect this Part 6
unless specifically agreed to by the parties.

                                      21
<PAGE>   23

                                    PART 7

                               DISPUTE RESOLUTION

INITIATION OF PROCESS

7.1   If at any time a dispute between the parties with respect to any matter
relating to this Agreement arises, a party that wishes that the issue be
considered further must give written notice (the "Dispute Notice") to the other
requiring that such issue or dispute be decided pursuant to this Part 7.

REFERRAL TO CHIEF EXECUTIVE OFFICERS

7.2   If a Dispute Notice is given, the Chief Executive Officers of each of the
parties will initiate discussions with a view to settling the issue or matter.
A decision reached by such Chief Executive Officers and communicated by them in
writing to the parties will be binding on the parties and will be implemented.

SUBMISSION TO ARBITRATION

7.3   If no decision is communicated by the Chief Executive Officers within 30
days after such issue or dispute is referred to them, either party may at any
time before a decision thereon is so communicated and less than 120 days after
delivery of the Dispute Notice, by further notice given to the other, submit
the issue or dispute for a binding determination by a three member arbitration
panel in accordance with the rules of arbitration of the International Chamber
of Commerce.

ACCEPTANCE AND IMPLEMENTATION

7.4   Each of the parties will accept and proceed in good faith diligently to
implement the binding award or decision of an arbitrator on an arbitration
pursuant to Section 7.3.

PLACE OF ARBITRATION

7.5   All arbitration proceedings will be conducted in San Francisco,
California or in such other place as the parties may agree.

LEGAL PROCEEDINGS

7.6   A legal proceeding commenced by a party to this Agreement in respect of
an issue or dispute that may be arbitrated under this Agreement will be stayed
until the time during which arbitration may be initiated has expired or, if
arbitration is initiated, a decision on the arbitration is delivered or the
arbitration process has otherwise ended.

EXCLUSIONS

7.7   This Part 7 will not apply to any action under Part 6 or for the grant of
provisional remedies, including injunctions, restraining orders and specific
performance, and each party

                                      22
<PAGE>   24

reserves its right to commence such action or seek such remedies from a court
of competent jurisdiction.

                                    PART 8

                              TERM AND TERMINATION

TERM

8.1   This Agreement will come into force on the Commencement Date and, subject
to Section 5.6 and Section 6.6, will continue for a period of nine years unless
terminated sooner pursuant to Section 8.2. Thereafter, unless terminated as
provided above, this Agreement will be deemed renewed automatically from year
to year until terminated by either party pursuant to Section 8.2 or upon
written notice of a party's election to not renew given by that party to the
other 60 days before the end of the then current period. UCAR CARBON may, at
any time, terminate this Agreement and the Exclusive License arising under the
Collaboration Agreement on 30 days notice if it is determined that through
technological advances or otherwise, BPS no longer requires the Materials in
the development and manufacture of electrically conductive fuel cell separator
plates. The parties will review this Agreement within 90 days after each of the
third and sixth anniversary dates of the Commencement Date and will make such
changes to this Agreement as may be necessary or desirable in light of any
changed circumstances. If during such review period the parties cannot agree as
to the necessity or content of any such changes, the disagreement as to the
proposed changes shall be submitted to the Dispute Resolution Process set out
in Part 7 and the Agreement will continue in effect as if no review had been
initiated.

TERMINATION FOR DEFAULT

8.2   Subject to Section 5.6 and Section 6.6, either party will be entitled to
terminate this Agreement in accordance with the terms hereof by written notice
to the other if the other has become the subject of an Event of Default;
provided that if BPS is in breach of its obligations under Section 2.1 and not
under circumstances upon which a license has been granted under Section 2.2 or
Part 5, UCAR CARBON will have the usual remedies available under law or equity
and may terminate all licenses extended to BPS including the Exclusive License
except with respect to that limited license required for BPS's use of the
Materials and UCAR CARBON will not be entitled to terminate this Agreement with
regard to its obligations to supply BPS with the Materials.

NO PREJUDICE

8.3   The right to terminate this Agreement will not prejudice any other right
or remedy of either party in respect of the breach concerned (if any) or any
other breach.

NO FURTHER OBLIGATIONS

8.4   Subject to Section 5.6 and Section 6.6 and the Collaboration Agreement,
upon the termination of this Agreement for any reason, except for any rights or
obligations which may have accrued before termination, or rights specifically
contemplated to continue after termination or arise as a result of termination,
neither party will have any further rights or obligations to the other under
this Agreement.

                                      23
<PAGE>   25

                                    PART 9

                                  MISCELLANEOUS

MODIFICATIONS, APPROVALS AND CONSENTS

9.1   No amendment, modification, supplement, termination or waiver of any
provision of this Agreement will be effective unless in writing signed by both
parties and then only in the specific instance and for the specific purpose
given.

FURTHER ASSURANCES

9.2   The parties will execute such further assurances and other documents and
instruments and do such further and other things as may be necessary to
implement and carry out the intent of this Agreement.

ENTIRE AGREEMENT

9.3   This Agreement and the Collaboration Agreement constitute the entire
agreement between the parties hereto and supersede all previous expectations,
understandings, communications, representations and agreements whether verbal
or written between the parties.

NOTICES

9.4   Every notice, request, demand, direction or other communication (each,
for the purposes of Section 9.4, Section 9.5 and Section 9.6, a "Notice")
required or permitted to be given pursuant to this Agreement will be deemed to
be well and sufficiently given if in writing and delivered by hand (or
recognized overnight courier service addressed as follows:

<TABLE>
<S>        <C>
      (a)    if to BPS at:

             9000 Glenlyon Parkway
             Burnaby, British Columbia
             Canada  V5J 5J9
             Attention:  President and Chief Operating Officer
             Facsimile:  (604) 412-3131

             with a copy to BPS's Vice-President, Corporate Affairs at the same address; and

      (b)    if to UCAR CARBON at:

             3102 West End Avenue
             Suite 1100
             Nashville, Tennessee
             USA 37203
             Attention:  The President
             Facsimile:  (615) 760-7797
</TABLE>

                                      24
<PAGE>   26

with a copy to UCAR CARBON's General Counsel at the same address; or to such
other address as is specified by the particular party by Notice to the others.

DEEMED RECEIPT

9.5   Any Notice delivered as aforesaid will be deemed conclusively to have
been effectively given and received on the day Notice was delivered if it was
on a day that was a Business Day or on the next day that is a Business Day if
it was delivered on a day that was not a Business Day.

CHANGE OF ADDRESS

9.6   A party may at any time, by Notice to the others, change its address.

ENUREMENT

9.7   This Agreement will enure to the benefit of and be binding upon the
parties and their respective successors and permitted assigns.

APPLICABLE LAW

9.8   This Agreement will be deemed to have been made in British Columbia,
Canada and the construction, validity and performance of this Agreement will be
governed in all respects by the laws of British Columbia and applicable laws of
Canada. The application of the provisions of the United Nations Convention on
Contracts for the International Sale of Goods are hereby excluded.

ATTORNMENT

9.9   Each party irrevocably attorns to the exclusive jurisdiction of the
courts of British Columbia, Canada and all courts having appellate jurisdiction
thereover in respect of any proceeding arising out of or relating to this
Agreement.

JUDGMENT CURRENCY

9.10  If, for the purposes of obtaining a judgment in any court, it is
necessary to convert a sum awarded in Canadian Dollars (the "Original
Currency") into United States Dollars (the "Judgment Currency"), the parties
agree that the rate of exchange used shall be established on the business day
preceding the date on which the final judgment is rendered by the court. If it
is necessary to convert a sum awarded in United States Dollars (the "Original
Currency") into Canadian Dollars (the "Judgment Currency"), the parties agree
that the rate of exchange used shall be established on the business day
preceding the date on which the final judgment is rendered by the court. The
rate of exchange shall be determined by reference to the Bank of Canada noon
rate of exchange for Canadian to U.S. Dollars or U.S. to Canadian as published
by Reuters. In the event such rate is not available through Reuters the rate
shall be ascertained by reference to any other means by which such rate is
published from time to time by the Bank of Canada.

                                      25
<PAGE>   27

FORCE MAJEURE

9.11  Neither party will be liable to the other for default or delay in the
performance of its obligations under this Agreement if such default or delay is
caused by fire, strike, riot, war, act of God, delay of carriers, governmental
orders or regulation, complete or partial shutdown of plant by reason of
inability to obtain sufficient raw material or power, or any other occurrence
beyond the reasonable control of such party. The party whose performance is
prevented by any such occurrence will notify the other party of the same in
writing as soon as is reasonably possible after the commencement thereof, will
provide the other with full written particulars of such occurrence and attempts
made to remedy the same, will use commercially reasonable efforts to remedy
such occurrence with all reasonable dispatch and, upon cessation of the
occurrence, will give prompt written notice to the other party of the same.
Should an event of Force Majeure continue for such a period of time that UCAR
CARBON will not be able to meet BPS's monthly forecast as originally
established in the Annual Commitment for the Materials, UCAR CARBON shall use
reasonable commercial efforts to obtain an alternative source for performance
which may include leasing production time, assigning a temporary license to
allow a third party (which may include BPS) to fulfill the immediate production
concerns and/or other appropriate actions.

SEVERABILITY

9.12  If any provision contained in this Agreement is found by any court or
arbitrator for any reason to be invalid, illegal or unenforceable in any
respect,

      (a)    the validity, legality and enforceability of the remaining
      provisions contained herein will not in any way be affected or impaired
      thereby, unless in either case as a result of such determination this
      Agreement would fail in its essential purpose, and

      (b)    the parties will use their best efforts to substitute for any
      provision that is invalid, illegal or unenforceable a valid and
      enforceable provision which achieves to the greatest extent possible the
      economic, legal and commercial objectives of such invalid, illegal or
      unenforceable provision and of this Agreement and, failing the agreement
      of the parties on such a substitution within 30 days after the finding of
      the court or arbitrator, either party may refer the matter for dispute
      resolution under Part 7.

COUNTERPARTS

9.13  This Agreement may be executed in counterparts or by facsimile, each of
which will together, for all purposes, constitute one and the same instrument,
binding on the parties, and each of which will together be deemed to be an
original, notwithstanding that both parties are not signatories to the same
counterpart or facsimile.

ASSIGNMENT

9.14  Neither party may assign any right, benefit or interest in this Agreement
without the written consent of the other party, such consent not to be
unreasonably withheld, and any purported assignment without such consent will
be void. Notwithstanding the foregoing, upon notice to the other party, either
party may assign this Agreement to a wholly owned subsidiary of

                                      26
<PAGE>   28
that party without the other party's consent provided that no such assignment
will release the assignor from its obligations under this Agreement.

NO PARTNERSHIP

9.15  Nothing in this Agreement will create, or be deemed to create, a
partnership between the parties.

Dated as of the day and year first above written.

<TABLE>
<CAPTION>
<S>                                                             <C>
UCAR CARBON COMPANY INC.                                          BALLARD POWER SYSTEMS INC.

By: /s/                                                           By: /s/
   --------------------------------------------                      -----------------------------------
           Authorized Signatory                                   Authorized Signatory

By: /s/                                                           By: /s/
   --------------------------------------------                      ----------------------------------
           Authorized Signatory                                   Authorized Signatory
</TABLE>

                                      27

<PAGE>   29

                                   SCHEDULE A

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
                                                     TITLE
             MATERIAL SPECIFICATION                       [text redacted]
-------------------------------------------------------------------------------------------------------
<S>                            <C>                          <C>                      <C>
AUTHOR                           DATE                        APPROVED                  DATE
Author: [text redacted]          Date:  Oct 7, 1998          [text redacted]           July 12, 1999
-------------------------------------------------------------------------------------------------------
</TABLE>

1.    SCOPE

         1.1.   This specification covers flexible graphite material supplied
                by UCAR. [text redacted]

2.    APPLICABLE DOCUMENTS

         2.1.  American Society for Testing and Materials (ASTM) [text redacted]

3.    REQUIREMENTS

         3.1.   Precedence - In the event of any conflict between the
                requirements of this specification and the referenced
                documents, this specification shall govern.
                [text redacted]

         3.2.   Chemical Requirements - All flexible graphite material shall
                conform to the following requirements:

[text redacted]

<PAGE>   30

         3.3.   Physical Properties - Shall conform to the following
                requirements:

         [text redacted]

         3.4.   Dimensional Requirements - Plates produced from this material
                shall conform to the dimensions specified on the relevant part
                drawing. On occasion Ballard may request material to be sent
                for testing purposes, only that does not have the dimensions
                listed in this document. The results of tests requiring
                specific dimensions will not be considered to be requirements
                but should be performed and included in the Certificate of
                Compliance. Such data should be labeled as such.

4.    QUALITY ASSURANCE PROVISIONS

         4.1.   Responsibility for Inspection - Unless otherwise specified,
                the supplier is responsible for the performance of all
                inspections specified in Section 3. The supplier may use
                their own, or any other facility suitable, for the
                performance of the inspections specified herein.

         4.2.   Quality Verification - Ballard Power Systems Inc. will
                have the right to subject any requested lot of material to
                any of the inspection requirements specified to verify
                that the lot will comply with the requirements specified
                herein.

         4.3.   Process Change Notification - The supplier shall provide
                advance information in writing concerning any changes in
                process or preservations from the product previously
                approved. Approval to ship product incorporating changes
                shall be dependant upon Ballard's evaluation that these
                changes do not violate this specification or the intended
                use of the product. Ballard Power Systems Inc. reserves the
                right to perform a qualification inspection if necessary.

         4.4.   Certificate of Compliance - The supplier is required to
                provide a certificate of compliance with data for each lot
                number of material. Failure to supply a certificate may be
                cause for rejection except as noted in section 3.4. The
                supplier is required to provide the following data:

                4.4.1.     Material Lot Number, Purchase Order Number and BPS
                           Part Number.

                                       2
<PAGE>   31

                4.4.2.     Chemical Analysis (see Section 3.2.).

                4.4.3.     Physical Property Inspection Data (see Section 3.3).

        4.5.    Methods of Inspection

                4.5.1.     Chemical Requirements Inspection - A chemical
                           analysis shall be performed on each lot of material.
                           The analysis shall conform to the requirements of
                           Section 3.2.

                4.5.2.     Physical Property Inspection.  The physical tests
                           shall be performed according to the following
                           methods.

               [text redacted]
                                       3
<PAGE>   32
     [text redacted]

5.    PACKAGING

         5.1.   Documentation - A packing list and certificate of compliance
                will accompany each shipment. The packing list will contain
                information as shown in Section 5.2. The certificate of
                compliance will contain information as shown in Section 4.4.

6.    REVISION HISTORY

         6.1.   New Issue.   [text redacted]

     [text redacted]

                                       4

<PAGE>   33

<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------

               MATERIAL SPECIFICATION                     TITLE  [text redacted]
-------------------------------------------------------------------------------------------------------------
<S>                          <C>                         <C>                       <C>
AUTHOR                        DATE                                                    DATE
Author: [text redacted]       Date:  July 20, 1999        APPROVED  [text redacted]   July 12, 1999
-------------------------------------------------------------------------------------------------------------
</TABLE>

1.    SCOPE

         1.1.   This specification covers flexible graphite material supplied
                by UCAR. [text redacted]

2.    APPLICABLE DOCUMENTS

         2.1.   American Society for Testing and Materials (ASTM)

          [text redacted]

3.    REQUIREMENTS

         3.1.   Precedence - In the event of any conflict between the
                requirements of this specification and the referenced
                documents, this specification shall govern.

          [text redacted]

         3.2.   Chemical Requirements - All flexible graphite material shall
                conform to the following requirements:

          [text redacted]
                                       5
<PAGE>   34

         3.3.   Physical Properties - Shall conform to the following
                requirements:

          [text redacted]

         3.4.   Dimensional Requirements - Plates produced from this material
                shall conform to the dimensions specified on the relevant part
                drawing. On occasion Ballard may request material to be sent
                for testing purposes, only that does not have the dimensions
                listed in this document. The results of tests requiring
                specific dimensions will not be considered to be requirements
                but should be performed and included in the Certificate of
                Compliance. Such data should be labeled as such.

4.    QUALITY ASSURANCE PROVISIONS

         4.1.   Responsibility for Inspection - Unless otherwise specified, the
                supplier is responsible for the performance of all inspections
                specified in Section 3. The supplier may use their own, or any
                other facility suitable, for the performance of the inspections
                specified herein.

         4.2.   Quality Verification - Ballard Power Systems Inc. will have the
                right to subject any requested lot of material to any of the
                inspection requirements specified to verify that the lot will
                comply with the requirements specified herein.

         4.3.   Process Change Notification - The supplier shall provide
                advance information in writing concerning any changes in
                process or preservations from the product previously
                approved. Approval to ship product incorporating changes
                shall be dependant upon Ballard's evaluation that these
                changes do not violate this specification or the intended
                use of the product. Ballard Power Systems Inc. reserves the
                right to perform a qualification inspection if necessary.

         4.4.   Certificate of Compliance - The supplier is required to
                provide a certificate of compliance with data for each lot
                number of material. Failure to supply a certificate may be
                cause for rejection except as noted in section 3.4 The
                supplier is required to provide the following data:

                4.4.1.     Material Lot Number, Purchase Order Number and BPS
                           Part Number.

                                       6
<PAGE>   35

                4.4.2.     Chemical Analysis (see Section 3.2).

                4.4.3.     Physical Property Inspection Data (see Section 3.3).

         4.5.   Methods of Inspection

                4.5.1.     Chemical Requirements Inspection - A chemical
                           analysis shall be performed on each lot of material.
                           The analysis shall conform to the requirements of
                           Section 3.2.

                4.5.2.     Physical Property Inspection.  The physical tests
                           shall be performed according to the following
                           methods.

                   [text redacted]
                                       7
<PAGE>   36
      [TEXT REDACTED]

5.    PACKAGING

         5.1.   Documentation - A packing list and certificate of compliance
                will accompany each shipment. The packing list will contain
                information as shown in Section 5.2. The certificate of
                compliance will contain information as shown in Section 4.4.

6.    REVISION HISTORY

      [TEXT REDACTED]

                                       8
<PAGE>   37

                                SUPPLY AGREEMENT

                                   SCHEDULE B

                       [TEXT REDACTED] MATERIAL FORECASTS

[TEXT REDACTED]

<PAGE>   38

                                   SCHEDULE C

UCAR CARBON COMPANY INC.
P.O. Box 94637, Cleveland, Ohio 44101 U.S.A.

<TABLE>
<S>                                                      <C>
                                                           Date       08/03/99
       Ballard Power Systems Inc.
       9000 Glenlyon Parkway                               Quotation Number:        99G1203
       Burnby, BC
       Canada  V5J 5J9                                     Inquiry Number:
</TABLE>

       Attn: [TEXT REDACTED]

            In response to your inquiry, we are pleased to quote as follows:

<TABLE>
<CAPTION>
=====================================================================================================================
ITEM            QUANTITY                                            DESCRIPTION                       PRICE
---------------------------------------------------------------------------------------------------------------------
<S>          <C>                 <C>                                                            <C>

                                                        [TEXT REDACTED]

                                                SEE PARAGRAPH 1 ON REVERSE SIDE

=====================================================================================================================
</TABLE>

                Delivery Point [TEXT REDACTED] - Cleveland, Ohio
                Items of Payment:              Date Draft  30 Days
                Estimated Time of Shipment From Plant:        As Required

                This date will be confirmed upon receipt of order. If it is
                unsatisfactory please let us know.

                The sale of the products described herein shall be governed by
                the terms and conditions contained in any written contract
                currently in effect between Buyer and Seller covering such
                sale. If there is no such contract, then Seller hereby offers
                to sell such product to Buyer only upon the terms set forth
                herein, including those on the reverse side of this document.

                This quotation is subject to acceptance within (30) days from
                the date hereof.

                Thank you for this inquiry. Be assured your order will receive
                our prompt attention.

<PAGE>   39

<TABLE>
           <S>                                                    <C>
                                                                   Very truly yours,
                cc: [text redacted]                                [text redacted]

</TABLE>

                                       2
<PAGE>   40

                                   SCHEDULE D

The Supplier Evaluation System Criteria shall consist of the following general
categories to be further defined and implemented at a later date subject to
Section 2.2 of the Agreement. Criteria has been established for the Delivery
category as set out in the attached "2.2 Delivers on Time" and "2.3 Delivers
Proper Qualities."

<TABLE>
<CAPTION>
Price:
<S>       <C>
1.         Competitive pricing
2.         Advanced notice on pricing changes
3.         Frequency of price reductions
4.         Price accuracy

Delivery:

1.         Meets due dates without constant follow-up
2.         Delivers on time
3.         Delivers proper quantities
4.         Responses to emergency delivery requirements
5.         Accurate documentation and information
6.         Lead time competitiveness

Quality:

1.         Meets Specifications
2.         Product documentation
3.         Product reliability
4.         Durability
5.         Product packaging

Service:

1.         Support on professional and technical matters
2.         Inside sales support effectiveness, provides feedback from factory
3.         Issues credit notes in a timely manner
4.         Invoicing efficiency
</TABLE>

<PAGE>   41

      2.2       DELIVERY ON TIME

      Application:

      Refers to the delivery of material, or completion of services requested
      by way of purchase orders.

      Question:

      1.   Does the vendor deliver ordered material or perform required
           services on time?

      Considerations:

      Early deliveries usually mean early invoices. This has an adverse effects
      on the Company's cash flow. Late deliveries have unfavorable effect and
      can results in stock-outs (back orders) which inconvenience the internal
      and external customers. Sometimes, late deliveries cause the Company's
      customers to look elsewhere for product (loss of opportunity for the
      Company).

      The delivery date is the date agreed by both the buyer and the vendor.
      The delivery date cannot be change without the approval of both the buyer
      and the vendor. To allow for shipping and handling delays, the Company
      applies a delivery grace period of two working days before or after the
      required date. If the vendor delivers the product within this period, the
      buyer considers the shipment on time. This performance criteria item
      measures the delivery of each purchase order line item. For example, an
      order for 3 pencils, 5 pens and 2 erasers would be three (3) line items.

      Supporting Documentation:

      Purchase Order, Invoice, Order Confirmation.

      [text redacted]
                                       2
<PAGE>   42
      [text redacted]

      This PDQ'S Evaluation Criteria item will be measured primarily by
      Ballard. The supplier will have direct input to this item and it will be
      measured monthly.

Supplier Price, Delivery, Quality and Service Evaluation Criteria

      2.3    DELIVER PROPER QUANTITIES

      Application:

      Refers to the delivery of material, or completion of services
      requested by way of purchase orders.

      Question:

      1.     How many incorrect quantities does the vendor ship?

      2.     Does the vendor split shipments on contracted items?

      Considerations:

      Incorrect quantities are either short shipments, over shipments or split
      shipments. All of these conditions are significant contributors to
      nonconformance costs. Short shipments and over shipments both require
      vendor contact to rectify the problem. With split shipments the vendor
      makes multiple shipments to fill the purchase order line item. The
      Company incurs additional costs in handling material. Additional costs
      are also incurred in accounting when the vendor sends a split shipment
      invoices.

      A grace quantity of [text redacted] on a under-shipment or [text redacted]
      on a over-shipment are acceptable.

      Supporting Documentation:
      ------------------------
      Quantity Quotation, Purchase Order, Invoice, Order Confirmation.

      [text redacted]                                 3
<PAGE>   43
      [text redacted]

      This PDQ'S Evaluation Criteria item will be measured primarily by
      Ballard. The supplier will have direct input to this item and it will be
      measured monthly.

Supplier Price, Delivery, Quality and Service Evaluation Criteria

                                       4
<PAGE>   44

                                TABLE OF CONTENTS

<TABLE>
<S>                                                                                                         <C>
                                                                                                                PAGE

PART 1     DEFINITIONS AND INTERPRETATION..........................................................................2

     Definitions...................................................................................................2

     Interpretation................................................................................................5

     Schedules.................................................................................................... 6

PART 2     SALE OF MATERIALS.......................................................................................6

     Materials Sale................................................................................................6

     Supplier Evaluation System....................................................................................6

     Most Favoured Customer........................................................................................7

     First Year Forecast and Pricing...............................................................................7

     Future Forecasts and Pricing..................................................................................7

     Delivery of Materials.........................................................................................8

     License to Use of Materials...................................................................................8

     Improvements to Materials.....................................................................................8

PART 3     CONDITIONS OF SALE......................................................................................9

     Sales/Purchase Order Conditions...............................................................................9

     Effect of Purchase Order Terms and Conditions................................................................17

     Revised Purchase Order Terms and Conditions..................................................................17

PART 4     PRICE OF THE PRODUCTS..................................................................................17

     Price .......................................................................................................17

PART 5     GRANT OF LICENSE.......................................................................................18

     [text redacted]

     Grant of Default License.....................................................................................18

     License Restrictions.........................................................................................19

     Technology Transfer..........................................................................................19

     Further Assurances for Licensed Materials....................................................................19

     Survival of Part 5 Provisions................................................................................19

PART 6     CONFIDENTIALITY........................................................................................20

     Confidentiality Obligations..................................................................................20

     Exceptions for Confidentiality...............................................................................20

     Employment Relations.........................................................................................21

     Reasonable Restriction.......................................................................................21
</TABLE>

                                      -i-

<PAGE>   45

                                TABLE OF CONTENTS
                                   (CONTINUED)

<TABLE>
<S>                                                                                                         <C>
                                                                                                               PAGE
     Mutual Secrecy Agreement and Collaboration Agreement.........................................................21

     Survival of Part 6 Provisions................................................................................21

PART 7     DISPUTE RESOLUTION.....................................................................................22

     Initiation of Process........................................................................................22

     Referral to Chief Executive Officers.........................................................................22

     Submission to Arbitration....................................................................................22

     Acceptance and Implementation................................................................................22

     Place of Arbitration.........................................................................................22

     Legal Proceedings............................................................................................22

     Exclusions...................................................................................................22

PART 8     TERM AND TERMINATION...................................................................................23

     Term      ...................................................................................................23

     Termination for Default......................................................................................23

     No Prejudice.................................................................................................23

     No Further Obligations.......................................................................................23

PART 9     MISCELLANEOUS..........................................................................................24

     Modifications, Approvals and Consents........................................................................24

     Further Assurances...........................................................................................24

     Entire Agreement.............................................................................................24

     Notices......................................................................................................24

     Deemed Receipt...............................................................................................25

     Change of Address............................................................................................25

     Enurement....................................................................................................25

     Applicable Law...............................................................................................25

     Attornment...................................................................................................25

     Judgment Currency............................................................................................25

     Force Majeure................................................................................................26

     Severability.................................................................................................26

     Counterparts.................................................................................................26

     Assignment...................................................................................................26

     No Partnership...............................................................................................27
</TABLE>

                                     -ii-<PAGE>   1
                                                               Exhibit 10.8

                                  GRAFTECH INC.
                         EMPLOYEE EQUITY INCENTIVE PLAN

1.       Purpose.

                  The purpose of the Graftech Inc. Employee Equity Incentive
Plan (the "Plan") is to assist Graftech Inc. (the "Corporation") and its
Subsidiaries (together with the Corporation, the "Company") in attracting,
retaining and motivating employees and make the compensation program of the
Company competitive with those of other similarly situated employers. Options
granted under the Plan may be either "incentive stock options," intended to
qualify as such under the Code (as defined herein), or "nonqualified stock
options," which are not intended to so qualify.

2.       Definitions.

         2.1 "Acceleration Event" means an event with respect to which an Award
Agreement provides for the acceleration of the exercisability or lapse of
restrictions applicable to any Award.

         2.2 "Award" means an award or grant made to a Participant under the
Plan.

         2.3 "Award Agreement" means the agreement provided in connection with
an Award under the Plan.

         2.4 "Award Date" means the date that an Award is made, as specified in
the relevant Award Agreement.

         2.5 "Board" means the Board of Directors of the Corporation.

         2.6 "Cause" means: (i) gross neglect or willful and continuing refusal
by the Participant to substantially perform his duties (other than due to
Disability); (ii) breach by the Participant of confidentiality obligations owed
to the Company; (iii) willful engagement by the Participant in conduct which is
demonstrably injurious to the Company (including, without limitation, a breach
by the Participant of non-competition or non-solicitation obligations owed to
the Company); or (iv) conviction or plea of nolo contendere by the Participant
to a felony or a misdemeanor involving moral turpitude. Notwithstanding the
foregoing, if the Participant is party to an employment agreement or severance
compensation agreement (or a similar agreement) with the Company which includes
an express definition of "cause" for termination of employment by the Company,
then "Cause" shall have the meaning set forth in such agreement to the extent
such agreement applies to the event or circumstance giving rise to the need for
a determination of "cause".

         2.7 A "Change in Control" shall be deemed to occur if, after (but only
after) UCAR or its successors ceases to own or hold, directly or indirectly, a
majority of the then outstanding
<PAGE>   2
Common Stock, any of the following circumstances shall occur:

                  (i) any "person" or "group" within the meaning of Section
13(d) or 14(d)(2) of the Exchange Act becomes the beneficial owner of 15% or
more of the then outstanding Common Stock or 15% or more of the then outstanding
voting securities of the Corporation;

                  (ii) any "person" or "group" within the meaning of Section
13(d) or 14(d)(2) of the Exchange Act acquires by proxy or otherwise the right
to vote for the election of directors, on any merger or consolidation of the
Corporation or on any other matter or question with respect to 15% or more of
the then outstanding Common Stock or 15% or more of the combined voting power of
the then outstanding voting securities of the Corporation;

                  (iii) Present Directors and New Directors cease for any reason
to constitute a majority of the Board (and, for purposes of this clause (iii),
"Present Directors" shall mean individuals who at the beginning of any
consecutive twenty-four month period were members of the Board and "New
Directors" shall mean individuals whose election by the Board or whose
nomination for election as directors by the Corporation's stockholders was
approved by a vote of at least two-thirds of the directors then in office who
were Present Directors or New Directors);

                  (iv) the stockholders of the Corporation approve a plan of
complete liquidation or dissolution of the Corporation; or

                  (v) consummation of:

                           (x) a reorganization, restructuring,
recapitalization, reincorporation, merger or consolidation of the Corporation (a
"Business Combination") unless, following such Business Combination, (a) all or
substantially all of the individuals and entities who were the beneficial owners
of the Common Stock and the voting securities of the Corporation outstanding
immediately prior to such Business Combination beneficially own, directly or
indirectly, more than 50% of the common equity securities and the combined
voting power of the voting securities of the corporation or other entity
resulting from such Business Combination (including, without limitation, a
corporation or other entity which as a result of such Business Combination owns
the Corporation or all or substantially all of the assets of the Corporation or
the Company either directly or through one or more subsidiaries) outstanding
after such Business Combination, in substantially the same proportions as their
ownership, immediately prior to such Business Combination, of outstanding Common
Stock and the combined voting power of the outstanding voting securities of the
Corporation, respectively, (b) no "person" or "group" within the meaning of
Section 13(d) or 14(d)(2) of the Exchange Act (excluding (1) any corporation or
other entity resulting from such Business Combination and (2) any employee
benefit plan (or related trust) of the Company or any corporation or other
entity resulting from such Business Combination) beneficially owns 15% or more
of the common equity securities or 15% or more of the combined voting power of
the voting securities of the corporation or other entity resulting from such
Business Combination outstanding after such Business Combination, except to the
extent that such beneficial ownership existed prior to such Business Combination
with respect to the Common Stock and the voting securities of the Corporation,
and (c) at least a majority of the members of the board of directors (or similar
governing body) of the corporation or other entity resulting from such Business
Combination were members of the Board at the time of the execution of the
initial agreement providing for such Business Combination or at the time of the
action of the Board approving such Business Combination, whichever is earlier;
or

                                       2
<PAGE>   3
                           (y) any sale, lease, exchange or other transfer (in
one transaction or a series of related transactions) of all or substantially all
of the assets of the Corporation or the Company, whether held directly or
indirectly through one or more subsidiaries (excluding any pledge, mortgage,
grant of security interest, sale-leaseback or similar transaction, but including
any foreclosure sale), provided, that, for purposes of clauses (v) (x) and (v)
(y) above, the divestiture of less than substantially all of the assets of the
Corporation or the Company in one transaction or a series of related
transactions, whether effected by sale, lease, exchange, spin-off, sale of stock
of or merger or consolidation of a subsidiary, transfer or otherwise, shall not
constitute a Change in Control of the Corporation.

         Notwithstanding the foregoing, a Change in Control of the Corporation
shall not be deemed to occur:

                   (I) pursuant to clause (i) or (ii) above, solely because 15%
or more of the then outstanding Common Stock or the then outstanding voting
securities of the Corporation is or becomes beneficially owned or is directly or
indirectly held or acquired by one or more employee benefit plans (or related
trusts) maintained by the Company; or

                  (II) pursuant to clause (v)(y) above, if the Board determines
that any sale, lease, exchange or other transfer does not involve all or
substantially all of the assets of the Corporation or the Company; or

                  (III) pursuant to clause (i) or (ii) above, solely because
UCAR remains the beneficial owner of 15% or more of the then outstanding Common
Stock or 15% or more of the then outstanding voting securities of the
Corporation; or

                  (IV) pursuant to clause (i) or (ii) above, if a "person" or
"group" acquires 15% or more of the then outstanding Common Stock or 15% or more
of the then outstanding voting securities of the Corporation from UCAR;
provided, however, that a "Change in Control" of the Corporation shall be deemed
to occur if thereafter the beneficial ownership of Common Stock or voting
securities of the Corporation by such "person" or "group" increases by more than
1% of the then outstanding shares of Common Stock or the then outstanding voting
securities of the Corporation (excluding increases due to repurchases of Common
Stock or voting securities of the Corporation by the Company, and similar
transactions, which have not been directly or indirectly proposed or initiated
by such "person" or "group").

         For purposes of this Section 2.7, references to "beneficial owner" and
correlative phrases shall have the same definition as set forth in Rule 13d-3
under the Exchange Act (except that ownership by underwriters for purposes of a
distribution or offering shall not be deemed to be "beneficial ownership").

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

         2.9 "Committee" means any committee of the Board (however named) which
performs the functions of a compensation committee.

                                       3
<PAGE>   4
         2.10 "Common Stock" means the common stock of the Corporation.

         2.11 "Disability" shall mean the inability of the Employee to perform
in all material respects the Employee's duties and responsibilities to the
Company by reason of a physical or mental disability or infirmity which
inability is reasonably expected to be permanent and has continued: (i) for a
period of six consecutive months; or (ii) such shorter period as the Corporation
may determine. The Employee (or the Employee's representative) shall furnish the
Corporation with satisfactory medical evidence documenting the Employee's
disability or infirmity.

         2.12 "Dividend Equivalent Unit" shall have the meaning set forth in
Section 11.

         2.13 "Effective Date" shall have the meaning set forth in Section 22.

         2.14 "Employee" means any employee of the Company, including those who
are also directors of the Corporation.

         2.15 "Exchange Act" means the Securities Exchange Act of 1934.

         2.16 "Exercise Price" means the purchase price of one share of Common
Stock under an Option.

         2.17 "Fair Market Value" of a share of Common Stock as of a given date
means the closing sales price (or, if there is no such price, the average of the
highest bid and lowest asked prices) of the Common Stock on the last trading day
immediately preceding such date as of which Fair Market Value is to be
determined as reported by the principal exchange or market on which the Common
Stock is traded. Notwithstanding the foregoing, for those Awards granted
effective as of the Effective Date, Fair Market Value means the initial public
offering price of the Common Stock on such Effective Date.

         2.18 "Good Reason" means the occurrence of any of the following
circumstances without the Participant's express written consent: (i) a reduction
in the Participant's salary or opportunity to participate in any incentive
compensation plan of the Company; (ii) a material adverse change in any
retirement program, savings program, benefits trust or any incentive
compensation plan of the Company; (iii) relocation of the Participant's
principal place of business to a location which is more than 35 miles from its
current location; or (iv) a material diminution in the Participant's duties,
responsibilities or reporting position (unless due to a promotion or other
increased responsibility). Notwithstanding the foregoing, if the Participant is
party to an employment agreement or severance compensation agreement (or a
similar agreement) with the Company which includes an express definition of
"good reason" for termination of employment by the Participant, then "Good
Reason" shall have the meaning set forth in such agreement to the extent such
agreement applies to the event or circumstance giving rise to the need for a
determination of "good reason".

         2.19 "Incentive Stock Option" means an option to purchase shares of
Common Stock that is intended to qualify as an incentive stock option under
Section 422 of the Code.

         2.20 "Nonqualified Stock Option" means an option to purchase shares of
Common Stock that is not

                                       4
<PAGE>   5
intended to qualify as an Incentive Stock Option.

         2.21 "Option" means an Incentive Stock Option or a Nonqualified Stock
Option granted hereunder.

         2.22 "Outside Director" means a member of the Board who is not an
Employee.

         2.23 "Performance Measures" means, for Section 162(m) Awards, one or
more of the following performance criteria, which may be applied with respect to
the Company or any business unit, and which may be measured on an absolute or
relative to peer-group basis: (i) earnings per share; (ii) total stockholder
return; (iii) return on stockholders' equity; (iv) cash flow; and (v) cumulative
return on net assets employed. For Awards which are not Section 162(m) Awards,
"Performance Measures" means any performance criteria designated by the Board in
its sole discretion.

         2.24 "Performance Unit" shall have the meaning set forth in Section 10.

         2.25 "Permitted Transferee" means any transferee or class of
transferees approved by the Board to whom a Participant may transfer an Award
other than an Award of Incentive Stock Options.

         2.26 "Retirement" means retirement from employment by the Company with
the right to receive immediately a non-actuarially reduced pension under the
retirement program maintained by the Corporation for Employees.

         2.27 "Restricted Stock" shall have the meaning set forth in Section 8.

         2.28 "Section 162(m)" means Section 162(m) of the Code.

         2.29 "Section 162(m) Award" means any Award that is intended to qualify
for the performance-based compensation exemption to the application of the $1
million deduction limit under Section 162(m).

         2.30 "Settlement Date" means: (i) with respect to any Option that has
been exercised in whole or in part, the date or dates upon which shares of
Common Stock are to be delivered to the Participant and the Exercise Price
therefor paid; (ii) with respect to any SARs that have been exercised, the date
or dates upon which cash payment is to be made to the Participant or, in the
case of SARs that are to be settled in shares of Common Stock, the date or dates
upon which such shares are to be delivered to the Participant; and (iii) with
respect to Performance Units, Dividend Equivalent Units and Stock Equivalent
Units, the date or dates upon which cash or shares of Common Stock are to be
delivered to the Participant, in each case determined in accordance with the
terms of the relevant Award Agreement under which any such Award was made.

         2.31 "Stock Appreciation Right" or "SAR" shall have the meaning set
forth in Section 7.

         2.32 "Stock Equivalent Unit" shall have the meaning set forth in
Section 9.

         2.33 "Subsidiary" means an entity (whether or not a corporation) that
is wholly or majority owned or controlled, directly or indirectly, by the
Corporation.

                                       5
<PAGE>   6
         2.34 "UCAR" means UCAR International Inc., a Delaware corporation, and
its subsidiaries (other than the Corporation).

3.       Eligibility and Participation.

                  All Employees shall be eligible to receive Awards under the
Plan. The participants in the Plan ("Participants") shall be those Employees who
are selected, from time to time, to participate in the Plan by the Board.
Outside Directors are not eligible for Awards under the Plan.

4.       Administration.

         4.1 Authority of the Board. The Plan shall be administered by the
Board. The Board shall have full power and authority to: (i) interpret the Plan
and Award Agreements; (ii) establish, amend and rescind any rules and
regulations relating to the Plan; (iii) select recipients of Awards and grant
Awards to them; (iv) establish the terms and conditions of Awards; (v) determine
the terms and provisions of any Award Agreement made pursuant to the Plan; and
(vi) take any and all other actions desirable or necessary to implement the
Plan. All decisions and acts of the Board shall be final and binding upon all
persons.

         4.2 Delegation. The Board shall have the right, power and authority to
delegate administration of the Plan, in whole or in part, to the Committee,
subject to such limitations as the Board shall determine. The Board and the
Committee shall have the right, power and authority to: (i) delegate
administration of the Plan relating to ministerial, clerical or
non-discretionary matters to an administrative committee of Employees or the
Chief Executive Officer of the Corporation (the "CEO"); and (ii) delegate to the
CEO the right, power and authority to select recipients of Awards so long as
those Awards and the terms and conditions thereof have been previously approved
by the Board or the Committee and the recipients thereof are not "executive
officers" of the Corporation within the meaning of Rule 16(a) of the Exchange
Act. Any such delegation may be revoked by the Board at any time and for any
reason.

         4.3 Section 162(m) Awards. Notwithstanding anything contained herein to
the contrary, Section 162m Awards shall be granted only by a Committee or by
unanimous vote or consent of the Board where at least two directors shall
satisfy the requirements for an "outside director" under Section 162(m). The
Board shall take such action as is required to ensure that Section 162(m) Awards
comply with Section 162(m).

5.       Awards.

         5.1 Types of Awards. Awards may be made in any of the following forms:
(i) Options; (ii) Stock Appreciation Rights; (iii) Restricted Stock; (iv) Stock
Equivalent Units; (v) Performance Units; or (vi) Dividend Equivalent Units.

         5.2 Award Agreements. All Awards shall be evidenced by Award Agreements
between the Participant and the Corporation. Award Agreements shall set forth
the terms and conditions for each Award.

                                       6
<PAGE>   7
         5.3 Maximum Number of Shares Available. 4,600,000 shares of Common
Stock are initially reserved for issuance in connection with Awards granted
under the Plan, subject to Section 5.4 hereof; provided, however, that no more
than 1,000,000 shares of Common Stock shall be issued in connection with Awards
of Incentive Stock Options. Such shares may consist in whole or in part of
authorized and unissued shares or treasury shares. At the time shares of Common
Stock are issued pursuant to an Award (other than an Incentive Stock Option
Award), the number of shares of Common Stock reserved for issuance under the
Plan shall automatically be increased by the number of shares of Common Stock
issued with respect to such Award. If an Award expires unexercised or is
forfeited, surrendered, cancelled or settled in cash in lieu of Common Stock,
shares of Common Stock previously set aside for such Award shall be available
for use in connection with future Awards. Subject to Section 5.4 hereof, the
maximum number of shares of Common Stock that may be covered under Awards
granted to any one Participant during any one calendar year shall be 500,000
shares.

         5.4 Adjustment in the Event of Recapitalization and Other Events. In
the event of any stock split or reverse stock split, stock dividend, stock
exchange, recapitalization, merger, consolidation, business combination or other
major corporate change, or in the event of any special distribution to
stockholders, the Board shall make such equitable adjustments in the number and
kind of securities and prices per security and related terms applicable to
Awards then outstanding, and in the number and kind of securities which are
available thereafter for Awards under the Plan, as the Board determines are
necessary and appropriate. Any such adjustment shall be conclusive and binding
for all purposes of the Plan.

6.       Options.

         6.1 Award. Options may be awarded to any Participant. Except as
otherwise provided below, Awards of Options shall be subject to such terms and
conditions as are established by the Board. Each Option shall be designated, at
the discretion of the Board, as an Incentive Stock Option or a Nonqualified
Stock Option.

         6.2 Exercise Price. The Exercise Price of each share of Common Stock
subject to an Option Award shall be determined by the Board and specified in the
Award Agreement; provided, however, that the Exercise Price shall not be less
than the Fair Market Value of a share of Common Stock on the Award Date. In the
case of an Option granted retroactively in tandem with or as a substitution for
another Award, the Exercise Price shall not be less than the Fair Market Value
of a share of Common Stock on the Award Date of such other Award.

         6.3 Vesting, Exercisability and Term of Option. An Option shall vest
and become exercisable in the manner and subject to the conditions specified by
the Board. The duration of each Option shall be ten years from the Award Date,
unless a shorter period is specified by the Board.

         6.4 Payment of Exercise Price. An Option may be exercised with respect
to part or all of the shares subject to the Option, with respect to whole shares
only, by (but only by) giving written notice of exercise to the Corporation. The
Exercise Price for the shares for which an Option is exercised shall be paid
concurrently with the notice of exercise in: (i) cash; (ii) whole shares of
Common Stock; (iii) combination of cash and whole shares of Common Stock; or
(iv) any other manner

                                       7
<PAGE>   8
that the Board may approve. The value of any share of Common Stock delivered in
payment of the Exercise Price shall be its Fair Market Value on the date the
Option is exercised. Unless otherwise approved by the Board, an Option shall be
deemed exercised on the date on which both notice of exercise and payment of the
Exercise Price are received by the Corporation.

         6.5 Additional Rules for Incentive Stock Options.

                  (a) Annual Limits. No Incentive Stock Option shall be granted
to a Participant the result of which the aggregate Fair Market Value (determined
as of the Award Date) of the Common Stock with respect to which Incentive Stock
Options are exercisable for the first time in any calendar year under the Plan
and any other stock option plans of the Company or any parent corporation would
exceed the maximum amount permitted under Section 422(d) of the Code. This
limitation shall be applied by taking Options into account in the order in which
granted.

                  (b) Termination of Employment. An Award of an Incentive Stock
Option may provide that such Option may be exercised not later than 3 months
following termination of employment of the Participant with the Company, subject
to special rules relating to death and Disability, as and to the extent
determined by the Board to be appropriate with regard to the requirements of
Section 422 of the Code.

                  (c) Nontransferability. An Incentive Stock Option shall by its
terms be nontransferable otherwise than by will or by the laws of descent and
distribution, and shall be exercisable during the lifetime of the Participant to
whom such Incentive Stock Option is Awarded only by such Participant.

                  (d) Timing of Grants. Awards of Incentive Stock Options shall
only be granted within 10 years from the earlier of: (i) the date the Plan is
adopted by the Board; or (ii) the date the Plan is approved by the stockholders
of the Corporation.

                  (e) Other Terms and Conditions. Any Incentive Stock Option
shall contain such additional terms and conditions, not inconsistent with the
terms of this Plan, as are deemed necessary or desirable by the Board, which
terms, together with the terms of this Plan, shall be intended and interpreted
to cause such Incentive Stock Option to qualify as an "incentive stock option"
under Section 422 of the Code. Such terms shall include, if applicable,
limitations on Incentive Stock Options granted to ten-percent owners of the
Corporation. An Award Agreement for an Incentive Stock Option may provide that
such Option shall be treated as a Nonqualified Stock Option to the extent that
certain requirements applicable to "incentive stock options" under the Code
shall not be satisfied.

                  (f) Disqualifying Dispositions. If shares of Common Stock
acquired by exercise of an Incentive Stock Option are disposed of within two
years following the Award Date or one year following the transfer of such shares
to the Participant upon exercise, the Participant shall, promptly following such
disposition, notify the Corporation in writing of the date and terms of such
disposition and provide such other information regarding the disposition as the
Board may reasonably require.

                                       8
<PAGE>   9
7.       Stock Appreciation Rights.

         7.1 Award. An SAR Award is an award where, upon the exercise of the
SAR, the Participant to whom such Award is awarded shall receive an amount equal
to the excess of the Fair Market Value of a share of Common Stock on the
Settlement Date over the Award Price of the SAR for the number of SARs exercised
("Stock Appreciation Right" or "SAR"). SARs may be awarded to any Participant
either separately from any other Award to such Participant ("Additional Right
SAR") or in conjunction with any other Award to such Participant ("Alternative
Right SAR"). Except as otherwise provided below, Awards of SARs shall be subject
to such other terms and conditions as are established by the Board.

         7.2 Award Price. The Award Price for: (i) Additional Right SAR's shall
be the Fair Market Value of a share of Common Stock on the Award Date; and (ii)
Alternative Right SAR's shall be the Fair Market Value of a share of Common
Stock on the Award Date of the Award in conjunction with which it is granted. In
the case of an SAR granted retroactively in tandem with or as a substitution for
another Award, the Award Price of an SAR shall not be less than the Fair Market
Value of a share of Common Stock on the Award Date of such other Award.

         7.3 Additional Right SAR. The exercise of an Additional Right SAR shall
have no effect on the exercisability of any other Award and the exercise of any
other Award shall have no effect on the exercisability of an Additional Right
SAR.

         7.4 Alternative Right SAR. The exercise of an Award granted in
conjunction with an Alternative Right SAR shall terminate the Alternative Right
SAR to the extent of the shares of Common Stock with respect to which the Award
is exercised. The exercise of an Alternative Right SAR granted in conjunction
with any other Award shall terminate the Award to the extent of the shares of
Common Stock with respect to which the Alternative Right SAR is exercised.

8.       Restricted Stock.

         8.1 Award. A Restricted Stock Award is an award of Common Stock where
such shares are subject to restrictions (including restrictions on transfer,
conditions of forfeitability, or other limitations) as determined by the Board
("Restricted Stock"). Such restrictions, terms and conditions may include, but
are not limited to, the requirement of continued service with the Company,
achievement of specific business objectives and other measurements of individual
or business unit performance, the manner in which such Restricted Stock is held,
the extent to which the holder of such Restricted Stock has rights of a
stockholder and the circumstances under which such Restricted Stock shall be
forfeited.

         8.2 Transferability of Restricted Stock. Unless otherwise provided by
the Board, Restricted Stock may not be assigned, transferred, pledged or sold by
the Participant until the termination or lapse of the applicable restrictions or
conditions.

         8.3 Rights as Shareholder. Subject to the foregoing provisions of this
Section 8, the Participant to whom such Restricted Stock is Awarded shall have
all rights of a stockholder with respect to the

                                       9
<PAGE>   10
shares granted under an Award of Restricted Stock, including the right to vote
the shares of Common Stock and receive all dividends and other distributions
paid or made with respect thereto. Unless otherwise provided by the Board,
dividends on Restricted Stock shall be credited to a Participant's account for
subsequent distribution. The Board may provide for the reinvestment of dividends
paid on Restricted Stock in shares of Common Stock.

9.       Stock Equivalent Units.

                  A Stock Equivalent Unit Award is an award where, upon the
exercise of the Stock Equivalent Unit, the Participant to whom such Award is
awarded shall receive an amount equal to the Fair Market Value of a share of
Common Stock ("Stock Equivalent Unit"). An Award of Stock Equivalent Units shall
be subject to such terms and conditions as are established by the Board.

10.      Performance Units.

                  A Performance Unit Award is an award entitling the Participant
to whom such Award is awarded to payment based on the attainment, over a
specified period, of individual performance targets or other Performance
Measures specified by the Board ("Performance Unit"). At the time Performance
Units are granted, the Board shall determine, in its sole discretion, one or
more performance periods and the performance targets or other Performance
Measures to be achieved. At the end of a performance period, the Board shall
determine the extent to which they have been attained or degree of achievement
between minimum and maximum levels in order to establish the level of payment to
be made. An Award of Performance Units shall be subject to such other terms and
conditions as are established by the Board.

11.      Dividend Equivalent Units.

                  The Board may provide that an Award shall accrue Dividend
Equivalent Units. A Dividend Equivalent Unit Award is an award where, upon the
exercise of the Dividend Equivalent Unit, the Participant to whom such Award is
awarded shall receive an amount equal to the amount of the cash dividends that
are declared and become payable during the period beginning on the day after the
Award Date of the Award to which the Dividend Equivalent Units relates and
ending on the Settlement Date of the Award ("Dividend Equivalent Unit"). In lieu
of an Award of Dividend Equivalents Units, the Board may provide for automatic
awards of Stock Equivalent Units on each date that cash dividends are paid on
Common Stock equal to (i) the product of the dividend per share times the total
number of shares subject to Awards held by the Participant, divided by (ii) the
Fair Market Value of the Common Stock on the dividend payment date. An Award of
Dividend Equivalent Units shall be subject to such other terms and conditions as
are established by the Board.

12.      Section 162(m) Awards.

                  The Board may designate whether an Award granted to a
Participant is intended

                                       10
<PAGE>   11
to be a Section 162(m) Award. As to Awards of Restricted Stock, Stock Equivalent
Units or Performance Units, any such Award designated as a Section 162(m) Award
shall be conditioned on the achievement of one or more Performance Measures
selected by the Board. The grant of Section 162(m) Awards and the establishment
of Performance Measures shall be made during the time specified and in
accordance with the terms of Section 162(m).

13.      Exercise of Awards Other Than Incentive Stock Options.

                  Awards other than Awards of Incentive Stock Options, may be
exercised, in whole or in part, by (but only by) giving written notice of
exercise to the Corporation. During the lifetime of a Participant, Awards to
such Participant may be exercised by such Participant or by a Permitted
Transferee. In the event of such Participant's or Permitted Transferee's
Disability, Awards may be exercised by his or her legal guardian or legal
representative. In the event of the death of a Participant or Permitted
Transferee, exercise of Awards to such Participant or Permitted Transferee shall
be made only by the executor or administrator of the deceased Participant's or
Permitted Transferee's estate or the person or persons to whom the deceased
Participant's or Permitted Transferee's rights under such Awards shall pass by
will or the laws of descent and distribution.

14.      Settlement of Awards Other Than Options.

                  At the Board's discretion, Awards other than Awards of Options
may be settled in cash, shares of Common Stock valued at their Fair Market Value
on the Settlement Date, other Awards or any combination thereof. The Board may:
(i) require or permit Participants to defer the issuance or vesting of shares of
Common Stock or the settlement of Awards in cash; and (ii) provide that deferred
settlements include the payment or crediting of interest on deferred amounts or
the payment of Dividend Equivalent Units on deferred settlements denominated in
shares of Common Stock.

15.      Acceleration of Awards.

         15.1 Acceleration. Subject to Section 23 hereof, the Board may, in its
discretion, provide in an Award Agreement for the accelerated vesting and
exercisability of Awards upon the occurrence of specified events, including: (i)
a Participant's termination of employment on account of death or Disability;
(ii) a Change of Control; and (iii) a Participant's termination of employment by
the Corporation without Cause or a Participant's resignation for Good Reason.
The Board may, in its discretion, accelerate the vesting and exercisability of
any or all Awards at any time and for any reason.

         15.2 Conditional Exercise in Contemplation of an Acceleration Event. In
contemplation of an Acceleration Event, a Participant may conditionally
exercise, not more than 30 days prior to the Acceleration Event, all or any
portion of any Awards which are exercisable or which will become exercisable
upon the occurrence of the Acceleration Event. Such conditional exercise shall
become null and void if the anticipated Acceleration Event does not occur within
six (6) months following the date of such conditional exercise. A conditional
exercise shall become binding upon a Participant (and such Participant shall
become obligated to pay the Exercise Price

                                       11
<PAGE>   12
thereunder, if any) upon the occurrence of the Acceleration Event.

16. Noncompete and Confidentiality Covenants.

                  If a Participant breaches any confidentiality or noncompete
covenant that such Participant has entered into with the Company, then
notwithstanding the terms of any Award or Award Agreement, the Participant: (i)
shall immediately forfeit the right to exercise all Options, SARs, Stock
Equivalent Units, Dividend Equivalent Units, Performance Units (or similar
Awards) and to become vested in all Restricted Stock (and similar Awards), in
each case outstanding or received at any time after the date of the first such
violation; and (ii) will be obligated to pay the Corporation, as liquidated
damages, an amount equal to the gross amount of all gains realized upon the
exercise of all Options, Stock Appreciation Rights, Stock Equivalent Units,
Dividend Equivalent Units, Performance Units (and similar Awards) plus all
appreciation in and other increase in value recognized in connection with all
Restricted Stock (and similar Awards) at any time after the date of the first
such violation. The Board may, in its discretion, waive this Section 16.

17. Transferability of Awards. No Award granted under the Plan shall be
assignable, alienable, saleable or otherwise transferable other than by will or
the laws of descent and distribution or pursuant to a Qualified Domestic
Relations Order (as defined in Section 414(p) of the Code), except that, the
Board may provide that the Participant shall be permitted to, during his or her
lifetime, transfer all or part of any Award other than an Award of Incentive
Stock Options to a Permitted Transferee.

18. Other Terms and Conditions. The Board may provide that Awards granted
hereunder are subject to such other terms and conditions not specified herein,
including, but not limited to, a right of first refusal or repurchase right on
the part of the Corporation or cancellation of any or all outstanding Awards by
the Corporation upon payment by the Corporation of the Fair Market Value thereof
at the time of cancellation upon the occurrence a Change in Control.

19. General Provisions.

         19.1 Unfunded Plan. Nothing contained herein shall require the
Corporation to segregate any monies to create any trusts or to make any special
deposits for any immediate or deferred amounts payable to any Participant under
this Plan.

         19.2 No Right to Employment. Participation in this Plan shall not
affect the Company's right to discharge a Participant nor shall it constitute an
agreement of employment between a Participant and the Company.

         19.3 Rights as a Stockholder. Except as otherwise provided by the
Board, a Participant shall have no rights as a stockholder of the Corporation
with respect to the Common Stock subject to Awards until: (i) exercise of the
Award; and (ii) all conditions to exercise of the Award have been duly
satisfied.

         19.4 Jurisdiction and Governing Law. Jurisdiction over disputes with
regard to the validity,

                                       12
<PAGE>   13
construction and effect of this Plan, and all actions taken or relating to the
Plan, shall be exclusively in the courts of the State of Delaware, and this Plan
shall be construed and interpreted in accordance with and governed by the laws
of the State of Delaware, other than the conflict of laws provisions of such
laws.

         19.5 Successors and Assigns. The Plan and the relevant Award Agreement
shall be binding on all successors and assigns of a Participant, including,
without limitation, the estate of the Participant, the executor, administrator
or trustee of such estate, any receiver or trustee in bankruptcy for the
Participant or such estate, and any representative of the creditors of the
Participant or such estate.

20. Amendment, Suspension, or Termination.

                  The Board may suspend, terminate or amend the Plan at any time
and from time to time, without notice to or consent of the stockholders of the
Corporation or any Participant or Employee. The Board may amend any Award
previously made and any relevant Award Agreement without notice to or consent of
the relevant Participants unless such amendment would materially adversely
affect such Award or the Participant's rights or benefits in connection
therewith. No suspension or termination of the Plan shall affect any Awards
previously made or any relevant Award Agreement, unless the written consent of
the Participant is obtained. No amendment of the Plan, Award previously made or
relevant Award Agreement shall be made which would materially adversely affect
such Award or the Participant's rights or benefits in connection therewith,
unless the written consent of the Participant is obtained.

21. Tax Withholding.

                  The Corporation shall have the right to: (i) make deductions
from any settlement of any Award, including the delivery or vesting of shares of
Common Stock, or require shares of Common Stock or cash, or both, be withheld
from any settlement of an Award, in each case in an amount sufficient to satisfy
withholding of any federal, state, local or foreign taxes required by law; or
(ii) take such other action as may be necessary or appropriate to satisfy any
such withholding obligation.

22. Effective Date.

                  The Plan shall become effective upon the effective date of the
registration statement filed by the Corporation with the Securities and Exchange
Commission in connection with the initial public offering of shares of Common
Stock of the Corporation (the "Effective Date"); provided, however, that no
Incentive Stock Option shall be exercisable by a Participant unless and until
the Plan shall have been approved by the stockholders of the Corporation, which
approval shall be obtained within 12 months before or after the adoption of the
Plan by the Board. Notwithstanding anything contained herein to the contrary,
the Plan and all Awards granted hereunder shall become null and void if such
Effective Date does not occur before September 30, 2000 or the closing of such
offering does not occur within 30 days after such Effective Date.

23. Limitations on the Grant of Awards. Notwithstanding anything contained
herein to the contrary,

                                       13
<PAGE>   14
the Board shall not, without the prior express written consent of UCAR, which
such consent may be withheld by UCAR in its sole discretion (i) grant any Award,
other than a Nonqualified Stock Option Award, or (ii) cause or permit the
vesting, exercisability or accelerated vesting of a Nonqualified Stock Option
awarded hereunder or any portion thereof, in each case, prior to the third
anniversary of the Effective Date, if at the time of such grant, vesting or
exercisability UCAR owns or holds, directly or indirectly, a majority of the
then outstanding shares of Common Stock.

24. Automatic Option Grants. Notwithstanding anything contained herein to the
contrary (including, without limitation, restrictions as to the identity of
Participants and the terms and conditions of Awards), Options shall be granted
automatically hereunder in accordance with Article XI of each of the UCAR
International Inc. Management Stock Option Plans and Section 19 of the UCAR
International Inc. 1996 Mid-Management Equity Incentive Plan, in each case as
amended through the Effective Date (collectively, the "UCAR Plans"), effective
as of the date UCAR distributes to its stockholders, by dividend or otherwise,
Common Stock which, at the time such distribution is declared, constitute a
majority of the then outstanding shares of Common Stock, under the terms and
conditions as set forth in the UCAR Plans. Shares of Common Stock issued
pursuant to Options granted under this Section 23 are in addition to and not
counted against the maximum share limits set forth in Section 5.3 hereof.
Notwithstanding the provisions of Section 20 hereof, the Board shall not,
without the prior express written consent of UCAR, which such consent may be
withheld by UCAR in its sole discretion, amend: (i) this Section 23; or (ii) any
provision of the Plan in a manner that is inconsistent with this Section 23. For
purposes of this Section 23, UCAR shall be deemed a third party beneficiary.
Article XI and Section 19 of each of the respective UCAR Plans are attached
hereto as Exhibits 1, 2 and 3.

                                       14
<PAGE>   15
                                    EXHIBIT 1

                    AMENDMENT TO THE UCAR INTERNATIONAL INC.
                    1996 MID-MANAGEMENT EQUITY INCENTIVE PLAN

         The 1996 Mid-Management Equity Incentive Plan is hereby amended,
         effective as of the effective date of the registration statement filed
         by Graftech Inc. with the Securities and Exchange Commission in
         connection with the initial public offering of shares of Graftech
         Inc.'s common stock (the "Effective Date"), in accordance with the
         following. Notwithstanding anything contained herein to the contrary,
         this amendment shall become null and void if such Effective Date does
         not occur before September 30, 2000 or the closing of such offering
         does not occur within 30 days after such Effective Date.

         1.       Section 2.6 is hereby amended to read in its entirety as
                  follows:

                  "Change in Control" means the occurrence of any of the
                  following events:

                           (i) any "person" or "group" within the meaning of
                  Section 13(d) or 14(d)(2) of the Securities Exchange Act of
                  1934 (the "Act") becomes the beneficial owner of 15% or more
                  of the then outstanding Common Stock or 15% or more of the
                  then outstanding voting securities of UCAR;

                           (ii)any "person" or "group" within the meaning of
                  Section 13(d) or 14(d)(2) of the Act acquires by proxy or
                  otherwise the right to vote for the election of directors, on
                  any merger or consolidation of UCAR or on any other matter or
                  question with respect to 15% or more of the then outstanding
                  Common Stock or 15% or more of the combined voting power of
                  the then outstanding voting securities of UCAR;

                           (iii) Present Directors and New Directors cease for
                  any reason to constitute a majority of the Board (and, for
                  purposes of this clause (iii), "Present Directors" shall mean
                  individuals who at the beginning of any consecutive
                  twenty-four month period were members of the Board and "New
                  Directors" shall mean individuals whose election by the Board
                  or whose nomination for election as directors by UCAR's
                  stockholders was approved by a vote of at least two-thirds of
                  the directors then in office who were Present Directors or New
                  Directors);

                           (iv)the stockholders of UCAR approve a plan of
                  complete liquidation or dissolution of UCAR; or

                           (v) consummation of:

                               (x) a reorganization, restructuring,
                  recapitalization, reincorporation, merger or consolidation of
                  UCAR (a "Business Combination") unless, following

                                       15
<PAGE>   16
                  such Business Combination, (a) all or substantially all of the
                  individuals and entities who were the beneficial owners of the
                  Common Stock and the voting securities of UCAR outstanding
                  immediately prior to such Business Combination beneficially
                  own, directly or indirectly, more than 50% of the common
                  equity securities and the combined voting power of the voting
                  securities of the corporation or other entity resulting from
                  such Business Combination (including, without limitation, a
                  corporation or other entity which as a result of such Business
                  Combination owns UCAR or all or substantially all of the
                  assets of UCAR or the Company either directly or through one
                  or more subsidiaries) outstanding after such Business
                  Combination, in substantially the same proportions as their
                  ownership, immediately prior to such Business Combination, of
                  outstanding Common Stock and the combined voting power of the
                  outstanding voting securities of UCAR, respectively, (b) no
                  "person" or "group" within the meaning of Section 13(d) or
                  14(d)(2) of the Act (excluding (1) any corporation or other
                  entity resulting from such Business Combination and (2) any
                  employee benefit plan (or related trust) of the Company or any
                  corporation or other entity resulting from such Business
                  Combination) beneficially owns 15% or more of the common
                  equity securities or 15% or more of the combined voting power
                  of the voting securities of the corporation or other entity
                  resulting from such Business Combination outstanding after
                  such Business Combination, except to the extent that such
                  beneficial ownership existed prior to such Business
                  Combination with respect to the Common Stock and the voting
                  securities of UCAR, and (c) at least a majority of the members
                  of the board of directors (or similar governing body) of the
                  corporation or other entity resulting from such Business
                  Combination were members of the Board at the time of the
                  execution of the initial agreement providing for such Business
                  Combination or at the time of the action of the Board
                  approving such Business Combination, whichever is earlier; or

                               (y) any sale, lease, exchange or other transfer
                  (in one transaction or a series of related transactions) of
                  all or substantially all of the assets of UCAR or the Company,
                  whether held directly or indirectly through one or more
                  subsidiaries (excluding any pledge, mortgage, grant of
                  security interest, sale-leaseback or similar transaction, but
                  including any foreclosure sale), provided, that, for purposes
                  of clauses (v) (x) and (v) (y) above, the divestiture of less
                  than substantially all of the assets of UCAR or the Company in
                  one transaction or a series of related transactions, whether
                  effected by sale, lease, exchange, spin-off, sale of stock of
                  or merger or consolidation of a subsidiary, transfer or
                  otherwise, shall not constitute a Change in Control.

                  Notwithstanding the foregoing, (A) a Change in Control shall
not be deemed to occur:

                      (I) pursuant to clause (i) or (ii) above, solely because
         15% or more of the then outstanding Common Stock or the then
         outstanding voting securities of UCAR is or

                                       16
<PAGE>   17
         becomes beneficially owned or is directly or indirectly held or
         acquired by one or more employee benefit plans (or related trusts)
         maintained by the Company; or

                      (II) pursuant to clause (v)(y) above, (1) if the Board
         determines that any sale, lease, exchange or other transfer does not
         involve all or substantially all of the assets of UCAR or the Company
         or (2) unless the Board determines otherwise, solely because of the
         consummation of a transaction or a series of transactions pursuant to
         which the Company sells, distributes to UCAR's stockholders, or
         otherwise transfers or disposes of any or all of its ownership of its
         natural graphite-based product business (which includes its flexible
         graphite business), however owned (including ownership through one or
         more dedicated subsidiaries and holding companies therefor and
         successors thereto); and

                  (B) to the extent that a "person" or "group" within the
         meaning of Section 13(d) or 14(d)(2) of the Act is the beneficial owner
         of 15% or more of the Common Stock or the voting securities of UCAR on
         the Effective Date, then the references therein to 15% shall be deemed
         to be references to 22.5% as (but only as) to such "person" or "group."
         For purposes hereof, references to "beneficial owner" and correlative
         phrases shall have the same definition as set forth in Rule 13d-3 under
         the Act (except that ownership by underwriters for purposes of a
         distribution or offering shall not be deemed to be "beneficial
         ownership") and references to the Act or rules and regulations
         thereunder shall mean those in effect on the Effective Date."

         2.       The following new Section 19 is added:

                  "19.     Rules Applicable to Graftech.

                  19.1 General Applicability. Notwithstanding anything contained
                  in this Plan or the Graftech Option Plan to the contrary, if
                  UCAR distributes to its stockholders, by dividend or
                  otherwise, shares of Graftech Common Stock which, at the time
                  such distribution is declared, constitute a majority of the
                  then outstanding shares of the Graftech Common Stock (the
                  "Spin-Off"), then the following provisions of this Section 19
                  shall apply. Prior to the IPO Date, UCAR shall cause Graftech
                  to enter into agreements with it as it shall deem necessary to
                  give effect to this Section 19.

                  19.2 Option Grant. Each UCAR IPO Date Option (whether vested
                  or unvested) that is outstanding on the Spin-Off Date, shall,
                  upon and after the Spin-Off Date, without further action by
                  the optionee, the Board (or any committee thereof), the Board
                  of Directors of Graftech (or any committee thereof), or UCAR
                  or Graftech, be converted into and represent the following two
                  options:

                           (a) an option granted under this Plan which covers a
                  number of shares of Common Stock equal to the UCAR Original
                  Number of Shares and which has a per share exercise price
                  equal to the UCAR New Per Share Exercise Price (the

                                       17
<PAGE>   18
                  "New UCAR Option"); and

                           (b) an option granted under the Graftech Option Plan
                  which covers a number of shares of Graftech Common Stock equal
                  to the Graftech Pro Rata Number of Shares and which has a per
                  share exercise price equal to the Graftech Per Share Exercise
                  Price (the "New Graftech Option").

                  UCAR shall be the issuer of each New UCAR Option and Graftech
                  shall be the issuer of each New Graftech Option.

                  19.3     Graftech Exercise Price. Graftech's obligation to
                  issue New Graftech Options shall be based on the Option Price
                  of the corresponding UCAR IPO Date Option as in effect on the
                  IPO Date regardless of any subsequent change, if any, thereto.

                  19.4     Service For Purposes of Vesting and Exercisability.

                           (a) Any period of employment or service with UCAR (or
                  any of its subsidiaries) or with Graftech (or any of its
                  subsidiaries) shall be considered employment or service with
                  each of UCAR and Graftech for purposes of determining the
                  vesting and exercisability of any New UCAR Option and any New
                  Graftech Option to the same extent as such period would have
                  been so considered under the related UCAR IPO Date Option if
                  Graftech had continued as a wholly owned subsidiary of UCAR.

                           (b) The circumstances of any termination of
                  employment or service with UCAR (or any of its subsidiaries)
                  or Graftech (or any of its subsidiaries) for purposes of
                  determining vesting, exercisability and termination or
                  cancellation of any New UCAR Option or any New Graftech Option
                  shall be considered to be the same as it would have been if
                  Graftech had continued as a wholly owned subsidiary of UCAR.

                  19.5 Rounding. In the case of each New UCAR Option and each
                  New Graftech Option, any resulting per share exercise price
                  which is not equal to a whole multiple of a cent shall be
                  rounded to the nearest whole cent and any resulting number of
                  shares covered thereby which is not equal to a whole number of
                  a share shall be rounded to the nearest whole share.

                  19.6     Terms and Conditions.

                           (a) The terms and conditions of each New UCAR Option
                  shall be the same as those of the related UCAR IPO Date Option
                  (except that the per share exercise price and number of shares
                  of Common Stock covered thereby shall be changed as provided
                  for in Section 19.2 hereof and except as otherwise required to
                  give effect to Sections 19.4 and 19.5 hereof). Each New
                  Graftech Option shall have the per share exercise price and
                  cover the number of shares of Graftech Common Stock as
                  provided in Section 19.2, shall be exercisable when (but only
                  when) the related New UCAR Option is exercisable and (except
                  as otherwise required to give effect to Sections 19.4 and 19.5
                  hereof, to differences in

                                       18
<PAGE>   19
                  administrative matters and to the preceding clause regarding
                  exercisability and except as required to provide for
                  exercisability as to a whole number of shares (subject to
                  adjustment for dilutive events occurring after the Declaration
                  Date)) shall have terms and conditions substantially the same
                  as those of the related New UCAR Option.

                           (b) If a New UCAR Option and the related New Graftech
                  Option are exercisable pursuant to Section 19.6(a), then
                  either of such Options can be exercised with or without
                  concurrent exercise, or affecting the future exercisability,
                  of the other Option.

                           (c) Upon exercise of a New UCAR Option or a New
                  Graftech Option, the exercise price of such Option shall be
                  payable to, and the securities purchased shall be delivered
                  by, the issuer of such Option.

                            (d) Notwithstanding anything contained herein to the
                  contrary, to the extent required by UCAR in its sole
                  discretion, the exercise price of each New UCAR Option and
                  each New Graftech Option shall be adjusted to the extent
                  necessary to avoid compensation expense under generally
                  accepted accounting principles applied by it to UCAR and
                  Graftech with respect to the transactions contemplated hereby.

                  19.7 Definitions. For purposes of this Section 19, the
following definitions shall apply:

                           (a) "Declaration Date" shall mean the date on which
                               the Spin-Off is declared by the Board.

                           (b) "Graftech" shall mean UCAR Graph-Tech Inc. or any
                               successor thereto or holding company therefor.

                           (c) "Graftech Average Closing Price" shall mean the
                               average closing sale price of Graftech Common
                               Stock over the period of five trading days ending
                               on the trading day immediately preceding the
                               Declaration Date. If there is no such closing
                               sale price on any such day, then the average of
                               the closing highest bid and lowest asked prices
                               shall be used.

                           (d) "Graftech Common Stock" shall mean the common
                               stock of Graftech.

                           (e) "Graftech Market Cap" shall mean the number equal
                               to the Graftech Average Closing Price multiplied
                               by the sum of: (i) the number of outstanding
                               shares of Graftech Common Stock at the close of
                               the trading day immediately preceding the
                               Declaration Date; plus (ii) the maximum number of
                               shares of Graftech Common Stock issuable upon
                               exercise, conversion or exchange of all
                               "in-the-money" options, warrants, convertible or
                               exchangeable securities or similar rights,
                               granted by Graftech that are outstanding as of
                               such day; less (iii) the number of shares of
                               Graftech Common Stock that Graftech could
                               repurchase on the open market on such day at the
                               Graftech Average Closing Price if it used the
                               aggregate cash consideration it would receive
                               upon exercise, conversion or exchange thereof to
                               effect such

                                       19
<PAGE>   20
                               repurchase (without regard to transaction costs,
                               trading volume or similar factors). For purposes
                               hereof, "in-the-money" shall mean that the
                               exercise, conversion or exchange price or rate is
                               lower than the Graftech Average Closing Price.

                           (f) "Graftech Option Plan" shall mean, individually
                               and collectively, any and all plans maintained by
                               Graftech under which stock options may be
                               granted.

                           (g) "Graftech Per Share Exercise Price" shall mean an
                               amount equal to the result of the division of (i)
                               the difference between the UCAR Original Per
                               Share Exercise Price and UCAR New Per Share
                               Exercise Price by (ii) the Spin-Off Ratio.

                           (h) "Graftech Pro Rata Number of Shares" shall mean
                               the result of the multiplication of the UCAR
                               Original Number of Shares by the Spin-Off Ratio.

                           (i) "IPO Date" shall mean the effective date of the
                               registration statement filed by Graftech with the
                               Securities and Exchange Commission with respect
                               to the initial public offering of Graftech Common
                               Stock (or, if later, the pricing date for such
                               initial public offering).

                           (j) "Spin-Off Date" shall mean the distribution date
                               for the Spin-Off.

                           (k) "Spin-Off Ratio" shall mean the number of shares
                               of Graftech Common Stock to be received for each
                               outstanding share of Common Stock by holders of
                               record of Common Stock in the Spin-Off, expressed
                               as a ratio.

                           (l) "UCAR Average Closing Price" shall mean the
                               average closing sale price of the Common Stock
                               over the period of five trading days ending on
                               the trading date immediately preceding the
                               Declaration Date. If there is no such closing
                               sale price on any such day, then the average of
                               the closing highest bid and lowest asked prices
                               shall be used.

                           (m) "UCAR Market Cap" shall mean the number equal to
                               the UCAR Average Closing Price multiplied by the
                               sum of: (i) the number of outstanding shares of
                               Common Stock at the close of the trading day
                               immediately preceding the Declaration Date; plus
                               (ii) the maximum number of shares of Common Stock
                               issuable upon exercise, conversion or exchange of
                               all "in-the-money" options, warrants, convertible
                               or exchangeable securities or similar rights,
                               granted by UCAR that are outstanding as of such
                               day; less (iii) the number of shares of Common
                               Stock that UCAR could repurchase on the open

                                       20
<PAGE>   21
                               market on such day at the UCAR Average Closing
                               Price if it used the aggregate cash consideration
                               it would receive upon exercise, conversion or
                               exchange thereof to effect such repurchase
                               (without regard to transaction costs, trading
                               volume or similar factors). For purposes hereof,
                               "in-the-money" shall mean that the exercise,
                               conversion or exchange price or rate is lower
                               than the UCAR Average Closing Price.

                           (n) "UCAR Market Cap Ratio" shall mean a fraction
                               whose numerator is the UCAR Market Cap and whose
                               denominator is the sum of the (i) UCAR Market Cap
                               and (ii) Graftech Market Cap.

                           (o) "UCAR New Per Share Exercise Price" shall mean an
                               amount equal to the UCAR Original Per Share
                               Exercise Price multiplied by the UCAR Market Cap
                               Ratio.

                           (p) "UCAR IPO Date Option" shall mean a Stock Option
                               granted by UCAR under the Plan on or prior to the
                               IPO Date.

                           (q) "UCAR Original Number of Shares" shall mean, as
                               to any UCAR IPO Date Option, the number of shares
                               of Common Stock covered by such UCAR IPO Date
                               Option immediately prior to the IPO Date.

                           (r) "UCAR Original Per Share Exercise Price" shall
                               mean, as to any UCAR IPO Date Option, the
                               Exercise Price of such UCAR IPO Date Option
                               immediately prior to the Declaration Date."

                                      21

<PAGE>   22
                                    EXHIBIT 2

                    AMENDMENT TO THE UCAR INTERNATIONAL INC.
            MANAGEMENT STOCK OPTION PLAN (SENIOR MANAGEMENT VERSION)

         The Management Stock Option Plan (Senior Management Version) is hereby
         amended, effective as of the effective date of the registration
         statement filed by Graftech Inc. with the Securities and Exchange
         Commission in connection with the initial public offering of shares of
         Graftech Inc.'s common stock (the "Effective Date"), in accordance with
         the following. Notwithstanding anything contained herein to the
         contrary, this amendment shall become null and void if such Effective
         Date does not occur before September 30, 2000 or the closing of such
         offering does not occur within 30 days after such Effective Date.

         1.       The definition of "Change of Control" is hereby amended to
                  read in its entirety as follows:

                  "Change of Control" shall mean the occurrence of any of the
                  following events:

                           (i) any "person" or "group" within the meaning of
                  Section 13(d) or 14(d)(2) of the Securities Exchange Act of
                  1934 (the "Act") becomes the beneficial owner of 15% or more
                  of the then outstanding Common Stock or 15% or more of the
                  then outstanding voting securities of the Company;

                           (ii)any "person" or "group" within the meaning of
                  Section 13(d) or 14(d)(2) of the Act acquires by proxy or
                  otherwise the right to vote for the election of directors, on
                  any merger or consolidation of the Company or on any other
                  matter or question with respect to 15% or more of the then
                  outstanding Common Stock or 15% or more of the combined voting
                  power of the then outstanding voting securities of the
                  Company;

                           (iii) Present Directors and New Directors cease for
                  any reason to constitute a majority of the Board (and, for
                  purposes of this clause (iii), "Present Directors" shall mean
                  individuals who at the beginning of any consecutive
                  twenty-four month period were members of the Board and "New
                  Directors" shall mean individuals whose election by the Board
                  or whose nomination for election as directors by the Company's
                  stockholders was approved by a vote of at least two-thirds of
                  the directors then in office who were Present Directors or New
                  Directors);

                           (iv) the stockholders of the Company approve a plan
                  of complete liquidation or dissolution of the Company; or

                           (v) consummation of:

                                      22
<PAGE>   23
                               (x) a reorganization, restructuring,
                  recapitalization, reincorporation, merger or consolidation of
                  the Company (a "Business Combination") unless, following such
                  Business Combination, (a) all or substantially all of the
                  individuals and entities who were the beneficial owners of the
                  Common Stock and the voting securities of the Company
                  outstanding immediately prior to such Business Combination
                  beneficially own, directly or indirectly, more than 50% of the
                  common equity securities and the combined voting power of the
                  voting securities of the corporation or other entity resulting
                  from such Business Combination (including, without limitation,
                  a corporation or other entity which as a result of such
                  Business Combination owns the Company or all or substantially
                  all of the assets of the Company or the Group (and, for
                  purposes hereof, the "Group" refers to the Company and its
                  Subsidiaries, collectively) either directly or through one or
                  more subsidiaries) outstanding after such Business
                  Combination, in substantially the same proportions as their
                  ownership, immediately prior to such Business Combination, of
                  outstanding Common Stock and the combined voting power of the
                  outstanding voting securities of the Company, respectively,
                  (b) no "person" or "group" within the meaning of Section 13(d)
                  or 14(d)(2) of the Act (excluding (1) any corporation or other
                  entity resulting from such Business Combination and (2) any
                  employee benefit plan (or related trust) of the Group or any
                  corporation or other entity resulting from such Business
                  Combination) beneficially owns 15% or more of the common
                  equity securities or 15% or more of the combined voting power
                  of the voting securities of the corporation or other entity
                  resulting from such Business Combination outstanding after
                  such Business Combination, except to the extent that such
                  beneficial ownership existed prior to such Business
                  Combination with respect to the Common Stock and the voting
                  securities of the Company, and (c) at least a majority of the
                  members of the board of directors (or similar governing body)
                  of the corporation or other entity resulting from such
                  Business Combination were members of the Board at the time of
                  the execution of the initial agreement providing for such
                  Business Combination or at the time of the action of the Board
                  approving such Business Combination, whichever is earlier; or

                               (y) any sale, lease, exchange or other transfer
                  (in one transaction or a series of related transactions) of
                  all or substantially all of the assets of the Company or the
                  Group, whether held directly or indirectly through one or more
                  subsidiaries (excluding any pledge, mortgage, grant of
                  security interest, sale-leaseback or similar transaction, but
                  including any foreclosure sale), provided, that, for purposes
                  of clauses (v) (x) and (v) (y) above, the divestiture of less
                  than substantially all of the assets of the Company or the
                  Group in one transaction or a series of related transactions,
                  whether effected by sale, lease, exchange, spin-off, sale of
                  stock of or merger or consolidation of a subsidiary, transfer
                  or otherwise, shall not constitute a Change of Control.

                  Notwithstanding the foregoing, (A) a Change of Control shall
not be deemed to

                                      23
<PAGE>   24
occur:

                      (I) pursuant to clause (i) or (ii) above, solely because
         15% or more of the then outstanding Common Stock or the then
         outstanding voting securities of the Company is or becomes beneficially
         owned or is directly or indirectly held or acquired by one or more
         employee benefit plans (or related trusts) maintained by the Group; or

                      (II) pursuant to clause (v)(y) above, (1) if the Board
         determines that any sale, lease, exchange or other transfer does not
         involve all or substantially all of the assets of the Company or the
         Group or (2) unless the Board determines otherwise, solely because of
         the consummation of a transaction or a series of transactions pursuant
         to which the Group sells, distributes to the Company's stockholders, or
         otherwise transfers or disposes of any or all of its ownership of its
         natural graphite-based product business (which includes its flexible
         graphite business), however owned (including ownership through one or
         more dedicated subsidiaries and holding companies therefor and
         successors thereto); and

                  (B) to the extent that a "person" or "group" within the
         meaning of Section 13(d) or 14(d)(2) of the Act is the beneficial owner
         of 15% or more of the Common Stock or the voting securities of the
         Company on the Effective Date, then the references therein to 15% shall
         be deemed to be references to 22.5% as (but only as) to such "person"
         or "group." For purposes hereof, references to "beneficial owner" and
         correlative phrases shall have the same definition as set forth in Rule
         13d-3 under the Act (except that ownership by underwriters for purposes
         of a distribution or offering shall not be deemed to be "beneficial
         ownership") and references to the Act or rules and regulations
         thereunder shall mean those in effect on the Effective Date."

         2.       The following new Article XI is added:

                                   "ARTICLE XI

                          RULES APPLICABLE TO GRAFTECH

                  11.1 General Applicability. Notwithstanding anything contained
                  in this Plan or the Graftech Option Plan to the contrary, if
                  the Company distributes to its stockholders, by dividend or
                  otherwise, shares of Graftech Common Stock which, at the time
                  such distribution is declared, constitute a majority of the
                  then outstanding shares of the Graftech Common Stock (the
                  "Spin-Off"), then the following provisions of this Article XI
                  shall apply. Prior to the IPO Date, the Company shall cause
                  Graftech to enter into agreements with it as it shall deem
                  necessary to give effect to this Article XI.

                  11.2 Option Grant.

                  11.2.1 Conversion. Each UCAR IPO Date Option (whether vested
                  or unvested) that is outstanding on the Spin-Off Date, shall,
                  upon and after the Spin-Off Date,

                                       24
<PAGE>   25
                  without further action by the optionee, the Board, the
                  Committee, the Board of Directors of Graftech (or any
                  committee thereof), or the Company or Graftech, be converted
                  into and represent the following two options:

                           (a) an option granted under this Plan which covers a
                  number of shares of Common Stock equal to the UCAR Original
                  Number of Shares and which has a per share exercise price
                  equal to the UCAR New Per Share Exercise Price (the "New UCAR
                  Option"); and

                           (b) an option granted under the Graftech Option Plan
                  which covers a number of shares of Graftech Common Stock equal
                  to the Graftech Pro Rata Number of Shares and which has a per
                  share exercise price equal to the Graftech Per Share Exercise
                  Price (the "New Graftech Option").

                 The Company shall be the issuer of each New UCAR Option and
                 Graftech shall be the issuer of each New Graftech Option.

                  11.2.2   Graftech Exercise Price. Graftech's obligation to
                  issue New Graftech Options shall be based on the Exercise
                  Price of the corresponding UCAR IPO Date Option as in effect
                  on the IPO Date regardless of any subsequent change, if any,
                  thereto.

                  11.3     Service For Purposes of Vesting and Exercisability.

                           (a) Any period of employment or service with the
                  Company (or any of its Subsidiaries) or with Graftech (or any
                  of its subsidiaries) shall be considered employment or service
                  with each of the Company and Graftech for purposes of
                  determining the vesting and exercisability of any New UCAR
                  Option and any New Graftech Option to the same extent as such
                  period would have been so considered under the related UCAR
                  IPO Date Option if Graftech had continued as a wholly owned
                  Subsidiary of the Company.

                           (b) The circumstances of any termination of
                  employment or service with the Company (or any of its
                  Subsidiaries) or Graftech (or any of its subsidiaries) for
                  purposes of determining vesting, exercisability and
                  termination or cancellation of any New UCAR Option or any New
                  Graftech Option shall be considered to be the same as it would
                  have been if Graftech had continued as a wholly owned
                  Subsidiary of the Company.

                  11.4 Rounding. In the case of each New UCAR Option and each
                  New Graftech Option, any resulting per share exercise price
                  which is not equal to a whole multiple of a cent shall be
                  rounded to the nearest whole cent and any resulting number of
                  shares covered thereby which is not equal to a whole number of
                  a share shall be rounded to the nearest whole share.

                  11.5     Terms and Conditions.

                           (a) The terms and conditions of each New UCAR Option
                  shall be the same as those of the related UCAR IPO Date Option
                  (except that the per share

                                      25
<PAGE>   26
                  exercise price and number of shares of Common Stock covered
                  thereby shall be changed as provided for in Section 11.2
                  hereof and except as otherwise required to give effect to
                  Sections 11.3 and 11.4 hereof). Each New Graftech Option shall
                  have the per share exercise price and cover the number of
                  shares of Graftech Common Stock as provided in Section 11.2,
                  shall be exercisable when (but only when) the related New UCAR
                  Option is exercisable and (except as otherwise required to
                  give effect to Sections 11.3 and 11.4 hereof, to differences
                  in administrative matters and to the preceding clause
                  regarding exercisability and except as required to provide for
                  exercisability as to a whole number of shares (subject to
                  adjustment for dilutive events occurring after the Declaration
                  Date)) shall have terms and conditions substantially the same
                  as those of the related New UCAR Option.

                           (b) If a New UCAR Option and the related New Graftech
                  Option are exercisable pursuant to Section 11.5(a), then
                  either of such Options can be exercised with or without
                  concurrent exercise, or affecting the future exercisability,
                  of the other Option.

                           (c) Upon exercise of a New UCAR Option or a New
                  Graftech Option, the exercise price of such Option shall be
                  payable to, and the securities purchased shall be delivered
                  by, the issuer of such Option.

                           (d) Notwithstanding anything contained herein to the
                  contrary, to the extent required by UCAR in its sole
                  discretion, the exercise price of each New UCAR Option and
                  each New Graftech Option shall be adjusted to the extent
                  necessary to avoid compensation expense under generally
                  accepted accounting principles applied by it to UCAR and
                  Graftech with respect to the transactions contemplated hereby.

                  11.6 Definitions. For purposes of this Article XI, the
                  following definitions shall apply:

                           (a)      "Declaration Date" shall mean the date on
                                    which the Spin-Off is declared by the Board.

                           (b)      "Graftech" shall mean UCAR Graph-Tech Inc.
                                    or any successor thereto or holding company
                                    therefor.

                           (c)      "Graftech Average Closing Price" shall mean
                                    the average closing sale price of Graftech
                                    Common Stock over the period of five trading
                                    days ending on the trading day immediately
                                    preceding the Declaration Date. If there is
                                    no such closing sale price on any such day,
                                    then the average of the closing highest bid
                                    and lowest asked prices shall be used.

                           (d)      "Graftech Common Stock" shall mean the
                                    common stock of Graftech.

                           (e)      "Graftech Market Cap" shall mean the number
                                    equal to the Graftech Average Closing Price
                                    multiplied by the sum of: (i) the number of
                                    outstanding shares of Graftech Common Stock
                                    at the

                                      26
<PAGE>   27
                                    close of the trading day immediately
                                    preceding the Declaration Date; plus (ii)
                                    the maximum number of shares of Graftech
                                    Common Stock issuable upon exercise,
                                    conversion or exchange of all "in-the-money"
                                    options, warrants, convertible or
                                    exchangeable securities or similar rights,
                                    granted by Graftech that are outstanding as
                                    of such day; less (iii) the number of shares
                                    of Graftech Common Stock that Graftech could
                                    repurchase on the open market on such day at
                                    the Graftech Average Closing Price if it
                                    used the aggregate cash consideration it
                                    would receive upon exercise, conversion or
                                    exchange thereof to effect such repurchase
                                    (without regard to transaction costs,
                                    trading volume or similar factors). For
                                    purposes hereof, "in-the-money" shall mean
                                    that the exercise, conversion or exchange
                                    price or rate is lower than the Graftech
                                    Average Closing Price.

                           (f)      "Graftech Option Plan" shall mean,
                                    individually and collectively, any and all
                                    plans maintained by Graftech under which
                                    stock options may be granted.

                           (g)      "Graftech Per Share Exercise Price" shall
                                    mean an amount equal to the result of the
                                    division of (i) the difference between the
                                    UCAR Original Per Share Exercise Price and
                                    UCAR New Per Share Exercise Price by (ii)
                                    the Spin-Off Ratio.

                           (h)      "Graftech Pro Rata Number of Shares" shall
                                    mean the result of the multiplication of the
                                    UCAR Original Number of Shares by the
                                    Spin-Off Ratio.

                           (i)      "IPO Date" shall mean the effective date of
                                    the registration statement filed by Graftech
                                    with the Securities and Exchange Commission
                                    with respect to the initial public offering
                                    of Graftech Common Stock (or, if later, the
                                    pricing date for such initial public
                                    offering).

                           (j)      "Spin-Off Date" shall mean the distribution
                                    date for the Spin-Off.

                           (k)      "Spin-Off Ratio" shall mean the number of
                                    shares of Graftech Common Stock to be
                                    received for each outstanding share of
                                    Common Stock by holders of record of Common
                                    Stock in the Spin-Off, expressed as a ratio.

                           (l)      "UCAR Average Closing Price" shall mean the
                                    average closing sale price of the Common
                                    Stock over the period of five trading days
                                    ending on the trading date immediately
                                    preceding the Declaration Date. If there is
                                    no such closing sale price on any such day,
                                    then the average of the closing highest bid
                                    and lowest asked

                                       27
<PAGE>   28
                                    prices shall be used.

                           (m)      "UCAR Market Cap" shall mean the number
                                    equal to the UCAR Average Closing Price
                                    multiplied by the sum of: (i) the number of
                                    outstanding shares of Common Stock at the
                                    close of the trading day immediately
                                    preceding the Declaration Date; plus (ii)
                                    the maximum number of shares of Common Stock
                                    issuable upon exercise, conversion or
                                    exchange of all "in-the-money" options,
                                    warrants, convertible or exchangeable
                                    securities or similar rights, granted by
                                    UCAR that are outstanding as of such day;
                                    less (iii) the number of shares of Common
                                    Stock that the Company could repurchase on
                                    the open market on such day at the UCAR
                                    Average Closing Price if it used the
                                    aggregate cash consideration it would
                                    receive upon exercise, conversion or
                                    exchange thereof to effect such repurchase
                                    (without regard to transaction costs,
                                    trading volume or similar factors). For
                                    purposes hereof, "in-the-money" shall mean
                                    that the exercise, conversion or exchange
                                    price or rate is lower than the UCAR Average
                                    Closing Price.

                           (n)      "UCAR Market Cap Ratio" shall mean a
                                    fraction whose numerator is the UCAR Market
                                    Cap and whose denominator is the sum of the
                                    (i) UCAR Market Cap and (ii) Graftech Market
                                    Cap.

                           (o)      "UCAR New Per Share Exercise Price" shall
                                    mean an amount equal to the UCAR Original
                                    Per Share Exercise Price multiplied by the
                                    UCAR Market Cap Ratio.

                           (p)      "UCAR IPO Date Option" shall mean an Option
                                    granted by the Company under the Plan on or
                                    prior to the IPO Date.

                           (q)      "UCAR Original Number of Shares" shall mean,
                                    as to any UCAR IPO Date Option, the number
                                    of shares of Common Stock covered by such
                                    UCAR IPO Date Option immediately prior to
                                    the IPO Date.

                           (r)      "UCAR Original Per Share Exercise Price"
                                    shall mean, as to any UCAR IPO Date Option,
                                    the Exercise Price of such UCAR IPO Date
                                    Option immediately prior to the Declaration
                                    Date."

                                      28
<PAGE>   29
                                    EXHIBIT 3

                    AMENDMENT TO THE UCAR INTERNATIONAL INC.
              MANAGEMENT STOCK OPTION PLAN (MID-MANAGEMENT VERSION)

         The Management Stock Option Plan (Mid-Management Version) is hereby
         amended, effective as of the effective date of the registration
         statement filed by Graftech Inc. with the Securities and Exchange
         Commission in connection with the initial public offering of shares of
         Graftech Inc.'s common stock (the "Effective Date"), in accordance with
         the following. Notwithstanding anything contained herein to the
         contrary, this amendment shall become null and void if such Effective
         Date does not occur before September 30, 2000 or the closing of such
         offering does not occur within 30 days after such Effective Date.

         1.       The definition of "Change of Control" is hereby amended to
                  read in its entirety as follows:

                  "Change of Control" shall mean the occurrence of any of the
                  following events:

                           (i) any "person" or "group" within the meaning of
                  Section 13(d) or 14(d)(2) of the Securities Exchange Act of
                  1934 (the "Act") becomes the beneficial owner of 15% or more
                  of the then outstanding Common Stock or 15% or more of the
                  then outstanding voting securities of the Company;

                           (ii) any "person" or "group" within the meaning of
                  Section 13(d) or 14(d)(2) of the Act acquires by proxy or
                  otherwise the right to vote for the election of directors, on
                  any merger or consolidation of the Company or on any other
                  matter or question with respect to 15% or more of the then
                  outstanding Common Stock or 15% or more of the combined voting
                  power of the then outstanding voting securities of the
                  Company;

                           (iii) Present Directors and New Directors cease for
                  any reason to constitute a majority of the Board (and, for
                  purposes of this clause (iii), "Present Directors" shall mean
                  individuals who at the beginning of any consecutive
                  twenty-four month period were members of the Board and "New
                  Directors" shall mean individuals whose election by the Board
                  or whose nomination for election as directors by the Company's
                  stockholders was approved by a vote of at least two-thirds of
                  the directors then in office who were Present Directors or New
                  Directors);

                           (iv) the stockholders of the Company approve a plan
                  of complete liquidation or dissolution of the Company; or

                           (v) consummation of:

                                      29
<PAGE>   30
                               (x) a reorganization, restructuring,
                  recapitalization, reincorporation, merger or consolidation of
                  the Company (a "Business Combination") unless, following such
                  Business Combination, (a) all or substantially all of the
                  individuals and entities who were the beneficial owners of the
                  Common Stock and the voting securities of the Company
                  outstanding immediately prior to such Business Combination
                  beneficially own, directly or indirectly, more than 50% of the
                  common equity securities and the combined voting power of the
                  voting securities of the corporation or other entity resulting
                  from such Business Combination (including, without limitation,
                  a corporation or other entity which as a result of such
                  Business Combination owns the Company or all or substantially
                  all of the assets of the Company or the Group (and, for
                  purposes hereof, the "Group" refers to the Company and its
                  Subsidiaries, collectively) either directly or through one or
                  more subsidiaries) outstanding after such Business
                  Combination, in substantially the same proportions as their
                  ownership, immediately prior to such Business Combination, of
                  outstanding Common Stock and the combined voting power of the
                  outstanding voting securities of the Company, respectively,
                  (b) no "person" or "group" within the meaning of Section 13(d)
                  or 14(d)(2) of the Act (excluding (1) any corporation or other
                  entity resulting from such Business Combination and (2) any
                  employee benefit plan (or related trust) of the Group or any
                  corporation or other entity resulting from such Business
                  Combination) beneficially owns 15% or more of the common
                  equity securities or 15% or more of the combined voting power
                  of the voting securities of the corporation or other entity
                  resulting from such Business Combination outstanding after
                  such Business Combination, except to the extent that such
                  beneficial ownership existed prior to such Business
                  Combination with respect to the Common Stock and the voting
                  securities of the Company, and (c) at least a majority of the
                  members of the board of directors (or similar governing body)
                  of the corporation or other entity resulting from such
                  Business Combination were members of the Board at the time of
                  the execution of the initial agreement providing for such
                  Business Combination or at the time of the action of the Board
                  approving such Business Combination, whichever is earlier; or

                               (y) any sale, lease, exchange or other transfer
                  (in one transaction or a series of related transactions) of
                  all or substantially all of the assets of the Company or the
                  Group, whether held directly or indirectly through one or more
                  subsidiaries (excluding any pledge, mortgage, grant of
                  security interest, sale-leaseback or similar transaction, but
                  including any foreclosure sale), provided, that, for purposes
                  of clauses (v) (x) and (v) (y) above, the divestiture of less
                  than substantially all of the assets of the Company or the
                  Group in one transaction or a series of related transactions,
                  whether effected by sale, lease, exchange, spin-off, sale of
                  stock of or merger or consolidation of a subsidiary, transfer
                  or otherwise, shall not constitute a Change of Control.

                  Notwithstanding the foregoing, (A) a Change of Control shall
                  not be deemed to

                                      30
<PAGE>   31
         occur:

                      (I) pursuant to clause (i) or (ii) above, solely because
         15% or more of the then outstanding Common Stock or the then
         outstanding voting securities of the Company is or becomes beneficially
         owned or is directly or indirectly held or acquired by one or more
         employee benefit plans (or related trusts) maintained by the Group; or

                      (II) pursuant to clause (v)(y) above, (1) if the Board
         determines that any sale, lease, exchange or other transfer does not
         involve all or substantially all of the assets of the Company or the
         Group or (2) unless the Board determines otherwise, solely because of
         the consummation of a transaction or a series of transactions pursuant
         to which the Group sells, distributes to the Company's stockholders, or
         otherwise transfers or disposes of any or all of its ownership of its
         natural graphite-based product business (which includes its flexible
         graphite business), however owned (including ownership through one or
         more dedicated subsidiaries and holding companies therefor and
         successors thereto); and

                  (B) to the extent that a "person" or "group" within the
         meaning of Section 13(d) or 14(d)(2) of the Act is the beneficial owner
         of 15% or more of the Common Stock or the voting securities of the
         Company on the Effective Date, then the references therein to 15% shall
         be deemed to be references to 22.5% as (but only as) to such "person"
         or "group." For purposes hereof, references to "beneficial owner" and
         correlative phrases shall have the same definition as set forth in Rule
         13d-3 under the Act (except that ownership by underwriters for purposes
         of a distribution or offering shall not be deemed to be "beneficial
         ownership") and references to the Act or rules and regulations
         thereunder shall mean those in effect on the Effective Date."

         2.       The following new Article XI is added:

                                   "ARTICLE XI

                          RULES APPLICABLE TO GRAFTECH

                  11.1 General Applicability. Notwithstanding anything contained
                  in this Plan or the Graftech Option Plan to the contrary, if
                  the Company distributes to its stockholders, by dividend or
                  otherwise, shares of Graftech Common Stock which, at the time
                  such distribution is declared, constitute a majority of the
                  then outstanding shares of the Graftech Common Stock (the
                  "Spin-Off"), then the following provisions of this Article XI
                  shall apply. Prior to the IPO Date, the Company shall cause
                  Graftech to enter into agreements with it as it shall deem
                  necessary to give effect to this Article XI.

                  11.2 Option Grant.

                  11.2.1 Conversion. Each UCAR IPO Date Option (whether vested
                  or unvested) that is outstanding on the Spin-Off Date, shall,
                  upon and after the Spin-Off Date,

                                      31
<PAGE>   32
                  without further action by the optionee, the Board, the
                  Committee, the Board of Directors of Graftech (or any
                  committee thereof), or the Company or Graftech, be converted
                  into and represent the following two options:

                           (a) an option granted under this Plan which covers a
                  number of shares of Common Stock equal to the UCAR Original
                  Number of Shares and which has a per share exercise price
                  equal to the UCAR New Per Share Exercise Price (the "New UCAR
                  Option"); and

                           (b) an option granted under the Graftech Option Plan
                  which covers a number of shares of Graftech Common Stock equal
                  to the Graftech Pro Rata Number of Shares and which has a per
                  share exercise price equal to the Graftech Per Share Exercise
                  Price (the "New Graftech Option").

                 The Company shall be the issuer of each New UCAR Option and
                 Graftech shall be the issuer of each New Graftech Option.

                 11.2.2   Graftech Exercise Price.  Graftech's obligation to
                 issue New Graftech Options shall be based on the Exercise Price
                 of the corresponding UCAR IPO Date Option as in effect on the
                 IPO Date regardless of any subsequent change, if any, thereto.

                 11.3     Service For Purposes of Vesting and Exercisability.

                           (a) Any period of employment or service with the
                  Company (or any of its Subsidiaries) or with Graftech (or any
                  of its subsidiaries) shall be considered employment or service
                  with each of the Company and Graftech for purposes of
                  determining the vesting and exercisability of any New UCAR
                  Option and any New Graftech Option to the same extent as such
                  period would have been so considered under the related UCAR
                  IPO Date Option if Graftech had continued as a wholly owned
                  Subsidiary of the Company.

                           (b) The circumstances of any termination of
                  employment or service with the Company (or any of its
                  Subsidiaries) or Graftech (or any of its subsidiaries) for
                  purposes of determining vesting, exercisability and
                  termination or cancellation of any New UCAR Option or any New
                  Graftech Option shall be considered to be the same as it would
                  have been if Graftech had continued as a wholly owned
                  Subsidiary of the Company.

                  11.4    Rounding. In the case of each New UCAR Option and each
                  New Graftech Option, any resulting per share exercise price
                  which is not equal to a whole multiple of a cent shall be
                  rounded to the nearest whole cent and any resulting number of
                  shares covered thereby which is not equal to a whole number of
                  a share shall be rounded to the nearest whole share.

                  11.5     Terms and Conditions.

                           (a) The terms and conditions of each New UCAR Option
                  shall be the same as those of the related UCAR IPO Date Option
                  (except that the per share

                                      32
<PAGE>   33
                  exercise price and number of shares of Common Stock covered
                  thereby shall be changed as provided for in Section 11.2
                  hereof and except as otherwise required to give effect to
                  Sections 11.3 and 11.4 hereof). Each New Graftech Option shall
                  have the per share exercise price and cover the number of
                  shares of Graftech Common Stock as provided in Section 11.2,
                  shall be exercisable when (but only when) the related New UCAR
                  Option is exercisable and (except as otherwise required to
                  give effect to Sections 11.3 and 11.4 hereof, to differences
                  in administrative matters and to the preceding clause
                  regarding exercisability and except as required to provide for
                  exercisability as to a whole number of shares (subject to
                  adjustment for dilutive events occurring after the Declaration
                  Date)) shall have terms and conditions substantially the same
                  as those of the related New UCAR Option.

                           (b) If a New UCAR Option and the related New Graftech
                  Option are exercisable pursuant to Section 11.5(a), then
                  either of such Options can be exercised with or without
                  concurrent exercise, or affecting the future exercisability,
                  of the other Option.

                           (c) Upon exercise of a New UCAR Option or a New
                  Graftech Option, the exercise price of such Option shall be
                  payable to, and the securities purchased shall be delivered
                  by, the issuer of such Option.

                           (d) Notwithstanding anything contained herein to the
                  contrary, to the extent required by UCAR in its sole
                  discretion, the exercise price of each New UCAR Option and
                  each New Graftech Option shall be adjusted to the extent
                  necessary to avoid compensation expense under generally
                  accepted accounting principles applied by it to UCAR and
                  Graftech with respect to the transactions contemplated hereby.

                  11.6 Definitions. For purposes of this Article XI, the
                  following definitions shall apply:

                           (a)      "Declaration Date" shall mean the date on
                                    which the Spin-Off is declared by the Board.

                           (b)      "Graftech" shall mean UCAR Graph-Tech Inc.
                                    or any successor thereto or holding company
                                    therefor.

                           (c)      "Graftech Average Closing Price" shall mean
                                    the average closing sale price of Graftech
                                    Common Stock over the period of five trading
                                    days ending on the trading day immediately
                                    preceding the Declaration Date. If there is
                                    no such closing sale price on any such day,
                                    then the average of the closing highest bid
                                    and lowest asked prices shall be used.

                           (d)      "Graftech Common Stock" shall mean the
                                    common stock of Graftech.

                           (e)      "Graftech Market Cap" shall mean the number
                                    equal to the Graftech Average Closing Price
                                    multiplied by the sum of: (i) the number of
                                    outstanding shares of Graftech Common Stock
                                    at the

                                      33
<PAGE>   34
                                    close of the trading day immediately
                                    preceding the Declaration Date; plus (ii)
                                    the maximum number of shares of Graftech
                                    Common Stock issuable upon exercise,
                                    conversion or exchange of all "in-the-money"
                                    options, warrants, convertible or
                                    exchangeable securities or similar rights,
                                    granted by Graftech that are outstanding as
                                    of such day; less (iii) the number of shares
                                    of Graftech Common Stock that Graftech could
                                    repurchase on the open market on such day at
                                    the Graftech Average Closing Price if it
                                    used the aggregate cash consideration it
                                    would receive upon exercise, conversion or
                                    exchange thereof to effect such repurchase
                                    (without regard to transaction costs,
                                    trading volume or similar factors). For
                                    purposes hereof, "in-the-money" shall mean
                                    that the exercise, conversion or exchange
                                    price or rate is lower than the Graftech
                                    Average Closing Price.

                           (f)      "Graftech Option Plan" shall mean,
                                    individually and collectively, any and all
                                    plans maintained by Graftech under which
                                    stock options may be granted.

                           (g)      "Graftech Per Share Exercise Price" shall
                                    mean an amount equal to the result of the
                                    division of (i) the difference between the
                                    UCAR Original Per Share Exercise Price and
                                    UCAR New Per Share Exercise Price by (ii)
                                    the Spin-Off Ratio.

                           (h)      "Graftech Pro Rata Number of Shares" shall
                                    mean the result of the multiplication of the
                                    UCAR Original Number of Shares by the
                                    Spin-Off Ratio.

                           (i)      "IPO Date" shall mean the effective date of
                                    the registration statement filed by Graftech
                                    with the Securities and Exchange Commission
                                    with respect to the initial public offering
                                    of Graftech Common Stock (or, if later, the
                                    pricing date for such initial public
                                    offering).

                           (j)      "Spin-Off Date" shall mean the distribution
                                    date for the Spin-Off.

                           (k)      "Spin-Off Ratio" shall mean the number of
                                    shares of Graftech Common Stock to be
                                    received for each outstanding share of
                                    Common Stock by holders of record of Common
                                    Stock in the Spin-Off, expressed as a ratio.

                           (l)      "UCAR Average Closing Price" shall mean the
                                    average closing sale price of the Common
                                    Stock over the period of five trading days
                                    ending on the trading date immediately
                                    preceding the Declaration Date. If there is
                                    no such closing sale price on any such day,
                                    then the average of the closing highest bid
                                    and lowest asked

                                      34
<PAGE>   35
                                    prices shall be used.

                           (m)      "UCAR Market Cap" shall mean the number
                                    equal to the UCAR Average Closing Price
                                    multiplied by the sum of: (i) the number of
                                    outstanding shares of Common Stock at the
                                    close of the trading day immediately
                                    preceding the Declaration Date; plus (ii)
                                    the maximum number of shares of Common Stock
                                    issuable upon exercise, conversion or
                                    exchange of all "in-the-money" options,
                                    warrants, convertible or exchangeable
                                    securities or similar rights, granted by
                                    UCAR that are outstanding as of such day;
                                    less (iii) the number of shares of Common
                                    Stock that the Company could repurchase on
                                    the open market on such day at the UCAR
                                    Average Closing Price if it used the
                                    aggregate cash consideration it would
                                    receive upon exercise, conversion or
                                    exchange thereof to effect such repurchase
                                    (without regard to transaction costs,
                                    trading volume or similar factors). For
                                    purposes hereof, "in-the-money" shall mean
                                    that the exercise, conversion or exchange
                                    price or rate is lower than the UCAR Average
                                    Closing Price.

                           (n)      "UCAR Market Cap Ratio" shall mean a
                                    fraction whose numerator is the UCAR Market
                                    Cap and whose denominator is the sum of the
                                    (i) UCAR Market Cap and (ii) Graftech Market
                                    Cap.

                           (o)      "UCAR New Per Share Exercise Price" shall
                                    mean an amount equal to the UCAR Original
                                    Per Share Exercise Price multiplied by the
                                    UCAR Market Cap Ratio.

                           (p)      "UCAR IPO Date Option" shall mean an Option
                                    granted by the Company under the Plan on or
                                    prior to the IPO Date.

                           (q)      "UCAR Original Number of Shares" shall mean,
                                    as to any UCAR IPO Date Option, the number
                                    of shares of Common Stock covered by such
                                    UCAR IPO Date Option immediately prior to
                                    the IPO Date.

                           (r)      "UCAR Original Per Share Exercise Price"
                                    shall mean, as to any UCAR IPO Date Option,
                                    the Exercise Price of such UCAR IPO Date
                                    Option immediately prior to the Declaration
                                    Date."

                                      35

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00011-of-00352.parquet"}]]