Document:

<PAGE>   1
                                                                     Exhibit 4.2

                       CABOT MICROELECTRONICS CORPORATION

                                       and

                         EQUISERVE TRUST COMPANY, N.A.,

                                  Rights Agent

                                RIGHTS AGREEMENT

                           Dated as of March 24, 2000

<PAGE>   2
                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                      Page

<S>         <C>                                                                      <C>
Section 1.  Certain Definitions ...............................................         1

Section 2.  Appointment of Rights Agent .......................................         5

Section 3.  Issuance of Right Certificates ....................................         5

Section 4.  Form of Right Certificate .........................................         7

Section 5.  Countersignature and Registration .................................         8

Section 6.  Transfer, Split-Up, Combination and Exchange of Right
            Certificates; Mutilated, Destroyed, Lost or Stolen
            Right Certificate .................................................         9

Section 7.  Exercise of Rights; Purchase Price; Expiration Date of Rights......        10

Section 8.  Cancellation and Destruction of Right Certificates ................        12

Section 9.  Reservation and Availability of Preferred Shares ..................        13

Section 10.  Preferred Shares Record Date .....................................        14

Section 11.  Adjustment of Purchase Price, Number and Kind of Shares or
             Number of Rights .................................................        14

Section 12.  Certificate of Adjusted Purchase Price or Number of Shares........        22

Section 13.  Consolidation, Merger or Sale or Transfer of Assets or
             Earning Power ....................................................        23

Section 14.  Fractional Rights and Fractional Shares ..........................        25

Section 15.  Rights of Action .................................................        27

Section 16.  Agreement of Right Holders .......................................        27

Section 17.  Right Certificate Holder Not Deemed a Stockholder ................        28
</TABLE>

                                       -i-

<PAGE>   3
<TABLE>
<CAPTION>

<S>          <C>                                                                     <C>
Section 18.  Concerning the Rights Agent .....................................       29

Section 19.  Merger or Consolidation or Change of Name of Rights Agent........       29

Section 20.  Duties of Rights Agent ..........................................       30

Section 21.  Change of Rights Agent ..........................................       33

Section 22.  Issuance of New Right Certificates ..............................       34

Section 23.  Redemption and Termination ......................................       34

Section 24.  Exchange ........................................................       36

Section 25.  Notice of Certain Events ........................................       37

Section 26.  Notices .........................................................       38

Section 27.  Supplements and Amendments ......................................       38

Section 28.  Determination and Actions by the Board of Directors, etc ........       39

Section 29.  Successors ......................................................       40

Section 30.  Benefits of this Agreement ......................................       40

Section 31.  Severability ....................................................       40

Section 32.  Governing Law ...................................................       40

Section 33.  Counterparts ....................................................       41

Section 34.  Descriptive Headings ............................................       41

Signatures ...................................................................       42
</TABLE>

Exhibit A - Certificate of Designation, Preferences and Rights of Series A
            Junior Participating Preferred Stock of Cabot Microelectronics
            Corporation

Exhibit B - Form of Right Certificate

Exhibit C - Summary of Rights to Purchase Preferred Shares

<PAGE>   4

Defined Term Cross Reference Sheet
<TABLE>
<CAPTION>

Term                                                   Location

<S>                                                    <C>
Acquiring Person                                       Section 1(a)
Act                                                    Section 1(b)
Adjustment Shares                                      Section 11(a)(ii)
Adjusted Number of Shares                              Section 11(a)(iii)
Adjusted Purchase Price                                Section 11(a)(iii)
Affiliate                                              Section 1(c)
Agreement                                              Preface
Associate                                              Section 1(c)
Beneficial Owner                                       Section 1(d)
Beneficially Own                                       Section 1(d)
Business Day                                           Section 1(e)
Capital Stock Equivalent                               Section 11(a)(iii)
Close of Business                                      Section 1(f)
Common Shares                                          Section 1(g)
Corporation                                            Preface
Current Per Share Market Price                         Section 11(d)(i)
</TABLE>
                                      -iii-

<PAGE>   5

<TABLE>
<CAPTION>

<S>                                                          <C>
Distribution Date                                            Section 3(a)
Documents                                                    Section 18
Equivalent Preferred Shares                                  Section 11(b)
Exchange Act                                                 Section 1(c)
Exchange Ratio                                               Section 24(a)
Final Expiration Date                                        Section 7(a)
Interested Stockholder                                       Section 1(j)
NASDAQ                                                       Section 11(d)(i)
Permitted Offer                                              Section 1(k)
Person                                                       Section 1(l)
Preferred Shares                                             Section 1(m)
Principal Party                                              Section 13(b)
Proration Factor                                             Section 11(a)(iii)
Purchase Price                                               Section 4(a)
Record Date                                                  Preface
Redemption Date                                              Section 7(a)
Redemption Price                                             Section 23(a)(i)
Right                                                        Preface
Right Certificate                                            Section 3(a)
Rights Agent                                                 Preface
</TABLE>

                                      -iv-

<PAGE>   6
<TABLE>
<CAPTION>

<S>                                                        <C>
Rights Agreement                                             Section 3(c)
Section 11(a)(ii) Event                                      Section 1(o)
Section 13 Event                                             Section 13(a)
Security                                                     Section 11(d)(i)
Shares Acquisition Date                                      Section 1(q)
Subsidiary                                                   Section 1(r)
Summary of Rights                                            Section 3(b)
Then Outstanding                                             Section 1(d)(iii)
Trading Day                                                  Section 11(d)(i)
Triggering Event                                             Section 1(s)
Voting Securities                                            Section 13(a)
</TABLE>
                                       -v-

<PAGE>   7
                                RIGHTS AGREEMENT

         RIGHTS AGREEMENT, dated as of March 24, 2000 (this "Agreement"),
between Cabot Microelectronics Corporation, a Delaware corporation (the
"Corporation"), and EquiServe Trust Company, N.A., a national banking
association (the "Rights Agent").

         The Board of Directors of the Corporation has authorized and declared a
dividend of one preferred share purchase right (a "Right") for each Common Share
(as hereinafter defined) of the Corporation outstanding at the Close of Business
on April 7, 2000 (the "Record Date"), each Right representing the right to
purchase one one-thousandth of a Preferred Share (as hereinafter defined), upon
the terms and subject to the conditions herein set forth, and has further
authorized and directed the issuance of one Right with respect to each Common
Share that shall become outstanding between the Record Date and the earliest of
the Distribution Date, the Redemption Date or the Final Expiration Date (as such
terms are hereinafter defined); provided, however, that Rights may be issued
with respect to Common Shares that shall become outstanding after the
Distribution Date and prior to the earlier of the Redemption Date and the Final
Expiration Date in accordance with the provisions of Section 22 of this
Agreement.

         Accordingly, in consideration of the premises and the mutual agreements
herein set forth, the parties hereby agree as follows:

Section 1.  Certain Definitions.

         For purposes of this Agreement, the following terms have the meanings
indicated:

                  (a) "Acquiring Person" shall mean any Person who or which,
together with all Affiliates and Associates of such Person, shall be the
Beneficial Owner of 15% or more of the then outstanding Common Shares (other
than as a result of a Permitted Offer (as hereinafter defined)) or was such a
Beneficial Owner at any time after the date hereof, whether or not such person
continues to be the Beneficial Owner of 15% or more of the then outstanding
Common Shares. Notwithstanding the foregoing, (A) the term "Acquiring Person"
shall not include (i) the Corporation, (ii) any Subsidiary of the Corporation,
(iii) any employee benefit plan of the Corporation or of any Subsidiary of the
Corporation, (iv) any Person or entity organized, appointed or established by
the Corporation for or pursuant to the terms of any such plan, (v) any Person,
who or which together with all Affiliates and Associates of such Person becomes
the Beneficial Owner of 15% or more of the then outstanding Common Shares as a
result of the acquisition of Common Shares directly from the Corporation or (vi)
any Grandfathered Person, and (B) no Person shall be deemed to be an "Acquiring
Person" either (X) as a result of the acquisition of Common Shares by the
Corporation which, by reducing the number of Common Shares outstanding,
increases the proportional number of shares beneficially

                                       1
<PAGE>   8
owned by such Person together with all Affiliates and Associates of such Person;
except that if (i) a Person would become an Acquiring Person (but for the
operation of this subclause X) as a result of the acquisition of Common Shares
by the Corporation, and (ii) after such share acquisition by the Corporation,
such Person, or an Affiliate or Associate of such Person, becomes the Beneficial
Owner of any additional Common Shares, then such Person shall be deemed an
Acquiring Person, or (Y) if such Person became an Acquiring Person
inadvertently, (i) promptly after such Person discovers that such Person would
otherwise have become an Acquiring Person (but for the operation of this
subclause Y), such Person notifies the Board of Directors that such Person did
so inadvertently and (ii) within 2 days after such notification, such Person is
the Beneficial Owner of less than 15% of the outstanding Common Shares.

                  (b) "Act" shall mean the Securities Act of 1933, as amended
and as in effect on the date of this Agreement.

                  (c) "Affiliate" and "Associate" shall have the respective
meanings ascribed to such terms in Rule 12b-2 of the General Rules and
Regulations under the Securities Exchange Act of 1934, as amended and in effect
on the date of this Agreement (the "Exchange Act").

                  (d) A Person shall be deemed the "Beneficial Owner" of and
shall be deemed to "Beneficially Own" any securities:

                           (i) which such Person or any of such Person's
Affiliates or Associates beneficially owns, directly or indirectly;

                           (ii) which such Person or any of such Person's
Affiliates or Associates has (A) the right to acquire (whether such right is
exercisable immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding, or upon the exercise of conversion
rights, exchange rights, rights (other than the Rights), warrants or options, or
otherwise; provided, however, that a Person shall not be deemed the Beneficial
Owner of, or to Beneficially Own, securities tendered pursuant to a tender or
exchange offer made by or on behalf of such Person or any of such Person's
Affiliates or Associates until such tendered securities are accepted for
purchase or exchange; or (B) the right to vote pursuant to any agreement,
arrangement or understanding; provided, however, that a Person shall not be
deemed the Beneficial Owner of, or to Beneficially Own, any security if the
agreement, arrangement or understanding to vote such security (1) arises solely
from a revocable proxy or consent given to such Person in response to a public
proxy or consent solicitation made pursuant to, and in accordance with, the
applicable rules and regulations promulgated under the Exchange Act and (2) is
not also then reportable on Schedule 13D under the Exchange Act (or any
comparable or successor report); or

                                       2
<PAGE>   9
                           (iii) which are beneficially owned, directly or
indirectly, by any other Person (or any Affiliate or Associate thereof) with
which such Person (or any of such Person's Affiliates or Associates) has any
agreement, arrangement or understanding (other than customary agreements with
and between underwriters and selling group members with respect to a bona fide
public offering of securities) relating to the acquisition, holding, voting
(except to the extent contemplated by the proviso to Section 1(d)(ii)(B)) or
disposing of any securities of the Corporation.

         Notwithstanding anything in this definition of Beneficial Ownership to
the contrary, the phrase "then outstanding," when used with reference to a
Person's Beneficial Ownership of securities of the Corporation, shall mean the
number of such securities then issued and outstanding together with the number
of such securities not then actually issued and outstanding which such Person
would be deemed to own beneficially hereunder.

                  (e) "Business Day" shall mean any day other than a Saturday,
Sunday or U.S. federal holiday.

                  (f) "Close of Business" on any given date shall mean 5:00
P.M., New York City, New York time, on such date; provided, however, that if
such date is not a Business Day it shall mean 5:00 P.M., New York City, New York
time, on the next succeeding Business Day.

                  (g) "Common Shares" when used with reference to the
Corporation shall mean the shares of Common Stock, par value $.001 per share, of
the Corporation or, in the event of a subdivision, combination or consolidation
with respect to such shares of Common Stock, the shares of Common Stock
resulting from such subdivision, combination or consolidation. "Common Shares"
when used with reference to any Person other than the Corporation shall mean the
capital stock (or equity interest) with the greatest voting power of such other
Person or, if such other Person is a Subsidiary of another Person, the Person or
Persons which ultimately control such first-mentioned Person.

                   (h) "Distribution Date" shall have the meaning set forth in
Section 3 hereof.

                   (i) "Final Expiration Date" shall have the meaning set forth
in Section 7 hereof.

                   (j) "Grandfathered Person" shall mean any of the following:

                           (i) Cabot Corporation and any Subsidiary of Cabot
                  Corporation so long as Cabot Corporation and all Subsidiaries
                  of Cabot Corporation own 50% or more of the total outstanding
                  equity securities of the Corporation;

                                       3
<PAGE>   10

                           (ii) any descendant of Godfrey L. Cabot (the deceased
                  founder of the Corporation), or any spouse, widow or widower
                  of any such descendant (any such descendants, spouses, widows
                  and widowers collectively defined as the "Cabot Family
                  Members");

                           (iii) any trust (including any voting trust) which is
                  in existence on the date of this Agreement and which has been
                  established by Godfrey L. Cabot or one or more Cabot Family
                  Members, any estate of, or the executor or administrator of
                  any estate of, or any guardian or custodian for, a Cabot
                  Family Member who died on or before the date of this Agreement
                  (such trusts, estates, executors, administrators or guardians
                  or custodians collectively defined as the "Cabot Family
                  Entities");

                           (iv) any estate of, or the executor or administrator
                  of any estate of, or any guardian or custodian for, a Cabot
                  Family Member who dies after the date of this Agreement, or
                  any trust established after the date hereof by one or more
                  Cabot Family Members or Cabot Family Entities, provided that
                  one or more Cabot Family Members or Cabot Family Entities,
                  collectively, are the beneficiaries of at least 80% of the
                  actuarially-determined beneficial interests in such estate or
                  trust;

                           (v) any charitable organization which qualifies as an
                  exempt organization under Section 501(c) of the Internal
                  Revenue Code of 1986, as amended ("Charitable Organization")
                  which is established by one or more Cabot Family Members or
                  Cabot Family Entities (a "Cabot Family Charitable
                  Organization");

                           (vi) any corporation of which at least 80% of the
                  voting power and at least 80% of the equity interest is held,
                  directly or indirectly, by or for the benefit of one or more
                  Cabot Family Members, Cabot Family Entities, estates,
                  executors, administrators, guardians or custodians or trusts
                  described in clause (iv) above, or Cabot Family Charitable
                  Organizations; and

                           (vii) any general partnership, limited partnership,
                  organization or other entity or arrangement of which at least
                  80% of the voting interest and at least 80% of the economic
                  interest is held, directly or indirectly, by or for the
                  benefit of one or more Cabot Family Members, Cabot Family
                  Entities, estates, executors, administrators, guardians or
                  custodians, or trusts described in clause (iii) above, or
                  Cabot Family Charitable Organizations;

                  provided, however, that a Grandfathered Person shall cease to
                  be a

                                       4
<PAGE>   11
                  Grandfathered Person at the time that all or any part of its
                  interest in the Common Shares becomes reportable on a Schedule
                  13D under the Exchange Act (or any comparable or successor
                  report) as part of a "group" (as such term is defined or used
                  under Rule 13d-5(b) of the General Rules and Regulations under
                  the Exchange Act) which beneficially owns, directly or
                  indirectly, 15% or more of the then outstanding Common Shares
                  and includes one or more Persons (including any Affiliate or
                  Associate thereof) who (i) are not Grandfathered Persons and
                  (ii) individually or in the aggregate beneficially own,
                  directly or indirectly, in excess of 1% of the then
                  outstanding Common Shares.

                  For purposes of the definition of Grandfathered Person, the
term "descendant" shall be deemed to include adopted children and the issue of
such adopted children, including adopted issue, provided that any such adoptee
is adopted before his or her eighteenth birthday.

                  (k) "Interested Stockholder" shall mean any Acquiring Person
or any Affiliate or Associate of an Acquiring Person or any other Person in
which any such Acquiring Person, Affiliate or Associate has an interest, or any
other Person acting directly or indirectly on behalf of or in concert with any
such Acquiring Person, Affiliate or Associate.

                  (l) "Permitted Offer" shall mean a tender or exchange offer
which is for all outstanding Common Shares at a price and on terms determined,
prior to the purchase of shares under such tender or exchange offer, by at least
a majority of the members of the Board of Directors who are not officers of the
Corporation and who are not Acquiring Persons or Persons who would become
Acquiring Persons as a result of the offer in question or Affiliates,
Associates, nominees or representatives of any such Person, to be adequate
(taking into account all factors that such Directors deem relevant including,
without limitation, prices that could reasonably be achieved if the Corporation
or its assets were sold on an orderly basis designed to realize maximum value)
and otherwise in the best interests of the Corporation and its stockholders
(other than the Person or any Affiliate or Associate thereof on whose behalf the
offer is being made) taking into account all factors that such directors may
deem relevant.

                  (m) "Person" shall mean any individual, firm, partnership,
corporation, limited liability company, trust, association, joint venture or
other entity, and shall include any successor (by merger or otherwise) of such
entity.

                  (n) "Preferred Shares" shall mean shares of Series A Junior
Participating Preferred Stock, par value $.001 per share, of the Corporation,
having the relative rights, preferences and limitations set forth in the
Certificate of Designation, Preferences and

                                       5
<PAGE>   12
Rights attached to this Agreement as Exhibit A.

                   (o) "Redemption Date" shall have the meaning set forth in
Section 7 hereof.

                   (p) "Section 11(a)(ii) Event" shall mean any event described
in Section 11(a)(ii) hereof.

                   (q) "Section 13 Event" shall mean any event described in
clause (x), (y) or (z) of Section 13(a) hereof.

                  (r) "Shares Acquisition Date" shall mean the first date of
public announcement (which, for purposes of this definition, shall include,
without limitation, a report filed pursuant to the Exchange Act) by the
Corporation or an Acquiring Person that an Acquiring Person has become such;
provided, that, if such Person is determined not to have become an Acquiring
Person pursuant to Section 1(a)(B)(Y) hereof, then no Shares Acquisition Date
shall be deemed to have occurred.

                  (s) "Subsidiary" of any Person shall mean any corporation or
other Person of which a majority of the voting power of the voting equity
securities or equity interest is owned, directly or indirectly, by such Person.

                  (t) "Triggering Event" shall mean any Section 11(a)(ii) Event
or any Section 13 Event.

           Section 2. Appointment of Rights Agent.

         The Corporation hereby appoints the Rights Agent to act as agent for
the Corporation in accordance with the terms and conditions hereof, and the
Rights Agent hereby accepts such appointment. The Corporation may from time to
time appoint such co-Rights Agents as it may deem necessary or desirable upon
ten (10) days' prior written notice to the Rights Agent. The Rights Agent shall
have no duty to supervise, and shall in no event be liable for, the acts and
omissions of any such co-Rights Agent.

          Section 3.  Issuance of Right Certificates.

                  (a) Until the earlier of (i) the Shares Acquisition Date or
(ii) the Close of Business on the tenth day (or such later date as may be
determined by action of the Board of Directors of the Corporation) after the
date of the commencement by any Person (other than the Corporation, any
Subsidiary of the Corporation, any employee benefit plan of the

                                       6
<PAGE>   13
Corporation or of any Subsidiary of the Corporation or any Person or entity
organized, appointed or established by the Corporation for or pursuant to the
terms of any such plan) of, or of the first public announcement of the intention
of any Person (other than the Corporation, any Subsidiary of the Corporation,
any employee benefit plan of the Corporation or of any Subsidiary of the
Corporation or any Person or entity organized, appointed or established by the
Corporation for or pursuant to the terms of any such plan) to commence (which
intention to commence remains in effect for five Business Days after such
announcement), a tender or exchange offer the consummation of which would result
in any Person becoming an Acquiring Person (including, in the case of both (i)
and (ii), any such date which is after the date of this Agreement and prior to
the issuance of the Rights), the earlier of such dates being herein referred to
as the "Distribution Date," (x) the Rights will be evidenced (subject to the
provisions of Section 3(b) hereof) by the certificates for Common Shares
registered in the names of the holders thereof (which certificates shall also be
deemed to be Right Certificates) and not by separate Right Certificates, and (y)
the right to receive Right Certificates will be transferable only in connection
with the transfer of the underlying Common Shares (including a transfer to the
Corporation); provided, however, that if a tender or exchange offer is
terminated prior to the occurrence of a Distribution Date, then no Distribution
Date shall occur as a result of such tender or exchange offer. As soon as
practicable after the Distribution Date, the Corporation will prepare and
execute, the Rights Agent will countersign, and the Corporation will send or
cause to be sent by first- class, postage-prepaid mail, to each record holder of
Common Shares as of the Close of Business on the Distribution Date, at the
address of such holder shown on the records of the Corporation, a Right
Certificate, substantially in the form of Exhibit B hereto (a "Right
Certificate"), evidencing one Right for each Common Share so held. As of and
after the Distribution Date, the Rights will be evidenced solely by such Right
Certificates.

                  (b) As promptly as practicable following the Record Date, the
Corporation will send a copy of a Summary of Rights to Purchase Preferred
Shares, in substantially the form of Exhibit C hereto (the "Summary of Rights"),
by first-class, postage-prepaid mail, to each record holder of Common Shares as
of the Close of Business on the Record Date, at the address of such holder shown
on the records of the Corporation. With respect to certificates for Common
Shares outstanding as of the Record Date, until the Distribution Date, the
Rights will be evidenced by such certificates registered in the names of the
holders thereof together with a copy of the Summary of Rights attached thereto.
Until the Distribution Date (or the earlier of the Redemption Date or the Final
Expiration Date), the surrender for transfer of any certificate for Common
Shares outstanding on the Record Date, with or without a copy of the Summary of
Rights attached thereto, shall also constitute the transfer of the Rights
associated with such Common Shares. As a result of the execution of this
Agreement, on April 7, 2000, each share of Common Stock outstanding on such date
shall, subject to the terms and conditions of this Agreement, also represent one
Right and shall, subject to the terms and conditions of this Agreement,
represent the right to purchase one one-thousandth of a share of Preferred
Stock.

                                       7
<PAGE>   14

                  (c) Certificates for Common Shares which become outstanding
(including, without limitation, reacquired Common Shares referred to below in
this paragraph (c)) after the Record Date but prior to the earliest of the
Distribution Date, the Redemption Date or the Final Expiration Date, shall be
deemed also to be certificates for Rights, and shall bear the following legend:

        "This certificate also evidences and entitles the holder hereof to
        certain rights as set forth in a Rights Agreement between Cabot
        Microelectronics Corporation and EquiServe Trust Company, N.A., dated as
        of March 24, 2000 (the "Rights Agreement"), the terms of which are
        hereby incorporated herein by reference and a copy of which is on file
        at the principal executive offices of Cabot Microelectronics Corporation
        Under certain circumstances, as set forth in the Rights Agreement, such
        Rights will be evidenced by separate certificates and will no longer be
        evidenced by this certificate. Cabot Microelectronics Corporation will
        mail to the holder of this certificate a copy of the Rights Agreement
        without charge after receipt of a written request therefor. Under
        certain circumstances set forth in the Rights Agreement, Rights issued
        to, or held by, any Person who is, was or becomes an Acquiring Person or
        an Affiliate or Associate thereof (as defined in the Rights Agreement)
        and certain related persons, whether currently held by or on behalf of
        such Person or by any subsequent holder, may become null and void."

With respect to such certificates containing the foregoing legend, until the
Distribution Date, the Rights associated with the Common Shares represented by
such certificates shall be evidenced by such certificates alone, and the
surrender for transfer of any such certificate shall also constitute the
transfer of the Rights associated with the Common Shares represented thereby. In
the event that the Corporation purchases or acquires any Common Shares after the
Record Date but prior to the Distribution Date, any Rights associated with such
Common Shares shall be deemed canceled and retired so that the Corporation shall
not be entitled to exercise any Rights associated with the Common Shares which
are no longer outstanding. The failure to print the foregoing legend on any such
Common Shares certificate or any other defect therein shall not affect in any
manner whatsoever the application or interpretation of the provisions of Section
7(e) hereof.

         Section 4. Form of Right Certificate.

                  (a) The Right Certificates (and the forms of election to
purchase and of assignment to be printed on the reverse thereof) shall be
substantially in the form set forth in Exhibit B hereto and may have such marks
of identification or designation and such legends, summaries or endorsements
printed thereon as the Corporation may deem appropriate (which do not affect the
duties or responsibilities of the Rights Agent) and as are not inconsistent with
the provisions of this Agreement, or as may be required to comply with any
applicable law or with any rule or regulation made pursuant thereto or

                                       8
<PAGE>   15
with any rule or regulation of any stock exchange on which the Rights may from
time to time be listed, or to conform to usage. Subject to the provisions of
Section 11 and Section 22 hereof, the Right Certificates shall entitle the
holders thereof to purchase such number of one one-thousandths of a Preferred
Share as shall be set forth therein at the price per one one-thousandth of a
Preferred Share set forth therein (the "Purchase Price"), but the amount and
type of securities purchasable upon the exercise of each Right and the Purchase
Price thereof shall be subject to adjustment as provided herein.

                  (b) Any Right Certificate issued pursuant to Section 3(a) or
Section 22 hereof that represents Rights which are null and void pursuant to
Section 7(e) of this Agreement and any Right Certificate issued pursuant to
Section 6 or Section 11 hereof upon transfer, exchange, replacement or
adjustment of any other Right Certificate referred to in this sentence, shall
contain (to the extent feasible) the following legend:

         "The Rights represented by this Right Certificate are or were
         Beneficially Owned by a Person who was or became an Acquiring Person or
         an Affiliate or Associate of an Acquiring Person (as such terms are
         defined in the Rights Agreement). Accordingly, this Right Certificate
         and the Rights represented hereby are null and void."

Provisions of Section 7(e) of this Agreement shall be operative whether or not
the foregoing legend is contained on any such Right Certificate. The Corporation
shall notify the Rights Agent to the extent that this Section 4(b) applies.

         Section 5. Countersignature and Registration.

         The Right Certificates shall be executed on behalf of the Corporation
by its Chairman of the Board, its Chief Executive Officer, its President, any of
its Vice Presidents, or its Treasurer, either manually or by facsimile
signature, shall have affixed thereto the Corporation's seal or a facsimile
thereof, and shall be attested by the Secretary or an Assistant Secretary of the
Corporation, either manually or by facsimile signature. The Right Certificates
shall be countersigned by the Rights Agent and shall not be valid for any
purpose unless so countersigned. In case any officer of the Corporation who
shall have signed any of the Right Certificates shall cease to be such officer
of the Corporation before countersignature by the Rights Agent and issuance and
delivery by the Corporation, such Right Certificates may nevertheless be
countersigned by the Rights Agent and issued and delivered by the Corporation
with the same force and effect as though the person who signed such Right
Certificates had not ceased to be such officer of the Corporation; and any Right
Certificate may be signed on behalf of the Corporation by any Person who, at the
actual date of the execution of such Right Certificate, shall be a proper
officer of the Corporation to sign such Right Certificate, although at the date
of the execution of this Agreement any such Person was not such an officer.

                                       9
<PAGE>   16
         Following the Distribution Date and receipt by the Rights Agent of a
list of record holders of Rights, the Rights Agent will keep or cause to be
kept, at its office set forth in Section 26 hereof or offices designated as the
appropriate place for surrender of such Right Certificate or transfer, books for
registration and transfer of the Right Certificates issued hereunder. Such books
shall show the names and addresses of the respective holders of the Right
Certificates, the number of Rights evidenced on its face by each of the Right
Certificates and the certificate number and the date of each of the Right
Certificates.

         Section  6. Transfer, Split-Up, Combination and Exchange of Right
                     Certificates; Mutilated, Destroyed, Lost or Stolen Right
                     Certificate.

         Subject to the provisions of Section 4(b), Section 7(e) and Section 14
hereof, at any time after the Close of Business on the Distribution Date, and at
or prior to the Close of Business on the earlier of the Redemption Date or the
Final Expiration Date, any Right Certificate or Right Certificates may be
transferred, split up, combined or exchanged for another Right Certificate or
Right Certificates, entitling the registered holder to purchase a like number of
one one-thousandths of a Preferred Share (or, following a Triggering Event,
other securities, as the case may be) as the Right Certificate or Right
Certificates surrendered then entitled such holder (or former holder in the case
of a transfer) to purchase. Any registered holder desiring to transfer, split
up, combine or exchange any Right Certificate or Right Certificates shall make
such request in writing delivered to the Rights Agent, and shall surrender the
Right Certificate or Right Certificates to be transferred, split up, combined or
exchanged at the office or offices of the Rights Agent designated for such
purpose. Neither the Rights Agent nor the Corporation shall be obligated to take
any action whatsoever with respect to the transfer of any such surrendered Right
Certificate until the registered holder shall have completed and signed the
certificate contained in the form of assignment on the reverse side of such
Right Certificate and shall have provided such additional evidence of the
identity of the Beneficial Owner (or former Beneficial Owner) or Affiliates or
Associates thereof as the Corporation or the Rights Agent shall reasonably
request. Thereupon the Rights Agent shall, subject to Section 4(b), Section 7(e)
and Section 14 hereof, countersign and deliver to the Person entitled thereto a
Right Certificate or Right Certificates, as the case may be, as so requested.
The Corporation may require payment of a sum sufficient to cover any tax or
governmental charge that may be imposed in connection with any transfer, split
up, combination or exchange of Right Certificates. If the Corporation requires
the payment referred to in the immediately preceding sentence, then the Rights
Agent shall not be required to process any transaction until it receives notice
from the Corporation that the Corporation has received such payment.

         Upon receipt by the Corporation and the Rights Agent of evidence
satisfactory to them of the loss, theft, destruction or mutilation of a Right
Certificate, and, in case of

                                       10
<PAGE>   17
loss, theft or destruction, of indemnity or security reasonably satisfactory to
them, and, at the Corporation's request, reimbursement to the Corporation and
the Rights Agent of all reasonable expenses incidental thereto, and upon
surrender to the Rights Agent and cancellation of the Right Certificate if
mutilated, the Corporation will make and deliver a new Right Certificate of like
tenor to the Rights Agent for countersignature and delivery to the registered
holder in lieu of the Right Certificate so lost, stolen, destroyed or mutilated.

         Section 7. Exercise of Rights; Purchase Price; Expiration Date of
                    Rights.

                  (a) Subject to Section 7(e) hereof, the registered holder of
any Right Certificate may exercise the Rights evidenced thereby (except as
otherwise provided herein) in whole or in part at any time after the
Distribution Date upon surrender of the Right Certificate, with the form of
election to purchase and the certificate on the reverse side thereof duly
executed, to the Rights Agent at the office or offices of the Rights Agent
designated for such purpose, together with payment of the aggregate Purchase
Price for the total number of one one-thousands of a Preferred Share (or other
securities, as the case may be) as to which such surrendered Rights are
exercised, at or prior to the earliest of (i) the Close of Business on April 7,
2010 (the "Final Expiration Date"), (ii) the time at which the Rights are
redeemed as provided in Section 23 hereof (the "Redemption Date"); (iii) the
time at which the Rights are exchanged as provided in Section 24 hereof, or (iv)
the consummation of a transaction contemplated by Section 13(d) hereof.

                  (b) The Purchase Price for each one one-thousandth of a
Preferred Share pursuant to the exercise of a Right shall initially be $138.00,
shall be subject to adjustment from time to time as provided in the next
sentence and in Sections 11 and 13(a) hereof and shall be payable in accordance
with paragraph (c) below. Anything in this Agreement to the contrary
notwithstanding, in the event that at any time after the date of this Agreement
and prior to the Distribution Date, the Corporation shall (i) declare or pay any
dividend on the Common Shares payable in Common Shares or (ii) effect a
subdivision, combination or consolidation of the Common Shares (by
reclassification or otherwise than by payment of dividends in Common Shares)
into a greater or lesser number of Common Shares, then in any such case, each
Common Share outstanding following such subdivision, combination or
consolidation shall continue to have one Right associated therewith and the
Purchase Price following any such event shall be proportionately adjusted to
equal the result obtained by multiplying the Purchase Price immediately prior to
such event by a fraction the numerator of which shall be the total number of
Common Shares outstanding immediately prior to the occurrence of the event and
the denominator of which shall be the total number of Common Shares outstanding
immediately following the occurrence of such event. The adjustment provided for
in the preceding sentence shall be made successively whenever such a dividend is
declared or paid or such a subdivision, combination or consolidation is
effected.

                                       11
<PAGE>   18
                  (c) Upon receipt of a Right Certificate representing
exercisable Rights, with the form of election to purchase and the certificate
duly executed, accompanied by payment of the Purchase Price for the Preferred
Shares (or other securities, as the case may be) to be purchased and an amount
equal to any applicable tax or governmental charge required to be paid by the
holder of such Right Certificate in accordance with Section 6 hereof by
certified check, cashier's check or money order payable to the order of the
Corporation, the Rights Agent shall thereupon promptly (i) (A) requisition from
any transfer agent of the Preferred Shares certificates for the number of
Preferred Shares to be purchased and the Corporation hereby irrevocably
authorizes its transfer agent to comply with all such requests, or (B) if the
Corporation, in its sole discretion, shall have elected to deposit the Preferred
Shares issuable upon exercise of the Rights hereunder into a depositary,
requisition from the depositary agent depositary receipts representing such
number of one one-thousandths of a Preferred Share as are to be purchased (in
which case certificates for the Preferred Shares represented by such receipts
shall be deposited by the transfer agent with the depositary agent) and the
Corporation will direct the depositary agent to comply with such requests, (ii)
when appropriate, requisition from the Corporation the amount of cash to be paid
in lieu of issuance of fractional shares in accordance with Section 14 hereof,
(iii) after receipt of such certificates or depositary receipts, cause the same
to be delivered to or upon the order of the registered holder of such Right
Certificate, registered in such name or names as may be designated by such
holder, and (iv) when appropriate, after receipt thereof, deliver such cash to
or upon the order of the registered holder of such Right Certificate. In the
event that the Corporation is obligated to issue other securities (including
Common Shares) of the Corporation pursuant to Section 11(a) hereof, the
Corporation will make all arrangements necessary so that such other securities
are available for distribution by the Rights Agent, if and when necessary to
comply with this Agreement.

                  In addition, in the case of an exercise of the Rights by a
holder pursuant to Section 11(a)(ii), the Rights Agent shall return such Right
Certificate to the registered holder thereof after imprinting, stamping or
otherwise indicating thereon that the rights represented by such Right
Certificate no longer include the rights provided by Section 11(a)(ii) of this
Agreement and if less than all the Rights represented by such Right Certificate
were so exercised, the Rights Agent shall indicate on the Right Certificate the
number of Rights represented thereby which continue to include the rights
provided by Section 11(a)(ii).

                  (d) In case the registered holder of any Right Certificate
shall exercise less than all the Rights evidenced thereby, a new Right
Certificate evidencing Rights equivalent to the Rights remaining unexercised
shall be issued by the Rights Agent to the registered holder of such Right
Certificate or to his duly authorized assigns, subject to the provisions of
Section 6 and Section 14 hereof, or the Rights Agent shall place an

                                       12
<PAGE>   19

appropriate notation on the Right Certificate with respect to those Rights
exercised.

                  (e) Notwithstanding anything in this Agreement to the
contrary, from and after the first occurrence of a Section 11(a)(ii) Event, any
Rights Beneficially Owned by (i) an Acquiring Person or an Affiliate or
Associate of an Acquiring Person, (ii) a transferee of an Acquiring Person (or
of any Affiliate or Associate thereof) who becomes a transferee after the
Acquiring Person becomes such, or (iii) a transferee of an Acquiring Person (or
of any Affiliate or Associate thereof) who becomes a transferee prior to or
concurrently with the Acquiring Person becoming such and receives such Rights
pursuant to either (A) a transfer (whether or not for consideration) from the
Acquiring Person to holders of equity interests in such Acquiring Person or to
any Person with whom the Acquiring Person has a continuing agreement,
arrangement or understanding regarding the transferred Rights or (B) a transfer
which the Board of Directors of the Corporation has determined is part of an
agreement, arrangement or understanding which has as a primary purpose or effect
the avoidance of this Section 7(e), shall become null and void without any
further action and no holder of such Rights shall have any rights whatsoever
with respect to such Rights, whether under any provision of this Agreement or
otherwise. The Corporation shall notify the Rights Agent when this Section 7(e)
applies and shall use all reasonable efforts to insure that the provisions of
this Section 7(e) and Section 4(b) hereof are complied with, but neither the
Corporation nor the Rights Agent shall have any liability to any holder of Right
Certificates or other Person as a result of the Corporation's failure to make
any determinations with respect to an Acquiring Person or its Affiliates,
Associates or transferees hereunder.

                  (f) Notwithstanding anything in this Agreement to the
contrary, neither the Rights Agent nor the Corporation shall be obligated to
undertake any action with respect to a registered holder upon the occurrence of
any purported exercise as set forth in this Section 7 unless such registered
holder shall have (i) properly completed and signed the certificate contained in
the form of election to purchase set forth on the reverse side of the Right
Certificate surrendered for such exercise, and (ii) provided such additional
evidence of the identity of the Beneficial Owner (or former Beneficial Owner) or
Affiliates or Associates thereof as the Corporation or the Rights Agent shall
reasonably request.

         Section 8. Cancellation and Destruction of Right Certificates.

         All Right Certificates surrendered for the purpose of exercise,
transfer, split up, combination or exchange shall, if surrendered to the
Corporation or to any of its agents, be delivered to the Rights Agent for
cancellation or in canceled form, or, if surrendered to the Rights Agent, shall
be canceled by it, and no Right Certificates shall be issued in lieu thereof
except as expressly permitted by any of the provisions of this Agreement. The
Corporation shall deliver to the Rights Agent for cancellation and retirement,
and the Rights Agent shall so cancel and retire, any other Right Certificate
purchased or acquired

                                       13
<PAGE>   20
by the Corporation otherwise than upon the exercise thereof. The Rights Agent
shall deliver all canceled Right Certificates to the Corporation, or shall, at
the written request of the Corporation, destroy such canceled Right
Certificates, and in such case shall deliver a certificate of destruction
thereof to the Corporation.

         Section 9. Reservation and Availability of Preferred Shares.

         The Corporation covenants and agrees that at all times prior to the
occurrence of a Section 11(a)(ii) Event it will cause to be reserved and kept
available out of its authorized and unissued Preferred Shares, or any authorized
and issued Preferred Shares held in its treasury, the number of Preferred Shares
that will be sufficient to permit the exercise in full of all outstanding Rights
and, after the occurrence of a Section 11(a)(ii) Event, shall, to the extent
reasonably practicable, so reserve and keep available a sufficient number of
Common Shares (and/or other securities) which may be required to permit the
exercise in full of the Rights pursuant to this Agreement.

         So long as the Preferred Shares (and, after the occurrence of a Section
11(a)(ii) Event, Common Shares or any other securities) issuable upon the
exercise of the Rights may be listed on any national securities exchange, the
Corporation shall use its best efforts to cause, from and after such time as the
Rights become exercisable, all shares reserved for such issuance to be listed on
such exchange upon official notice of issuance upon such exercise.

         The Corporation covenants and agrees that it will take all such action
as may be necessary to ensure that all Preferred Shares (or Common Shares and/or
other securities, as the case may be) delivered upon exercise of Rights shall,
at the time of delivery of the certificates for such shares or other securities
(subject to payment of the Purchase Price), be duly and validly authorized and
issued and fully paid and non-assessable shares or securities.

         The Corporation further covenants and agrees that it will pay when due
and payable any and all U.S. federal and state taxes and charges which may be
payable in respect of the issuance or delivery of the Right Certificates or of
any Preferred Shares (or Common Shares and/or other securities, as the case may
be) upon the exercise of Rights. The Corporation shall not, however, be required
to pay any tax or other charge which may be payable in respect of any transfer
or delivery of Right Certificates to a Person other than, or the issuance or
delivery of certificates or depositary receipts for the Preferred Shares (or
Common Shares and/or other securities, as the case may be) in a name other than
that of, the registered holder of the Right Certificate evidencing Rights
surrendered for exercise, or to issue or to deliver any certificates or
depositary receipts for Preferred Shares (or Common Shares and/or other
securities, as the case may be) upon the exercise of any Rights, until any such
tax or other charge shall have been paid (any such

                                       14
<PAGE>   21
tax or other charge being payable by the holder of such Right Certificate at the
time of surrender) or until it has been established to the Corporation's
reasonable satisfaction that no such tax or other charge is due.

         The Corporation shall use its best efforts to (i) file, as soon as
practicable following the Shares Acquisition Date, a registration statement
under the Act, with respect to the securities purchasable upon exercise of the
Rights on an appropriate form, (ii) cause such registration statement to become
effective as soon as practicable after such filing, and (iii) cause such
registration statement to remain effective (with a prospectus at all times
meeting the requirements of the Act and the rules and regulations thereunder)
until the date of the expiration of the rights provided by Section 11(a)(ii).
The Corporation will also take such action as may be appropriate under the blue
sky laws of the various states.

         Section 10. Preferred Shares Record Date.

         Each Person in whose name any certificate for Preferred Shares (or
Common Shares and/or other securities, as the case may be) is issued upon the
exercise of Rights shall for all purposes be deemed to have become the holder of
record of the Preferred Shares (or Common Shares and/or other securities, as the
case may be) represented thereby on, and such certificate shall be dated, the
date upon which the Right Certificate evidencing such Rights was duly
surrendered and payment of the Purchase Price (and any applicable taxes and
other governmental charges) was made; provided, however, that, if the date of
such surrender and payment is a date upon which the Preferred Shares (or Common
Shares and/or other securities, as the case may be) transfer books of the
Corporation are closed, such person shall be deemed to have become the record
holder of such shares on, and such certificate shall be dated, the next
succeeding Business Day on which the Preferred Shares (or Common Shares and/or
other securities, as the case may be) transfer books of the Corporation are
open.

         Section 11. Adjustment of Purchase Price, Number and Kind of Shares or
         Number of Rights.

         The Purchase Price, the number and kind of shares covered by each Right
and the number of Rights outstanding are subject to adjustment from time to time
as provided in this Section 11.

                  (a) (i) In the event the Corporation shall at any time after
the date of this Agreement (A) declare a dividend on the Preferred Shares
payable in Preferred Shares, (B) subdivide the outstanding Preferred Shares, (C)
combine the outstanding Preferred Shares into a smaller number of Preferred
Shares or (D) issue any shares of its capital stock in a reclassification of the
Preferred Shares (including any such reclassification in

                                       15
<PAGE>   22
connection with a consolidation or merger in which the Corporation is the
continuing or surviving corporation), except as otherwise provided in this
Section 11(a) and Section 7(e) hereof, the Purchase Price in effect at the time
of the record date for such dividend or of the effective date of such
subdivision, combination or reclassification, and the number and kind of shares
of capital stock issuable on such date, shall be proportionately adjusted so
that the holder of any Right exercised after such time shall be entitled to
receive the aggregate number and kind of shares of capital stock which, if such
Right had been exercised immediately prior to such date and at a time when the
Preferred Shares transfer books of the Corporation were open, such holder would
have owned upon such exercise and been entitled to receive by virtue of such
dividend, subdivision, combination or reclassification; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the shares of capital stock of the
Corporation issuable upon exercise of one Right. If an event occurs which would
require an adjustment under both Section 11(a)(i) and Section 11(a)(ii), the
adjustment provided for in this Section 11(a)(i) shall be in addition to, and
shall be made prior to, any adjustment required pursuant to Section 11(a)(ii).

                   (ii) In the event any Person, alone or together with its
Affiliates and Associates, shall become an Acquiring Person, then proper
provision shall be made so that each holder of a Right (except as provided below
and in Section 7(e) hereof) shall, for a period of 60 days after the later of
the occurrence of any such event or the effective date of an appropriate
registration statement under the Act pursuant to Section 9 hereof, have a right
to receive, upon exercise thereof at a price equal to the then current Purchase
Price, in accordance with the terms of this Agreement, such number of Common
Shares (or, in the discretion of the Board of Directors, one one-thousandths of
a Preferred Share) as shall equal the result obtained by (x) multiplying the
then current Purchase Price by the then number of one one-thousandths of a
Preferred Share for which a Right was exercisable immediately prior to the first
occurrence of a Section 11(a)(ii) Event, and dividing that product by (y) 50% of
the then current per share market price of the Corporation's Common Shares
(determined pursuant to Section 11(d) hereof) on the date of such first
occurrence (such number of shares being referred to as the "Adjustment Shares");
provided, however, that if the transaction that would otherwise give rise to the
foregoing adjustment is also subject to the provisions of Section 13 hereof,
then only the provisions of Section 13 hereof shall apply and no adjustment
shall be made pursuant to this Section 11(a)(ii);

                   (iii) In the event that there shall not be sufficient
treasury shares or authorized but unissued (and unreserved) Common Shares to
permit the exercise in full of the Rights in accordance with the foregoing
subparagraph (ii) and the Rights become so exercisable (and the Board of
Directors of the Corporation has determined to make the Rights exercisable into
fractions of a Preferred Share), notwithstanding any other

                                       16
<PAGE>   23
provision of this Agreement, to the extent necessary and permitted by applicable
law, each Right shall thereafter represent the right to receive, upon exercise
thereof at the then current Purchase Price in accordance with the terms of this
Agreement, (x) a number of (or fractions of) Common Shares (up to the maximum
number of Common Shares which may permissibly be issued) and (y) a number of (or
fractions of) one one-thousandths of a Preferred Share or a number of (or
fractions of) other equity securities of the Corporation (or, in the discretion
of the Board of Directors, debt) which the Board of Directors of the Corporation
has determined to have the same aggregate current market value (determined
pursuant to Section 11(d)(i) and (ii) hereof, to the extent applicable,) as one
Common Share (such number of, or fractions of, Preferred Shares, debt, or other
equity securities or debt of the Corporation being referred to as a "capital
stock equivalent") equal in the aggregate to the number of Adjustment Shares;
provided, however, if sufficient Common Shares and/or capital stock equivalents
are unavailable, then the Corporation shall, to the extent permitted by
applicable law, take all such action as may be necessary to authorize additional
Common Shares or capital stock equivalents for issuance upon exercise of the
Rights, including the calling of a meeting of stockholders; and provided,
further, that if the Corporation is unable to cause sufficient Common Shares
and/or capital stock equivalents to be available for issuance upon exercise in
full of the Rights, then each Right shall thereafter represent the right to
receive the Adjusted Number of Shares upon exercise at the Adjusted Purchase
Price (as such terms are hereinafter defined). As used herein, the term
"Adjusted Number of Shares" shall be equal to that number of (or fractions of)
Common Shares (and/or capital stock equivalents) equal to the product of (x) the
number of Adjustment Shares and (y) a fraction, the numerator of which is the
number of Common Shares (and/or capital stock equivalents) available for
issuance upon exercise of the Rights and the denominator of which is the
aggregate number of Adjustment Shares otherwise issuable upon exercise in full
of all Rights (assuming there were a sufficient number of Common Shares
available) (such fraction being referred to as the "Proration Factor"). The
"Adjusted Purchase Price" shall mean the product of the Purchase Price and the
Proration Factor. The Board of Directors may, but shall not be required to,
establish procedures to allocate the right to receive Common Shares and capital
stock equivalents upon exercise of the Rights among holders of Rights.

                  (b) In case the Corporation shall fix a record date for the
issuance of rights (other than the Rights), options or warrants to all holders
of Preferred Shares entitling them (for a period expiring within 45 calendar
days after such record date) to subscribe for or purchase Preferred Shares (or
shares having the same rights, privileges and preferences as the Preferred
Shares ("equivalent preferred shares")) or securities convertible into Preferred
Shares or equivalent preferred shares at a price per Preferred Share or
equivalent preferred share (or having a conversion price per share, if a
security convertible into Preferred Shares or equivalent preferred shares) less
than the then current per share market price of the Preferred Shares (as
determined pursuant to Section 11(d)

                                       17
<PAGE>   24
hereof) on such record date, the Purchase Price to be in effect after such
record date shall be determined by multiplying the Purchase Price in effect
immediately prior to such record date by a fraction, the numerator of which
shall be the number of Preferred Shares outstanding on such record date plus the
number of Preferred Shares which the aggregate offering price of the total
number of Preferred Shares and/or equivalent preferred shares so to be offered
(and/or the aggregate initial conversion price of the convertible securities so
to be offered) would purchase at such current per share market price, and the
denominator of which shall be the number of Preferred Shares outstanding on such
record date plus the number of additional Preferred Shares and/or equivalent
preferred shares to be offered for subscription or purchase (or into which the
convertible securities so to be offered are initially convertible); provided,
however, that in no event shall the consideration to be paid upon the exercise
of one Right be less than the aggregate par value of the shares of capital stock
of the Corporation issuable upon exercise of one Right. In case such
subscription price may be paid in a consideration part or all of which shall be
in a form other than cash, the value of such consideration shall be determined
in good faith by the Board of Directors of the Corporation, whose determination
shall be described in a statement filed with the Rights Agent and shall be
binding on the Rights Agent and the holders of the Rights. Preferred Shares
owned by or held for the account of the Corporation shall not be deemed
outstanding for the purpose of any such computation. Such adjustment shall be
made successively whenever such a record date is fixed; and in the event that
such rights, options or warrants are not so issued, the Purchase Price shall be
adjusted to be the Purchase Price which would then be in effect if such record
date had not been fixed.

                  (c) In case the Corporation shall fix a record date for the
making of a distribution to all holders of the Preferred Shares (including any
such distribution made in connection with a consolidation or merger in which the
Corporation is the continuing or surviving corporation) of evidences of
indebtedness or assets (other than a regular quarterly cash dividend or a
dividend payable in Preferred Shares) or subscription rights or warrants
(excluding those referred to in Section 11(b) hereof), the Purchase Price to be
in effect after such record date shall be determined by multiplying the Purchase
Price in effect immediately prior to such record date by a fraction, the
numerator of which shall be the then current per share market price (as
determined pursuant to Section 11(d) hereof) of the Preferred Shares on such
record date, less the fair market value (as determined in good faith by the
Board of Directors of the Corporation, whose determination shall be described in
a statement filed with the Rights Agent and shall be binding on the Rights Agent
and the holders of the Rights) of the portion of the assets or evidences of
indebtedness so to be distributed or of such subscription rights or warrants
applicable to one Preferred Share and the denominator of which shall be such
current per share market price of the Preferred Shares; provided, however, that
in no event shall the consideration to be paid upon the exercise of one Right be
less than the aggregate par value of the

                                       18
<PAGE>   25
shares of capital stock of the Corporation to be issued upon exercise of one
Right. Such adjustments shall be made successively whenever such a record date
is fixed; and in the event that such distribution is not so made, the Purchase
Price shall again be adjusted to be the Purchase Price which would then be in
effect if such record date had not been fixed.

                  (d) (i) For the purpose of any computation hereunder, the
"current per share market price" of any security (a "Security") for the purpose
of this Section 11(d)(i)) on any date shall be deemed to be the average of the
daily closing prices per share of such Security for the thirty (30) consecutive
Trading Days (as such term is hereinafter defined) immediately prior to and not
including such date; provided, however, that in the event that the current per
share market price of the Security is determined during a period following the
announcement by the issuer of such Security of (A) a dividend or distribution on
such Security payable in shares of such Security or securities convertible into
such shares, or (B) any subdivision, combination or reclassification of such
Security and prior to the expiration of thirty (30) Trading Days after and not
including the ex-dividend date for such dividend or distribution, or the record
date for such subdivision, combination or reclassification, then, and in each
such case, the current per share market price shall be appropriately adjusted to
reflect the current market price per share equivalent of such Security. The
closing price for each day shall be the last sale price, regular way, or, in
case no such sale takes place on such day, the average of the closing bid and
asked prices, regular way, in either case as reported in the principal
consolidated transaction reporting system with respect to securities listed or
admitted to trading on the New York Stock Exchange or, if the Security is not
listed or admitted to trading on the New York Stock Exchange, as reported in the
principal consolidated transaction reporting system with respect to securities
listed on the principal national securities exchange on which the Security is
listed or admitted to trading or, if the Security is not listed or admitted to
trading on any national securities exchange, the last quoted price or, if not so
quoted, the average of the high bid and low asked prices as reported on the
Nasdaq Stock Market ("NASDAQ") or such other market or system then in use, or,
if on any such date the Security is not quoted by any such organization, the
average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Security selected by the Board of Directors
of the Corporation. If on any such date no such market maker is making a market
in the Security, the fair value of the Security on such date as determined in
good faith by the Board of Directors of the Corporation shall be used. The term
"Trading Day" shall mean a day on which the principal national securities
exchange on which the Security is listed or admitted to trading is open for the
transaction of business or, if the Security is not listed or admitted to trading
on any national securities exchange, a Business Day. Subject to Section
11(d)(ii), if any Security is not publicly traded, "current per share market
price" of such Security shall mean the fair market value per share as determined
in good faith by the Board of Directors of the Corporation, whose

                                       19
<PAGE>   26
determination shall be described in a statement filed with the Rights Agent and
shall be binding on the Rights Agent and the holders of the Rights.

                   (ii) For the purpose of any computation hereunder, the
"current per share market price" of the Preferred Shares shall be determined in
accordance with the method set forth in Section 11(d)(i). If the Preferred
Shares are not publicly traded, the "current per share market price" of the
Preferred Shares shall be conclusively deemed to be the current per share market
price of the Common Shares as determined pursuant to Section 11(d)(i)
(appropriately adjusted to reflect any stock split, stock dividend or similar
transaction occurring after the date hereof), multiplied by one thousand
(1,000). If neither the Common Shares nor the Preferred Shares are publicly held
or so listed or traded, "current per share market price" shall mean the fair
value per share as determined in good faith by the Board of Directors of the
Corporation, whose determination shall be described in a statement filed with
the Rights Agent and shall be binding on the Rights Agent and the holders of the
Rights.

         (e) Anything herein to the contrary notwithstanding, no adjustment in
the Purchase Price shall be required unless such adjustment would require an
increase or decrease of at least 1% in the Purchase Price; provided, however,
that any adjustments which by reason of this Section 11(e) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this Section 11 shall be made to the nearest
cent or to the nearest one one-thousandth of a Preferred Share or one one-
thousandth of any other share or security as the case may be. Notwithstanding
the first sentence of this Section 11(e), any adjustment required by this
Section 11 shall be made no later than the earlier of (i) three (3) years from
the date of the transaction which mandates such adjustment or (ii) the Final
Expiration Date.

         (f) If as a result of an adjustment made pursuant to Section 11(a)(ii)
or Section 13(a) hereof, the holder of any Right thereafter exercised shall
become entitled to receive any shares of capital stock of the Corporation other
than Preferred Shares, thereafter the number of other shares so receivable upon
exercise of any Right shall be subject to adjustment from time to time in a
manner and on terms as nearly equivalent as practicable to the provisions with
respect to the Preferred Shares contained in Section 11(a) through (c),
inclusive, and the provisions of Sections 7, 9, 10, 13 and 14 with respect to
the Preferred Shares shall apply on like terms to any such other shares.

         (g) All Rights originally issued by the Corporation subsequent to any
adjustment made to the Purchase Price hereunder shall evidence the right to
purchase, at the adjusted Purchase Price, the number of one one-thousandths of a
Preferred Share purchasable from time to time hereunder upon exercise of the
Rights, all subject to further adjustment as provided herein.

                                       20
<PAGE>   27

                  (h) Unless the Corporation shall have exercised its election
so provided in Section 11(i) hereof, upon adjustment of the Purchase Price as a
result of the calculations made in Sections 11(b) and 11(c) hereof, each Right
outstanding immediately prior to the making of such adjustment shall thereafter
evidence the right to purchase, at the Adjusted Purchase Price, that number of
one one-thousandths of a Preferred Share calculated to the nearest one
one-thousandth of a Preferred Share) obtained by (i) multiplying (A) the number
of Preferred Shares covered by a Right immediately prior to this adjustment of
the Purchase Price by (B) the Purchase Price in effect immediately prior to such
adjustment of the Purchase Price and (ii) dividing the product so obtained by
the Purchase Price in effect immediately after such adjustment of the Purchase
Price.

                  (i) The Corporation may elect on or after the date of any
adjustment of the Purchase Price to adjust the number of Rights, in lieu of any
adjustment in the number of one one-thousandths of a Preferred Share purchasable
upon the exercise of a Right. Each of the Rights outstanding after such
adjustment of the number of Rights shall be exercisable for the number of one
one-thousandths of a Preferred Share for which a Right was exercisable
immediately prior to such adjustment. Each Right held of record prior to such
adjustment of the number of Rights shall become that number of Rights
(calculated to the nearest one one-thousandth) obtained by dividing the Purchase
Price in effect immediately prior to adjustment of the Purchase Price by the
Purchase Price in effect immediately after adjustment of the Purchase Price. The
Corporation shall make a public announcement of its election to adjust the
number of Rights, indicating the record date for the adjustment, and, if known
at the time, the amount of the adjustment to be made, a copy of which public
announcement shall promptly be delivered to the Rights Agent. This record date
may be the date on which the Purchase Price is adjusted or any day thereafter,
but, if the Right Certificates have been issued, shall be at least ten (10) days
later than the date of the public announcement. If Right Certificates have been
issued, upon each adjustment of the number of Rights pursuant to this Section
11(i), the Corporation shall, as promptly as practicable, cause to be
distributed to holders of record of Right Certificates on such record date Right
Certificates evidencing, subject to Section 14 hereof, the additional Rights to
which such holders shall be entitled as a result of such adjustment, or, at the
option of the Corporation, shall cause to be distributed to such holders of
record in substitution and replacement for the Right Certificates held by such
holders prior to the date of adjustment, and upon surrender thereof, if required
by the Corporation, new Right Certificates evidencing all the Rights to which
such holders shall be entitled after such adjustment. Right Certificates so to
be distributed shall be issued, executed and countersigned in the manner
provided for herein and shall be registered in the names of the holders of
record of Right Certificates on the record date specified in the public
announcement.

                  (j) Irrespective of any adjustment or change in the Purchase
Price or the

                                       21
<PAGE>   28

number of one one-thousandths of a Preferred Share issuable upon the exercise of
the Rights, the Right Certificates theretofore and thereafter issued may
continue to express the Purchase Price and the number of one one-thousandths of
a Preferred Share which were expressed in the initial Right Certificates issued
hereunder.

                  (k) Before taking any action that would cause an adjustment
reducing the Purchase Price below the then par value, if any, of the number of
one one-thousandths of a Preferred Share, Common Shares or other securities
issuable upon exercise of the Rights, the Corporation shall take any corporate
action which may, in the opinion of its counsel, be necessary in order that the
Corporation may validly and legally issue such number of fully paid and
non-assessable one one-thousandths of a Preferred Share, Common Shares or other
securities at such adjusted Purchase Price.

                  (l) In any case in which this Section 11 shall require that an
adjustment in the Purchase Price be made effective as of a record date for a
specified event, the Corporation may elect to defer until the occurrence of such
event the issuance to the holder of any Right exercised after such record date
the Preferred Shares, Common Shares or other securities of the Corporation, if
any, issuable upon such exercise over and above the Preferred Shares, Common
Shares or other securities of the Corporation, if any, issuable upon exercise on
the basis of the Purchase Price in effect prior to such adjustment; provided,
however, that the Corporation shall deliver to such holder a due bill or other
appropriate instrument evidencing such holder's right to receive such additional
shares or other securities, as the case may be, upon the occurrence of the event
requiring such adjustment.

                  (m) Anything in this Section 11 to the contrary
notwithstanding, the Corporation shall be entitled to make such reductions in
the Purchase Price, in addition to those adjustments expressly required by this
Section 11, as and to the extent that it in its sole discretion shall determine
to be advisable in order that (i) any consolidation or subdivision of the
Preferred Shares, (ii) issuance wholly for cash of Preferred Shares at less than
the current market price, (iii) issuance wholly for cash of Preferred Shares or
securities which by their terms are convertible into or exchangeable for
Preferred Shares, (iv) stock dividends or (v) issuance of rights, options or
warrants referred to in this Section 11, hereafter made by the Corporation to
holders of its Preferred Shares shall not be taxable to such stockholders.

                  (n) The Corporation covenants and agrees that it shall not, at
any time after the Distribution Date, (i) consolidate with any other Person
(other than a Subsidiary of the Corporation in a transaction which does not
violate Section 11(o) hereof), (ii) merge with or into any other Person (other
than a Subsidiary of the Corporation in a transaction which does not violate
Section 11(o) hereof), or (iii) sell or transfer (or permit any Subsidiary to
sell or transfer), in one transaction, or a series of related transactions,
assets

                                       22
<PAGE>   29

or earning power aggregating more than 50% of the assets or earning power of the
Corporation and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(o) hereof), if (x)
at the time of or immediately after such consolidation, merger, sale or transfer
there are any charter or bylaw provisions or any rights, warrants or other
instruments or securities outstanding or agreements in effect or other actions
taken, which would materially diminish or otherwise eliminate the benefits
intended to be afforded by the Rights or (y) prior to, simultaneously with or
immediately after such consolidation, merger or sale, the stockholders of the
Person who constitutes, or would constitute, the "Principal Party" for purposes
of Section 13(a) hereof shall have received a distribution of Rights previously
owned by such Person or any of its Affiliates and Associates. The Corporation
shall not consummate any such consolidation, merger, sale or transfer unless
prior thereto the Corporation and such other Person shall have executed and
delivered to the Rights Agent a supplemental agreement evidencing compliance
with this Section 11(n).

                  (o) The Corporation covenants and agrees that, after the
Distribution Date, it will not, except as permitted by Section 23, Section 24 or
Section 27 hereof, take (or permit any Subsidiary to take) any action the
purpose of which is to, or if at the time such action is taken it is reasonably
foreseeable that the effect of such action is to, materially diminish or
otherwise eliminate the benefits intended to be afforded by the Rights.

                  (p) The exercise of Rights under Section 11(a)(ii) shall only
result in the loss of rights under Section 11(a)(ii) to the extent so exercised
and shall not otherwise affect the rights represented by the Rights under this
Agreement, including the rights represented by Section 13.

         Section 12. Certificate of Adjusted Purchase Price or Number of Shares.

         Whenever an adjustment is made as provided in Sections 11 or 13 hereof,
the Corporation shall promptly (a) prepare a certificate setting forth such
adjustment, and a brief reasonably detailed statement of the facts and
computations accounting for such adjustment, (b) file with the Rights Agent and
with each transfer agent for the Common Shares and the Preferred Shares a copy
of such certificate and (c) mail a brief summary thereof to each holder of a
Right Certificate in accordance with Section 25 hereof. The Rights Agent shall
be fully protected in relying on any such certificate and on any adjustment
therein contained and shall have no duty with respect to and shall not be deemed
to have knowledge of such adjustment unless and until it shall have received
such certificate.

         Section 13. Consolidation, Merger or Sale or Transfer of Assets or
Earning Power.

                                       23
<PAGE>   30

                  (a) In the event that, on or following the Shares Acquisition
Date, directly or indirectly, (x) the Corporation shall consolidate with, or
merge with and into, any Interested Stockholder or, if in such merger or
consolidation all holders of Common Stock are not treated alike, any other
Person, (y) the Corporation shall consolidate with, or merge with, any
Interested Stockholder or, if in such merger or consolidation all holders of
Common Stock are not treated alike, any other Person, and the Corporation shall
be the continuing or surviving corporation of such consolidation or merger
(other than, in a case of any transaction described in (x) or (y), a merger or
consolidation which would result in all of the securities generally entitled to
vote in the election of directors ("voting securities") of the Corporation
outstanding immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into securities of the surviving
entity) all of the voting securities of the Corporation or such surviving entity
outstanding immediately after such merger or consolidation and the holders of
such securities not having changed as a result of such merger or consolidation),
or (z) the Corporation shall sell or otherwise transfer (or one or more of its
Subsidiaries shall sell or otherwise transfer), in one transaction or a series
of related transactions, assets or earning power aggregating more than 50% of
the assets or earning power of the Corporation and its Subsidiaries (taken as a
whole) to any Interested Stockholder or Stockholders or, if in such transaction
all holders of Common Stock are not treated alike, any other Person (other than
the Corporation or any Subsidiary of the Corporation in one or more transactions
each of which does not violate Section 11(n) hereof), then, and in each such
case (except as provided in Section 13(d) hereof), proper provision shall be
made so that (i) each holder of a Right, except as provided in Section 7(e)
hereof, shall thereafter have the right to receive, upon the exercise thereof at
a price equal to the then current Purchase Price, in accordance with the terms
of this Agreement and in lieu of Preferred Shares, such number of freely
tradable shares of common stock of the Principal Party (as hereinafter defined),
not subject to any liens, encumbrances, rights of first refusal or other adverse
claims, as shall equal the result obtained by (A) multiplying the then current
Purchase Price by the number of one one-thousandths of a Preferred Share for
which a Right is then exercisable (without taking into account any adjustment
previously made pursuant to Section 11(a)(ii)) and dividing that product by (B)
50% of the then current per share market price of the Common Shares of such
Principal Party (determined pursuant to Section 11(d) hereof) on the date of
consummation of such Section 13 Event; (ii) such Principal Party shall
thereafter be liable for, and shall assume, by virtue of such Section 13 Event,
all the obligations and duties of the Corporation pursuant to this Agreement;
(iii) the term "Corporation" shall thereafter be deemed to refer to such
Principal Party, it being specifically intended that the provisions of Section
11 hereof shall apply only to such Principal Party following the first
occurrence of a Section 13 Event; and (iv) such Principal Party shall take such
steps (including, but not limited to, the reservation of a sufficient number of
its Common Shares) in connection with the consummation of any such transaction
as may be necessary to assure that the provisions hereof shall thereafter

                                       24
<PAGE>   31

be applicable, as nearly as reasonably may be, in relation to the Common Shares
thereafter deliverable upon the exercise of the Rights.

                  (b)  "Principal Party" shall mean

                           (i) in the case of any transaction described in
clause (x) or (y) of the first sentence of Section 13(a), the Person that is the
issuer of any securities into which Common Shares of the Corporation are
converted in such merger or consolidation, and if no securities are so issued,
the Person that is the other party to such merger or consolidation (including,
if applicable, the Corporation if it is the surviving corporation); and (ii) in
the case of any transaction described in clause (z) of the first sentence of
Section 13(a), the Person that is the party receiving the greatest portion of
the assets or earning power transferred pursuant to such transaction or
transactions; provided, however, that in any of the foregoing cases, (1) if the
Common Shares of such Person are not at such time and have not been continuously
over the preceding twelve (12) month period registered under Section 12 of the
Exchange Act, and such Person is a direct or indirect Subsidiary of another
Person the Common Shares of which are and have been so registered, "Principal
Party" shall refer to such other Person; (2) in case such Person is a
Subsidiary, directly or indirectly, of more than one Person, the Common Shares
of two or more of which are and have been so registered, "Principal Party" shall
refer to whichever of such Persons is the issuer of the Common Shares having the
greatest aggregate market value; and (3) in case such Person is owned, directly
or indirectly, by a joint venture formed by two or more Persons that are not
owned, directly or indirectly, by the same Person, the rules set forth in (1)
and (2) above shall apply to each of the chains of ownership having an interest
in such joint venture as if such party were a "Subsidiary" of both or all of
such joint venturers and the Principal Parties in each such chain shall bear the
obligations set forth in this Section 13 in the same ratio as their direct or
indirect interests in such Person bear to the total of such interests.

                  (c) The Corporation shall not consummate any such
consolidation, merger, sale or transfer unless the Principal Party shall have a
sufficient number of its authorized shares of common stock which have not been
issued or reserved for issuance to permit the exercise in full of the Rights in
accordance with this Section 13 and unless prior thereto the Corporation and
such Principal Party shall have executed and delivered to the Rights Agent a
supplemental agreement providing for the terms set forth in paragraphs (a) and
(b) of this Section 13 and further providing that, as soon as practicable after
the date of any consolidation, merger, sale or transfer mentioned in paragraph
(a) of this Section 13, the Principal Party at its own expense shall:

                           (i)  prepare and file a registration statement under
the Act with respect to the Rights and the securities purchasable upon exercise
of the Rights on an appropriate form, and will use its best efforts to cause
such registration statement to (A)

                                       25
<PAGE>   32

become effective as soon as practicable after such filing and (B) remain
effective (with a prospectus at all times meeting the requirements of the Act)
until the Final Expiration Date;

                           (ii) use its best efforts to qualify or register the
Rights and the securities purchasable upon exercise of the Rights under the blue
sky laws of such jurisdictions as may be necessary or appropriate; and

                           (iii) deliver to holders of the Rights historical
financial statements for the Principal Party which comply in all respects with
the requirements for registration on Form 10 under the Exchange Act.

         The provisions of this Section 13 shall similarly apply to successive
mergers or consolidations or sales or other transfers. The rights under this
Section 13 shall be in addition to the rights to exercise Rights and adjustments
under Section 11(a)(ii) and shall survive any exercise thereof.

                  (d) Notwithstanding anything in this Agreement to the
contrary, Section 13 shall not be applicable to a transaction described in
subparagraphs (x) and (y) of Section 13(a) if: (i) such transaction is
consummated with a Person or Persons who acquired Common Shares pursuant to a
Permitted Offer (or a wholly owned Subsidiary of any such Person or Persons);
(ii) the price per Common Share offered in such transaction is not less than the
price per Common Share paid to all holders of Common Shares whose shares were
purchased pursuant to such Permitted Offer; and (iii) the form of consideration
offered in such transaction is the same as the form of consideration paid
pursuant to such Permitted Offer. Upon consummation of any such transaction
contemplated by this Section 13(d), all Rights hereunder shall expire.

         Section 14.  Fractional Rights and Fractional Shares.

                  (a) The Corporation shall not be required to issue fractions
of Rights or to distribute Right Certificates which evidence fractional Rights.
In lieu of such fractional Rights, there shall be paid to the registered holders
of the Right Certificates with regard to which such fractional Rights would
otherwise be issuable, an amount in cash equal to the same fraction of the
current market value of a whole Right. For the purposes of this Section 14(a),
the current market value of a whole Right shall be the closing price of the
Rights for the Trading Day immediately prior to the date on which such
fractional Rights would have been otherwise issuable. The closing price for any
day shall be the last sale price, regular way, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, regular way,
in either case as reported in the principal consolidated transaction reporting
system with respect to securities listed or admitted to trading on the New York
Stock Exchange or, if the Rights are not listed or admitted to

                                       26
<PAGE>   33

trading on the New York Stock Exchange, as reported in the principal
consolidated transaction reporting system with respect to securities listed on
the principal national securities exchange on which the Rights are listed or
admitted to trading or, if the Rights are not listed or admitted to trading on
any national securities exchange, the last quoted price or, if not so quoted,
the average of the high bid and low asked prices as reported on NASDAQ or such
other market or system then in use or, if on any such date the Rights are not
quoted by any such organization, the average of the closing bid and asked prices
as furnished by a professional market maker making a market in the Rights
selected by the Board of Directors of the Corporation. If on any such date no
such market maker is making a market in the Rights, the fair value of the Rights
on such date as determined in good faith by the Board of Directors of the
Corporation shall be used.

                  (b) The Corporation shall not be required to issue fractions
of Preferred Shares (other than fractions which are one one-thousandth or
integral multiples of one one-thousandth of a Preferred Share) upon exercise of
the Rights or to distribute certificates which evidence fractional Preferred
Shares (other than fractions which are one one-thousandth or integral multiples
of one one-thousandth of a Preferred Share). Fractions of Preferred Shares in
integral multiples of one one-thousandth of a Preferred Share may, at the
election of the Corporation, be evidenced by depositary receipts, pursuant to an
appropriate agreement between the Corporation and a depositary selected by it;
provided that such agreement shall provide that the holders of such depositary
receipts shall have the rights, privileges and preferences to which they are
entitled as beneficial owners of the Preferred Shares represented by such
depositary receipts. In lieu of fractional Preferred Shares that are not one
one-thousandth or integral multiples of one one-thousandth of a Preferred Share,
the Corporation shall pay to the registered holders of Right Certificates at the
time such Rights are exercised as herein provided an amount in cash equal to the
same fraction of the current market value of one Preferred Share. For the
purposes of this Section 14(b), the current market value of a Preferred Share
shall be the closing price of a Preferred Share (as determined pursuant to
Section 11(d)(ii) hereof) for the Trading Day immediately prior to the date of
such exercise.

                  (c) Following the occurrence of one of the transactions or
events specified in Section 11 giving rise to the right to receive Common
Shares, capital stock equivalents (other than Preferred Shares) or other
securities upon the exercise of a Right, the Corporation shall not be required
to issue fractions of shares or units of such Common Shares, capital stock
equivalents or other securities upon exercise of the Rights or to distribute
certificates which evidence fractions of such Common Shares, capital stock
equivalents or other securities. In lieu of fractional shares or units of such
Common Shares, capital stock equivalents or other securities, the Corporation
may pay to the registered holders of Right Certificates at the time such Rights
are exercised as herein provided an amount in cash equal to the same fraction of
the current market value of a

                                       27
<PAGE>   34

share or unit of such Common Shares, capital stock equivalents or other
securities. For purposes of this Section 14(c), the current market value shall
be determined in the manner set forth in Section 11(d) hereof for the Trading
Day immediately prior to the date of such exercise and, if such capital stock
equivalent is not traded, each such capital stock equivalent shall have the
value of one one-thousandth of a Preferred Share.

                  (d) The holder of a Right by the acceptance of the Right
expressly waives his right to receive any fractional Rights or any fractional
share upon exercise of a Right (except as provided above). The Rights Agent
shall not be deemed to have knowledge of, and shall have no duty in respect of,
the issuance of fractional Rights or fractional shares until it shall have
received instructions from the Corporation concerning the issuance of the
fractional Rights or fractional shares upon which instructions the Rights Agent
may conclusively rely.

         Section 15.  Rights of Action.

         All rights of action in respect of this Agreement, excepting the rights
of action given to the Rights Agent under Section 18 hereof, are vested in the
respective registered holders of the Right Certificates (and, prior to the
Distribution Date, the registered holders of the Common Shares); and any
registered holder of any Right Certificate (or, prior to the Distribution Date,
of the Common Shares), without the consent of the Rights Agent or of the holder
of any other Right Certificate (or, prior to the Distribution Date, of the
Common Shares), may, in his own behalf and for his own benefit, enforce, and may
institute and maintain any suit, action or proceeding against the Corporation to
enforce, or otherwise act in respect of, his right to exercise the Rights
evidenced by such Right Certificate (or, prior to the Distribution Date, of the
Common Shares) in the manner provided in such Right Certificate and in this
Agreement. Without limiting the foregoing or any remedies available to the
holders of Rights, it is specifically acknowledged that the holders of Rights
would not have an adequate remedy at law for any breach of this Agreement and
will be entitled to specific performance of the obligations under, and
injunctive relief against actual or threatened violations of the obligations of
any Person subject to, this Agreement.

         Section 16.  Agreement of Right Holders.

         Every holder of a Right, by accepting the same, consents and agrees
with the Corporation and the Rights Agent and with every other holder of a Right
that:

                  (a) prior to the Distribution Date, the Rights will be
transferable only in connection with the transfer of the Common Shares;

                  (b) after the Distribution Date, the Right Certificates are
transferable only

                                       28
<PAGE>   35

on the registry books of the Rights Agent if surrendered at the office or
offices of the Rights Agent designated for such purpose, duly endorsed or
accompanied by a proper instrument of transfer and with the appropriate form
fully executed;

                  (c) subject to Section 7(f) hereof, the Corporation and the
Rights Agent may deem and treat the Person in whose name the Right Certificate
(or, prior to the Distribution Date, the associated Common Shares certificate)
is registered as the absolute owner thereof and of the Rights evidenced thereby
(notwithstanding any notations of ownership or writing on the Right Certificate
or the associated Common Shares certificate made by anyone other than the
Corporation or the Rights Agent) for all purposes whatsoever, and neither the
Corporation nor the Rights Agent, subject to the last sentence of Section 7(e)
hereof, shall be required to be affected by any notice to the contrary; and

                  (d) notwithstanding anything in this Agreement to the
contrary, neither the Corporation nor the Rights Agent shall have any liability
to any holder of a Right or a beneficial interest in a Right or other Person as
a result of its inability to perform any of its obligations under this Agreement
by reason of any preliminary or permanent injunction or other order, judgment,
decree or ruling (whether interlocutory or final) issued by a court of competent
jurisdiction or by a governmental, regulatory or administrative agency or
commission, or any statute, rule, regulation or executive order promulgated or
enacted by any governmental authority, prohibiting or otherwise restraining
performance of such obligation; provided, however, the Corporation must use its
best efforts to have any such order, decree, judgment, or ruling lifted or
otherwise overturned as soon as possible.

         Section 17.  Right Certificate Holder Not Deemed a Stockholder.

         No holder, as such, of any Right Certificate shall be entitled to vote,
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or any other securities of the Corporation which may at any time be
issuable on the exercise of the Rights represented thereby, nor shall anything
contained herein or in any Right Certificate be construed to confer upon the
holder of any Right Certificate, as such, any of the rights of a stockholder of
the Corporation or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in Section 25 hereof), or to
receive dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights evidenced by such
Right Certificate shall have been exercised in accordance with the provisions
hereof.

         Section 18.  Concerning the Rights Agent.

                                       29
<PAGE>   36

         The Corporation agrees to pay to the Rights Agent reasonable
compensation for all services rendered by it hereunder and, from time to time,
on demand of the Rights Agent, its reasonable expenses and counsel fees and
other disbursements incurred in the preparation, execution, delivery, amendment,
administration and execution of this Agreement and the exercise and performance
of its duties hereunder. The Corporation also agrees to indemnify the Rights
Agent for, and to hold it harmless against, any loss, liability, damage,
judgment, fine, penalty, claim, demand, settlement, cost or expense, incurred
without gross negligence, bad faith or willful misconduct on the part of the
Rights Agent, for any action taken, suffered or omitted by the Rights Agent in
connection with the acceptance and administration of this Agreement, including
without limitation the costs and expenses of defending against any claim of
liability in the premises. The indemnity provided for herein shall survive the
expiration of the Rights and the termination of this Agreement.

The Rights Agent shall be authorized and protected and shall incur no liability
for, or in respect of, any action taken, suffered or omitted by it in connection
with, its acceptance and administration of this Agreement in reliance upon any
Right Certificate or certificate for Common Shares or for other securities of
the Corporation, instrument of assignment or transfer, power of attorney,
endorsement, affidavit, letter, notice, direction, consent, certificate,
statement, or other paper or document (collectively, "Documents") believed by it
to be genuine and to be signed, executed and, where necessary, verified or
acknowledged, by the proper Person or Persons. The Rights Agent shall not be
deemed to have knowledge of, and shall have no duty in respect of, any such
Documents, until it receives notice or instructions in respect thereof. In no
case will the Rights Agent be liable for special, indirect, punitive, incidental
or consequential loss or damage of any kind whatsoever, even if the Rights Agent
has been advised of the likelihood of such loss or damage.

         Section 19.  Merger or Consolidation or Change of Name of Rights Agent.

         Any Person into which the Rights Agent or any successor Rights Agent
may be merged or with which it may be consolidated, or any Person resulting from
any merger or consolidation to which the Rights Agent or any successor Rights
Agent shall be a party, or any Person succeeding to the stock transfer or all or
substantially all of the stockholder services business of the Rights Agent or
any successor Rights Agent, shall be the successor to the Rights Agent under
this Agreement without the execution or filing of any paper or any further act
on the part of any of the parties hereto, provided that such Person would be
eligible for appointment as a successor Rights Agent under the provisions of
Section 21 hereof. In case at the time such successor Rights Agent shall succeed
to the agency created by this Agreement, any of the Right Certificates shall
have been countersigned but not delivered, any such successor Rights Agent may
adopt the countersignature of a predecessor Rights Agent and deliver such Right
Certificates so

                                       30
<PAGE>   37

countersigned; and in case at that time any of the Right Certificates shall not
have been countersigned, any successor Rights Agent may countersign such Right
Certificates either in the name of the predecessor or in the name of the
successor Rights Agent; and in all such cases such Right Certificates shall have
the full force provided in the Right Certificates and in this Agreement. In case
at any time the name of the Rights Agent shall be changed and at such time any
of the Right Certificates shall have been countersigned but not delivered, the
Rights Agent may adopt the countersignature under its prior name and deliver
Right Certificates so countersigned; and in case at that time any of the Right
Certificates shall not have been countersigned, the Rights Agent may countersign
such Right Certificates either in its prior name or in its changed name; and in
all such cases such Right Certificates shall have the full force provided in the
Right Certificates and in this Agreement.

         Section 20.  Duties of Rights Agent.

         The Rights Agent undertakes only those duties and obligations expressly
imposed by this Agreement (and no implied duties or obligations) upon the
following terms and conditions, by all of which the Corporation and the holders
of Right Certificates, by their acceptance thereof, shall be bound:

                  (a) The Rights Agent may consult with legal counsel (who may
be legal counsel for the Corporation), and the advice or opinion of such counsel
shall be full and complete authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability for or in respect of, any action
taken, suffered or omitted by it in good faith and in accordance with such
opinion.

                  (b) Whenever in the performance of its duties under this
Agreement the Rights Agent shall deem it necessary or desirable that any fact or
matter (including, without limitation, the identity of an Acquiring Person and
the determination of the current market price of any Security) be proved or
established by the Corporation prior to taking, suffering or omitting any action
hereunder, such fact or matter (unless other evidence in respect thereof be
herein specifically prescribed) may be deemed to be conclusively proved and
established by a certificate signed by any one of the Chairman of the Board, the
Chief Executive Officer, the President, any Vice President, the Treasurer or the
Secretary of the Corporation and delivered to the Rights Agent; and such
certificate shall be full authorization and protection to the Rights Agent and
the Rights Agent shall incur no liability in respect of any action taken,
suffered or omitted in good faith by it under the provisions of this Agreement
in reliance upon such certificate.

                  (c) The Rights Agent shall be liable hereunder only for its
own gross negligence, bad faith or willful misconduct.

                                       31
<PAGE>   38

                  (d) The Rights Agent shall not be liable for, or by reason of
any liability in respect of, the statements of fact or recitals contained in
this Agreement or in the Right Certificates (except its countersignature on such
Right Certificates) or be required to verify the same, but all such statements
and recitals are and shall be deemed to have been made by the Corporation only.

                  (e) The Rights Agent shall not be under any liability or
responsibility in respect of the validity of this Agreement or the execution and
delivery hereof (except the due execution hereof by the Rights Agent) or in
respect of the validity or execution of any Right Certificate (except its
countersignature thereof); nor shall it be responsible for any breach by the
Corporation of any covenant or condition contained in this Agreement or in any
Rights Certificate; nor shall it be responsible for any change in the
exercisability of the Rights (including the Rights becoming null and void
pursuant to Section 7(e) hereof) or any adjustment required under the provisions
of Section 11 or Section 13 hereof or responsible for the manner, method or
amount of any such adjustment or the ascertaining of the existence of facts that
would require any such adjustment (except with respect to the exercise of Rights
evidenced by Right Certificates after receipt of the certificate described in
Section 12 hereof); nor shall it by any act hereunder be deemed to make any
representation or warranty as to the authorization or reservation of any
Preferred Shares or Common Shares to be issued pursuant to this Agreement or any
Right Certificate or as to whether any Preferred Shares or Common Shares will,
when issued, be validly authorized and issued, fully paid and non-assessable.

                  (f) The Corporation agrees that it will perform, execute,
acknowledge and deliver or cause to be performed, executed, acknowledged and
delivered all such further and other acts, instruments and assurances as may
reasonably be required by the Rights Agent for the carrying out or performing by
the Rights Agent of the provisions of this Agreement.

                  (g) The Rights Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
any one of the Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Treasurer or the Secretary of the
Corporation, and to apply to such officers for advice or instructions in
connection with its duties, and such instructions shall be full authorization
and protection to the Rights Agent and the Rights Agent shall incur no liability
for or in respect of any action taken, suffered or omitted by it in good faith
or lack of action in accordance with instructions of any such officer or for any
delay in acting while waiting for those instructions. Any application by the
Rights Agent for written instructions from the Corporation may, at the option of
the Rights Agent, set forth in writing any action proposed to be taken or
omitted by the Rights Agent under this Agreement and the date on or after which
such action shall be taken or suffered or such omission shall be effective. The
Rights Agent shall not be liable or responsible for any

                                       32
<PAGE>   39

action taken or suffered by, or omission of, the Rights Agent in accordance with
a proposal included in any such application on or after the date specified in
such application (which date shall not be less than five Business Days after the
date any officer of the Corporation actually receives such application, unless
any such officer shall have consented in writing to an earlier date) unless,
prior to taking any such action (or the effective date in the case of an
omission), the Rights Agent shall have received written instruction from any one
of the Chairman of the Board, the Chief Executive Officer, the President, any
Vice President, the Treasurer or the Secretary of the Corporation in response to
such application specifying the action to be taken, suffered or omitted.

                  (h) The Rights Agent and any stockholder, affiliate, director,
officer or employee of the Rights Agent may buy, sell or deal in any of the
Rights or other securities of the Corporation or become pecuniarily interested
in any transaction in which the Corporation may be interested, or contract with
or lend money to the Corporation or otherwise act as fully and freely as though
it were not Rights Agent under this Agreement. Nothing herein shall preclude the
Rights Agent from acting in any other capacity for the Corporation or for any
other Person or legal entity.

                  (i) The Rights Agent may execute and exercise any of the
rights or powers hereby vested in it or perform any duty hereunder either itself
or by or through its attorneys or agents, and the Rights Agent shall not be
answerable or accountable for any act, default, neglect or misconduct of any
such attorneys or agents or for any loss to the Corporation or any other Person
resulting from any such act, default, neglect or misconduct, absent gross
negligence, bad faith or willful misconduct in the selection and continued
employment thereof.

                  (j) No provision of this Agreement shall require the Rights
Agent to expend or risk its own funds or otherwise incur any financial liability
in the performance of any of its duties hereunder or in the exercise of its
rights if it believes that repayment of such funds or adequate indemnification
against such risk or liability is not reasonably assured to it.

                  (k) If, with respect to any Rights Certificate surrendered to
the Rights Agent for exercise or transfer, the certificate attached to the form
of assignment or form of election to purchase, as the case may be, has not been
completed, the Rights Agent shall not take any further action with respect to
such requested exercise of transfer without first consulting with the
Corporation.

         Section 21.  Change of Rights Agent.

         The Rights Agent or any successor Rights Agent may resign and be
discharged from its duties under this Agreement upon thirty (30) days' notice in
writing mailed to the

                                       33
<PAGE>   40

Corporation and to each transfer agent of the Common Shares or Preferred Shares
by registered or certified mail, and to the holders of the Right Certificates by
first-class mail. The Corporation may remove the Rights Agent or any successor
Rights Agent upon sixty (60) days' notice in writing, mailed to the Rights Agent
or successor Rights Agent, as the case may be, and to each transfer agent of the
Common Shares or Preferred Shares by registered or certified mail, and to
holders of the Right Certificates by first-class mail. If the Rights Agent
shall resign or be removed or shall otherwise become incapable of acting, the
Corporation shall appoint a successor to the Rights Agent. If the Corporation
shall fail to make such appointment within a period of sixty (60) days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Rights Agent or by
the holder of a Right Certificate (who shall, with such notice, submit his Right
Certificate for inspection by the Corporation), then the registered holder of
any Right Certificate may apply to any court of competent jurisdiction for the
appointment of a new Rights Agent. Any successor Rights Agent, whether appointed
by the Corporation or by such a court, shall be a Person organized and doing
business under the laws of the United States or of the States of New York or
Illinois (or of any other state of the United States so long as such Person is
authorized to do business in the States of New York and Illinois), in good
standing, having an office in the States of New York or Illinois, which is
subject to supervision or examination by federal or state authority. After
appointment, the successor Rights Agent shall be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as Rights
Agent without further act or deed; but the predecessor Rights Agent shall
deliver and transfer to the successor Rights Agent any property at the time held
by it hereunder, and execute and deliver any further assurance, conveyance, act
or deed necessary for the purpose. Not later than the effective date of any such
appointment the Corporation shall file notice thereof in writing with the
predecessor Rights Agent and each transfer agent of the Common Shares or
Preferred Shares, and mail a notice thereof in writing to the registered holders
of the Right Certificates. Failure to give any notice provided for in this
Section 21, however, or any defect therein, shall not affect the legality or
validity of the resignation or removal of the Rights Agent or the appointment of
the successor Rights Agent, as the case may be.

         Section 22.  Issuance of New Right Certificates.

         Notwithstanding any of the provisions of this Agreement or of the
Rights to the contrary, the Corporation may, at its option, issue new Right
Certificates evidencing Rights in such form as may be approved by its Board of
Directors to reflect any adjustment or change in the Purchase Price and the
number or kind or class of shares or other securities or property purchasable
under the Right Certificates made in accordance with the provisions of this
Agreement.

         In addition, in connection with the issuance or sale of Common Shares
following

                                       34
<PAGE>   41

the Distribution Date and prior to the earlier of the Redemption Date and the
Final Expiration Date, the Corporation (a) shall with respect to Common Shares
so issued or sold pursuant to the exercise of stock options or under any
employee plan or arrangement, or upon the exercise, conversion or exchange of
securities, notes or debentures issued by the Corporation, and (b) may, in any
other case, if deemed necessary or appropriate by the Board of Directors of the
Corporation, issue Right Certificates representing the appropriate number of
Rights in connection with such issuance or sale; provided, however, that (i) the
Corporation shall not be obligated to issue any such Right Certificates if, and
to the extent that, the Corporation shall be advised by counsel that such
issuance would create a significant risk of material adverse tax consequences to
the Corporation or the Person to whom such Right Certificate would be issued,
and (ii) no Right Certificate shall be issued if, and to the extent that,
appropriate adjustment shall otherwise have been made in lieu of the issuance
thereof.

         Section 23.  Redemption and Termination.

                  (a) (i) The Board of Directors of the Corporation may, at its
option, redeem all but not less than all of the then outstanding Rights at a
redemption price of $.01 per Right, as such amount may be appropriately adjusted
to reflect any stock split, stock dividend or similar transaction occurring
after the date hereof (such redemption price being hereinafter referred to as
the "Redemption Price"), at any time prior to the earlier of (x) the occurrence
of a Section 11(a)(ii) Event or (y) the Final Expiration Date.

                           (ii) In addition, the Board of Directors of the
Corporation may, at its option, at any time following the occurrence of a
Section 11(a)(ii) Event and the expiration of any period during which the holder
of Rights may exercise the rights under Section 11(a)(ii) but prior to any
Section 13 Event redeem all but not less than all of the then outstanding Rights
at the Redemption Price (x) in connection with any merger, consolidation or sale
or other transfer (in one transaction or in a series of related transactions) of
assets or earning power aggregating 50% or more of the earning power of the
Corporation and its subsidiaries (taken as a whole) in which all holders of
Common Shares are treated alike and not involving (other than as a holder of
Common Shares being treated like all other such holders) an Interested
Stockholder or (y)(aa) if and for so long as the Acquiring Person is not
thereafter the Beneficial Owner of 15% of the Common Shares, and (bb) at the
time of redemption no other Persons are Acquiring Persons.

                  (b) In the case of a redemption permitted under Section
23(a)(i), immediately upon the date for redemption set forth (or determined in
the manner specified) in a resolution of the Board of Directors of the
Corporation ordering the redemption of the Rights, and without any further
action and without any notice, the right to exercise the Rights will terminate
and the only right thereafter of the holders of Rights

                                       35
<PAGE>   42

shall be to receive the Redemption Price for each Right so held. In the case of
a redemption permitted only under Section 23(a)(ii), the right to exercise the
Rights will terminate and represent only the right to receive the Redemption
Price upon the later of ten (10) Business Days following the giving of such
notice or the expiration of any period during which the rights under Section
11(a)(ii) may be exercised. The Corporation shall promptly give public notice
and notify the Rights Agent of any such redemption; provided, however, that the
failure to give, or any defect in, any such notice shall not affect the validity
of such redemption. Within ten (10) days after such date for redemption set
forth in a resolution of the Board of Directors ordering the redemption of the
Rights, the Corporation shall mail a notice of redemption to all the holders of
the then outstanding Rights at their last addresses as they appear upon the
registry books of the Rights Agent or, prior to the Distribution Date, on the
registry books of the transfer agent for the Common Shares. Any notice which is
mailed in the manner herein provided shall be deemed given, whether or not the
holder receives the notice. Each such notice of redemption will state the method
by which the payment of the Redemption Price will be made. Neither the
Corporation nor any of its Affiliates or Associates may redeem, acquire or
purchase for value any Rights at any time in any manner other than that
specifically set forth in this Section 23 and other than in connection with the
purchase of Common Shares prior to the Distribution Date.

                  (c) The Corporation may, at its option, discharge all of its
obligations with respect to the Rights by (i) issuing a press release announcing
the manner of redemption of the Rights in accordance with this Agreement and
(ii) mailing payment of the Redemption Price to the registered holders of the
Rights at their last addresses as they appear on the registry books of the
Rights Agent or, prior to the Distribution Date, on the registry books of the
Transfer Agent of the Common Shares, and upon such action, all outstanding
Rights and Right Certificates shall be null and void without any further action
by the Corporation.

         Section 24.  Exchange.

                  (a) The Board of Directors of the Corporation may, at its
option, at any time after the time that any Person becomes an Acquiring Person,
exchange all or part of the then outstanding and exercisable Rights (which shall
not include Rights that have become null and void pursuant to the provisions of
Section 7(e) and Section 11(a)(ii) hereof) for Common Shares of the Corporation
at an exchange ratio of one Common Share per Right, appropriately adjusted to
reflect any stock split, stock dividend or similar transaction occurring after
the date hereof (such exchange ratio being hereinafter referred to as the
"Exchange Ratio"). Notwithstanding the foregoing, the Board of Directors of the
Corporation shall not be empowered to effect such exchange at any time after any
Person (other than the Corporation, any Subsidiary of the Corporation, any
employee benefit plan of the Corporation or any such Subsidiary, any Person
organized, appointed or established

                                       36
<PAGE>   43

by the Corporation for or pursuant to the terms of any such plan or any trustee,
administrator or fiduciary of such a plan), together with all Affiliates and
Associates of such Person, becomes the Beneficial Owner of 50% or more of the
Common Shares then outstanding.

                  (b) Immediately upon the action of the Board of Directors of
the Corporation ordering the exchange of any Rights pursuant to subsection (a)
of this Section 24 and without any further action and without any notice, the
right to exercise such Rights shall terminate and the only right thereafter of
the holders of such Rights shall be to receive that number of Common Shares
equal to the number of such Rights held by such holder multiplied by the
Exchange Ratio. The Corporation shall promptly give public notice and notify the
Rights Agent of any such exchange; provided, however, that the failure to give,
or any defect in, such notice shall not affect the validity of such exchange.
The Corporation promptly shall mail a notice of any such exchange to all of the
holders of such Rights at their last addresses as they appear upon the registry
books of the Rights Agent. Any notice which is mailed in the manner herein
provided shall be deemed given, whether or not the holder receives the notice.
Each such notice of exchange will state the method by which the exchange of the
Common Shares for Rights will be effected and, in the event of any partial
exchange, the number of Rights will be exchanged. Any partial exchange shall be
effected pro rata based on the number of Rights (other than Rights which have
become null and void pursuant to the provisions of Section 7(e) and Section
11(a)(ii) hereof) held by each holder of Rights.

                  (c) In any exchange pursuant to this Section 24, the
Corporation, at its option, may substitute Preferred Shares (or equivalent
preferred shares, as such term is defined in Section 11(b) hereof) for some or
all of the Common Shares exchangeable for Rights, at the initial rate of one
one-thousandth of a Preferred Share (or equivalent preferred share) for each
Common Share, as appropriately adjusted to reflect adjustments in the voting
rights of the Preferred Shares pursuant to the terms thereof, so that the
fraction of a Preferred Share delivered in lieu of each Common Share shall have
the same voting rights as one Common Share.

                  (d) The Board of Directors of the Corporation shall not
authorize any exchange transaction referred to in Section 24(a) hereof unless at
the time such exchange is authorized there shall be sufficient Common Shares or
Preferred Shares issued but not outstanding, or authorized but unissued, to
permit the exchange of Rights as contemplated in accordance with this Section
24.

         Section 25.  Notice of Certain Events.

                  (a) In case the Corporation shall propose (i) to pay any
dividend payable in stock of any class to the holders of its Preferred Shares or
to make any other distribution

                                       37
<PAGE>   44

to the holders of its Preferred Shares (other than a regularly quarterly cash
dividend), (ii) to offer to the holders of its Preferred Shares rights or
warrants to subscribe for or to purchase any additional Preferred Shares or
shares of stock of any class or any other securities, rights or options, (iii)
to effect any reclassification of its Preferred Shares (other than a
reclassification involving only the subdivision of outstanding Preferred
Shares), (iv) to effect any consolidation or merger into or with any other
Person (other than a Subsidiary of the Corporation in a transaction which does
not violate Section 11(n) hereof), or to effect any sale or other transfer (or
to permit one or more of its Subsidiaries to effect any sale or other transfer)
in one or more transactions, of 50% or more of the assets or earning power of
the Corporation and its Subsidiaries (taken as a whole) to any other Person or
Persons (other than the Corporation and/or any of its Subsidiaries in one or
more transactions each of which does not violate Section 11(n) hereof), or (v)
to effect the liquidation, dissolution or winding up of the Corporation, then,
in each such case, the Corporation shall give to the Rights Agent and to each
holder of a Right Certificate, in accordance with Section 26 hereof, a notice of
such proposed action and file a certificate with the Rights Agent to that
effect, which shall specify the record date for the purposes of such stock
dividend, or distribution of rights or warrants, or the date on which such
reclassification, consolidation, merger, sale, transfer, liquidation,
dissolution, or winding up is to take place and the date of participation
therein by the holders of the Preferred Shares, if any such date is to be fixed,
and such notice shall be so given in the case of any action covered by clause
(i) or (ii) above at least twenty (20) days prior to the record date for
determining holders of the Preferred Shares for purposes of such action, and in
the case of any such other action, at least twenty (20) days prior to the date
of the taking of such proposed action or the date of participation therein by
the holders of the Preferred Shares, whichever shall be the earlier.

                  (b) In case of a Section 11(a)(ii) Event, then (i) the
Corporation shall as soon as practicable thereafter give to each holder of a
Right Certificate, in accordance with Section 26 hereof, a notice of the
occurrence of such event, which notice shall describe such event and the
consequences of such event to holders of Rights under Section 11(a)(ii) hereof,
and (ii) all references in the preceding paragraph (a) to Preferred Shares shall
be deemed thereafter to refer also to Common Shares and/or, if appropriate,
other securities of the Corporation.

         Section 26.  Notices.

         Notices or demands authorized by this Agreement to be given or made by
the Rights Agent or by the holder of any Right Certificate to or on the
Corporation shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed (until another address is filed in writing with the
Rights Agent) as follows:

                       Cabot Microelectronics Corporation

                                       38
<PAGE>   45

                             870 North Commons Drive
                             Aurora, Illinois 60504
                             Attention:  Matthew Neville, President and
                             Chief Executive Officer

Subject to the provisions of Section 21 hereof, any notice or demand authorized
by this Agreement to be given or made by the Corporation or by the holder of any
Right Certificate to or on the Rights Agent shall be sufficiently given or made
if sent by first-class mail, postage prepaid, addressed (until another address
is filed in writing with the Corporation) as follows:

                             EquiServe Trust Company, N.A.
                             c/o Equiserve Limited Partnership
                             150 Royall Street
                             Canton, MA 02021
                             Attention: Client Administration
                             Facsimile: 781-575-2549

         Notices or demands authorized by this Agreement to be given or made by
the Corporation or the Rights Agent to the holder of any Right Certificate or,
if prior to the Distribution Date, to the holder of certificates representing
Common Shares shall be sufficiently given or made if sent by first-class mail,
postage prepaid, addressed to such holder at the address of such holder as shown
on the registry books of the Corporation.

         Section 27.  Supplements and Amendments.

         Except as set forth in the penultimate sentence of this Section 27,
prior to the Distribution Date, the Corporation may and the Rights Agent shall,
if the Corporation so directs, supplement or amend any provision of this
Agreement without the approval of any holders of certificates representing
Common Shares. From and after the Distribution Date, the Corporation may and the
Rights Agent shall, if the Corporation so directs, supplement or amend this
Agreement without the approval of any holders of Right Certificates in order (i)
to cure any ambiguity, (ii) to correct or supplement any provision contained
herein which may be defective or inconsistent with any other provisions herein,
(iii) to shorten or lengthen any time period hereunder or (iv) to change or
supplement the provisions hereunder in any manner which the Corporation may deem
necessary or desirable and which shall not adversely affect the interests of the
holders of Right Certificates (other than an Acquiring Person or an Affiliate or
Associate of an Acquiring Person); provided, however, that this Agreement may
not be supplemented or amended to lengthen, pursuant to clause (iii) of this
sentence, (A) a time period relating to when the Rights may be redeemed at such
time as the Rights are not then redeemable, or (B) any other time period unless
any such lengthening is for the purpose of protecting, enhancing

                                       39
<PAGE>   46

or clarifying the rights of, and/or the benefits to, the holders of Rights. Upon
the delivery of a certificate from an appropriate officer of the Corporation
which states that the proposed supplement or amendment is in compliance with the
terms of this Section 27, and if requested by the Rights Agent an opinion of
counsel, the Rights Agent shall execute such supplement or amendment, provided
that such supplement or amendment does not adversely affect the rights or
obligations of the Rights Agent under Section 18 or Section 20 of this
Agreement. Prior to the Distribution Date, the interests of the holders of
Rights shall be deemed coincident with the interests of the holders of Common
Shares.

         Section 28.  Determination and Actions by the Board of Directors, etc.

         The Board of Directors of the Corporation shall have the exclusive
power and authority to administer this Agreement and to exercise all rights and
powers specifically granted to the Board of Directors of the Corporation, or the
Corporation, or as may be necessary or advisable in the administration of this
Agreement, including, without limitation, the right and power to (i) interpret
the provisions of this Agreement, and (ii) make all determinations deemed
necessary or advisable for the administration of this Agreement (including,
without limitation, a determination to redeem or not redeem the Rights or to
amend the Agreement and whether any proposed amendment adversely affects the
interests of the holders of Right Certificates). For all purposes of this
Agreement, any calculation of the number of Common Shares or other securities
outstanding at any particular time, including for purposes of determining the
particular percentage of such outstanding Common Shares or any other securities
of which any Person is the Beneficial Owner, shall be made in accordance with
the last sentence of Rule 13d-3(d)(1)(i) of the General Rules and Regulations
under the Exchange Act as in effect on the date of this Agreement. All such
actions, calculations, interpretations and determinations (including, for
purposes of clause (y) below, all omissions with respect to the foregoing) which
are done or made by the Board of Directors of the Corporation in good faith (and
the Rights Agent shall be able to assume that the Board of Directors of the
Corporation acted in such good faith), shall (x) be final, conclusive and
binding on the Corporation, the Rights Agent, the holders of the Right
Certificates and all other Persons, and (y) not subject the Board of Directors
of the Corporation to any liability to the holders of the Right Certificates.

         Section 29.  Successors.

         All the covenants and provisions of this Agreement by or for the
benefit of the Corporation or the Rights Agent shall bind and inure to the
benefit of their respective successors and assigns hereunder.

         Section 30.  Benefits of this Agreement.

                                       40
<PAGE>   47

         Nothing in this Agreement shall be construed to give to any person or
corporation other than the Corporation, the Rights Agent and the registered
holders of the Right Certificates (and, prior to the Distribution Date, the
Common Shares) any legal or equitable right, remedy or claim under this
Agreement; but this Agreement shall be for the sole and exclusive benefit of the
Corporation, the Rights Agent and the registered holders of the Right
Certificates (and, prior to the Distribution Date, the Common Shares).

         Section 31.  Severability.

         If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction or other authority to be invalid, void
or unenforceable, the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated.

         Section 32.  Governing Law.

         This Agreement, each Right and each Right Certificate issued hereunder
shall be deemed to be a contract made under the laws of the State of Delaware
and for all purposes shall be governed by and construed in accordance with the
laws of such State applicable to contracts to be made and performed entirely
within such State; except that all provisions regarding the rights, duties and
obligations of the Rights Agent shall be governed by and construed in accordance
with the laws of the State of New York applicable to contracts made and to be
performed entirely within such State.

         Section 33.  Counterparts

         This Agreement may be executed in any number of counterparts and each
of such counterparts shall for all purposes be deemed to be an original, and all
such counterparts shall together constitute but one and the same instrument.

         Section 34.  Descriptive Headings.

         Descriptive headings of the several Sections of this Agreement are
inserted for convenience only and shall not control or affect the meaning or
construction of any of the provisions hereof.

                                       41
<PAGE>   48

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and attested, all as of the date and year first
above written.

                                               CABOT MICROELECTRONICS
                                               CORPORATION

Attest:

By  /s/ William C. McCarthy                    By:  /s/ Matthew Neville
Name:  William C. McCarthy, Secretary          Name: Matthew Neville, President

                                                EQUISERVE TRUST COMPANY, N.A.

Attest:

By: /s/ Carole A. McHugh                       By: /s/ Charles V. Rossi
Name: Carole A. McHugh                         Name: Charles V. Rossi
Title: Account Manager                         Title: Executive Vice President

                                       42
<PAGE>   49

                                                                       Exhibit A

                       CABOT MICROELECTRONICS CORPORATION
                     CERTIFICATE OF DESIGNATION, PREFERENCES
                   AND RIGHTS OF SERIES A JUNIOR PARTICIPATING
                                 PREFERRED STOCK
                            (Pursuant to Section 151
            of the General Corporation Law of the State of Delaware)

         We, Matthew Neville, the President and Chief Executive Officer, and
William C. McCarthy, Chief Financial Officer and Secretary of Cabot
Microelectronics Corporation, a corporation organized and existing under the
General Corporation Law of the State of Delaware (the "Corporation"), in
accordance with the provisions of Section 151 thereof, do hereby certify;

         The Board of Directors, at a meeting held on March 24, 2000, adopted
the following resolution to create, upon the filing with the Secretary of State
of the State of Delaware, and the effectiveness of (the "Effective Time"), the
Corporation's Amended and Restated Certificate of Incorporation (the
"Certificate of Incorporation"), a series of fifty thousand (50,000) shares of
Preferred Stock designated as Series A Junior Participating Preferred Stock;

         WHEREAS, the Certificate of Incorporation will provide that the
Corporation is authorized to issue 20,000,000 shares of Preferred Stock, none of
which are currently issued and outstanding, now therefore it is:

         RESOLVED, that pursuant to the authority vested in the Board of
Directors of the Corporation by Article IV of the Certificate of Incorporation
(as defined below), a series of Preferred Stock of the Corporation shall, upon
the Effective  Time, be created out of the authorized but unissued shares of the
capital stock of the Corporation, such series to be designated Series A Junior
Participating Preferred Stock (the "Participating Preferred Stock"), to consist
of 50,000 shares, par value $.001 per share, of which the preferences and
relative and other rights, and the qualifications, limitations or restrictions
thereof, shall be as follows:

                  1. Future Increase or Decrease. Subject to paragraph 4(e) of
this resolution, the number of shares of said series may at any time or from
time to time be increased or decreased by the Board of Directors notwithstanding
that shares of such series may be outstanding at such time of increase or
decrease.

                                       43
<PAGE>   50

                  2.  Dividend Rate.

                           (a) The holders of shares of Participating Preferred
Stock shall be entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available for the purpose, quarterly dividends
payable in cash on the first day of each January, April, July and October in
each year (each such date being referred to herein as a "Quarterly Dividend
Payment Date"), commencing on the first Quarterly Dividend Payment Date after
the first issuance (the "First Issuance") of a share or fraction of a share of
Participating Preferred Stock, in an amount per share (rounded to the nearest
cent) equal to the greater of (i) $10.00 and (ii) 1,000 times the aggregate per
share amount of all cash dividends and 1,000 times the aggregate per share
amount (payable in kind) of all non-cash dividends or other distributions, other
than a dividend or distribution payable in shares of Common Stock, par value
$.001 per share, of the Corporation ("Common Stock") or by way of a subdivision
of the outstanding shares of Common Stock (by reclassification or otherwise),
declared on the Common Stock, since the immediately preceding Quarterly Dividend
Payment Date, or, with respect to the first Quarterly Dividend Payment Date,
since the first issuance of any share or fraction of a share of Participating
Preferred Stock. In the event the Corporation shall at any time after the First
Issuance declare or pay any dividend on the Common Stock payable in shares of
Common Stock, or effect a subdivision or combination or consolidation of the
outstanding shares of Common Stock (by reclassification or otherwise than by
payment of a dividend in shares of Common Stock) into a greater or lesser number
of shares of Common Stock, then in each such case the amount to which holders of
shares of Participating Preferred Stock were entitled immediately prior to such
event under the preceding sentence shall be adjusted by multiplying such amount
by a fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

                           (b) On or after the First Issuance, no dividend on
Common Stock shall be declared unless concurrently therewith a dividend or
distribution is declared on the Participating Preferred Stock as provided in
paragraph (a) above; and the declaration of any such dividend on the Common
Stock shall be expressly conditioned upon payment or declaration of and
provision for a dividend on the Participating Preferred Stock as above provided.
In the event no dividend or distribution shall have been declared on the Common
Stock during the period between any Quarterly Dividend Payment Date and the next
subsequent Quarterly Dividend Payment Date, a dividend of $10.00 per share on
the Participating Preferred Stock shall nevertheless be payable on such
subsequent Quarterly Dividend Payment Date.

                           (c) Whenever quarterly dividends or other dividends
payable on the Participating Preferred Stock as provided in paragraph (a) above
are in arrears, thereafter

                                       44
<PAGE>   51

and until all accrued and unpaid dividends and distributions, whether or not
declared, on shares of Participating Preferred Stock outstanding shall have been
paid in full, the Corporation shall not redeem or purchase or otherwise acquire
for consideration shares of any stock ranking junior (either as to dividends or
upon liquidation, dissolution or winding up) to the Participating Preferred
Stock, provided that the Corporation may at any time redeem, purchase or
otherwise acquire shares of any such junior stock in exchange for shares of any
stock of the Corporation ranking junior (as to dividends and upon dissolution,
liquidation or winding up) to the Participating Preferred Stock.

                           (d) Dividends shall begin to accrue and be cumulative
on outstanding shares of Participating Preferred Stock from the Quarterly
Dividend Payment Date next preceding the date of issue of such shares of
Participating Preferred Stock, unless the date of issue of such shares is prior
to the record date for the first Quarterly Dividend Payment Date, in which case
dividends on such shares shall begin to accrue from the date of issue of such
shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a
date after the record date for the determination of holders of shares of
Participating Preferred Stock entitled to receive a quarterly dividend and
before such Quarterly Dividend Payment Date, in either of which events such
dividends shall begin to accrue and be cumulative from such Quarterly Dividend
Payment Date. Accrued but unpaid dividends shall not bear interest. The Board of
Directors may fix a record date for the determination of holders of shares of
Participating Preferred Stock entitled to receive payment of a dividend
distribution declared thereon, which record date shall be no more than 30 days
prior to the date fixed for the payment thereof.

                  3. Dissolution, Liquidation and Winding Up. In the event of
any voluntary or involuntary dissolution, liquidation or winding up of the
affairs of the Corporation (hereinafter referred to as a "Liquidation"), the
holders of Participating Preferred Stock shall be entitled to receive the
greater of (a) $10.00 per share, plus an amount equal to accrued and unpaid
dividends and distributions thereon, whether or not declared, to the date of
such payment and (b) the aggregate amount per share equal to 1,000 times the
aggregate amount to be distributed per share to holders of Common Stock (the
"Participating Preferred Liquidation Preference"). In the event the Corporation
shall at any time after the First Issuance declare or pay any dividend on the
Common Stock payable in shares of Common Stock, or effect a subdivision or
combination or consolidation of the outstanding shares of Common Stock (by
reclassification or otherwise than by payment of a dividend in shares of Common
Stock) into a greater or lesser number of shares of Common Stock, then in each
such case the aggregate amount to which holders of shares of Participating
Preferred Stock were entitled immediately prior to such event under the
preceding sentence shall be adjusted by multiplying such amount by a fraction
the numerator of which is the number of shares of Common Stock outstanding
immediately after such event and the denominator of which is the number of

                                       45
<PAGE>   52

shares of Common Stock that were outstanding immediately prior to such event.

                  4. Voting Rights. The holders of shares of Participating
Preferred Stock shall have the following voting rights:

                           (a) Each share of Participating Preferred Stock shall
entitle the holder thereof to one thousand (1,000) votes on all matters
submitted to a vote of the stockholders of the Corporation. In the event the
Corporation shall at any time after the First Issuance declare or pay any
dividend on the Common Stock payable in shares of Common Stock, or effect a
subdivision or combination or consolidation of the outstanding shares of Common
Stock (by reclassification or otherwise than by payment of a dividend in shares
of Common Stock) into a greater or lesser number of shares of Common Stock, then
in each such case the aggregate number of votes to which holders of shares of
Participating Preferred Stock were entitled immediately prior to such event
under the preceding sentence shall be adjusted by multiplying such number by a
fraction the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

                           (b) Except as otherwise provided herein, or by law,
the Corporation's Restated Certificate of Incorporation ("Certificate of
Incorporation") or the Bylaws of the Corporation (the "Bylaws"), the holders of
shares of Participating Preferred Stock and the holders of shares of Common
Stock shall vote together as one class on all matters submitted to a vote of
stockholders of the Corporation.

                           (c) If and whenever dividends on the Participating
Preferred Stock shall be in arrears in an amount equal to six quarterly dividend
payments, then and in such event the holders of the Participating Preferred
Stock, voting separately as a class (subject to the provisions of subparagraph
(d) below), shall be entitled at the next annual meeting of the stockholders or
at any special meeting to elect two (2) directors. Each share of Participating
Preferred Stock shall be entitled to one vote, and holders of fractional shares
shall have the right to a fractional vote. Upon election, such directors shall
become additional directors of the Corporation and the authorized number of
directors of the Corporation shall thereupon be automatically increased by such
number of directors. Such right of the holders of Participating Preferred Stock
to elect directors may be exercised until all dividends in default on the
Participating Preferred Stock shall have been paid in full, and when so paid and
set apart, the right of the holders of Participating Preferred Stock to elect
such number of directors shall cease, the term of such directors shall thereupon
terminate, and the authorized number of directors of the Corporation shall
thereupon return to the number of authorized directors otherwise in effect, but
subject always to the same provisions for the vesting of such special voting
rights in the case of any such future dividend default or defaults. The fact
that dividends

                                       46
<PAGE>   53

have been paid and set apart as required by the preceding sentence shall be
evidenced by a certificate executed by the President and the Chief Financial
Officer of the Corporation and delivered to the Board of Directors. The
directors so elected by holders of Participating Preferred Stock shall serve
until the certificate described in the preceding sentence shall have been
delivered to the Board of Directors or until their respective successors shall
be elected or appointed and qualify.

         At any time when such special voting rights have been so vested in the
holders of the Participating Preferred Stock, the Secretary of the Corporation
may, and upon the written request of the holders of record of 10% or more of the
number of shares of the Participating Preferred Stock then outstanding addressed
to such Secretary at the principal office of the Corporation in the State of
Illinois, shall call a special meeting of the holders of the Participating
Preferred Stock for the election of the directors to be elected by them as
hereinabove provided, to be held in the case of such written request within
forty (40) days after delivery of such request, and in either case to be held at
the place and upon the notice provided by law and in the Bylaws of the
Corporation for the holding of meetings of stockholders; provided, however, that
the Secretary shall not be required to call such a special meeting (i) if any
such request is received less than ninety (90) days before the date fixed for
the next ensuing annual or special meeting of stockholders or (ii) if at the
time any such request is received, the holders of Participating Preferred Stock
are not entitled to elect such directors by reason of the occurrence of an event
specified in the third sentence of subparagraph (d) below.

                           (d) If, at any time when the holders of Participating
Preferred Stock are entitled to elect directors pursuant to the foregoing
provisions of this paragraph 4, the holders of any one or more additional series
of Preferred Stock are entitled to elect directors by reason of any default or
event specified in the Certificate of Incorporation, as in effect at the time of
the certificate of designation for such series, and if the terms for such other
additional series so permit, the voting rights of the two or more series then
entitled to vote shall be combined (with each series having a number of votes
proportional to the aggregate liquidation preference of its outstanding shares).
In such case, the holders of Participating Preferred Stock and of all such other
series then entitled so to vote, voting as a class, shall elect such directors.
If the holders of any such other series (if designated) have elected such
directors prior to the happening of the default or event permitting the holders
of Participating Preferred Stock to elect directors, or prior to a written
request for the holding of a special meeting being received by the Secretary of
the Corporation from the holders of not less than 10% of the then outstanding
shares of Participating Preferred Stock, then such directors so previously
elected will be deemed to have been elected by and on behalf of the holders of
Participating Preferred Stock as well as such other series, without prejudice to
the right of the holders of Participating Preferred Stock to vote for directors
if such previously elected directors shall resign, cease to serve or fail to
stand for

                                       47
<PAGE>   54

reelection while the holders of Participating Preferred Stock are entitled to
vote. If the holders of any such other series are entitled to elect in excess of
two (2) directors, the Participating Preferred Stock shall not participate in
the election of more than two (2) such directors, and those directors whose
terms first expire shall be deemed to be the directors elected by the holders of
Participating Preferred Stock; provided that, if at the expiration of such terms
the holders of Participating Preferred Stock are entitled to vote in the
election of directors pursuant to the provisions of this paragraph 4, then the
Secretary of the Corporation shall call a meeting (which meeting may be the
annual meeting or special meeting of stockholders referred to in subparagraph
(c)) of holders of Participating Preferred Stock for the purpose of electing
replacement directors (in accordance with the provisions of this paragraph 4) to
be held on or prior to the time of expiration of the expiring terms referred to
above.

                           (e) Except as otherwise set forth herein or required
by law, the Certificate of Incorporation or the Bylaws, holders of Participating
Preferred Stock shall have no special voting rights and their consent shall not
be required (except to the extent they are entitled to vote with holders of
Common Stock as set forth herein) for the taking of any corporate action. No
consent of the holders of outstanding shares of Participating Preferred Stock at
any time outstanding shall be required in order to permit the Board of Directors
to: (i) increase the number of authorized shares of Participating Preferred
Stock or to decrease such number to a number not below the sum of the number of
shares of Participating Preferred Stock then outstanding and the number of
shares with respect to which there are outstanding rights to purchase; or (ii)
issue Preferred Stock which is senior to the Participating Preferred Stock,
junior to the Participating Preferred Stock or on a parity with the
Participating Preferred Stock.

                  5. Consolidation, Merger, etc. In case the Corporation shall
enter into any consolidation, merger, combination or other transaction in which
the shares of Common Stock are exchanged for or changed into other stock or
securities, cash and/or any other property, then in any such case each share of
Participating Preferred Stock shall at the same time be similarly exchanged or
changed into an amount per share, subject to the provision for adjustment
hereinafter set forth, equal to 1,000 times the aggregate amount of stock,
securities, cash and/or any other property (payable in kind), as the case may
be, into which or for which each share of Common Stock is changed or exchanged.
In the event the Corporation shall at any time after the First Issuance declare
or pay any dividend on the Common Stock payable in shares of Common Stock, or
effect a subdivision or combination or consolidation of the outstanding shares
of Common Stock (by reclassification or otherwise than by payment of a dividend
in shares of Common Stock) into a greater or lesser number of shares of Common
Stock, then in each such case the amount set forth in the preceding sentence
with respect to the exchange or change of shares of Participating Preferred
Stock shall be adjusted by multiplying such amount by a

                                       48
<PAGE>   55

fraction, the numerator of which is the number of shares of Common Stock
outstanding immediately after such event and the denominator of which is the
number of shares of Common Stock that were outstanding immediately prior to such
event.

                  6. Redemption. The shares of Participating Preferred Stock
shall not be redeemable.

                  7. Conversion Rights. The Participating Preferred Stock is not
convertible into Common Stock or any other security of the Corporation.

                  8. Ranking. The Participating Preferred Stock shall rank
junior to all other classes and series of the Corporation's Preferred Stock as
to payment of dividends and the distribution of assets, unless the terms of any
such series shall provide otherwise.

                                       49
<PAGE>   56

IN WITNESS WHEREOF, the undersigned President and Chief Executive Officer and
Secretary and General Counsel of the Corporation each declares under penalty of
perjury the truth, to the best of his knowledge, of this Certificate of
Designation, Preferences and Rights of Series B Junior Participating Preferred
Stock.

                  Executed this    day of April, 2000.

                                        By: ________________________
                                             Name: Matthew Neville
                                             Title:  President and
                                                     Chief Executive Officer

Attest:
___________________________
Name:   William C. McCarthy
Title:  Chief Financial Officer, Secretary

STATE OF ILLINOIS                   )
                                    ) ss.:
COUNTY OF ________                  )

         This instrument was acknowledged before me on April   , 2000, by
Matthew Neville, as President and Chief Executive Officer of Cabot
Microelectronics Corporation and by William C. McCarthy, as Chief Financial
Officer and Secretary of Cabot Microelectronics Corporation They are personally
known to me and did not take an oath.

                                       ______________________________________
                                       Name: ________________________________
                                             Notary Public - State of Illinois
                                             My Commission Expires:

                                       50
<PAGE>   57

Preferred

                                                                       Exhibit B

                            Form of Right Certificate

Certificate No. R-_______                                         _______ Rights

NOT EXERCISABLE AFTER APRIL 7, 2010, OR EARLIER IF REDEEMED BY THE CORPORATION.
THE RIGHTS ARE SUBJECT TO REDEMPTION AT $0.01 PER RIGHT ON THE TERMS SET FORTH
IN THE RIGHTS AGREEMENT.

                                Right Certificate

                       Cabot Microelectronics Corporation

         This certifies that ________________________, or registered assigns, is
the registered owner of the number of Rights set forth above, each of which
entitles the owner thereof, subject to the terms, provisions and conditions of
the Rights Agreement, dated as of March 24, 2000 (the "Rights Agreement"),
between Cabot Microelectronics Corporation, a Delaware corporation (the
"Corporation"), and Equiserve Trust Company, N.A., a national banking
association (the "Rights Agent"), to purchase from the Corporation at any time
after the Distribution Date (as such term is defined in the Rights Agreement)
and prior to 5:00 P.M., New York City, New York time, on April 7, 2010, unless
the Rights evidenced hereby shall have been previously redeemed by the
Corporation, at the office or offices of the Rights Agent designated for such
purpose, or at the office of its successor as Rights Agent, one one-thousandth
of a fully paid non-assessable share of Series A Junior Participating Preferred
Stock, par value $.001 per share (the "Preferred Shares"), of the Corporation,
at a purchase price of $138.00 per one one-thousandth of Preferred Share (the
"Purchase Price"), upon presentation and surrender of this Right Certificate
with the Form of Election to Purchase duly executed. The number of Rights
evidenced by this Right Certificate (and the number of one one-thousandths of a
Preferred Share which may be purchased upon exercise hereof) set forth above,
and the Purchase Price set forth above, are the number and Purchase Price as of
April 7, 2000 based on the Preferred Shares as constituted at such date.

         Upon the occurrence of a Section 11(a)(ii) Event (as such term is
defined in the Rights Agreement), if the Rights evidenced by this Right
Certificate are Beneficially Owned by (i) an Acquiring Person or an Affiliate or
Associate of any such Acquiring Person (as such terms are defined in the Rights
Agreement), (ii) a transferee of any such Acquiring Person, Associate or
Affiliate who becomes a transferee after the Acquiring Person becomes such, or
(iii) under certain circumstances specified in the Rights Agreement, a
transferee of any such Acquiring Person, Associate or Affiliate who

                                       51
<PAGE>   58

becomes a transferee prior to or concurrently with the Acquiring Person becoming
such, such Rights shall become null and void and no holder hereof shall have any
right with respect to such Rights from and after the occurrence of such Section
11(a)(ii) Event.

         As provided in the Rights Agreement, the Purchase Price and the number
of one one-thousandths of a Preferred Share or other securities which may be
purchased upon the exercise of the Rights evidenced by this Right Certificate
are subject to modification and adjustment upon the happening of certain events,
including Triggering Events (as such term is defined in the Rights Agreement).

         This Right Certificate is subject to all of the terms, covenants and
restrictions of the Rights Agreement, which terms, covenants and restrictions
are hereby incorporated herein by reference and made a part hereof and to which
Rights Agreement reference is hereby made for a full description of the rights,
limitations of rights, obligations, duties and immunities hereunder of the
Rights Agent, the Corporation and the holders of the Right Certificates, which
limitations of rights include the temporary suspension of the exercisability of
such Rights under the specific circumstances set forth in the Rights Agreement.
Copies of the Rights Agreement are on file at the principal executive offices of
the Corporation and the office or offices of the Rights Agent.

         This Right Certificate, with or without other Right Certificates, upon
surrender at the principal office of the Rights Agent, may be exchanged for
another Right Certificate or Right Certificates of like tenor and date
evidencing Rights entitling the holder to purchase a like aggregate number of
Preferred Shares or other securities as the Rights evidenced by the Right
Certificate or Right Certificates surrendered shall have entitled such holder to
purchase. If this Right Certificate shall be exercised in part, the holder shall
be entitled to receive upon surrender hereof another Right Certificate or Right
Certificates for the number of whole Rights not exercised.

         Subject to the provisions of the Rights Agreement, the Rights evidenced
by this Certificate may be redeemed by the Corporation at a redemption price of
$0.01 per Right (subject to adjustment as provided in the Rights Agreement)
payable in cash.

         No fractional Preferred Shares will be issued upon the exercise of any
Right or Rights evidenced hereby (other than fractions which are one
one-thousandth or integral multiples of one one-thousandth of a Preferred Share,
which may, at the election of the Corporation, be evidenced by depositary
receipts), but in lieu thereof a cash payment will be made, as provided in the
Rights Agreement.

         No holder of this Right Certificate shall be entitled to vote or
receive dividends or be deemed for any purpose the holder of the Preferred
Shares or of any other securities of the Corporation which may at any time be
issuable on the exercise hereof, nor shall

                                       52
<PAGE>   59

anything contained in the Rights Agreement or herein be construed to confer upon
the holder hereof, as such, any of the rights of a stockholder of the
Corporation or any right to vote for the election of directors or upon any
matter submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action, or to receive notice of meetings or other
actions affecting stockholders (except as provided in the Rights Agreement), or
to receive dividends or other distributions or to exercise any preemptive or
subscription rights, or otherwise, until the Right or Rights evidenced by this
Right Certificate shall have been exercised as provided in the Rights Agreement.

         This Right Certificate shall not be valid or obligatory for any purpose
until it shall have been countersigned by the Rights Agent.

                                       53
<PAGE>   60

                  WITNESS the facsimile signature of the proper officers of the
Corporation and its corporate seal.

[SEAL]

ATTEST:                                     CABOT MICROELECTRONICS CORPORATION
By:_____________________________            By:_____________________________
   Name: William C. McCarthy                   Name: Matthew Neville
   Title: Secretary                            Title: President

Countersigned:

EQUISERVE TRUST COMPANY, N.A.,
as Rights Agent

By:_____________________________
   Authorized Officer

                                       54
<PAGE>   61

                    Form of Reverse Side of Right Certificate

                               FORM OF ASSIGNMENT

                (To be executed by the registered holder if such
               holder desires to transfer the Right Certificate.)

         FOR VALUE RECEIVED_________________ hereby sells, assigns and transfers
unto __________________________________________________________________________
_______________________________________________________________________________
                  (Please print name and address of transferee)

_______________________________________________________________________________
this Right Certificate, together with all right, title and interest therein, and
does hereby irrevocably constitute and appoint _______________ Attorney, to
transfer the within Right Certificate on the books of the within-named
Corporation, with full power of substitution.

Dated:  ____________, ____

                                                  _____________________________
                                                  Signature

Signature Guaranteed:

_______________________________________________________

                  The undersigned hereby certifies that (1) the Rights evidenced
by this Right Certificate are not being sold, assigned or transferred by or on
behalf of a Person who is or was an Acquiring Person or an Affiliate or
Associate thereof (as such terms are defined in the Right Agreement) and (2)
after due inquiry and to the best knowledge of the undersigned, the undersigned
did not acquire the Rights evidenced by this Right Certificate from any Person
who is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement).

                                                   ____________________________
                                                   Signature

                                       55
<PAGE>   62

             Form of Reverse Side of Right Certificate -- continued

                          FORM OF ELECTION TO PURCHASE

             (To be executed by the registered holder if such holder
                           desires to exercise Rights
                     represented by the Right Certificate.)

To the Rights Agent:

         The undersigned hereby irrevocably elects to exercise _________________
Rights represented by this Right Certificate to purchase the Preferred Shares,
Common Shares or other securities issuable upon the exercise of such Rights and
requests that certificates for such Preferred Shares, Common Shares or other
securities be issued in the name of:

Please insert social security
or other identifying number  ________________________________________________
_______________________________________________________________________________
                         (Please print name and address)

_______________________________________________________________________________
If such number of Rights shall not be all the Rights evidenced by this Right
Certificate, a new Right Certificate for the balance remaining of such Rights
shall be registered in the name of and delivered to:

Please insert social security
or other identifying number  ________________________________________________
_______________________________________________________________________________
                         (Please print name and address)

_______________________________________________________________________________

                                       56
<PAGE>   63

             Form of Reverse Side of Right Certificate -- continued

Dated:  _______________, ____

                                                     __________________________
                                                     Signature

Signature Guaranteed:

                                       57
<PAGE>   64

             Form of Reverse Side of Right Certificate -- continued.

                  The undersigned hereby certifies that (1) the Rights evidenced
by this Right Certificate are not being exercised by or on behalf of a Person
who is or was an Acquiring Person or an Affiliate or Associate thereof (as such
terms are defined in the Rights Agreement) and (2) after due inquiry and to the
best knowledge of the undersigned, the undersigned did not acquire the Rights
evidenced by this Rights Certificate from any Person who is or was an Acquiring
Person or an Affiliate or Associate thereof (as such terms are defined in the
Rights Agreement).

                                                 ______________________________
                                                 Signature

                                     NOTICE

                  The signature on the foregoing Forms of Assignment and
Election and certificates must conform to the name as written upon the face of
this Right Certificate in every particular, without alteration or enlargement or
any change whatsoever.

                  In the event the certification set forth above in the Form of
Assignment or the Form of Election to Purchase, as the case may be, is not
completed, the Corporation and the Rights Agent will deem the Beneficial Owner
of the Rights evidenced by this Right Certificate to be an Acquiring Person or
an Affiliate or Associate thereof (as such terms are defined in the Rights
Agreement) and such Assignment or Election to Purchase will not be honored.

                                       58
<PAGE>   65

                                                                       Exhibit C

                          SUMMARY OF RIGHTS TO PURCHASE
                                PREFERRED SHARES

         On March 24, 2000, the Board of Directors of Cabot Microelectronics
Corporation (the "Corporation") declared a dividend distribution of one
preferred share purchase right (a "Right") for each outstanding share of Common
Stock, par value $.001 per share (the "Common Shares"), of the Corporation. The
dividend is payable to the stockholders of record on April 7, 2000 (the "Record
Date"), and with respect to Common Shares issued thereafter until the
Distribution Date (as defined below) and, in certain circumstances, with respect
to Common Shares issued after the Distribution Date. Except as set forth below,
each Right, when it becomes exercisable, entitles the registered holder to
purchase from the Corporation one one-thousandth of a share of Series A Junior
Participating Preferred Stock, $.001 par value per share (the "Preferred
Shares"), of the Corporation at a price of $138.00 per one one-thousandth of a
Preferred Share (the "Purchase Price"), subject to adjustment. The description
and terms of the Rights are set forth in a Rights Agreement (the "Rights
Agreement") between the Corporation and EquiServe Trust Company, N.A., as Rights
Agent (the "Rights Agent"), dated as of March 24, 2000.

         Initially, the Rights will be attached to all certificates representing
Common Shares then outstanding, and no separate Right Certificates will be
distributed. The Rights will separate from the Common Shares upon the earliest
to occur of (i) the date of first public announcement that an Acquiring Person
(as hereinafter defined) has become such; or (ii) 10 days (or such later date as
the Board may determine) following the commencement of, or announcement of an
intention to make, a tender offer or exchange offer the consummation of which
would result in a person or group becoming an Acquiring Person (as hereinafter
defined) (the earliest of such dates being called the "Distribution Date").
Subject to certain exceptions, an "Acquiring Person" is any person who or which
together with all affiliated and associates is the beneficial owner of 15% or
more of the outstanding Common Shares (except pursuant to a Permitted Offer (as
hereinafter defined). The date of first public announcement that a person or
group has become an Acquiring Person is the "Shares Acquisition Date." The
Rights Agreement provides that, until the Distribution Date, the Rights will be
transferred with and only with the Common Shares. Until the Distribution Date
(or earlier redemption or expiration of the Rights) new Common Share
certificates issued after the Record Date upon transfer or new issuance of
Common Shares will contain a notation incorporating the Rights Agreement by
reference. Until the Distribution Date (or earlier redemption or expiration of
the Rights), the surrender for transfer of any certificates for Common Shares
outstanding as of the Record Date, even without such notation or a copy of this
Summary of Rights being attached thereto, will also constitute the transfer of
the Rights associated with the Common Shares represented by such certificate. As
soon as practicable following the

                                       59
<PAGE>   66

Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to holders of record of the Common Shares as of
the close of business on the Distribution Date (and to each initial record
holder of certain Common Shares issued after the Distribution Date), and such
separate Right Certificates alone will evidence the Rights.

         The Rights are not exercisable until the Distribution Date and will
expire at the close of business on April 7, 2010, unless earlier redeemed by the
Corporation as described below.

         In the event that any person becomes an Acquiring Person or an
affiliate or associate thereof (except pursuant to a tender or exchange offer
which is for all outstanding Common Shares at a price and on terms which a
majority of certain members of the Board of Directors determines to be adequate
and in the best interests of the Corporation and its stockholders, other than
such Acquiring Person, its affiliates and associates (a "Permitted Offer")),
each holder of a Right will thereafter have the right (the "Flip-In Right") to
receive upon exercise the number of Common Shares or of one one-thousandths of a
share of Preferred Shares (or, in certain circumstances, other securities of the
Corporation) having a value (immediately prior to such triggering event) equal
to two times the exercise price of the Right. Notwithstanding the foregoing,
following the occurrence of the event described above, all Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person or any affiliate or associate thereof
will be null and void.

         In the event that, at any time following the Shares Acquisition Date,
(i) the Corporation is acquired in a merger or other business combination
transaction in which the holders of all of the outstanding Common Shares
immediately prior to the consummation of the transaction are not the holders of
all of the surviving corporation's voting power, or (ii) more than 50% of the
Corporation's assets or earning power is sold or transferred, in either case
with or to an Acquiring Person or any affiliate or associate or any other person
in which such Acquiring Person, affiliate or associate has an interest or any
person acting on behalf of or in concert with such Acquiring Person, affiliate
or associate, or, if in such transaction all holders of Common Shares are not
treated alike, any other person, then each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have the
right (the "Flip-Over Right") to receive, upon exercise, common shares of the
acquiring company (or in certain circumstances, its parent) having a value equal
to two times the exercise price of the Right. The holder of a Right will
continue to have the Flip-Over Right whether or not such holder exercises or
surrenders the Flip-In Right.

         The Purchase Price payable, and the number of Preferred Shares, Common
Shares or other securities issuable, upon exercise of the Rights are subject to
adjustment from

                                       60
<PAGE>   67

time to time to prevent dilution (i) in the event of a stock dividend on, or a
subdivision, combination or reclassification of, the Preferred Shares, (ii) upon
the grant to holders of the Preferred Shares of certain rights or warrants to
subscribe for or purchase Preferred Shares at a price, or securities convertible
into Preferred Shares with a conversion price, less than the then current market
price of the Preferred Shares or (iii) upon the distribution to holders of the
Preferred Shares of evidences of indebtedness or assets (excluding regular
quarterly cash dividends) or of subscription rights or warrants (other than
those referred to above).

         The number of outstanding Rights and the number of one one-thousandths
of a Preferred Share issuable upon exercise of each Right are also subject to
adjustment in the event of a stock split of the Common Shares or a stock
dividend on the Common Shares payable in Common Shares or subdivisions,
consolidations or combinations of the Common Shares occurring, in any such case,
prior to the Distribution Date.

         Preferred Shares purchasable upon exercise of the Rights will not be
redeemable. Each Preferred Share will be entitled to a minimum preferential
quarterly dividend payment of $10.00 per share but, if greater, will be entitled
to an aggregate dividend per share of 1,000 times the dividend declared per
Common Share. In the event of liquidation, the holders of the Preferred Shares
will be entitled to the greater of (i) a minimum preferential liquidation
payment of $10.00 per share and (ii) an aggregate payment per share of 1,000
times the aggregate payment made per Common Share. The Preferred Shares rank
junior to all other classes and series of the Corporation's preferred stock with
respect to dividends and upon liquidation, unless the terms of such other series
provides otherwise. These rights are protected by customary antidilution
provisions. In the event that the amount of accrued and unpaid dividends on the
Preferred Shares is equivalent to six full quarterly dividends or more, the
holders of the Preferred Shares, subject to certain limitations, shall have the
right, voting as a class, to elect two directors in addition to the directors
elected by the holders of the Common Shares until all cumulative dividends on
the Preferred Shares have been paid through the last quarterly dividend payment
date.

         With certain exceptions, no adjustment in the Purchase Price will be
required until cumulative adjustments require an adjustment of at least 1% in
such Purchase Price. No fractional Preferred Shares will be issued (other than
fractions which are one one-thousandth or integral multiples of one
one-thousandth of a Preferred Share, which may, at the election of the
Corporation, be evidenced by depositary receipts) and in lieu thereof, an
adjustment in cash will be made based on the market price of the Preferred
Shares on the last trading day prior to the date of exercise.

         At any time prior to the earlier to occur of (i) a person becoming an
Acquiring Person or (ii) the expiration of the Rights, and under certain other
circumstances, the

                                       61
<PAGE>   68

Corporation may redeem the Rights in whole, but not in part, at a price of $0.01
per Right (the "Redemption Price") which redemption shall be effective upon the
action of the Board of Directors. Additionally, following the time a person
becomes an Acquiring Person and subject to certain other conditions, the
Corporation may redeem the then outstanding Rights in whole, but not in part, at
the Redemption Price, in certain circumstances, including redemption in
connection with a merger or other business combination transaction or series of
transactions involving the Corporation in which all holders of Common Shares are
treated alike but not involving (other than as a holder of Common Shares being
treated like all other holders) an Acquiring Person or its affiliates or
associates. The payment of the Redemption Price may be deferred under certain
circumstances as contemplated in the Rights Agreement.

         All of the provisions of the Rights Agreement may be amended by the
Board of Directors of the Corporation prior to the Distribution Date. After the
Distribution Date, the provisions of the Rights Agreement may be amended by the
Board of Directors in order to cure any ambiguity, defect or inconsistency, to
make changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or, subject to certain
limitations, to shorten or lengthen any time period under the Rights Agreement.

         Until a Right is exercised, the holder thereof, as such, will have no
rights as a stockholder of the Corporation, including, without limitation, the
right to vote or to receive dividends. While the distribution of the Rights will
not be taxable to stockholders of the Corporation, stockholders may, depending
upon the circumstances, recognize taxable income should the Rights become
exercisable or upon the occurrence of certain events thereafter.

         A copy of the Rights Agreement has been filed with the Securities and
Exchange Commission as an Exhibit to a Registration Statement on Form 8-A dated
April 3, 2000. A copy of the Rights Agreement is available free of charge from
the Corporation. This summary description of the Rights does not purport to be
complete and is qualified in its entirety by reference to the Rights Agreement,
which is hereby incorporated herein by reference.

                                       62<PAGE>   1

                                                                    Exhibit 10.1

                           MASTER SEPARATION AGREEMENT

                           DATED AS OF MARCH 28, 2000

                                  BY AND AMONG

                                CABOT CORPORATION

                  AND CERTAIN SUBSIDIARIES OF CABOT CORPORATION

                                       AND

                       CABOT MICROELECTRONICS CORPORATION
<PAGE>   2
                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                    ARTICLE 1

                                   DEFINITIONS

<S>                                                                                 <C>
   SECTION 1.01.    DEFINED TERMS..................................................    2

                                    ARTICLE 2

                    TRANSFER AND CONTRIBUTION OF MMD ASSETS;
                        ASSUMPTION OF CERTAIN LIABILITIES
   SECTION 2.01.    TRANSFER OF ASSETS.............................................    8
   SECTION 2.02.    ASSUMPTION OF LIABILITIES......................................   11
   SECTION 2.03.    METHODS OF TRANSFER AND ASSUMPTION.............................   12
   SECTION 2.04.    NONASSIGNABLE ASSETS AND ASSUMED LIABILITIES...................   13
   SECTION 2.05.    COSTS OF  TRANSFER.............................................   15
</TABLE>

<TABLE>
<CAPTION>
                                    ARTICLE 3

                              ANCILLARY AGREEMENTS

                                    ARTICLE 4

                                    COVENANTS
<S>                                                                                 <C>
   SECTION 4.01.    IPO AND DISTRIBUTION AGREEMENT.................................   16
   SECTION 4.02.    REGISTRATION RIGHTS AGREEMENT..................................   16
   SECTION 4.03.    JOINT AND SEVERAL LIABILITY....................................   16

                                    ARTICLE 5

                                 INDEMNIFICATION

   SECTION 5.01.    INDEMNIFICATION BY PARTIES.....................................   17
   SECTION 5.02.    INDEMNIFICATION PROCEDURES.....................................   17
   SECTION 5.03.    CERTAIN LIMITATIONS............................................   19
   SECTION 5.04.    EXISTING LITIGATION TO BE TRANSFERRED TO CMC; COOPERATION......   20

                                    ARTICLE 6

                              ACCESS TO INFORMATION

   SECTION 6.01.    ACCESS TO INFORMATION..........................................   20
   SECTION 6.02.    RECORD RETENTION...............................................   22
   SECTION 6.03.    PRODUCTION OF WITNESSES........................................   22
   SECTION 6.04.    REIMBURSEMENT..................................................   23

</TABLE>

                                      -i-
<PAGE>   3
<TABLE>
<CAPTION>
                                    ARTICLE 7

                                  MISCELLANEOUS
<S>                                                                                 <C>
   SECTION 7.01.    ENTIRE AGREEMENT...............................................   23
   SECTION 7.02.    GOVERNING LAW..................................................   23
   SECTION 7.03.    PERFORMANCE....................................................   23
   SECTION 7.04.    NOTICES........................................................   24
   SECTION 7.05.    THIRD PARTY BENEFICIARIES......................................   25
   SECTION 7.06.    COUNTERPARTS...................................................   25
   SECTION 7.07.    BINDING EFFECT; ASSIGNMENT.....................................   25
   SECTION 7.08.    DISPUTE RESOLUTION.............................................   25
   SECTION 7.09.    SEVERABILITY...................................................   26
   SECTION 7.10.    WAIVER.........................................................   26
   SECTION 7.11.    AMENDMENT......................................................   27
   SECTION 7.12.    AUTHORITY......................................................   27
   SECTION 7.13.    INTERPRETATION.................................................   27
</TABLE>

Schedule A                 Ancillary Agreements
Schedule 2.01(a)(i)(A)     Contracts and Agreements
Schedule 2.01(a)(i)(B)     Leasehold Interests in Real Property
Schedule 2.01(a)(i)(C)     Real Property
Schedule 2.01(a)(i)(D)     Management Information Systems and Software
Schedule 2.01(a)(i)(E)     Licenses, Permits and Franchises
Schedule 2.01(a)(i)(F)     Intellectual Property
Schedule 2.01(e)(ii)       Excluded Management Information Systems and Software
Schedule 2.01(e)(iii)(A)   Excluded Trademarks and Service Marks
Schedule 2.01(e)(iii)(B)   Excluded Patents
Schedule 2.01(e)(iii)(C)   Other Excluded Intellectual Property
Schedule 2.01(e)(v)        Other Excluded Assets
Schedule 5.04              Legal Claims

                                      -ii-
<PAGE>   4
                           MASTER SEPARATION AGREEMENT

         This Master Separation Agreement (this "Agreement") is entered into on
March 28, 2000 among Cabot Corporation, a Delaware corporation ("Cabot"), Cabot
Carbon Ltd., a United Kingdom corporation ("Cabot Carbon"), Cabot Specialty
Chemicals, Inc., a Delaware corporation ("Cabot Specialty"),
and together with Cabot Carbon, the "Relevant Cabot Subsidiaries"), and Cabot
Microelectronics Corporation, a Delaware corporation ("CMC"). Unless expressly
provided otherwise, all references to Cabot shall include all of the Relevant
Cabot Subsidiaries. Capitalized terms used and not otherwise defined herein
shall have the meanings ascribed to such terms in Article 1 hereof.

                                    RECITALS

         WHEREAS, the Board of Directors of Cabot has determined that it would
be in the best interests of Cabot and its stockholders to completely separate
the MMD Business (as defined below) from Cabot;

         WHEREAS, Cabot has caused CMC to be incorporated in order to effect
such separation, Cabot currently owns all of the issued and outstanding common
stock of CMC, and CMC currently conducts no business operations and has no
significant assets or liabilities;

         WHEREAS, the Boards of Directors of Cabot and CMC have each determined
that it would be appropriate and desirable for Cabot to contribute and transfer
to CMC, and for CMC to receive and assume, directly or indirectly, substantially
all of the assets and liabilities currently associated with the MMD Business,
including certain of the assets and liabilities currently held by the Relevant
Cabot Subsidiaries;

         WHEREAS, Cabot and CMC intend that the contribution and assumption of
assets and liabilities will qualify either as a tax-free reorganization under
Section 368 (a) (1) (D) of the Code or will be a tax-free transfer of assets
under Section 351 of the Code;

         WHEREAS, Cabot and CMC currently contemplate that, following the
contribution and assumption of assets and liabilities, CMC will make an initial
public offering of an amount of CMC's common stock that will reduce Cabot's
ownership of CMC, but not below 80%;

         WHEREAS, Cabot currently contemplates that, following such initial
public offering, Cabot will distribute to the holders of its stock by means of a
pro rata distribution all of the shares of CMC common stock owned by Cabot (the
"Distribution");

         WHEREAS, Cabot and CMC intend that the Distribution will be tax-free to
Cabot and its stockholders under the Code; and

                                      -1-
<PAGE>   5
         WHEREAS, the parties intend in this Agreement, including the Annexes
and Schedules hereto, to set forth the arrangements between them regarding the
separation of the MMD Business from Cabot.

         NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:

                                    ARTICLE 1

                                   DEFINITIONS

         SECTION 1.01. Defined Terms.

         The following terms, as used herein, shall have the following meanings:

         "AFFILIATE" of any specified Person means any other Person directly or
indirectly Controlling, Controlled by, or under common Control with, such
specified Person; provided, however, that for purposes of this Agreement, (i)
Cabot and its subsidiaries (other than CMC and its subsidiaries) shall not be
considered Affiliates of CMC and (ii) CMC and its subsidiaries shall not be
considered Affiliates of Cabot.

         "ANCILLARY AGREEMENTS" means each of the agreements which are listed on
Schedule A hereto, including any exhibits, schedules, attachments, tables or
other appendices thereto, and each agreement and other instrument contemplated
therein.

         "ANSUNG, KOREA ASSETS" means the MMD Assets located in Ansung, Korea.

         "ASSETS" means and includes all property and rights of every kind,
nature, character and description, tangible and intangible, real, personal or
mixed, wherever located, including, without limitation, the following:

         (A)      contracts and agreements (whether or not entered into in the
                  ordinary course of business), including without limitation
                  purchase orders issued or received;

         (B)      real property and the leasehold interests in real property;

         (C)      licenses, permits or franchises;

         (D)      Intellectual Property;

         (E)      Receivables;

         (F)      Equipment and all existing warranties and guarantees, if any,
                  express
                                      -2-
<PAGE>   6
                  or implied, with respect to the Equipment for the benefit of
                  the owner thereof;

         (G)      Inventory;

         (H)      books and records, customer lists, vendor lists, catalogs,
                  research material, technical information, technology,
                  specifications, designs, drawings, processes, and quality
                  control data;

         (I)      sales promotion and selling literature and promotional and
                  advertising materials;

         (J)      security (including cash) deposited with third parties and
                  security bonds;

         (K)      goodwill and going concern value;

         (L)      prepaid expenses;

         (M)      claims against other parties; and

         (N)      tax returns.

         "ASSUMED LIABILITIES" has the meaning set forth in Section 2.02(a) of
                  this Agreement.

         "BARRY, WALES ASSETS" means the MMD Assets located in Barry, Wales.

         "BUSINESS DAY" means a day other than a Saturday, a Sunday or a day on
which banking institutions located in the States of Illinois and Massachusetts
are authorized or obligated by law or executive order to close.

         "CABOT INDEMNITEES" has the meaning set forth in Section 5.01(a) of
this Agreement.

         "CMC CAPITAL CONTRIBUTION" has the meaning set forth in Section 2.01(b)
of this Agreement.

         "CMC COMMON STOCK" means the Common stock, $.001 par value per share,
of CMC.

         "CMC FINANCIAL STATEMENTS" means the financial statements (including
the notes thereto) of CMC for the period ended September 30, 1999 as set forth
in the IPO Registration Statement.

                                      -3-
<PAGE>   7
         "CMC INDEMNITEES" has the meaning set forth in Section 5.01(b) of this
Agreement.

         "CODE" means the Internal Revenue Code of 1986, as amended from time to
time, together with the rules and regulations promulgated thereunder.

         "COMMISSION" means the Securities and Exchange Commission.

         "CONTRIBUTION DATE" means March 28, 2000.

         "CONTROL" means the possession, direct or indirect, of the power to
direct or cause the direction of the management of the policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"CONTROLLING" and "CONTROLLED" have the corollary meanings ascribed thereto.

         "DEMAND" has the meaning set forth in Section 7.08 of this Agreement.

         "DISPUTES" has the meaning set forth in Section 7.08 of this Agreement.

         "DISTRIBUTION" has the meaning set forth in the recitals to this
Agreement.

         "DISTRIBUTION DATE" means the date to be determined by Cabot in its
sole and absolute discretion when the Distribution is completed.

         "EQUIPMENT" means equipment, furniture, furnishings, fixtures,
machinery, vehicles, telephones and other tangible personal property.

         "EXCLUDED ASSETS" has the meaning set forth in Section 2.01(e) of this
Agreement.

         "EXCLUDED LIABILITIES" has the meaning set forth in Section 2.02(b) of
this Agreement.

         "FOREIGN ASSETS" means the Ansung, Korea Assets, the Barry, Wales
Assets and the Geino, Japan Assets.

         "FUMED METAL OXIDE SUPPLY AGREEMENT" means the Fumed Metal Oxide Supply
Agreement, dated as of January 20, 2000, between Cabot and CMC.

         "GEINO, JAPAN ASSETS" means the MMD Assets located in Geino, Japan.

         "INCOME TAX" has the meaning set forth in the Tax Sharing Agreement.

         "INFORMATION" means all records, books, contracts, instruments,

                                      -4-
<PAGE>   8
computer data and other data.

         "INDEBTEDNESS" has the meaning set forth in Section 2.02(b) of this
Agreement.

         "INDEMNIFYING PARTY" has the meaning set forth in Section 5.02(a) of
this Agreement.

         "INDEMNITEE" has the meaning set forth in Section 5.02(a) of this
Agreement.

         "INTELLECTUAL PROPERTY" means the following types of property and all
rights to sue for past infringement thereof:

         (1)      United States and foreign registered and unregistered
                  trademarks and service marks, trademark and service mark
                  registrations, trademark and service mark applications for
                  registrations, trade names, trade dress and the like together
                  with the goodwill associated with such marks, names,
                  registrations and applications for registration;

         (2)      United States and foreign patents, patent applications, and
                  all other patent rights (including any divisions,
                  continuations, continuations-in-part, reexaminations,
                  extensions, renewals or reissues thereof);

         (3)      registered and unregistered copyrights, applications for
                  copyright registration and common law copyrights;

         (4)      technology, information, know-how and trade secrets, including
                  without limitation, recorded knowledge, surveys, engineering
                  reports, manuals, catalogues, research data, proprietary
                  information, photos, art work, editorial materials, formats,
                  syndicated market research data, sales data and other similar
                  information; and

         (5)      non-governmental licenses, sublicenses, covenants or
                  agreements which relate in whole or in part to any items of
                  the categories mentioned above in any of the foregoing clauses
                  (1), (2), (3) and (4).

         "INTENDED TRANSFEREE" has the meaning set forth in Section 2.04 of this
Agreement.

         "INTENDED TRANSFEROR" has the meaning set forth in Section 2.04 of this
Agreement.

         "INVENTORY" means inventories of raw materials, work in progress and
finished goods and other supplies on hand, in transit or on order, including,
without

                                      -5-
<PAGE>   9
limitation, packaging material, stationery, forms, labels, directories and
promotional materials

         "IPO AND DISTRIBUTION AGREEMENT" means the Initial Public Offering and
Distribution Agreement to be entered into between Cabot and CMC on or before the
IPO Effective Date.

         "IPO EFFECTIVE DATE" means the date on which the IPO Registration
Statement is declared effective by the Commission.

         "IPO REGISTRATION STATEMENT" means the registration statement on Form
S-1, Registration No. 333-95093 filed by CMC with the Commission in connection
with the initial public offering of CMC Common Stock, as it may be amended.

         "LOCAL COUNSEL" has the meaning set forth in Section 5.02(b) of this
Agreement.

         "MMD ASSETS" has the meaning set forth in Section 2.01(a) of this
Agreement.

         "MMD BUSINESS" means the business conducted by the Microelectronics
Materials Division of Cabot at any time on or before the Contribution Date,
either directly or indirectly, through the Relevant Cabot Subsidiaries,
including, but not limited to, (i) all business operations whose financial
performance is reflected in the CMC Financial Statements and (ii) all business
operations initiated or acquired by the Microelectronics Materials Division of
Cabot after the date of the CMC Financial Statements.

         "OTHER TAXES" has the meaning set forth in the Tax Sharing Agreement.

         "PERSON" means an individual, partnership, limited liability company,
joint venture, corporation, trust, unincorporated association, any other entity,
or any government or any department or agency or other unit thereof.

         "POSSESSOR" has the meaning set forth in Section 6.01 of this
Agreement.

         "PRIMARY COUNSEL" has the meaning set forth in Section 5.02(b) of this
Agreement.

         "PRIOR RELATIONSHIP" means the ownership relationship between Cabot and
CMC at any time prior to the Contribution Date.

         "RECEIVABLES" means all accounts and notes receivable and other

                                      -6-
<PAGE>   10
receivables (whether or not billed).

         "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement, dated as of March 28, 2000, between Cabot and CMC.

         "RELATED PARTIES" has the meaning set forth in Section 6.01 of this
Agreement.

         "REPRESENTATIVES" means directors, officers, employees, agents,
consultants, advisors, accountants, attorneys and representatives.

         "REQUESTOR" has the meaning set forth in Section 6.01 of this
Agreement.

         "REQUIRED TRANSFER CONSENT" has the meaning set forth in Section 2.04
of this Agreement.

         "RETENTION PERIOD" has the meaning set forth in Section 6.02(a) of this
Agreement.

         "SEPARATE COUNSEL" has the meaning set forth in Section 5.02(b) of this
Agreement.

         "SPECIAL PATENT COUNSEL" has the meaning set forth in Section 5.02(b)
of this Agreement.

         "SUBSIDIARY" means with respect to any specified Person, any
corporation, any limited liability company, any partnership or other legal
entity of which such Person or any of its Subsidiaries Controls or owns,
directly or indirectly, a majority of the equity interest.

         "TAX" or "TAXES" have the meaning set forth in the Tax Sharing
Agreement.

         "TAX SHARING AGREEMENT" means the Tax Sharing Agreement, between Cabot
and CMC, dated March 28, 2000.

         "THIRD-PARTY CLAIM" means any claim, suit, arbitration, inquiry,
proceeding or investigation by or before any court, governmental or other
regulatory or administrative agency or commission or any arbitration tribunal
asserted by a Person other than any party hereto or their respective Affiliates
which gives rise to a right of indemnification hereunder.

         "TRANSFER OBSTACLE" has the meaning set forth on Section 2.04 of this
Agreement.

                                      -7-
<PAGE>   11
                                    ARTICLE 2

                    TRANSFER AND CONTRIBUTION OF MMD ASSETS;
                        ASSUMPTION OF CERTAIN LIABILITIES

                  SECTION 2.01. Transfer of Assets.

                  (a) Transfer of MMD Assets. On the Contribution Date, Cabot
shall convey, assign, transfer and deliver to CMC all (or in the case of Section
2.01(a)(iii) below, the interest therein specified in such Section 2.01(a)(iii))
of its right, title and interest in and to the MMD Assets, other than the
Foreign Assets.

For the purposes of this Agreement, the term "MMD Assets" shall mean:

         (i) except for the Excluded Assets, all Assets that are (x) owned by
Cabot or with respect to which Cabot has the right to transfer after making the
commercially reasonable efforts referred to in Section 2.04(a), and (y) used
exclusively in, relate exclusively to or arise directly from the MMD Business;
for avoidance of doubt, but not by way of limitation of the foregoing, the
following specifically enumerated assets are included within MMD Assets:

                  (A) contracts and agreements set forth on Schedule
2.01(a)(i)(A);

                  (B) leasehold interests in real property listed on Schedule
2.01(a)(i)(B), including all buildings, structures and other improvements
situated thereon;

                  (C) real property listed on Schedule 2.01(a)(i)(C), including
all buildings, structures and other improvements situated thereon;

                  (D) management information systems and software listed on
Schedule 2.01(a)(i)(D);

                  (E) licenses, permits or franchises listed on Schedule
2.01(a)(i)(E);

                  (F) Intellectual Property listed on Schedule 2.01(a)(i)(F) and
all right, title and interest in and to all monetary and other awards and
judgments arising out of Cabot Corporation v. Solution Technology, Inc., Civil
Action No.: 3.96CV505-McK (WD NC) (the "STI Litigation");

                  (G) the tax returns of Cabot relating to Other Taxes relating
to or arising out of the MMD Business as conducted through the Contribution
Date; and
                  (H) the intercompany accounts owing from Cabot and its
Affiliates to the MMD Business.

           (ii) the Assets, other than Intellectual Property and Excluded
Assets set forth in 2.01(e)(ii) through (viii) below, located in Aurora,
Illinois,

                                      -8-

<PAGE>   12
Hammond, Indiana and Barry, Wales that are used by the MMD Business in the
manufacture and production of fumed metal oxide dispersions.

                  (b) Purchase of Barry, Wales Assets, Geino, Japan Assets and
Ansung, Korea Assets. In addition to the transfer of MMD Assets pursuant to the
foregoing paragraph (a) of this Agreement, Cabot and the Relevant Cabot
Subsidiaries hereby also agree to sell to CMC on the Contribution Date the
Foreign Assets in exchange for a total aggregate consideration equal to the fair
market value of such Foreign Assets, determined using the net book value of such
assets, which shall constitute the total purchase price for the assets.

                  (c) CMC ACKNOWLEDGES AND AGREES THAT THE FOREGOING TRANSFERS
AND SALES ARE BEING MADE "AS IS WHERE IS" AND THAT NEITHER CABOT NOR ANY
SUBSIDIARY OF CABOT HAS MADE OR WILL MAKE ANY WARRANTY, EXPRESSED OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A
PARTICULAR PURPOSE, WITH RESPECT TO ANY ASSET OR ANY FOREIGN ASSET.

                  (d) Cabot and CMC shall have the rights in and to the
Dispersions Technology as defined in the Confidential Disclosure and License
Agreement, dated as of March 28, 2000, between them (the "CD&L Agreement").

                  (e) Excluded Assets. Notwithstanding anything to the contrary
in paragraph (a) above, it is expressly understood and agreed that the Assets
shall not include the following assets (the "Excluded Assets"):

                         (i) assets (including, without limitation, Assets of
the type listed in the definition of Assets) used (partially or entirely) or
owned in connection with any businesses and operations of Cabot and its
Affiliates other than the MMD Business unless specifically enumerated in Section
2.01(a) and the related schedules;

                         (ii) management information systems and software listed
on Schedule 2.01(e)(ii);

                         (iii) Cabot's right, title and interest in and to the
following Intellectual Property:

                                    (A) all United States and foreign registered
                  and unregistered trademarks and service marks, trademark and
                  service mark registrations, trademark and service mark
                  applications for registrations, trade names, trade dress and
                  the like listed on Schedule 2.01(e)(iii)(A), together with the
                  goodwill associated with such marks, names, registrations and
                  applications for registration;

                                    (B) all United States and foreign patents,
                  patent

                                      -9-

<PAGE>   13
                  applications, and all other patent rights (including any
                  divisions, continuations, continuations-in-part,
                  reexaminations, extensions, renewals or reissues thereof)
                  listed on Schedule 2.01(e)(iii)(B);

                                    (C) all technology, information, know-how
                  and trade secrets, including without limitation, recorded
                  knowledge, surveys, engineering reports, manuals, catalogues,
                  research data, proprietary information, photos, art work,
                  editorial materials, formats, syndicated market research data,
                  sales data and other similar information listed on Schedule
                  2.01(e)(iii)(C), and

                                    (D) all non-governmental licenses,
                  sublicenses, covenants or agreements to which Cabot is a
                  party, which relate in whole or in part to any items of the
                  categories mentioned above in clauses (A), (B) and (C),
                  including all trademark licenses;

                         (iv) all of the Assets located at Cabot's facility in
Tuscola, Illinois;

                         (v) any assets listed on Schedule 2.01(e)(v);

                         (vi) the tax returns, corporate minute books and stock
ledgers of Cabot, except those specifically included in the definition of MMD
Assets;

                         (vii) all cash and cash equivalents or similar type
investments, such as certificates of deposit, Treasury bills and other
marketable securities, of Cabot (even if otherwise used in the MMD Business);
and

                         (viii) the real property, structures, other
improvements and fixtures located in Barry, Wales.

                  (f) Instruments of Conveyance and Transfer. On or about the
Contribution Date, Cabot shall (i) deliver or cause to be delivered to CMC such
deeds, bills of sale, endorsements, consents, assignment, and other good and
sufficient instruments of conveyance and assignment, all in recordable form,
where applicable, as are required under local custom and practice to vest in CMC
all right, title and interest of Cabot in and to the MMD Assets, and as will
otherwise be in form and substance reasonably satisfactory to CMC and CMC's
counsel; and (ii) transfer to CMC all contracts, agreements, commitments, books,
records, files, certificates, licenses, permits, plans and specifications and
other data included in the MMD Assets, including, without limitation, computer
tapes and computer-generated records. Notwithstanding the foregoing clause (i),
with respect to the Intellectual Property, Cabot shall deliver to CMC on the
Contribution Date documents for the transfer and assignment of the Intellectual

                                      -10-
<PAGE>   14
Property included in the MMD Assets and shall thereafter deliver to CMC good and
sufficient instruments of conveyance and assignment, all in recordable form, for
all registered trademarks, patents, registered copyrights and pending
applications with respect to any of the foregoing.

                  (g) Further Assurances. From time to time after the
Contribution Date, Cabot and any Affiliate of Cabot shall execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such other
instruments of conveyance, assignment, transfer and delivery and will take or
cause to be taken such other actions as CMC may reasonably request in order more
effectively to sell, convey, assign, transfer, and deliver to CMC any of the MMD
Assets, or to enable CMC to protect, exercise and enjoy all rights and benefits
of Cabot with respect thereto, and as otherwise may be appropriate to carry out
the transactions herein contemplated.

                  SECTION 2.02. Assumption of Liabilities.

                  (a) Assumed Liabilities. On the Contribution Date, CMC shall
assume and agree to pay, perform and discharge when due, all liabilities and
obligations of Cabot (other than the Excluded Liabilities) relating to or
arising out of the MMD Business, whether direct or indirect, absolute or
contingent, contractual, tortious or otherwise, known or unknown, including,
without limitation, all liabilities relating to or arising out of the MMD
Business as conducted through the Contribution Date that are unknown to Cabot
and/or unrealized as of the Contribution Date and that become known to Cabot or
are realized or otherwise arise after the Contribution Date. Without limiting
the generality of the foregoing, the Assumed Liabilities shall include all
duties, obligations and liabilities (actual, contingent and other) of Cabot to
the Rippey Corporation and Rodel Inc. The liabilities and obligations assumed by
CMC in accordance with this Section 2.02 (other than the Excluded Liabilities
described below) are sometimes hereinafter referred to as the "Assumed
Liabilities." Assumed Liabilities include intercompany accounts owing from the
MMD Business to Cabot and its Affiliates.

                  (b) Excluded Liabilities. Notwithstanding the foregoing, CMC
shall not assume any of the following liabilities (the "Excluded Liabilities"):

                           (i) any liability or obligation in respect of any
Indebtedness of Cabot and all Affiliates of Cabot (for the purposes hereof,
"Indebtedness" shall mean (i) all indebtedness for borrowed money, other than
capitalized leases and similar purchase money obligations, (ii) any other
Indebtedness evidenced by a note, bond, debenture or similar instrument, (iii)
all obligations in respect of banker's acceptances and (iv) any guarantee or
other contingent obligation in respect of any of the foregoing);

                           (ii) any liability for or obligation in respect of
Income Tax or any

                                      -11-
<PAGE>   15
liability for the payment of any "excess parachute payment," as defined in
Section 280G of the Code;

                           (iii) except as specifically provided in the
Ancillary Agreements or related to accrued reimbursement, welfare, vacation and
similar benefit obligations incurred in the ordinary course of business and
reflected in the CMC Financial Statements, any liabilities or obligations
relating to or arising under any employee or retirement benefit plan, program,
arrangement or agreement maintained or contributed by Cabot or its Affiliates;

                           (iv) any liabilities or obligations of Cabot that are
not incidental to or do not arise out of or were not incurred with respect to
the MMD Business; and

                           (v) any liability or obligation arising from or
related to Cabot's fumed metal oxide business.

                  SECTION 2.03. Methods of Transfer and Assumption.

                  (a) The parties shall enter into the Ancillary Agreements,
other than the IPO and Distribution Agreement and the Registration Rights
Agreement, on or about the date of this Agreement. To the extent that the
transfer of any Asset or the assumption of any Liability is expressly provided
for by the terms of any Ancillary Agreement, the terms of such Ancillary
Agreement shall determine the manner of the transfer or assumption. It is the
intent of the parties that pursuant to Section 2.01, the transfer and assumption
of all other MMD Assets and Assumed Liabilities shall be made effective as of
the Contribution Date, provided, however, that circumstances may require the
transfer of certain MMD Assets and the assumption of certain Liabilities to
occur in such other manner and at such other time as the parties shall agree.

                  (b) The parties intend to complete the assignment and transfer
of all MMD Assets and the transfer and assumption of all Assumed Liabilities
effective on or prior to the Contribution Date. If any MMD Asset cannot be
assigned or transferred by Cabot or a Relevant Cabot Subsidiary, or any Assumed
Liability cannot be transferred by Cabot or a Relevant Cabot Subsidiary or
assumed by MMD on or prior to the Contribution Date for a reason set forth in
Section 2.04(d), Section 2.4(d) shall govern the parties rights and obligations
with respect to such MMD Asset or such Assumed Liability. In addition to those
transfers and assumptions accurately identified and designated by the parties to
take place but which the parties are not able to effect prior to the
Contribution Date, there may exist (i) assets (including Assets) that the
parties discover were, contrary to the agreements between the parties, by
mistake or omission, transferred to CMC or retained by Cabot or (ii) liabilities
(including Liabilities) that the parties discover were, contrary to the
agreements between the parties, by mistake or omission, assumed by CMC

                                      -12-
<PAGE>   16
or not assumed by CMC. The parties shall cooperate in good faith to effect the
transfer or re-transfer of such assets, and/or the assumption or re-assumption
of such liabilities, in any case as soon as reasonably practicable, to or by the
appropriate party and shall not use the determination of remedial actions
contemplated herein to alter the original intent of the parties hereto with
respect to the MMD Assets to be transferred to or Assumed Liabilities to be
assumed by CMC. Each party shall reimburse the other or make other financial
adjustments (e.g., without limitation, cash reserves) or other adjustments to
remedy any mistakes or omissions relating to any of the Assets transferred
hereby or any of the Assumed Liabilities assumed hereby.

                           (c) Each party hereto shall execute and deliver to
each other party all such documents, instruments, certificates and agreements in
appropriate form, and shall make all filings and recordings and take all such
other actions, as shall be necessary or reasonably requested by such other
party, whether before or after the Contribution Date, in order to give full
effect to and to evidence and perfect the transfer and contribution of the MMD
Assets and the assumption of the Assumed Liabilities as contemplated hereby.
However, CMC acknowledges and agrees that neither Cabot nor any Subsidiary of
Cabot will comply with the provisions of any bulk transfer law or similar laws
of any jurisdiction giving creditors of a transferor rights against the
transferee in connection with the transfer of any Asset.

                  SECTION 2.04. Nonassignable Assets and Assumed Liabilities.

     Anything contained herein to the contrary notwithstanding, this Agreement
shall not constitute an agreement to assign or transfer any Asset or to transfer
and assume any Assumed Liability if an assignment or attempted assignment or
transfer or attempted transfer and assumption of the same without the consent of
another Person would constitute a breach of any contract or agreement or in any
way impair the rights of a party thereunder or give to any third party any
rights with respect thereto. If any such consent (a "Required Transfer Consent")
is not obtained and/or if for any other reason (a "Transfer Obstacle") an
attempted assignment or attempted transfer and assumption would otherwise be
ineffective or would impair the rights of the party attempting to make such
assignment or transfer (the "Intended Transferee") under any such contract or
agreement so that the party entitled to the benefits and responsibilities of
such attempted assignment or attempted transfer and assumption (the "Intended
Transferee") would not receive all such rights and responsibilities, then:

         (a) the Intended Transferor shall use commercially reasonable efforts
(without any obligation to expend any funds or incur any losses or liabilities)
to obtain the Required Transfer Consent and/or eliminate the Transfer Obstacle.

         (b) until the Required Transfer Consent is obtained and/or the Transfer
Obstacle is eliminated in accordance with subsection (a) above and the
assignment and transfer of the applicable Asset or the transfer and assumption
of the Assumed Liability

                                      -13-
<PAGE>   17
has been effected in accordance with subsection (c) below and the other
provisions of this Agreement:

         (i) the Intended Transferor shall use commercially reasonable efforts
to provide or cause to be provided to the Intended Transferee, to the extent
permitted by law, the benefits or liabilities of any such Asset or Assumed
Liability and the Intended Transferor shall promptly pay or cause to be paid to
the Intended Transferee when received all moneys received by the Intended
Transferor with respect to any such Asset,

         (ii) in consideration thereof the Intended Transferee shall pay,
perform and discharge on behalf of the Intended Transferor all of the Intended
Transferor's liabilities thereunder in a timely manner and in accordance with
the terms thereof which it may do without breach, and

         (iii) the Intended Transferor shall take such other actions as may
reasonably be requested by the Intended Transferee in order to place the
Intended Transferee, insofar as reasonably possible, in the same position as if
such Asset or Assumed Liability had been assigned or transferred as contemplated
hereby and so all the benefits and burdens relating thereto, including
possession, use, risk of loss, potential for gain and dominion, control and
command, shall inure to the Intended Transferee.

         (c) If and when any Required Transfer Consent is obtained or any
Transfer Obstacle is eliminated, the assignment of the applicable Asset or the
transfer and assumption of the Assumed Liability shall be effected as soon as
practicable in accordance with the terms of this Agreement.

         SECTION 2.05. Costs of Transfer.

         CMC shall bear the total costs of the transfer of the MMD Assets from
Cabot and the Relevant Cabot Subsidiaries to CMC and the assumption by CMC of
all Assumed Liabilities, including, without limitation, any and all (i) moving
expenses, (ii) transfer taxes, (iii) expenses incurred in connection with any
notices to customers, suppliers or other third parties regarding such transfer
of MMD Assets or such assumption of Assumed Liabilities, (iv) fees incurred in
connection with the transfer of any licenses, permits or franchises from Cabot
or any Relevant Cabot Subsidiary to CMC or the obtaining of any new (or the
re-issuance of any existing) licenses, permits or franchises in the name or CMC,
(v) fees and expenses incurred in connection with the assignment or transfer of
any contracts, agreements or Intellectual Property from Cabot or any Relevant
Cabot Subsidiary to CMC, (vi) any recording or other fees, taxes, charges or
assessments incurred in connection with the transfer of any real property from
Cabot or any Relevant Cabot Subsidiary to CMC, (vii) the transfer from Cabot or
any Relevant Cabot Subsidiary to CMC, or the establishment by CMC of any
domestic or foreign branch office and (viii) the transfer of any employee of
Cabot or any Relevant Cabot Subsidiary to CMC. CMC hereby agrees to reimburse
Cabot or any Relevant Cabot

                                      -14-
<PAGE>   18
Subsidiary, as applicable, promptly upon request, for any cost, including,
without limitation, any of the foregoing costs (including any applicable taxes,
fees and penalties assessed in connection with any of the foregoing), incurred
by Cabot in connection with the transfer of MMD Assets from Cabot or any
Relevant Cabot Subsidiary to CMC or the assumption by CMC of any Assumed
Liability.

                                    ARTICLE 3

                              ANCILLARY AGREEMENTS

         (a) General. Cabot and CMC acknowledge and agree that the Ancillary
Agreements have been or will be entered into prior to, and each of the Ancillary
Agreements will provide that the rights, interests, duties, liabilities and
obligations of the parties to such agreements will be effective on and as of,
the IPO Effective Date. Cabot and CMC shall take all steps reasonably necessary
to cause their respective Subsidiaries and Affiliates to enter into and perform
such Ancillary Agreements in accordance with their terms.

         (b) Priority. To the extent that any Ancillary Agreement conflicts with
the terms of this Agreement, including, without limitation, matters covered by
Article 2 and Article 5 hereof, the terms and conditions of such Ancillary
Agreement shall govern the rights and obligations of the parties with respect to
such matters.

                                    ARTICLE 4

                                    COVENANTS

         SECTION 4.01. IPO and Distribution Agreement.

         Cabot and CMC hereby agree to execute and deliver, on or before the IPO
Effective Date, the IPO and Distribution Agreement, in substantially the form
agreed upon between the parties on or prior to the date hereof, with such
modifications to such form as the parties shall mutually deem reasonably
necessary and desirable; provided, that Cabot shall be entitled in its sole and
absolute discretion at any time and from time to time to make any modifications
to the provisions thereof relating to the preservation of the tax-free nature of
the Distribution or the tax-free nature of the transactions contemplated hereby
as it shall reasonably deem necessary or desirable.

         SECTION 4.02. Registration Rights Agreement.

         Cabot and CMC hereby agree to execute and deliver, on or before the IPO
Effective Date, the Registration Rights Agreement, in substantially the form
agreed upon between the parties on or prior to the date hereof, with such
modifications to such form as the parties shall mutually deem reasonably
necessary and desirable; provided, that Cabot

                                      -15-
<PAGE>   19
shall be entitled in its sole and absolute discretion at any time and from time
to time to make any modifications to the provisions thereof relating to the
preservation of the tax-free nature of the Distribution or the tax-free nature
of the transactions contemplated hereby as it shall reasonably deem necessary or
desirable.

         SECTION 4.03. Joint and Several Liability.

         Cabot shall be liable for the duties, liabilities and obligations of
each Relevant Cabot Subsidiary under and pursuant to this Agreement.

                                    ARTICLE 5

                                 INDEMNIFICATION

         SECTION 5.01. Indemnification by Parties.

         (a) CMC shall indemnify, defend and hold harmless Cabot and each of its
Subsidiaries and their respective successors-in-interest, and each of their
respective past and present Representatives (the "Cabot Indemnitees") against
any losses, claims, damages, liabilities or actions, resulting from, relating to
or arising, whether prior to or following the Contribution Date, out of or in
connection with (a) the Assumed Liabilities and/or (b) CMC's conduct of its
business and affairs after the Contribution Date, and CMC shall reimburse each
Cabot Indemnitee for any reasonable attorneys' fees or any other expenses
reasonably incurred by any of them in connection with investigating and/or
defending any such loss, claim, damage, liability or action, other than legal
fees incurred prior to the Contribution Date.

         (b) Cabot (the "Cabot Indemnifying Party") shall indemnify, defend and
hold harmless CMC and each of its Subsidiaries and their respective
successors-in-interest, and each of their past and present Representatives (the
"CMC Indemnitees") against any losses, claims, damages, liabilities or actions,
resulting from, relating to or arising, whether prior to or following the
Contribution Date, out of or in connection with (a) the Excluded Assets and/or
(b) the Excluded Liabilities, and Cabot shall reimburse each CMC indemnitee for
any reasonable attorneys' fees or any other expenses reasonably incurred by any
of them in connection with investigating and/or defending any such loss, claim,
damage, liability or action, other than legal fees incurred prior to the
Contribution Date.

         SECTION 5.02. Indemnification Procedures.

                                      -16-
<PAGE>   20
         (a) If a Cabot Indemnitee or CMC Indemnitee (collectively, an
"Indemnitee") receives notice of the assertion of any Third-Party Claim with
respect to which a CMC Indemnifying Party or Cabot Indemnifying Party
(collectively, an "Indemnifying Party") is, or is likely to be, obligated under
this Agreement to provide indemnification, such Indemnitee shall promptly give
such Indemnifying Party notice thereof (together with a copy of such Third-Party
Claim, process or other legal pleading) promptly after becoming aware of such
Third-Party Claim; provided, however, that the failure of any Indemnitee to give
notice as provided in this Section 5.02 shall not relieve any Indemnifying Party
of its obligations under this Section 5.02, except to the extent that such
Indemnifying Party is actually prejudiced by such failure to give notice. Such
notice shall describe such Third-Party Claim in reasonable detail.

         (b) An Indemnifying Party, at such Indemnifying Party's own expense and
through counsel chosen by such Indemnifying Party (which counsel shall be
reasonably acceptable to the Indemnitee), may elect to defend any Third-Party
Claim. If an Indemnifying Party elects to defend a Third-Party Claim in
accordance with the foregoing, then, within ten Business Days after receiving
notice of such Third-Party Claim (or sooner, if the nature of such Third Party
claim so requires), such Indemnifying Party shall notify the Indemnitee of its
intent to do so, and such Indemnitee shall cooperate in the defense of such
Third-Party Claim. Such Indemnifying Party shall pay such Indemnitee's
reasonable out-of-pocket expenses incurred in connection with such cooperation.
Such Indemnifying Party shall keep the Indemnitee reasonably informed as to the
status of the defense of such Third-Party Claim. After notice from an
Indemnifying Party to an Indemnitee of its election to assume the defense of a
Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Section 5.02 for any attorneys' fees or other expenses
subsequently incurred by such Indemnitee in connection with the defense thereof
other than those expenses referred to in the preceding sentence; provided,
however, that such Indemnitee shall have the right to employ one law firm as
counsel ("Primary Counsel"), together with a local law firm in each applicable
jurisdiction (collectively, "Local Counsel") and, in the case of patent
litigation, special patent counsel ("Special Patent Counsel", and together with
Primary Counsel and Local Counsel, "Separate Counsel"), to represent such
Indemnitee in any action or group of related actions (which firm or firms shall
be reasonably acceptable to the Indemnifying Party) if, in such Indemnitee's
reasonable judgment at any time, either a conflict of interest between such
Indemnitee and such Indemnifying Party exists in respect of such claim, or there
may be defenses available to such Indemnitee which are significantly different
from or in addition to those available to such Indemnifying Party and the
representation of both parties by the same counsel would, in the reasonable
judgment of the Indemnitee, be inappropriate, and in that event (i) the
reasonable fees and expenses of such Separate Counsel shall be paid by such
Indemnifying Party (it being understood, however, that the Indemnifying Party
shall not be liable for the expenses of more than one Primary Counsel, one Local
Counsel in any one jurisdiction and one Special Patent Counsel with respect to
any Third-Party Claim (even if against multiple Indemnitees))

                                      -17-
<PAGE>   21
and (ii) each of such Indemnifying Party and such Indemnitee shall have the
right to conduct its own defense in respect of such claim. If an Indemnifying
Party (i) elects not to defend against a Third-Party Claim, (ii) fails to notify
an Indemnitee of its election as provided in this Section 5.02 within the period
of ten Business Days described above or (iii) elects to defend a Third Party
Claim but, in the reasonable judgment of the Indemnitee, fails to timely,
properly and adequately defend such claim, the Indemnitee may defend,
compromise, and settle such Third-Party Claim and shall be entitled to
indemnification hereunder (to the extent permitted hereunder); provided,
however, that no such Indemnitee may compromise or settle any such Third-Party
claim without the prior written consent of the Indemnifying Party, which consent
shall not be unreasonably withheld or delayed. Notwithstanding the foregoing,
the Indemnifying Party shall not, without the prior written consent of the
Indemnitee, (i) settle or compromise any Third-Party Claim or consent to the
entry of any judgment which does not include as an unconditional term thereof
the dismissal without prejudice of such Third Party Claim or delivery by the
claimant or plaintiff to the Indemnitee of a written release from all liability
in respect of such Third-Party Claim or (ii) settle or compromise any
Third-Party Claim in any manner that would be reasonably likely to have a
material adverse effect on the Indemnitee.

         SECTION 5.03. Certain Limitations.

         (a) The amount of any indemnifiable losses or other liability for which
indemnification is provided under this Agreement shall be net of any amounts
actually recovered by the Indemnitee from third parties (including, without
limitation, amounts actually recovered under insurance policies) with respect to
such indemnifiable losses or other liability. Any Indemnifying Party hereunder
shall be subrogated to the rights of the Indemnitee upon payment in full of the
amount of the relevant indemnifiable loss. An insurer who would otherwise be
obligated to pay any claim shall not be relieved of the responsibility with
respect thereto or, solely by virtue of the indemnification provision hereof,
have any subrogation rights with respect thereto. If any Indemnitee recovers an
amount from a third party in respect of an indemnifiable loss for which
indemnification is provided in this Agreement after the full amount of such
indemnifiable loss has been paid by an Indemnifying Party or after an
Indemnifying Party has made a partial payment of such indemnifiable loss and the
amount received from the third party exceeds the remaining unpaid balance of
such indemnifiable loss, then the Indemnitee shall promptly remit to the
Indemnifying Party the excess (if any) of (A) the sum of the amount theretofore
paid by such Indemnifying Party in respect of such indemnifiable loss plus the
amount received from the third party in respect thereof, less (B) the full
amount of such indemnifiable loss or other liability. Nothing in this Section
5.03(b) shall obligate any Indemnifying Party to seek to recover any amounts
from any third party (including, without limitation, amounts recoverable under
insurance policies) prior to, or as a

                                      -18-
<PAGE>   22
condition to, seeking indemnification under this Article Five.

         (b) The amount of any loss or other liability for which indemnification
is provided under this Agreement shall be (i) increased to take account of any
net tax cost incurred by the Indemnitee arising from the receipt or accrual of
an indemnification payment hereunder (grossed up for such increase) and (ii)
reduced to take account of any net tax benefit realized by the Indemnitee
arising from incurring or paying such loss or other liability. In computing the
amount of any such tax cost or tax benefit, the Indemnitee shall be deemed to
recognize all other items of income, gain, loss, deduction or credit before
recognizing any item arising from the receipt or accrual of any indemnification
payment hereunder or incurring or paying any indemnified loss. Any
indemnification payment hereunder shall initially be made without regard to this
Section 5.03(b) and shall be increased or reduced to reflect any such net tax
cost (including gross-up) or net tax benefit only after the Indemnitee has
actually realized such cost or benefit. For purposes of this Agreement, an
Indemnitee shall be deemed to have "actually realized" a net tax cost or a net
tax benefit to the extent that, and at such time as, the amount of taxes payable
by such Indemnitee is increased above or reduced below, as the case may be, the
amount of taxes that such Indemnitee would be required to pay but for the
receipt or accrual of the indemnification payment or the incurrence or payment
of such loss, as the case may be. The amount of any increase or reduction
hereunder shall be adjusted to reflect any final determination with respect to
the Indemnitee's liability for taxes, and payments between such indemnified
parties to reflect such adjustment shall be made if necessary.

         (c) Any indemnification payment made under this Agreement relating to
Assumed Liabilities, Excluded Assets and Excluded Liabilities shall be
characterized for tax purposes as if such payment were made immediately prior to
the Contribution Date.

         SECTION 5.04. Existing Litigation to be Transferred to CMC;
Cooperation.

         On the Contribution Date, all liabilities and legal responsibilities
for the claims identified on Schedule 5.04 shall be transferred in their
entirety from Cabot to CMC. As of the Contribution Date and until CMC shall
notify Cabot that CMC will assume the defense of such claims, Cabot shall
continue to defend such claims and shall be indemnified by CMC as provided in
Section 5.02.

                                    ARTICLE 6

                              ACCESS TO INFORMATION

         SECTION 6.01. Access to Information.

                                      -19-
<PAGE>   23
         During the Retention Period (as defined in Section 6.02 below), each of
the parties hereto shall cooperate with and afford, and shall cause their
respective Affiliates, Representatives, Subsidiaries, successors and/or
assignees, and shall use reasonable efforts to cause joint ventures that are not
Affiliates (collectively, "Related Parties") to cooperate with and afford, to
the other party reasonable access upon reasonable advance written request to all
Information (other than Information which is (i) protected from disclosure by
the attorney client privilege or work product doctrine, (ii) proprietary in
nature or (iii) the subject of a confidentiality agreement between such party
and a third party which prohibits disclosure to the other party) within such
party's or any Related Party's possession which was created prior to the
Contribution Date or, with respect to any information which would be relevant to
the provision of a transitional service pursuant to this Agreement or any
Ancillary Agreement, information created during the period in which one party is
providing the other party with such transition service. Access to the requested
information shall be provided so long as it relates to the requesting party's
(the "Requestor") business, assets or liabilities, and access is reasonably
required by the Requestor as a result of the parties' Prior Relationship for
purposes of auditing, accounting, claims or litigation (except for claims or
litigation between the parties hereto), employee benefits, regulatory or tax
purposes or fulfilling disclosure or reporting obligations including, without
limitation, Information reasonably necessary for the preparation of reports
required by or filed under the Securities Exchange Act of 1934, as amended, with
respect to any period entirely or partially prior to the Contribution Date.

         Access as used in this paragraph shall mean the obligation of a party
in possession of Information (the "Possessor") requested by the Requestor to
exert its reasonable best efforts to locate all requested Information that is
owned and possessed by Possessor or any Related Party. The Possessor, at its own
expense, shall conduct a diligent search designed to identify all requested
Information and shall collect all such Information for inspection by the
Requestor during normal business hours at the Possessor's place of business.
Subject to confidentiality and/or security provisions as the Possessor may
reasonably deem necessary, the Requestor may have all requested Information
duplicated at Requestor's expense. Alternatively, the Possessor may choose to
deliver, at its own expense, all requested Information to the Requestor in the
form it was requested by the Requestor. If so, the Possessor shall notify the
Requestor in writing at the time of delivery if such Information is to be
returned to the Possessor. In such case, the Requestor shall return such
Information when no longer needed to the Possessor at the Possessor's expense.

         In connection with providing Information pursuant to this Section 6.01,
each of the parties hereto shall upon the request of the other party make
available its respective employees (and those of their respective Related
Parties, as applicable) to the extent that they are reasonably necessary to
discuss and explain all requested Information with and to the requesting party.

                                      -20-
<PAGE>   24
         SECTION 6.02. Record Retention.

         (a) Books and Records. CMC shall preserve and keep all books and
records included in the MMD Assets or otherwise in the possession of CMC or its
Related Parties, whether in electronic form or otherwise, for not less than ten
years from the Contribution Date, or for any longer period as may be required
(i) by any government agency, or (ii) in connection with any litigation, law,
regulation, audit or appeal of taxes, tax examination or the expiration of the
periods described in Section 7 of the Tax Sharing Agreement, where applicable
(the "Retention Period") at CMC's sole cost and expense. If CMC wishes to
dispose of any books and records or other documents which it is obligated to
retain under this Section 6.02 after the Retention Period, then CMC shall first
provide 90 days' written notice to Cabot and Cabot shall have the right, at its
option and expense, upon prior written notice within such 90-day period, to take
possession of such books or records or other documents within 180 days after the
date of CMC's notice to Cabot hereunder. Written notice of intent to dispose of
such books and records shall include a description of the books and records in
detail sufficient to allow Cabot to reasonably assess its potential need to
retain such materials. In the event CMC enters into an agreement with a third
party to sell a portion of its business, together with the books and records
related thereto, Cabot shall have the right to duplicate such books and records
prior to any such disposition and, should the purchaser of the CMC business be a
competitor of Cabot, Cabot shall have the right to prohibit the transfer or
disclosure to such party of that portion of the former books and records of
Cabot which Cabot notifies CMC contain confidential and proprietary information.
To the extent that books and records of Cabot or any of its Affiliates which
contain information relating to the MMD Business are not included in the MMD
Assets, Cabot agrees to cooperate with CMC in providing CMC with any such
information upon CMC's reasonable request to the extent that any such
information exists and is reasonably separable from Cabot information unrelated
to the MMD Business. CMC shall reimburse Cabot for all of its reasonable
out-of-pocket costs incurred in connection with any such request.

         (b) Access to Personnel. Cabot shall, from time to time, at the
reasonable request of CMC, cooperate fully with CMC in providing CMC, to the
extent reasonably possible through applicable Cabot employees, with technical
assistance and information in respect to any claims brought against CMC
involving the conduct of the MMD Business prior to the Contribution Date,
including consultation and/or the appearance(s) of such persons on a reasonable
basis as expert or fact witnesses in trials or administrative proceedings.

         SECTION 6.03. Production of Witnesses.

         Until the six-year anniversary of the Contribution Date, each of the
parties hereto shall use all commercially reasonable efforts, and shall cause
each of their

                                      -21-
<PAGE>   25
respective Affiliates to use all commercially reasonable efforts, to make
available to each other, upon written request, its directors, officers,
employees and other Representatives as witnesses to the extent that any such
Person may reasonably be required (giving consideration to the business demands
upon such Persons) in connection with any legal, administrative or other
proceedings in which the requesting party may from time to time be involved;
provided, however, that with respect to any legal or administrative proceedings
relating to the tax liability of any of the parties hereto or any of their
respective Affiliates, each of the parties hereto shall, and shall cause each of
their respective Affiliates to, make their directors, officers, employees and
other Representatives available as witnesses until such time as the statute of
limitations have expired with respect to all tax years prior to and including
the year in which the asset transfers contemplated by this Agreement are
consummated.

         SECTION 6.04. Reimbursement.

         Unless otherwise provided in Article 5 or this Article 6, each party to
this Agreement providing access, information or witnesses to another party
pursuant to Sections 6.01, 6.02 or 6.03 shall be entitled to receive from the
recipient, upon the presentation of invoices therefor, payment for all
reasonable out-of-pocket costs and expenses (excluding allocated compensation,
salary and overhead expense) as may be reasonably incurred in providing such
information or witnesses.

                                    ARTICLE 7

                                  MISCELLANEOUS

         SECTION 7.01. Entire Agreement.

         Except as otherwise set forth in this Agreement, this Agreement, the
Ancillary Agreements and the schedules hereto shall constitute the entire
agreement between the parties hereto with respect to the subject matter hereof
and shall supersede all prior agreements and understandings, whether written or
oral, between the parties with respect to such subject matter.

         SECTION 7.02. Governing Law.

         This Agreement shall be governed by and construed in accordance with
the laws of the State of Delaware (other than the laws regarding conflicts of
laws) as to all matters, including matters of validity, construction, effect,
performance and remedies.

         SECTION 7.03. Performance.

         Each of the parties hereto shall use all commercially reasonable
efforts to cause to be performed all actions, agreements and obligations set
forth herein to be

                                      -22-
<PAGE>   26
performed by any Affiliate of such party.

         SECTION 7.04. Notices.

         All notices and other communications hereunder shall be in writing and
shall be delivered in person, by telecopy, by express or overnight mail
delivered by a nationally recognized air courier (delivery charges prepaid), or
by registered or certified mail (postage prepaid, return receipt requested) to
the respective parties as follows:

                     (a)       If to Cabot, to:

                               Cabot Corporation
                               75 State Street
                               Boston, Massachusetts  02109

                               Attention:    Chief Financial Officer
                               Telecopy No.: (617) 342-6281

                               With a copy to:

                               Law Department
                               Cabot Corporation
                               75 State Street
                               Boston, Massachusetts  02109

                               Attention:    General Counsel
                               Telecopy No.: (617) 342-6039

                     (b)       If to CMC, to:

                               Cabot Microelectronics Corporation
                               870 North Commons Drive
                               Aurora, Illinois  60504

                               Attention:    President
                               Telecopy No.: (630) 375-5593

or to such other address as the party to whom notice is given may have
previously furnished to the others in writing in the manner set forth above. Any
notice or communication delivered in person shall be deemed effective on
delivery or when delivery is refused. Any notice or communication sent by
telecopy or by air courier shall be deemed effective on the first Business Day
at the place at which such notice or communication is received following the day
on which such notice or communication

                                      -23-
<PAGE>   27
was sent.

         SECTION 7.05. Third Party Beneficiaries.

         The Indemnitees and their respective successors shall be third party
beneficiaries of the indemnification provisions of Section 5, as applicable, and
shall be entitled to enforce those provisions, in each such case as fully and to
the same extent as if they were parties to this Agreement. Except as provided in
the previous sentence, nothing in this Agreement, express or implied, is
intended to or shall confer upon any Person (other than the Parties and their
successors and assigns) any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement, and no Person (other
than as provided in the previous sentence) shall be deemed a third party
beneficiary under or by reason of this Agreement.

         SECTION 7.06. Counterparts.

         This Agreement may be executed in two or more counterparts, each of
which shall be deemed to be an original, but all of which together shall
constitute one and the same agreement. The Agreement may be delivered by
facsimile transmission of a signed copy thereof.

         SECTION 7.07. Binding Effect; Assignment.

         This Agreement and all of the provisions hereof shall be binding upon
the parties hereto and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Except with respect to a merger of
either party with another Person, neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by either party hereto
without the prior written consent of the other party, which consent shall not be
unreasonably withheld or delayed; provided, however, that Cabot and CMC may
assign their respective rights, interests, duties, liabilities and obligations
under this Agreement to any of their respective Subsidiaries, but such
assignment shall not relieve Cabot or CMC, as the assignee, of its obligations
hereunder. The Schedules attached hereto or referred to herein are an integral
part of this Agreement and are hereby incorporated into this Agreement and made
a part hereof as if set forth in full herein.

         SECTION 7.08. Dispute Resolution.

         Except as otherwise set forth in the Ancillary Agreements, resolution
of any and all disputes arising from or in connection with this Agreement,
whether based on contract, tort, or otherwise (collectively, "Disputes"), shall
be exclusively governed by and settled in accordance with the provisions of this
Section 7.08. The parties hereto shall use all commercially reasonable efforts
to settle all Disputes without resorting to mediation, arbitration, litigation
or other third party dispute resolution mechanisms. If

                                      -24-
<PAGE>   28
any Dispute remains unsettled, the parties hereby agree to mediate such Dispute
using a mediator reasonably acceptable to all parties involved in such Dispute.
If the Parties are unable to resolve such dispute through mediation, each Party
will be free to commence proceedings for the resolution thereof. No Party shall
be entitled to consequential, special, exemplary or punitive damages.

         SECTION 7.09. Remedies.

         Each of Cabot, the Relevant Cabot Subsidiaries and CMC shall be
entitled to enforce its rights under this Agreement specifically, to recover
damages and costs (including reasonable attorneys' fees) caused by any breach of
any provision of this Agreement and to exercise all other rights existing in its
favor. Each of Cabot, the Relevant Cabot Subsidiaries and CMC acknowledges and
agrees that under certain circumstances the breach by Cabot or any of its
Subsidiaries (including without limitation the Relevant Cabot Subsidiaries, but
excluding CMC and its Subsidiaries), on the one hand, and CMC or any of its
Subsidiaries, on the other hand, of a term or provision of this Agreement will
materially and irreparably harm the other party, that money damages will
accordingly not be an adequate remedy for such breach and that the
non-defaulting party, in its sole discretion and in addition to its rights under
this Agreement and any other remedies it may have at law or in equity, may apply
to any court of law or equity of competent jurisdiction (without posting any
bond or deposit) for specific performance and/or other injunctive relief in
order to enforce or prevent any breach of the provisions of this Agreement.

         SECTION 7.10. Severability.

         Any provision of this Agreement which is prohibited or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction.

         SECTION 7.11. Waiver.

         The observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
by the party entitled to enforce such term, but such waiver shall be effective
only if it is in writing signed by the party against which such waiver is to be
asserted. Unless otherwise expressly provided in this Agreement, no delay or
omission on the part of any party in exercising any right or privilege under
this Agreement shall operate as a waiver thereof, nor shall any waiver on the
part of any party of any right or privilege under this Agreement operate as a
waiver of any other right or privilege under this Agreement nor shall any single
or partial exercise of any right or privilege preclude any other or further
exercise thereof or the exercise of any other right or privilege under this
Agreement. No

                                      -25-
<PAGE>   29
failure by either party to take any action or assert any right or privilege
hereunder shall be deemed to be a waiver of such right or privilege in the event
of the continuation or repetition of the circumstances giving rise to such right
unless expressly waived in writing by the party against whom the existence of
such waiver is asserted.

         SECTION 7.12. Amendment.

         This Agreement or the Ancillary Agreements may not be amended or
modified in any respect except by a written agreement signed by both of the
parties hereto.

         SECTION 7.13. Authority.

         Each of the parties hereto represents to the other that (a) it has the
corporate power and authority to execute, deliver and perform this Agreement,
(b) the execution, delivery and performance of this Agreement by it has been
duly authorized by all necessary corporate action, (c) it has duly and validly
executed and delivered this Agreement, and (d) this Agreement is a legal, valid
and binding obligation, enforceable against it in accordance with its terms
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and general equity
principles.

         SECTION 7.14. Interpretation.

         The headings contained in this Agreement, in any Schedule hereto and in
the table or contents to this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement. Any
capitalized term used in any Schedule but not otherwise defined therein, shall
have the meaning assigned to such term in this Agreement. When a reference is
made in this Agreement to an Article or a Section or Schedule, such reference
shall be to an Article or Section of, or a Schedule to, this Agreement unless
otherwise indicated. After the Contribution Date, the MMD Business shall be
deemed to no longer exist and all references made herein to CMC as a party which
operate as of a time following the Contribution Date, shall be deemed to refer
to CMC and its subsidiaries as a single party.

                                 * * * * * * * *

                         [SIGNATURES ON FOLLOWING PAGE]

                                      -26-
<PAGE>   30
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be executed
on its behalf by its officers thereunto duly authorized on the day and year
first above written.

                                       CABOT CORPORATION

                                       By:     /s/ Samuel W. Bodman
                                             ---------------------------------
                                               Name:  Samuel W. Bodman
                                               Title:  Chairman and CEO

                                       CABOT CARBON LTD.

                                       By:     /s/ David Jayne
                                             ---------------------------------
                                               Name:  David Jayne
                                               Title:  Director

                                       CABOT SPECIALTY CHEMICALS, INC.

                                       By:     /s/ Samuel W. Bodman
                                             ---------------------------------
                                               Name:  Samuel W. Bodman
                                               Title:  Vice President

                                       CABOT MICROELECTRONICS CORPORATION

                                       By:     /s/ Matthew Neville
                                             ---------------------------------
                                               Name: Matthew Neville
                                               Title:   President and CEO

                                      -27-
<PAGE>   31
                                   Schedule A
                              Ancillary Agreements

           IPO and Distribution Agreement

           Tax Sharing Agreement

           Registration Rights Agreement

           Fumed Metal Oxide Supply Agreement

           Management Services Agreement

           Dispersion Services Agreement

           Confidential Disclosure and License Agreement

           Trademark License Agreement

           Barry, Wales Sublease Agreement

           Employee Matters Agreement

                                      -28-
<PAGE>   32
                             Schedule 2.01(a)(i)(A)

                            Contracts and Agreements

         1. Services Agreement between Cabot Corporation and Davies Imperial
Coatings, dated October 27, 1998, assigned in accordance with Amendment No. 1.

         2. Asset Purchase and Termination Agreement by and among Cabot
Corporation, Rippey Corporation and David Rippey, dated June 30, 1995.

                                      -29-
<PAGE>   33
                             Schedule 2.01(a)(i)(B)

                      Leasehold Interests in Real Property

1.         881 Embarcadero Drive, Suite # 4
           El Dorado Hills, CA   95762

2.         801 Frontenac Road
           Naperville, IL   60563

3.         1818 E. Southern Avenue, Suite # 15C
           Mesa, AZ   85204

4.         Heung-kuk Bldg.(7F), 6-7 Soo-nae Dong, Bundang-Gu
           Sungnam-Si, Kyongki-Do,  Korea

5.         No. 14, Lane 268, Kuang-Fu Road,
           Section 1, Hsin-Chu City,
           Taiwan, ROC

                                      -30-
<PAGE>   34
                             Schedule 2.01(a)(i)(C)

                                  Real Property

1.         870 Commons Drive
           Aurora, IL   60504

2.         500 Commons Drive
           Aurora, IL   60504

3.         845 Enterprise Street
           Aurora, IL   60504

4.         1287-19 Oazo-Kitakoyama
           Geino-Cho, Age-Gun, Mie-Ken, Japan

5.         Ansung Industrial Park
           267-4 Kyeluk-ri, Miyang-Myun,  Ansung-City,  Korea

                                      -31-
<PAGE>   35
                             Schedule 2.01(a)(i)(D)
                   Management Information Systems and Software

         1. The following hardware located at CMC's facilities in Aurora,
Illinois and Geino, Japan:

         -        personal computers

         servers

         computer wiring

         networking equipment (including hubs, routers and switches)

         phones, PBX's and voice mail systems, excluding leased equipment

         fax machines

         facility security systems

2. The following software resident on personal computers located at CMC's
facilities:

         -        Microsoft Windows and Office

         Lotus Notes

         ADP

         Anstat

         3. The personal computers (other than control room hardware) and fax
machines located in the dispersions building in Barry, Wales, as well as the
license to any of the software set forth in 2 above which is on such personal
computers, which may be assigned.

                                      -32-
<PAGE>   36
                             Schedule 2.01(a)(i)(E)

                        Licenses, Permits and Franchises

[Intentionally left blank]

                                      -33-
<PAGE>   37
                             Schedule 2.01(a)(i)(F)

                              Intellectual Property

         1. The patents set forth in the Worldwide Patent Assignment, Schedule
A, between Cabot Corporation and CMC, executed in conjunction with this Master
Separation Agreement.

         2. The trademarks set forth in the Worldwide Trademark Assignment,
Schedule A, between Cabot Corporation and CMC, executed in conjunction with this
Master Separation Agreement.

                                      -34-
<PAGE>   38
                              Schedule 2.01(e)(ii)

              Excluded Management Information Systems and Software

1. Any software and information system hardware, other than as specifically set
forth in Schedule 2.01(a)(i)(D) above, which is licensed to or owned by Cabot.

                                      -35-
<PAGE>   39
                            Schedule 2.01(e)(iii)(A)

                      Excluded Trademarks and Service Marks

           CABOT                with or without a logo or design, block letters
                                or stylized, as such may be used as a trademark,
                                service mark or trade name, individually or in
                                combination with other names or marks of CABOT.

           CABOT & DEVICE       with or without a logo or design, block letters
                                or stylized, as such may be used as a trademark,
                                service mark or trade name, individually or in
                                combination with other names or marks of CABOT,
                                as depicted in U.S. Reg. Nos. 613,329, 615,516,
                                615,689, 1,619,285, 1,827,952, and 1,833,580.

           CAB AND CABO         formatives and derivatives, with or without a
                                logo or design, block letters or stylized, as
                                such may be used in combination with one or more
                                prefixes, suffixes or combinations thereof.

           CABOT
           MICROELECTRONICS     with or without a logo or design, block letters
                                or stylized, as such may be used as a trademark,
                                service mark or trade name, individually or in
                                combination with other names or marks of CABOT.

           CAB-O-SPERSE         with or without a logo or design, block letters
                                or stylized, as such may be used as a trademark,
                                service mark or trade name, individually or in
                                combination with other names or marks of CABOT.

                                      -36-
<PAGE>   40
                            Schedule 2.01(e)(iii)(B)

                                Excluded Patents

The following patents are specifically excluded, as they are addressed in the
Confidential Disclosure and License Agreement:
<TABLE>
<CAPTION>

Country              Applic. No.            Filing Date              Patent No.              Grant Date
<S>                  <C>                    <C>                      <C>                     <C>
ASTL                 52010/90               21MR1990                 625980                  21MR1990
BELG                 9000319                21MR1990                 BR266/90                02JL1991
BRAZ                 PI9001302              21MR1990                 PI9001302               25NO1997
CANA                 2012719-8              21MR1990                 2012719                 08JE1999
CHIN                 90101525               21MR1990                 28833                   16OC1994
FRAN                 9003557                20MR1990                 9003557                 11FE1994
GBRI                 9006122.7              19MR1990                 2229432                 19MR1990
GERW                 P4006392.5             01MR1990
INDI                 869/MAS/89             29NO1989                 175167                  01DE1995
ITAL                 19748A90               21MR1990                 01239546                05NO1993
JAPA                 2-68568                20MR1990                 2949633                 09JL1999
KORS                 3705/1990              20MR1990                 148692                  29MY1998
MAYS                 PI9000449              21MR1990
MEXI                 19969                  20MR1990                 176811                  05DE1994
TAIW                 79100101               08JA1990                 NI-43287                02AP1991
THAI                 010174                 26JA1990                 7128                    11SE1997
USA                  07/829609              30JA1992                 5246624                 21SE1993

USA                  07/326891              1MR1989                  5116535                 26MY1992
ASTL                 52009/90               21MR1990                 631847                  21MR1990
BELG                 9000320                21MR1990                 9000320                 27AU1991
BRAZ                 PI9001239              15MR1990                 PI9001239               25NO1997
CANA                 2012718-0              21MR1990                 2012718                 03DE1996
CHIN                 90101086               28FE1990                 29805                   22JA1995
FRAN                 9003558                20MR1990                 9003558                 04FE1994
GBRI                 9006121.9              19MR1990                 2229715                 14OC1992
GERW                 P4006393.3-41          01MR1990
INDI                 912/MAS/89             11DE1989                 175056                  03NO1995
ITAL                 19747A90               21MR1990                 01241073                29DE1993
JAPA                 2-68569                20MR1990                 2935125                 04JE1999
KORS                 3706/1990              20MR1990                 145729                  06MY1998
MAYS                 PI9000448              21MR1990
MEXI                 19968                  20MR1990                 176602                  14NO1994
TAIW                 79102182               20MR1990                 NI-44248                10MY1991
THAI                 010175                 26JA1990
</TABLE>

                                      -37-
<PAGE>   41
                            Schedule 2.01(e)(iii)(C)

                      Other Excluded Intellectual Property

         1. Dispersion Intellectual Property (as defined in the Confidential
Disclosure and License Agreement) is excluded, as it is addressed in the
Confidential Disclosure and License Agreement.

         2. Any Intellectual Property related to (i) treated or untreated fumed
metal oxide particles or the manufacture or treatment of fumed metal oxide
particles; or (ii) cesium chemicals or other products of Cabot's Performance
Materials Division or the manufacture thereof; or (iii) treated or untreated
aerogels, xerogels and other gel based materials or the manufacture or treatment
of such particles.

                                      -38-
<PAGE>   42
                               Schedule 2.01(e)(v)

                              Other Excluded Assets

         1. Any specifications, procedures and other documentation related to
the manufacture of fumed metal oxide dispersions for non-chemical mechanical
planarization applications which are located in Aurora, Illinois, Barry Wales or
any other facilities operated by the MMD Business.

         2. All employee confidentiality and non-disclosure agreements entered
into between Cabot and employees of the MMD Business.

         3. Non-disclosure agreements entered into by Cabot Corporation with
parties who work with Cabot Corporation outside of the MMD Business.

         4. The air compressor, filter and air receiver located adjacent to the
leased dispersions facility in Barry, Wales.

                                      -39-
<PAGE>   43
                                  Schedule 5.04

                                   Litigation

1.       Rodel, Inc. v. Cabot Corporation, Civil Action No. 98-352 (D. Del.)

2.       Rodel, Inc. v. Cabot Corporation, Civil Action No. 99-256 (D. Del.)

3.       Cabot Corporation v. Solution Technology, Inc., Civil Action No.:
         3.96CV505-McK(WD NC).

                                      - 40-

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