content: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
  
  
  
  
                                      FORM 8-K
  
  
  
                               Current Report Pursuant
                            to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934
  
  
         Date of Report (Date of Earliest Event Reported): FEBRUARY 25, 1997
  
  
                                ILC TECHNOLOGY, INC.
               (Exact name of Registrant as Specified in its Charter)
  
  
                                     CALIFORNIA
                   (State or Other Jurisdiction of Incorporation)
  
  
             0-11360                                 94-1655721
  (Commission File Number)             (I.R.S. Employer Identification Number)
  
  
                     399 JAVA DRIVE, SUNNYVALE, CALIFORNIA 94089
                      (Address of Principal Executive Offices)
  
  
                                   (408) 745-7900
                (Registrant's Telephone Number, Including Area Code)
  
  
  
  
  
  
  
  
  
  <PAGE>
  
  ITEM 5: OTHER EVENTS
  
       In 1989,  the Board of Directors of ILC  Technology,  Inc. (the  "Company")
  declared and paid a dividend of one common share  purchase right (a "Right") for
  each outstanding share of common stock, no par value (the "Common  Shares"),  of
  the Company.  Each Right  entitles the  registered  holder to purchase  from the
  Company  one Common  Share at a price of $55 per share (the  "Purchase  Price"),
  subject to adjustment.  The description and terms of the Rights are set forth in
  a Rights  Agreement  dated as of  September  29,  1989  between  the Company and
  Security  Pacific National Bank, as Rights Agent (with  ChaseMellon  Shareholder
  Services  L.L.C.  currently  serving as Rights Agent) (the "Rights  Agent"),  as
  amended as of February 25, 1997 (the "Rights Agreement").
  
       Until the earlier to occur of the close of business on (i) 10 days (or such
  later date as may be determined by action of the Board of Directors) following a
  public  announcement that a person or group of affiliated or associated  persons
  (an "Acquiring Person") have acquired beneficial ownership of 15% or more of the
  outstanding Common Shares or (ii) 10 business days (or such later date as may be
  determined by action of the Board of Directors)  following the  commencement of,
  or  announcement  of an intention to make, a tender offer or exchange  offer the
  consummation  of which would result in the  beneficial  ownership by a person or
  group of 15% or more of such  outstanding  Common  Shares  (the  earlier of such
  dates being called the "Distribution Date"), the Rights will be evidenced,  with
  respect to any of the Common Shares  certificates  outstanding  as of the Record
  Date, by such Common Share  certificate  regardless of whether such  certificate
  has a copy of this Summary of Rights attached thereto.
  
       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  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
  such separate Right Certificates alone will evidence the Rights.
  
       The Rights are not exercisable until the Distribution Date. The rights will
  expire on December 31, 2006 (the "Final Expiration Date"), unless the Rights are
  earlier redeemed or exchanged by the Company, in each case, as described below.
  
       The  Purchase  Price  payable,  and the  number of  Common  Shares or other
  securities  or  property  issuable,  upon  exercise of the Rights are subject to
  adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
  dividend on, or a subdivision,  combination or  reclassification  of, the Common
  Shares (ii) upon the grant to holders of the Common Shares of certain  rights or
  
  
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  <PAGE>
  
  warrants to subscribe for or purchase  Common  Shares at a price,  or securities
  convertible  into Common  Shares  with a  conversion  price,  less than the then
  current  market  price of the Common  Shares or (iii) upon the  distribution  to
  holders of the Common Shares of evidences of indebtedness  or assets  (excluding
  regular  periodic cash  dividends  paid out of earnings or retained  earnings or
  dividends payable in Common Shares) or of subscription rights or warrants (other
  than those referred to above).
  
       The number of outstanding  Rights and the number of Common Shares  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 a subdivision,  consolidation  or combination of the
  Common Shares occurring, in any such case, prior to the Distribution Date.
  
       Common  Shares  purchasable  upon  exercise  of  the  Rights  will  not  be
  redeemable.
  
       In the event that the  Company is  acquired  in a merger or other  business
  combination  transaction  or 50% or more of its  consolidated  assets or earning
  power are sold after a person becomes an Acquiring Person, proper provision will
  be made so that each holder of Right will  thereafter have the right to receive,
  upon the exercise thereof at the then current exercise price of the Right,  that
  number of shares of common stock of the  acquiring  company which at the time of
  such transaction will have a market value of two times the exercise price of the
  Right.  In the event that (i) any person or group of  affiliated  or  associated
  persons becomes the beneficial  owner of 15% or more of the  outstanding  Common
  Shares (unless such person first acquires 15% or more of the outstanding  Common
  Shares by a purchase pursuant to a tender offer for all of the Common Shares for
  cash, which purchase increases such person's beneficial ownership to 90% or more
  of the outstanding  Common Shares),  (ii) an Acquiring  Person engages in one or
  more  "self-dealing"  transactions as set forth in the Rights Agreement or (iii)
  during  such  time  as  there  is  an  Acquiring   Person,   there  shall  be  a
  reclassification  of securities or a  recapitalization  or reorganization of the
  Company or other  transaction  or series of  transactions  involving the Company
  which has the effect of  increasing by more than 3% the  proportionate  share of
  the outstanding  shares of any class of equity  securities of the Company or any
  of its subsidiaries beneficially owned by the Acquiring Person, proper provision
  shall be made so that each  holder of a Right,  other than  Rights  beneficially
  owned by the Acquiring  Person (which will thereafter be void),  will thereafter
  have the right to receive upon exercise that number of Common Shares (or, in the
  event  that  there  are  insufficient   authorized  Common  Shares,   substitute
  consideration such as cash,  property or other securities of the Company) have a
  market value of two times the exercise price of the Right.
  
       At any time  after the  occurrence  of any of the events  described  in the
  preceding  paragraph and prior to the acquisition by such person or group of 50%
  or more of the outstanding  Common Shares, the Board of Directors of the Company
  may exchange  the Rights  (other than Rights owned by such person or group which
  have become void), in whole or in part, at an exchange ratio of one Common Share
  per Right (subject to adjustment).
  
       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  Common Shares will be issued and in lieu
  thereof,  an adjustment in  cash  will be made  based on the market price of the
  
  
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  <PAGE>
  
  
  
  based on the market price of the Common  Shares on the last trading day prior to
  the date of exercise.
  
       At any time prior to 10 days (or such later  date as may be  determined  by
  action of the Board of Directors)  following a public announcement that a person
  has become an Acquiring Person, the Board of Directors of the Company may redeem
  the  Rights  in  whole,  but not in  part,  at a price of $.01  per  Right  (the
  "Redemption  Price").  After the  redemption  period has expired,  the Company's
  rights of redemption  may be reinstated  if, prior to any event  triggering  the
  right to receive upon exercise of a Right that number of Common Shares or shares
  of an acquiring company having a market value of two times the exercise price of
  the Right, an Acquiring  Person reduces its beneficial  ownership to 15% or less
  of the outstanding  Common Shares in a transaction or series of transactions not
  involving the Company.  The  redemption  of the rights may be made  effective at
  such time,  on such basis and with such  conditions as the Board of Directors in
  its sole  discretion  may  establish.  Immediately  upon any  redemption  of the
  Rights,  the right to exercise the Rights will  terminate  and the only right of
  the holders of Rights will be to receive the Redemption Price.
  
       The terms of the Rights may be  amended  by the Board of  Directors  of the
  Company without the consent of the holders of the Rights, including an amendment
  to lower certain thresholds  described above to not less than the greater of (i)
  any percentage  greater than the largest  percentage of the  outstanding  Common
  Shares then known to the Company to be beneficially owned by any person or group
  of  affiliated or  associated  persons and (ii) 15%,  except that from and after
  such time as any  person  becomes  an  Acquiring  Person no such  amendment  may
  adversely affect the interests of the holders of the Rights.
  
       Until a Right is  exercised,  the holder of a Right will not,  by reason of
  being such a holder,  have rights as a  shareholder  of the Company,  including,
  without limitation, the right to vote or to receive dividends.
  
       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 filed
  October 2, 1989 and amended by an amendment to such registration statement filed
  March 10, 1997. A copy of the Rights  Agreement is available free of charge from
  the  Company.  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.
  
       The Rights may have certain  anti-takeover  effects.  The Rights will cause
  substantial  dilution to a person or group that  attempts to acquire the Company
  on terms not approved by the Company's  Board of Directors,  unless the offer is
  conditioned  on a  substantial  number of Rights being  acquired.  However,  the
  rights  should  not  interfere  with any  merger or other  business  combination
  approved  by the Board of  Directors  since the  Rights may be  redeemed  by the
  Company at a price of $0.01 per Right at any time prior to the  acquisition by a
  person or group of affiliated or associated  persons of beneficial  ownership of
  15% or more of the outstanding Common Shares.
  
       The Rights Agreement, specifying the terms of the Rights, the Form of Right
  Certificate  (Exhibit A to the Rights  Agreement)  and the  Summary of Rights to
  Purchase Common Shares (Exhibit B to  the  Rights Agreement) is filed  herein as
  
  
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  <PAGE>
  
  
  
  Exhibit 1, and the  Amendment to the Rights  Agreement,  with the Form of Rights
  Certificate  (Exhibit A to the  Amendment) and the Summary of Rights to Purchase
  Common Shares (Exhibit B to the Amendment) is filed herein as Exhibit 2. Each of
  these exhibits is incorporated herein in its entirety by reference.
  
  
  ITEM 7:  FINANCIAL STATEMENTS AND EXHIBITS.
  
  (a)  Financial Statements of Business Acquired.
  
       Not Applicable.
  
  (b)  Pro Forma Financial Information.
  
       Not Applicable.
  
  (c)  Exhibits.
  
       The following exhibits are filed herewith:
  
       1.   Rights  Agreement  dated  as  of  September  29,  1989,   between  ILC
            Technology,  Inc. and Security Pacific National Bank, as Rights Agent,
            which includes the Form of Right Certificate (attached as Exhibit A to
            the Rights  Agreement),  and the Summary of Rights to Purchase  Common
            Shares (attached as Exhibit B to the Rights Agreement).
  
       2.   Amendment  to Rights  Agreement  dated as of February 25, 1997 between
            ILC Technology,  Inc. and ChaseMellon  Shareholder  Services L.L.C. as
            Rights Agent,  which includes the Form of Right Certificate  (attached
            as Exhibit A to the  Amendment)  and the Summary of Rights to Purchase
            Common Shares (attached as Exhibit B to the Rights Agreement).
  
  
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  <PAGE>
  
  
  
                                     SIGNATURES
  
  
  
  
       Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  
  
  
  
  
  Date:  March 10, 1997
  
  
  
  
                                          ILC TECHNOLOGY, INC.
  
                                          By: /S/ RONALD E. FREDIANELLI
                                          -----------------------------
                                          Ronald E. Fredianelli,
                                          Chief Financial Officer
  
  
  
  
  
  
  
  
  
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  <PAGE>
  
  
  
                                  INDEX TO EXHIBITS
  
  
  EXHIBIT NO.           DESCRIPTION OF EXHIBIT
  
  
  1.                    Rights  Agreement dated as of September 29, 1989,  between
                        ILC Technology,  Inc. and Security  Pacific National Bank,
                        as  Rights  Agent,   which  includes  the  Form  of  Right
                        Certificate   (attached   as   Exhibit  A  to  the  Rights
                        Agreement),  and the Summary of Rights to Purchase  Common
                        Shares (attached as Exhibit B to the Rights Agreement).
  
  2.                    Amendment  to Rights  Agreement  dated as of February  25,
                        1997  between  ILC   Technology,   Inc.  and   ChaseMellon
                        Shareholder   Services  L.L.C.  as  Rights  Agent,   which
                        includes  the  Form  of  Right  Certificate  (attached  as
                        Exhibit A to the  Amendment)  and the Summary of Rights to
                        Purchase  Common  Shares  (attached  as  Exhibit  B to the
                        Rights Agreement).
  
  
  
  
  
  
  
  
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  <PAGE>
  
  
  
                                      EXHIBIT 1
  
  
  
                                ILC TECHNOLOGY, INC.
  
                                        and
  
  
                           SECURITY PACIFIC NATIONAL BANK
  
  
                                    Rights Agent
  
  
  
                                  Rights Agreement
  
  
                           Dated as of September 29, 1989
  
  
  
  
  
  <PAGE>
                                 TABLE OF CONTENTS
                                 -----------------
                                                                        Page
                                                                        ----
  
  Section 1.     Certain Definitions..................................  1
  
  Section 2.     Appointment of Rights Agent .........................  4
  
  Section 3.     Issue of Right Certificates .........................  4
  
  Section 4.     Form of Right Certificates ..........................  6
  
  Section 5.     Countersignature and Registration ...................  6
  
  Section 6.     Transfer, Split Up, Combination and Exchange of Right
                 Certificates; Mutilated, Destroyed, Lost or Stolen
                 Rights Certificates .................................  7
  
  Section 7.     Exercise of Rights; Purchase Price; Expiration Date
                 of Rights ...........................................  7
  
  Section 8.     Cancellation and Destruction of Right Certificates ..  8
  
  Section 9.     Availability of Commmon Shares ......................  8
  
  Section 10.    Common Shares Record Date ...........................  9
  
  Section 11.    Adjustment of Purchase Price, Number of Shares or
                 Number of Rights ....................................  9
  
  Section 12.    Certificate of Adjusted Purchase Price or
                 Number of Shares .................................... 17
  
  Section 13.    Consolidation Merger or Sale or Transfer of
                 Assets or Earning Power ............................. 17
  
  Section 14.    Fractional Rights and Fractional Shares ............. 19
  
  Section 15.    Rights of Action .................................... 19
  
  Section 16.    Agreement of Right Holders .......................... 20
  
  Section 17.    Right Certificate Holder Not Deemed a
                 Shareholder ......................................... 20
  
  Section 18.    Concerning the Rights Agent ......................... 20
  
  Section 19.    Merger or Consolidation or Change of Name of
                 Rights Agent ........................................ 21
  
  
  
  
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                                                                        Page
  
  Section 20.    Duties of Rights Agent ..............................  21
  Section 21.    Change of Rights Agent ..............................  23
  Section 22.    Issuance of New Right Certificates ..................  24
  Section 23.    Redemption ..........................................  24
  Section 24.    Exchange ............................................  25
  Section 25.    Notice of Certain Events ............................  26
  Section 26.    Notices .............................................  26
  Section 27.    Supplements and Amendments ..........................  27
  Section 28.    Registration of Securities ..........................  27
  Section 29.    Determinations and Actions by the Board of
                 Directors ...........................................  28
  Section 30.    Successors ..........................................  28
  Section 31.    Benefits of this Agreement ..........................  28
  Section 32.    Severability ........................................  28
  Section 33.    Governing Law .......................................  28
  Section 34.    Counterparts ........................................  28
  Section 35.    Descriptive Headings ................................  29
  Signatures     .....................................................  29
  
  
  Exhibit A - Form of Right Certificate
  
  Exhibit B - Summary of Rights to Purchase Common Shares
  
  Exhibit C - Press Release
  
  
                                         ii
  
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                                  RIGHTS AGREEMENT
  
  
  
       Agreement, dated as of September 29, 1989, between ILC Technology,  Inc., a
  California corporation (the "Company"),  and Security Pacific National Bank (the
  "Rights Agent").
  
       The Board of  Directors  of the  Company  has  authorized  and  declared  a
  dividend of one common  share  purchase  right (a "Right") for each Common Share
  (as  hereinafter  defined)  of the Company  outstanding  on October 2, 1989 (the
  "Record Date"),  each Right  representing the right to purchase one Common 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 and
  the Final Expiration Date (as such terms are hereinafter defined).
  
       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 (as such term is hereinafter
            defined) who or which, together with all Affiliates and Associates (as
            such  terms are  hereinafter  defined)  of such  Person,  shall be the
            Beneficial Owner (as such term is hereinafter  defined) of 20% or more
            of the Common  Shares of the Company then  outstanding,  but shall not
            include  the  Company,  any  Subsidiary  (as such term is  hereinafter
            defined) of the Company,  any employee  benefit plan of the Company or
            of any  Subsidiary  of the Company,  or of any entity  holding  Common
            Shares for or pursuant to the terms of any such plan.  Notwithstanding
            the  foregoing,  no Person shall become an  "Acquiring  Person" as the
            result of an  acquisition  of Common Shares by the Company  which,  by
            reducing the number of shares outstanding, increases the proportionate
            number of shares  beneficially  owned by such Person to 20% or more of
            the Common Shares of the Company then outstanding;  PROVIDED, however,
            that if a Person shall become the  Beneficial  Owner of 20% or more of
            the Common Shares of the Company then  outstanding  by reason of share
            purchases by the Company and shall,  after such share purchases by the
            Company,  become the Beneficial Owner of any additional  Common Shares
            of the Company,  then such Person shall be deemed to be an  "Acquiring
            Person."
  
       (b)  "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 (the
            "Exchange Act"), as in effect on the date of this Agreement.
  
       (c)  A Person shall be deemed the "Beneficial Owner" of and shall be deemed
            to "beneficially own" any securities:
  
  
  
  
  
  
  
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  <PAGE>
  
  
  
            (i)  which  such  Person  or  any  of  such  Person's   Affiliates  or
                 Associates beneficially owns, directly or indirectly for purposes
                 of Section  13(d) of the Exchange  Act and Rule 13d-3  thereunder
                 (or any comparable or successor law or regulation);
  
            (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  (other
                 than  customary  agreements  with and  between  underwriters  and
                 selling group members with respect to a bona fide public offering
                 of  securities),  or upon  the  exercise  of  conversion  rights,
                 exchange  rights,  rights (other than these Rights),  warrants or
                 options, or otherwise; PROVIDED, however, that a Person shall not
                 be deemed the Beneficial  Owner of, or to  beneficially  own, (1)
                 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 (2) securities which a Person or any of
                 such Person's  Affiliates or Associates may be deemed to have the
                 right to  acquire  pursuant  to any  merger or other  acquisition
                 agreement  between the Company and such Person (or one or more of
                 its Affiliates or Associates) if such agreement has been approved
                 by a majority  of the  Continuing  Directors  of the Company at a
                 time when  Continuing  Directors are in office and prior to there
                 being an Acquiring  Person;  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  arises  solely  from  a
                 revocable  proxy or consent given to such Person in response to a
                 proxy  or  consent  solicitation  made  in  accordance  with  the
                 applicable rules and regulations  promulgated  under the Exchange
                 Act; or
  
            (iii)which are  beneficially  owned,  directly or  indirectly,  by any
                 other  Person  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) for the purpose of acquiring,
                 holding, voting (except to the extent contemplated by the proviso
                 to Section  1(c)(ii)(B))  or disposing of any  securities  of the
                 Company;  PROVIDED,  however, that in no case shall an officer or
                 director  of the  Company  be  deemed  the  Beneficial  Owner  of
                 securities held of record by the trustee of any employee  benefit
                 plan of the  Company or any  Subsidiary  of the  Company  for the
                 benefit of any employee of the Company or any  Subsidiary  of the
                 Company,  other than the  officer or  director,  by reason of any
                 influence  that such officer or director may have over the voting
                 of the securities held in the plan.
  
       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 Company, 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.
  
       (d)  "Business Day" shall mean any day other than a Saturday,  a Sunday, or
            a day on  which  banking  institutions  in the  State  of New  York or
            California  are  authorized or obligated by law or executive  order to
            close.
  
  
  
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  <PAGE>
  
       (e)  "Close of  business"  on any given  date  shall  mean 5:00  P.M.,  San
            Francisco time, on such date; PROVIDED,  HOWEVER, that if such date is
            not a Business Day it shall mean 5:00 P.M., San Francisco time, on the
            next succeeding Business Day.
  
       (f)  "Common Shares" when used with reference to the Company shall mean the
            shares of common stock, no par value, of the Company.  "Common Shares"
            when used with  reference to any Person  other than the Company  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.
  
       (g)  "Continuing  Director"  shall  mean  (i) any  member  of the  Board of
            Directors of the Company,  while a member of the Board,  who is not an
            Acquiring Person, or an Affiliate or Associate or an Acquiring Person,
            or a representative of or member of any group (as that term is defined
            in the Exchange Act) with an Acquiring Person or of any such Affiliate
            or  Associate,  and who is a member  of the  Board on the date of this
            Agreement, or (ii) any Person who subsequently becomes a member of the
            Board, while a member of the Board, who is not an Acquiring Person, or
            an Affiliate or Associate of an Acquiring  Person, or a representative
            of or member of any group  (as that term is  defined  in the  Exchange
            Act) with an Acquiring  Person or of any such  Affiliate or Associate,
            if such Person's  nomination  for election or election to the Board is
            recommended  or  approved  by  a  majority  of  the  then   Continuing
            Directors.
  
       (h)  "Distribution  Date"  shall  have the  meaning  set forth in Section 3
            hereof.
  
       (i)  "Equivalent  Shares" shall mean preferred shares or any other class or
            series  of  capital   stock  of  the  Company  which  is  entitled  to
            participate   in   dividends   and  other   distributions,   including
            distributions  upon the liquidation,  dissolution or winding up of the
            Company,   on  a  proportional   basis  with  the  Common  Shares.  In
            calculating  the  number of any class or series of  Equivalent  Shares
            which have dividend or distribution  rights for purposes of Section 11
            of this  Agreement,  the number of shares,  or fraction of a share, of
            such class or series of capital  stock  that is  entitled  to the same
            dividend or distribution as a whole Common Share shall be deemed to be
            one share.
  
       (j)  "Expiration Date" shall mean the earliest of (i) the close of business
            on the Final Expiration Date, (ii) 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 the  third
            paragraph of Section 13 hereof.
  
  
       (k)  "Final Expiration Date" shall mean September 29, 1999.
  
       (l)  "Person" shall mean any individual, firm, partnership,  joint venture,
            corporation  or other  entity,  and shall  include any  successor  (by
            merger or otherwise) of such entity.
  
       (m)  "Purchase Price" shall have the meaning set forth in Section 4 hereof.
  
       (n)  "Redemption Date" shall mean the time at which the Rights are redeemed
            as provided in Section 23 hereof.
  
  
  
                                          3
  
  
  <PAGE>
  
       (o)  "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 Section 13(d) of the
            Exchange Act) by the Company or an Acquiring  Person that an Acquiring
            Person  has become  such or such  earlier  date as a  majority  of the
            directors of the Company  shall  become  aware of the  existence of an
            Acquiring Person.
  
       (p)  "Subsidiary"  of any Person shall mean any corporation or other entity
            of  which  a  majority  of  the  voting  power  of the  voting  equity
            securities  or equity  interest  is  beneficially  owned,  directly or
            indirectly, by such Person.
  
       (q)  "Trading  Day"  shall  have the  meaning  set forth in  Section  11(d)
            hereof.
  
       (r)  A "Trigger  Event"  shall be deemed to have  occurred  upon any Person
            (other than the Company,  any Subsidiary of the Company,  any employee
            benefit plan of the Company or of any Subsidiary of the Company, or of
            any entity  holding  Common Shares for or pursuant to the terms of any
            such  plan),  together  with all  Affiliates  and  Associates  of such
            Person,  becoming  the  Beneficial  Owner of 30% or more of the Common
            Shares of the Company then outstanding. Notwithstanding the foregoing,
            no Trigger  Event shall be deemed to have occurred as the result of an
            acquisition  of Common  Shares by the Company  which,  by reducing the
            number of shares  outstanding,  increases the proportionate  number of
            shares  beneficially owned by such Person to 30% or more of the Common
            Shares of the Company then outstanding; PROVIDED, however, that in the
            event that a Person shall become the  Beneficial  Owner of 30% or more
            of the Common  Shares of the  Company  then  outstanding  by reason of
            share  purchases  by the Company,  a Trigger  Event shall be deemed to
            have  occurred  upon such  Person,  after such share  purchases by the
            Company, becoming the Beneficial Owner of any additional Common Shares
            of the Company.
  
  Section 2.  APPOINTMENT OF RIGHTS AGENT.
  
       The  Company  hereby  appoints  the  Rights  Agent to act as agent  for the
       Company in accordance with the terms and conditions  hereof, and the Rights
       Agent hereby  accepts such  appointment.  The Company may from time to time
       appoint such co-Rights Agent as it may deem necessary or desirable.
  
  Section 3. ISSUE OF RIGHT CERTIFICATES.
  
       (a)  Until the  earlier of the close of  business  on (i) the tenth day (or
            such  later  date as may be  determined  by  action of a  majority  of
            Continuing  Directors  then in office prior to the  expiration of said
            tenth day or any such extended period, and publicly announced by the
  
  
  
                                          4
  
  <PAGE>
  
            Company) after the Shares  Acquisition Date or (ii) the tenth Business
            Day (or such later date as may be  determined  by action of a majority
            of the Continuing  Directors then in office prior to the expiration of
            said tenth  Business  Day, or any such extended  period,  and publicly
            announced by the Company)  after the date of the  commencement  by any
            Person (other than the Company,  any  Subsidiary  of the Company,  any
            employee  benefit  plan of the  Company  or of any  Subsidiary  of the
            Company or any entity  holding  Common  Shares for or  pursuant to the
            terms of any such plan) or, or of the first public announcement of the
            intention of any Person (other than the Company, any Subsidiary of the
            Company, any employee benefit plan of the Company or of any Subsidiary
            of the Company or any entity  holding Common Shares for or pursuant to
            the terms of any such plan) to  commence,  a tender or exchange  offer
            the  consummation  of which would  result in any Person  becoming  the
            Beneficial Owner of Common Shares  aggregating 30% or more of the then
            outstanding  Common Shares  (irrespective of whether any Common Shares
            are actually  purchased  pursuant to such offer)  (including  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  provision  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 Common Shares.  As soon as practicable
            after the Distribution Date, the Company will prepare and execute, the
            Rights Agent will  countersign,  and the Company will send or cause to
            be  sent  (and  the  Rights  Agent  will,  if   requested,   send)  by
            first-class,  insured,  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  Company,  a
            Right  Certificate,  in substantially  the form of Exhibit A hereto (a
            "Right  Certificate"),  evidencing  one Right to each Common  Share so
            held. As of the Distribution Date, the Rights will be evidenced solely
            by such Right Certificates.
  
       (b)  On the Record Date, or as soon as practicable thereafter,  the Company
            will send a copy of a Summary of Rights to Purchase Common Shares,  in
            substantially  the form of Exhibit B 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  Company.  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  regardless  of
            whether a copy of the Summary of Rights is attached thereto. Until the
            earlier of the Distribution Date or the Expiration Date, the surrender
            for transfer of any certificates for Common Shares  outstanding on the
            Record  Date,  with  or  without  a copy  of  the  Summary  of  Rights
            associated with the Common Shares represented thereby.
  
       (c)  Certificates  for Common Shares which become  outstanding  (including,
            without  limitation,  reacquired Common Shares referred to in the last
            sentence of this paragraph (c)) after the Record Date but prior to the
            earlier of the  Distribution  Date or the  Expiration  Date shall have
            impressed on, printed on, written on or otherwise  affixed to them the
            following legend:
  
                 This certificate also evidences and entitles the holder hereof to
                 certain  rights as set forth in a Rights  Agreement  between  ILC
                 Technology,  Inc. and Security Pacific National Bank, dated as of
                 September  29,  1989 (the "Rights Agreement"), the  terms  of are
  
  
                                          5
  
  
  <PAGE>
  
                 hereby incorporated herein by reference and a copy of which is on
                 file at the principal  executive offices of ILC Technology,  Inc.
                 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.  ILC
                 Technology,  Inc. will mail too the holder of this  certificate a
                 copy of the Rights  Agreement  without  charge after receipt of a
                 written request  therefor.  Under certain  circumstances,  as set
                 forth in the Rights  Agreement,  Rights  issued to or held by any
                 Person  who  becomes  an  Acquiring  Person or any  Affiliate  or
                 Associate thereof (as defined in the Rights Agreement) may become
                 null and void.
  
       With respect to such certificates  containing the foregoing  legend,  until
  the  earlier  of the  Distribution  Date  or the  Expiration  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 Company 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  Company  shall not be  entitled  to  exercise  any  Rights
  associated with such Common Shares which are no longer outstanding.
  
  Section 4. FORM OF RIGHT CERTIFICATES.
  
       The Right Certificates (and the forms of election to purchase Common Shares
       and  of  assignment  to  be  printed  on  the  reverse  thereof)  shall  be
       substantially  the same as  Exhibit  A hereto  and may have  such  marks of
       identification  or designation and such legends,  summaries or endorsements
       printed  thereon  as the  Company  may  deem  appropriate  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 with any rule or regulation  of any stock  exchange or
       other  organization  on which the Rights may from time to time be listed or
       quoted,  or to conform to usage.  Subject to the  provisions  of Section 22
       hereof,  the Right  Certificates  shall  entitle  the  holders  thereof  to
       purchase  such number of Common Shares as shall be set forth therein at the
       price per share set forth therein (the  "Purchase  Price"),  but the number
       and  kind of such  shares  and the  Purchase  Price  shall  be  subject  to
       adjustment as provided herein.
  
  Section 5.  COUNTERSIGNATURE  AND REGISTRATION.
  
       The Right  Certificates  shall be  executed on behalf of the Company by its
       Chairman of the Board, its Chief Executive Officer, its President or any of
       its  Executive  Vice  Presidents,  and by  the  Secretary  or an  Assistant
       Secretary of the Company,  either manually or by facsimile  signature,  and
       shall have affixed thereto the Company's seal or a facsimile  thereof.  The
       Right Certificates shall be manually  countersigned by the Rights Agent and
       shall  not be valid  for any  purposes  unless  countersigned.  In case any
       officer of the Company who shall have signed any of the Right  Certificates
       shall cease to be such officer of the Company  before  countersignature  by
       the Rights  Agent and  issuance  and  delivery by the  Company,  such Right
       Certificates,  nevertheless,  may be  countersigned by the Rights Agent and
       issued  and  delivered  by the  Company  with the same  force and effect as
       though the person who signed such right  Certificates  had not ceased to be
       such officer of the  Company;  and any Right  Certificate  may be signed on
       behalf  of the  Company  by any  person  who,  at the  actual  date  of the
       execution  of such  Right Certificate, shall be a  proper officer  of  the 
  
  
                                          6
  
  
  <PAGE>
  
       Company  to  sign  such  Right  Certificate,  although  at the  date of the
       execution of this Rights Agreement any such person was not such an officer.
  
       Following the Distribution  Date, the Rights Agent will keep or cause to be
       kept, at its principal  office,  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
       date of each of the Right Certificates.
  
  Section 6. TRANSFER,  SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT  CERTIFICATES;
       MUTILATED,  DESTROYED,  LOST OR STOLEN RIGHT  CERTIFICATES.
  
       Subject to the provisions of 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  Expiration   Date,   any  Right   Certificate  or  Right
       Certificates  (other than Right Certificates  representing Rights that have
       become  void  pursuant  to  Section  11  (a)(ii)  hereof  or that have been
       exchanged  pursuant  to Section 24 hereof)  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 Common Shares
       as the Right Certificate or Rights  Certificates  surrendered then entitled
       such holder 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  principal  office of the Rights
       Agent.  Thereupon  the Rights  Agent shall  countersign  and deliver to the
       person entitled thereto a Right Certificate or Right  Certificates,  as the
       case may be, as so  requested.  The Company  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 or Right
       Certificates.
  
       Upon  receipt by the  Company and the Rights  Agent of evidence  reasonably
       satisfactory  to them of the loss,  theft,  destruction  or mutilation of a
       Right Certificate, and, in case of loss, theft or destruction, of indemnity
       or security reasonably satisfactory to them, and, at the Company's request,
       reimbursement  to the  Company  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 Company will make
       and deliver a new Right  Certificate  of like tenor to the Rights Agent for
       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)  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  on the
            reverse  side  thereof  duly  executed,  to the  Rights  Agent  at the
            principal  office of the Rights  Agent,  together  with payment of the
            Purchase  Price  for each  Common  Share as to which  the  Rights  are
            exercised, at or prior to the Expiration Date.
  
       (b)  The Purchase Price for each Common Share pursuant to the exercise of a
            Right shall initially be $30, shall be subject to adjustment from time
            to time as provided in Sections 11 and 13 hereof and shall be payable
  
  
                                          7
  
  
  <PAGE>
            in lawful  money of the United  States of America in  accordance  with
            paragraph (c) below.
  
       (c)  Upon receipt of a Right Certificate  representing  exercisable Rights,
            with the form of election to purchase duly  executed,  accompanied  by
            payment of the  Purchase  Price for the number of Common  Shares to be
            purchased and an amount equal to any applicable  transfer tax required
            to be paid by the holder of such Right  Certificate in accordance with
            Section 9 hereof by certified  check,  cashier's  check or money order
            payable to the order of the Company,  the Rights Agent shall thereupon
            promptly (i) (A)  requisition  from any  transfer  agent of the Common
            Shares  certificates  for the number of Common  Shares to be purchased
            and the Company  hereby  irrevocably  authorizes its transfer agent to
            comply  with all  such  requests,  or (B) if the  Company  shall  have
            elected to deposit the total number of Common Shares  hereunder with a
            depositary  agent,  requsition  from the depositary  agent  depositary
            receipts  representing  such  number  of  Common  Shares  as are to be
            purchased   (in  which  case   certificates   for  the  Common  Shares
            represented  by such receipts shall be deposited by the transfer agent
            with  the  depositary  agent)  and  the  Company  hereby  directs  the
            depositary agent to comply with such request,  (ii) when  appropriate,
            requisition  from the Company 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,
            delivery  such cash to or upon the order of the  registered  holder of
            such Right Certificate.  In the event that the Company is obligated to
            issue other  securities  of the  Company,  pay cash and/or  distribute
            other property pursuant to Section 11(a) hereof, the Company will make
            all arrangements necessary so that such other securities,  cash and/or
            other property are available for  distribution by the Rights Agent, if
            and when appropriate.
  
       (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 14 hereof.
  
       (e)  The Company  covenants  and agrees  that it will use its best  efforts
            (subject to the provisions of Section 11(a)(iv) hereof) to cause to be
            reserved and kept  available out of its  authorized  Common Shares not
            reserved for another purpose, the number of Common Shares that will be
            sufficient to permit the exercise in full of all outstanding Rights in
            accordance with this Section 7.
  
  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 Company 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 Rights Agreement.  The
       Company 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  by the Company  otherwise  than upon the  exercise
       thereof. The Rights Agent shall deliver all canceled Rights Certificates to
       the Company, or shall, at the written request of the Company, destroy such
  
  
                                          8
  
  
  <PAGE>
  
       canceled Right  Certificates,  and in such case shall deliver a certificate
       of destruction thereof to the Company.
  
  Section 9. AVAILABILITY OF COMMON SHARES.
  
       The Company  covenants  and agrees that it will take all such action as may
       be necessary to ensure that all Common  Shares  delivered  upon exercise of
       Rights shall, at the time of delivery of the  certificates  for such Common
       Shares  (subject  to payment of the  Purchase  Price),  be duly and validly
       authorized and issued and fully paid and nonassessable shares.
  
       So long as the Common  Shares  issuable  upon the exercise of Rights may be
       listed on any national securities exchange,  the Company 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  Company  further  covenants  and agrees  that it will pay when due and
       payable any and all federal and state  transfer taxes and charges which may
       be payable in respect of the issuance or delivery of the Right Certificates
       or of any Common Shares upon the exercise of Rights. The Company shall not,
       however,  be  required  to pay any  transfer  tax 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 Common Shares 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 Common
       Shares upon the  exercise of any Rights  until any such tax shall have been
       paid (any such tax being payable by the holder of such Right Certificate at
       the time of  surrender) or until it has been  established  to the Company's
       reasonable satisfaction that no such tax is due.
  
  Section 10. COMMON  SHARES  RECORD DATE.
  
       Each person in whose name any  certificate for Common Shares is issued upon
       the  exercise of Rights shall for all purposes be deemed to have become the
       holder of record of the  Common  Shares  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  multiplied  by the number of Common Shares with respect to which the
       Rights have been exercised (and any  applicable  transfer  taxes) was made;
       PROVIDED, however, that if the date of such surrender and payment is a date
       upon which the Common Shares transfer books of the Company 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 Common Shares  transfer  books of the Company are open.  Prior to
       the  exercise  of the  Rights  evidenced  thereby,  the  holder  of a Right
       Certificate  shall  not be  entitled  to any  rights  of a holder of Common
       Shares  for which  the  Rights  shall be  exercisable,  including,  without
       limitation,  the right to vote, to receive dividends or other  distribution
       or to exercise any preemptive  rights, and shall not be entitled to receive
       any notice of any proceedings of the Company, except as provided herein.
  
  Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS.
  
       The Purchase Price, the number and kind of shares or other property covered
       by each  Right  and  the  number  of  Rights  outstanding  are  subject  to
       adjustment from time to time as provided in this Section 11.
  
  
  
                                         9
  
  
  <PAGE>
  
  
  
       (a)  (i) In the event the Company  shall at any time after the date of this
            Agreement  (A)  declare a  dividend  on the Common  Shares  payable in
            Common  Shares,  (B)  subdivide the  outstanding  Common  Shares,  (C)
            combine the outstanding  Common Shares into a smaller number of Common
            Shares  or  (D)  issue  any   shares  of  its   capital   stock  in  a
            reclassification   of  the   Common   Shares   (including   any   such
            reclassification in connection with a consolidation or merger in which
            the Company is the continuing or surviving corporation), then, in each
            such event,  except as otherwise  provided in this Section 11(a):  (1)
            each of the Rights outstanding at the time of the record date for such
            dividend or the  effective  date of such  subdivision  combination  or
            reclassification  shall be proportionately  adjusted to that number of
            Rights (calculated to the nearest one  ten-thousandth  (1/10,000) of a
            Right) equal to the result obtained by multiplying  each such Right by
            a fraction (the "Adjustment  Ratio"),  the numerator of which shall be
            the total number of Common Shares or shares of capital stock issued in
            such  reclassification  of the Common Shares  outstanding  immediately
            following  such time and the  denominator  of which shall be the total
            number of Common Shares  outstanding  immediately  prior to such time,
            and the number of Rights that shall  thereafter be issued with respect
            to each Common Share or share of such other  capital  stock that shall
            become outstanding  thereafter prior to the Distribution Date shall be
            equal to the total number of outstanding Rights immediately after such
            event (as  adjusted  pursuant to this clause (1)) divided by the total
            number of  outstanding  Common  Shares or shares of such other capital
            stock  immediately  after such event  (subject  to further  adjustment
            pursuant to the provisions of this Agreement);  (2) 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
            shall be adjusted so that the Purchase  Price  thereafter  shall equal
            the  result   obtained  by  dividing  the  Purchase  Price  in  effect
            immediately  prior to such  time by the  Adjustment  Ratio;  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 (if any) of
            the shares of capital  stock of the Company  issuable upon exercise of
            such  Right;  and (3) the  number of  Common  Shares or shares of such
            other  capital  stock  issuable  upon the exercise of each Right shall
            remain unchanged  immediately after such event, but, in the event of a
            reclassification,  the kind of shares  issuable  upon the  exercise of
            each Right immediately after such  reclassification  shall be adjusted
            to be the kind of shares of such other  capital  stock  issued in such
            reclassification,  rather than Common Shares. 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) Subject to Section 24 of this Agreement, in the event:
  
                 (A)  any  Acquiring  Person or any  Associate or Affiliate of any
                      Acquiring  Person,  at any  time  after  the  date  of  this
                      Agreement, directly or indirectly, (1) shall merger into the
                      Company  or  otherwise  combine  with  the  Company  and the
                      Company shall be the continuing or surviving  corporation of
                      such merger or combination  and Common Shares of the Company
                      shall remain  outstanding  and unchanged,  (2) shall, in one
                      transaction  or a  series  of  transactions,  other  than in
                      connection with the exercise of Rights or in connection with
                      the exercise or  conversion  of  securities  exercisable  or
                      convertible into equity  securities of the Company or any of
                      its  Subsidiaries,  transfer any assets to the Company or to
                      any of its  Subsidiaries  in exchange  (in whole or in part)
                      for shares of Common Shares of the Company, for other equity
                      securities of the Company or of any such Subsidiary,  or for
                      securities  exercisable  for or  convertible  into shares of
                      equity   securities   of  the  Company  or  of  any  of  its
                      Subsidiaries  (whether  Common  Shares  of  the  Company  or
  
  
                                         10
  
  
  <PAGE>
  
  
  
                      otherwise)  or  otherwise  obtain from the Company or any of
                      its  Subsidiaries,   with  or  without  consideration,   any
                      additional shares of such equity securities  exercisable for
                      or  convertible  into such  equity  securities  (other  than
                      pursuant to a pro rata distribution to all holders of Common
                      Shares of the  Company),  (3) shall sell,  purchase,  lease,
                      exchange, mortgage, pledge, transfer or otherwise acquire or
                      dispose of, in one transaction or a series of  transactions,
                      to,  from or with (as the case may be) the Company or any of
                      its  Subsidiaries or any employee benefit plan maintained by
                      the  Company or any of its  Subsidiaries  or any  trustee of
                      fiduciary with respect to such plan acting in such capacity,
                      assets  (including  securities) on terms and conditions less
                      favorable  to the  Company or such  Subsidiary  or plan than
                      those  that  could  have  been   obtained  in   arm's-length
                      negotiations  with an unaffiliated  third party,  other than
                      pursuant to a transaction set forth in Section 13(a) hereof,
                      (4) shall sell, purchase, lease, exchange, mortgage, pledge,
                      transfer  or   otherwise   acquire  or  dispose  of  in  one
                      transaction  or a series of  transactions,  to, from or with
                      (as the case  may be) the  Company  or any of the  Company's
                      Subsidiaries or any employee  benefit plan maintained by the
                      Company  or any  of  its  Subsidiaries  or  any  trustee  or
                      fiduciary with respect to such plan acting in such capacity,
                      any material  trademark or material service mark, other than
                      pursuant to a transaction set forth in Section 13(a) hereof,
                      (6) shall receive any  compensation  from the Company or any
                      of its  Subsidiaries  other than  compensation for full-time
                      employment  as  a  regular  employee  or  for  serving  as a
                      director at rates in  accordance  with the Company's (or its
                      Subsidiaries')  past  practices,  or (7) shall  receive  the
                      benefit, directly or indirectly (except proportionately as a
                      shareholder   or  as   required   by  law  or   governmental
                      regulation), of any loans, advances,  guarantees, pledges or
                      other  financial  assistance or any tax credits or other tax
                      advantage provided by the Company or any of its Subsidiaries
                      or any employee  benefit plan  maintained  by the Company or
                      any of its Subsidiaries; or
  
                 (B)  a Trigger Event shall have  occurred  (other than through an
                      acquisition   described  in   subparagraph   (iii)  of  this
                      paragraph (a)); or
  
                 (C)  during  such  time as there is an  Acquiring  Person,  there
                      shall be any  reclassification of securities  (including any
                      reverse stock split), or  recapitalization or reorganization
                      of  the   Company   or  other   transaction   or  series  of
                      transactions of any kind involving the Company which has the
                      effect,  directly or indirectly,  of increasing by more than
                      3% the proportionate  share of the outstanding shares of any
                      class of  equity  securities  of the  Company  or any of its
                      Subsidiaries  beneficially  owned by any Acquiring Person or
                      any Affiliate or Associate thereof,
  
  then,  and in each such case,  each  holder of a Right shall  thereafter  have a
  right to receive,  upon exercise  thereof in  accordance  with the terms of this
  Agreement, such number of Common Shares of the Company as shall equal the result
  obtained by (x)  multiplying  the then current  Purchase  Price by the number of
  Common  Shares  for  which a Right is then  exercisable  and (y)  dividing  that
  product  by 50% of the then  current  per share  market  price of the  Company's
  Common Shares  (determined  pursuant to Section 11(d) hereof) on the date of the
  occurrence  of the earliest of the events  described in clauses (A), (B) and (C)
  above; 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 shall apply and no  adjustment
  shall be made pursuant to this Section 11(a)(ii).
  
  
  
                                         11
  
  
  <PAGE>
  
  
  
       From and after the  occurrence  of the earlier of the events  described  in
  clauses  (A),  (B) and (C)  above,  any  Rights  that  are or were  acquired  or
  beneficially  owned by any  Acquiring  Person (or any  Associate or Affiliate of
  such  Acquiring  Person) shall be void and any holder of such Rights  (including
  any  subsequent  transferee)  shall  thereafter  have no right to exercise  such
  Rights under any  provision of this  Agreement.  No Right  Certificate  shall be
  issued pursuant to Section 3 that  represents  Rights  beneficially  owned by an
  Acquiring  Person whose Rights would be void pursuant to the preceding  sentence
  or any Associate or Affiliate  thereof;  no Right Certificate shall be issued at
  any time upon the  transfer of any Rights to an  Acquiring  Person  whose Rights
  would be void pursuant to the  preceding  sentence or any Associate or Affiliate
  thereof or to any nominee or such Acquiring Person,  Associate or Affiliate; and
  any Right Certificate delivered to the Rights Agent for transfer to an Acquiring
  Person whose Rights would be void  pursuant to the preceding  sentence  shall be
  canceled.
  
            (iii)The  right  to buy  Common  Shares  of the  Company  pursuant  to
                 subparagraph  (ii) of this  paragraph  (a)  shall  not arise as a
                 result of any  Person  becoming  an  Acquiring  Person  through a
                 purchase of Common Shares  pursuant to a tender offer made in the
                 manner  prescribed  by Section  14(d) of the Exchange Act and the
                 rules and regulations promulgated thereunder;  PROVIDED, however,
                 that (A) such tender offer shall provide for the  acquisition  of
                 all of the  outstanding  Common  Shares held by any Person  other
                 than such Person and its  Affiliates or Associates  for cash, (B)
                 such  tender  offer is held open for a minimum  of 60 days  after
                 commencement  of the  tender  offer and (C) such  purchase  shall
                 cause such Person, together with all Affiliates and Associates of
                 such  Person,  to be the  Beneficial  Owner of 90% or more of the
                 Common Shares then outstanding.
  
            (iv) In lieu of  issuing  Common  Shares in  accordance  with  Section
                 11(a)(ii)  hereof,  the Company  may,  if the Board of  Directors
                 determines  that such action is necessary or appropriate  and not
                 contrary to the interest of holders of Rights (and,  in the event
                 that the  number of Common  Shares  which are  authorized  by the
                 Company's  Articles  of  Incorporation  but  not  outstanding  or
                 reserved for issuance  for purposes  other than upon  exercise of
                 the Rights are not  sufficient  to permit the exercise in full of
                 the Rights,  or if any  necessary  regulatory  approval  for such
                 issuance  has not  been  obtained  by the  Company,  the  Company
                 shall):  (A)  determine the excess of (1) the value of the Common
                 Shares  issuable  upon  the  exercise  of a Right  (the  "Current
                 Value"),   over  (2)  the  Purchase   Price  (such  excess  being
                 hereinafter referred to as the "Spread"), and (B) with respect to
                 each  Right,  make  adequate  provision  to  substitute  for such
                 unavailable  Common  Shares,   upon  payment  of  the  applicable
                 Purchase Price,  (1) cash, (2) a reduction in the Purchase Price,
                 (3) other  equity  securities  of the  Company,  if any, (4) debt
                 securities  of  the  Company,   (5)  other  assets,  or  (6)  any
                 combination  of the foregoing,  having,  together with the Common
                 Shares  issued upon  exercise of such Right,  an aggregate  value
                 equal to the Current Value,  where such aggregate  value has been
                 determined  by the Board of Directors  of the Company  based upon
                 the advice of a  nationally  recognized  investment  banking firm
                 selected  by the Board of  Directors  of the  Company;  PROVIDED,
                 however, if the Company shall have not made adequate provision to
                 deliver  value  pursuant  to  clause  (B)  above  within  30 days
                 following  the  date of the  occurrence  of the  earliest  of the
                 events   described  in  clauses  (A),  (B)  and  (C)  of  Section
                 11a(a)(ii) above, then the Company shall be obligated to deliver,
                 upon the surrender for exercise of a Right and without  requiring
                 payment of the Purchase Price,  Common Shares (to the extent such
                 shares are available) and then, if necessary,  cash, which shares
                 and/or cash have an aggregate  value equal to the Spread.  If the
                 Board of Directors of the Company shall determine in  good  faith
  
  
                                         12
  
  
  <PAGE>
  
  
  
                 that it is likely that sufficient  additional Common Shares could
                 be  authorized  for issuance upon exercise in full of the Rights,
                 the 30 day period set forth  above may be  extended to the extent
                 necessary,  but not more than 120 days  following the date of the
                 occurrence  of the  earliest of the events  described  in clauses
                 (A), (B) and (C) of Section  11(a)(ii)  above,  in order that the
                 Company may seek  shareholder  approval for the  authorization of
                 such  additional  shares  (such  period,  as it may be  extended,
                 hereinafter  referred to as the  "Substitution  Period").  To the
                 extent that the Company  determines  that action need to be taken
                 pursuant to the first  and/or  second  sentences  of this Section
                 11(a)(iv),  the  Company  (x) shall  provide,  subject to Section
                 11(a)(ii)  hereof,  that such action shall apply uniformly to all
                 outstanding Rights, and (y) may suspend the exercisability of the
                 Rights until the expiration of the  Substitution  Period in order
                 to seek any  authorization of additional  shares and/or to decide
                 the appropriate  form of distribution to be made pursuant to such
                 first sentence and to determine the value  thereof.  In the event
                 of  any  such  suspension,  the  Company  shall  issue  a  public
                 announcement  stating that the  exercisability  of the Rights has
                 been temporarily  suspended,  as well as a public announcement at
                 such time as the suspension,  as well as a public announcement at
                 such time as the suspension is no longer in effect.  For purposes
                 of this Section  11(a)(iv),  the value of the Common Shares shall
                 be the current per share market price (as determined  pursuant to
                 Section  11(d)  hereof)  per  Common  Share  on the  date  of the
                 occurrence  of the  earliest of the events  described  in clauses
                 (A), (B) and (C) of Section 11(a)(ii) above.
  
       (b)  In case the  Company  shall  fix a record  date  for the  issuance  of
            rights,  option or warrants to all holders of Common  Shares or of any
            class or  series of  Equivalent  Shares  entitling  them (for a period
            expiring  within 45 calendar days after such record date) to subscribe
            for or  purchase  Common  Shares or  Equivalent  Shares or  securities
            convertible  into Common  Shares or  Equivalent  Shares or  securities
            convertible  into Common  Shares or  Equivalent  Shares at a price per
            Common Share or  Equivalent  Share (or having a  conversion  price per
            share,  if a security  convertible  into Common  Shares or  Equivalent
            Shares)  less  than the then  current  per share  market  price of the
            Common Shares (as defined in Section 11(d)) on such record date, then,
            in each such  case,  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 Common Shares and Equivalent
            Shares (if any)  outstanding  on such  record  date plus the number of
            Common  Shares or  Equivalent  Shares,  as the case may be,  which the
            aggregate  offering  price of the total number of Common Shares and/or
            Equivalent  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  market price and the  denominator  of which
            shall be the number of Common  Shares and  Equivalent  Shares (if any)
            outstanding  on such record date plus the number of additional  Common
            Shares  and/or  Equivalent  Shares to be offered for  subscription  or
            purchase (or into which the  convertible  securities  so to be offered
            are initially  convertible).  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 as determined in
            good  faith  by  the  Board  of  Directors   of  the  Company,   whose
            determination  shall be described in a statement filed with the Rights
            Agent. Such adjustment shall be made successively whenever such 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.
  
  
  
                                         13
  
  
  <PAGE>
  
  
  
       (c)  In case the  Company  shall  fix a record  date  for the  making  of a
            distribution  to all  holders of the Common  Shares or of any class or
            series of Equivalent  Shares  (including any such distribution made in
            connection with a consolidation  or merger in which the Company is the
            continuing or surviving  corporation)  of evidence of  indebtedness or
            assets  (other  than a regular  periodic  cash  dividend or a dividend
            payable  in  Common  Shares)  or   subscription   rights  or  warrants
            (excluding  those referred to in Section 11(b) hereof),  then, in each
            such case,  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 of the Common
            Shares or Equivalent  Shares on such record date, less the fair market
            value (as  determined  in good faith by the Board of  Directors of the
            Company,  whose  determination shall be described in a statement filed
            with the Rights  Agent) of the portion of the assets or  evidences  of
            indebtedness  so to be distributed or of such  subscription  rights or
            warrants  applicable to one Common Share or Equivalent  Share,  as the
            case may be, and the  denominator  of which shall be such  current per
            share market price of the Common  Shares or  Equivalent  Shares.  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)  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) on any date  shall be deemed to be the  average  of the
            daily closing prices per share of such Security for the 30 consecutive
            Trading Days (as such term is hereinafter  defined)  immediately prior
            to 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 30 Trading Days after the ex-dividend  date
            for  such  dividend  or  distribution,  or the  record  date  for such
            subdivision,  combination or  reclassification,  the, 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 in the  over-the-counter
            market, as reported by the National Association of Securities Dealers,
            Inc. Automated Quotations Systems ("NASDAQ") or such other 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 Company.  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. If the Common Shares are not publicly  held or  not so
  
  
                                         14
  
  
  <PAGE>
  
            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 Company,  whose determination shall be described in a statement
            filed with the Rights Agent.
  
       (e)  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  ten-thousandths  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 years from the date of
            the transaction which requires such adjustment or (ii) the date of the
            expiration of the right to exercise any Rights.
  
       (f)  If as a result of an adjustment made pursuant to Section 12(a) hereof,
            the holder of any Right thereafter  exercised shall become entitled to
            receive any shares of capital  stock of the Company  other than Common
            Shares,  thereafter the number of such other shares so receivable upon
            exercise of any Right and if required,  payment of the Purchase  Price
            thereof,  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 Common Shares  contained in Sections  11(a),  (b),
            (c),  (e),  (h),  (i),  (j),  (k),  (l) and  (m),  inclusive,  and the
            provisions  of Sections 7, 9, 10, 13 and 14 with respect to the Common
            Shares shall apply on like terms to any such other shares.
  
       (g)  All  Rights  originally  issued  by  the  Company  subsequent  to  any
            adjustment  made to the Purchase  Price  hereunder  shall evidence the
            right to  purchase,  at the  adjusted  Purchase  Price,  the number of
            Common Shares purchasable from time to time hereunder upon exercise of
            the Rights, all subject to further adjustment as provided herein.
  
       (h)  Unless the Company  shall have  exercised  its election as provided in
            Section 11(i),  upon each adjustment of the Purchase Price as a result
            of the  calculations  made in Section  11(b),  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 Common  Shares  (calculated  to the nearest  ten-thousandth)
            obtained  by (i)  multiplying  (x) the  number of shares  covered by a
            Right  immediately  prior to this adjustment by (y) 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  Company may elect on or after the date of any  adjustment  of the
            Purchase Price as a result of the  calculations  made in Section 11(b)
            to adjust the number of Rights,  in substitution for any adjustment in
            the number of Common Shares  purchasable upon the exercise of a Right.
            Each of the Rights  outstanding after such adjustment of the number or
            Rights shall be exercisable  for the number of Common Shares 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 ten-
            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 Company shall make a public announcement of its election to adjust
            the number of Rights, indicating the record  date for  the adjustment,
  
  
                                         15
  
  
  <PAGE>
  
  
  
            and, if known at the time,  the amount of the  adjustments to be made.
            The  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  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
            Company 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  Company,  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 Company,
            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
            number of Common Shares 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 Common Shares 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 Common Shares
            issuable  upon  exercise  of the Rights,  the  Company  shall take any
            corporate  action  which  may,  in  the  opinion  of its  counsel,  be
            necessary  in order that the Company  may  validly  and legally  issue
            fully paid and  nonassessable  Common Shares 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 Company may elect to defer until the occurrence
            of such event the issuing to the holder of any Right  exercised  after
            such  record  date of the  Common  Shares and other  capital  stock or
            securities  of the Company,  if any,  issuable upon such exercise over
            and above the Common  Shares and other  capital stock or securities of
            the Company,  if any,  issuable upon such exercise on the basis of the
            Purchase Price in effect prior to such adjustment;  PROVIDED, however,
            that the  Company  shall  deliver  to such  holder a due bill or other
            appropriate  instrument evidencing such holder's right to receive such
            additional  shares upon the  occurrence  of the event  requiring  such
            adjustment.
  
       (m)  Anything  in this  Section  11 to the  contrary  notwithstanding,  the
            Company  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  any   consolidation  or
            subdivision of the Common Shares,  issuance  wholly for cash of Common
            Shares or  securities  which by their  terms are  convertible  into or
            exchangeable for Common Shares, stock dividends or issuance of rights,
            options or  warrants  referred  to  hereinabove  in this  Section  11,
            hereafter  made by the Company to holders of its Common  Shares  shall
            not be taxable to such shareholders.
  
  
  
                                         16
  
  
  <PAGE>
  
  
  
       (n)  The Company  covenants and agrees that it shall not, at any time after
            the Distribution  Date, (i) consolidate  with, or merge with and into,
            any  other  Person  (other  than  a  Subsidiary  of the  Company  in a
            transaction  that complies with Section  11(o)),  (ii) permit or cause
            any Person to consolidate with the Company, or merge with and into the
            Company (other than a Subsidiary of the Company in a transaction  that
            complies with Section 11(o)), or (iii) sell or otherwise  transfer (or
            permit  any   Subsidiary  to  sell  or  transfer),   in  one  or  more
            transactions,  assets or earning power  aggregating 50% or more of the
            assets or earning power of the Company and its Subsidiaries  (taken as
            a whole) to any other Person or Persons (other than the Company and/or
            any of its  Subsidiaries  in one or more  transactions  each of  which
            complies  with Section  11(o)),  if (i) at the time of or  immediately
            after  such  consolidation,  merger  or sale  there  are  any  rights,
            warrants or other instruments or securities  outstanding or agreements
            in effect that would substantially diminish or otherwise eliminate the
            benefits  intended to be  afforded  by the  Rights,  or (ii) prior to,
            simultaneously  with or after any such event,  the shareholders of the
            Person who constitutes,  or would constitute, the "Principal Party" or
            purposes of Section 13 hereof shall have  received a  distribution  of
            Rights  previously  owned by such Person or any of its  Affiliates and
            Associates.
  
       (o)  The Company 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  of the  Company to take) any
            action  if  at  the  time  such  action  is  taken  it  is  reasonably
            foreseeable that such action will diminish  substantially or otherwise
            eliminate the benefits intended to be afforded by the Rights.
  
  Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
  
       Whenever  an  adjustment  is made as provided in Sections 11 and 13 hereof,
       the Company  shall  promptly (a) prepare a  certificate  setting forth such
       adjustment,  and a  brief  statement  of  the  facts  accounting  for  such
       adjustment, (b) file with the Rights Agent and with each transfer agent for
       the Common 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 not be deemed
       to have  knowledge  of any such  adjustment  unless and until it shall have
       received such certificate.
  
  Section 13.  CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
               POWER.
  
       In the event  that,  following  the Shares  Acquisition  Date,  directly or
       indirectly, (a) the Company shall consolidate with, or merge with and into,
       any other Person  (other than a Subsidiary  of the Company in a transaction
       the principal  purpose of which is to change the state of  incorporation of
       the Company of which complies with Section 11(o)  hereof),  and the Company
       shall not be the continuing or surviving  corporation of such consolidation
       or merger,  (b) any Person  (other  than a  Subsidiary  of the Company in a
       transaction that complies with Section 11(o) hereof) shall consolidate with
       the  Company,  or merge with and into the Company and the Company  shall be
       the  continuing or surviving  corporation of such merger and, in connection
       with such  consolidation or merger,  all or part of the Common Shares shall
       be changed into or  exchanged  for stock or other  securities  of any other
       Person (or the Company) or cash or any other  property,  or (c) the Company
       shall sell or otherwise  transfer (or one or more of its Subsidiaries shall
       sell or otherwise transfer), in one or more transactions, assets or earning
       power aggregating 50% or more of the assets or earning power of the Company
       and its Subsidiaries (taken as a whole) to any other Person (other than the
       Company or  one or  more of its  wholly-owned  Subsidiaries in  one or more
  
  
                                         17
  
  
  <PAGE>
  
       transactions,  each of which complies with Section 11(o) hereof), then, and
       in each such case,  proper  provision shall be made so that (i) each holder
       of a Right (except as otherwise  provided herein) shall thereafter have the
       right to receive,  upon the  exercise  thereof at a price equal to the then
       current  Purchase Price multiplied by the number of Common Shares for which
       a  Right  is  then  exercisable,  in  accordance  with  the  terms  of this
       Agreement, such number of validly authorized,  fully paid and nonassessable
       Common Shares of the Principal Party (as hereinafter defined),  free of 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 Common  Shares  for which a Right is then
       exercisable  immediately  prior  to  such  consolidation,  merger,  sale or
       transfer and (B) dividing that product by 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
       consolidation,  merger,  sale or transfer;  (ii) such Principal Party shall
       thereafter   by  liable  for,   and  shall   assume,   by  virtue  of  such
       consolidation,  merger, sale or transfer, all the obligations and duties of
       the Company  pursuant to this  Agreement;  (iii) the term  "Company"  shall
       thereafter  be  deemed  to refer to such  Principal  Party;  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 accordance with
       Section 9 hereof) in connection with such  consummation as may be necessary
       to assure that the provisions  hereof shall  thereafter be  applicable,  as
       nearly as reasonably  may be, in relation to the Common  Shares  thereafter
       deliverable  upon  the  exercise  of the  Rights.  The  Company  shall  not
       consummate any such  consolidation,  merger,  sale or transfer unless prior
       thereto the  Company  and such  Principal  Party  shall have  executed  and
       delivered to the Rights Agent a  supplemental  agreement so providing.  The
       Company  shall not enter into any  transaction  of the kind  referred to in
       this  Section 13 if at the time of such  transaction  there are any rights,
       warrants,  instruments  or  securities  outstanding  or any  agreements  or
       arrangements  which, as a result of the  consummation of such  transaction,
       would  eliminate or  substantially  diminish  the  benefits  intended to be
       afforded by the Rights.  The provisions of this Section 13 shall  similarly
       apply to successive mergers or consolidations or sales or other transfers.
  
       "Principal  Party" shall mean, in the case of any transaction  described in
       clause (a), (b) or (c) of this  Section 13, the Person  referred to therein
       (or such Person's  successor,  including the Company),  PROVIDED,  HOWEVER,
       that  in any  such  case,  (i) if  such  Person  is a  direct  or  indirect
       Subsidiary of another Person,  "Principal  Party" shall refer to such other
       Person  and  (ii)  in  case  such  Person  is  a  Subsidiary,  directly  or
       indirectly,  of more than one  Person,  "Principal  Party"  shall  refer to
       whichever  of such  Persons is the issuer of the Common  Shares  having the
       greatest aggregate market value.
  
       Notwithstanding anything in this Agreement to the contrary, this Section 13
       shall not be applicable to a transaction described in clauses (a) or (b) of
       this Section 13 if: (i) such  transaction is  consummated  with a Person or
       Persons who acquired  Common  Shares  pursuant to an offer  satisfying  the
       requirements of Section 11(a)(iii) hereof (or a wholly-owned  Subsidiary of
       any such  Person or  Persons)  within 120 days of the  termination  of said
       offer;  (ii)  the  price  per  share  of  Common  Shares  offered  in  such
       transaction  is not less than the price per share of Common  Shares paid to
       all holders of Common Shares whose shares were  purchased  pursuant to such
       offer; and (iii) the form of  consideration  being offered to the remaining
       holders  of  Common  Shares  pursuant  to such  transaction  in cash.  Upon
       consummation of any such  transaction  contemplated by this third paragraph
       of Section 13, all Rights hereunder shall immediately expire.
  
  
  
                                         18
  
  
  <PAGE>
  
  Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
  
       (a)  The Company  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 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 in the  over-the-counter
            market,  as reported by NASDAQ or such other 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  Company.  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 Company shall be used.
  
       (b)  The Company shall not be required to issue  fractions of Common Shares
            upon  exercise  of the  Rights  or to  distribute  certificates  which
            evidence  fractional  Common  Shares.  In  lieu of  fractional  Common
            Shares,  the  Company  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 Common Share.  For the purpose of this Section 14(b), the
            current market value of a Common Share shall be the closing price of a
            Common Share (as determined pursuant to the second sentence of Section
            11(d)  hereof) for the Trading  Day  immediately  prior to the date of
            such exercise.
  
       (c)  The holder of a Right by the acceptance of the Right expressly  waives
            his right to receive any fractional  Rights or any  fractional  shares
            upon exercise of a Right (except as provided above).
  
  Section 15. RIGHTS OF ACTION.
  
       All rights of action in respect of this Agreement,  excepting the rights of
       action give 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 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 Company
       to enforce,  or  otherwise  act in respect  of, his right to  exercise  the
       Rights  evidenced by such Right  Certificate 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
  
  
                                                         20
  
  
  <PAGE>
  
  
  
       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 Company 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 on the registry  books of the Rights Agent if  surrendered at the
            principal office of the Rights Agent,  duly endorsed or accompanied by
            a proper instrument of transfer; and
  
       (c)  the  Company  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  Certificates  or the  associated
            Common Shares certificate made by anyone other than the Company or the
            Rights Agent) for all purposes whatsoever, and neither the Company nor
            the Rights Agent shall be affected by any notice to the contrary.
  
  Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
  
       No  holder of any  Right  Certificate,  by reason of being a holder of such
       Right  Certificate,  shall be entitled  to vote,  receive  dividends  or be
       deemed  for any  purpose  the  holder  of the  Common  Shares  or any other
       securities of the Company 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,  by reason of being a holder of such Right Certificate,
       any of the rights of a shareholder  of the Company or any right to vote for
       the election of directors or upon any matter  submitted to  shareholders at
       any  meeting  thereof,  or to give or  withhold  consent  to any  corporate
       action,  or to  receive  notice  of  meetings  or other  actions  affecting
       shareholders  (except as  provided  in Section  25  hereof),  or to receive
       dividends 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.
  
       The Company 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  administration  and  execution  of  this
       Agreement and the exercise and  performance  of its duties  hereunder.  The
       Company  also  agrees to  indemnify  the Rights  Agent for,  and to hold it
       harmless  against,  any  loss,  liability,  or  expense,  incurred  without
       negligence,  bad  faith or  willful  misconduct  on the part of the  Rights
       Agent,  for anything done or omitted by the Rights Agent in connection with
       the acceptance and  administration  of this Agreement,  including the costs
       and expenses of defending against any claim of liability in the premises.
  
       The Rights Agent shall be  protected  and shall incur no ability for, or in
       respect of any action taken,  suffered or omitted by it in connection with,
       its administration of this Agreement in reliance upon any Right Certificate
  
  
                                         20
  
  
  <PAGE>
  
       or  certificate  for the  Common  Shares  or for  other  securities  of the
       Company,   instrument  of  assignment  or  transfer,   power  of  attorney,
       endorsement,  affidavit, letter, notice, direction,  consent,  certificate,
       statement,  or other paper or document  believed by it to be genuine and to
       be signed, executed and, where necessary,  verified or acknowledged, by the
       proper  person or persons,  or otherwise  upon the advice of counsel as set
       forth in Section 20 hereof.
  
  Section 19.  MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
  
       Any corporation  into which the Rights Agent or any successor  Rights Agent
       may be  merged or with  which it may be  consolidated,  or any  corporation
       resulting from any merger or consolidation to which the Rights Agent or any
       successor  Rights Agent shall be a party, or any corporation  succeeding to
       the stock  transfer or corporate  trust 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
       corporation  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 the  predecessor  Rights  Agent and deliver such Right
       Certificates  so  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  Rights Agent 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 Certificate 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  the duties and  obligations  imposed by this
       Agreement  upon the  following  terms and  conditions,  by all of which the
       Company 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  Company),  and the opinion of such  counsel  shall be
            full and complete  authorization and protection to the Rights Agent as
            to any action  taken 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 be  proved or  established  by the  Company  prior to taking or
            suffering  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 Executive Vice President or the Secretary
            of the Company and delivered to the Rights Agent; and such certificate
  
  
                                         21
  
  
  <PAGE>
  
  
  
            shall be full  authorization  to the Rights Agent for any action taken
            or suffered in good faith by it under the provisions of this Agreement
            in reliance upon such certificate.
  
       (c)  The Rights  Agent  shall be liable  hereunder  to the  Company and any
            other  Person  only  for its own  negligence,  bad  faith  or  willful
            misconduct.
  
       (d)  The  Rights  Agent  shall not be liable for or by reason of any of the
            statements of fact or recitals  contained in this  Agreement or in the
            Right  Certificates  (except  its  countersignature   thereof)  or  be
            required to verify the same, but all such  statements and recitals are
            and shall be deemed to have been made by the Company only.
  
       (e)  The Rights Agent shall not be under any  responsibility  in respect of
            the validity of the  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  Company  of any  covenant  or  condition  contained  in  this
            Agreement or in any Right Certificate; nor shall it be responsible for
            any change in the  exercisability  of the Rights (including the Rights
            becoming void pursuant to Section  11(a)(ii) hereof) or any adjustment
            in the terms of the Rights  (including  the  manner,  method or amount
            thereof)  provided  for  in  Section  3,  11,  13,  23 or  24,  or the
            ascertaining  of the  existence  of facts that would  require any such
            change or  adjustment  (except  with respect to the exercise of Rights
            evidenced by Right  Certificates  after actual notice that such change
            or  adjustment  is  required);  nor shall it by any act  hereunder  be
            deemed to make any  representation or warranty as to the authorization
            or  reservation  of any Common  Shares to be issued  pursuant  to this
            Agreement or any Right  Certificate or as to whether any Common Shares
            will, when issued,  be validly  authorized and issued,  fully paid and
            nonassessable.
  
       (f)  The Company  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 Executive Vice President or the Secretary
            of  the  Company,  and  to  apply  to  such  officers  for  advice  or
            instruction in connection with its duties,  and it shall not be liable
            for any action  taken or  suffered  by it in good faith in  accordance
            with instructions of any such officer or for any delay in acting while
            waiting for those instructions.
  
       (h)  The Rights Agent and any shareholder, director, officer or employee of
            the Rights  Agent may buy,  sell or deal in any of the Rights or other
            securities  of the  Company or become  pecuniarily  interested  in any
            transaction in which the Company may be  interested,  or contract with
            or lend money to the Company 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 Company or for any other 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
  
  
                                         22
  
  
  <PAGE>
  
            answerable or accountable for any act, default,  neglect or misconduct
            of any  such  attorneys  or  agents  or for any  loss  to the  Company
            resulting from any such act, default, neglect or misconduct,  provided
            reasonable   care  was   exercised  in  the  selection  and  continued
            employment thereof.
  
       (j)  At any time and from time to time after the  Distribution  Date,  upon
            the request of the Company, the Rights Agent shall promptly deliver to
            the Company a list, as of the most recent  practicable  date (or as of
            such earlier date as may be specified by the Company),  of the holders
            of record of Rights.
  
  Section 21.  CHANGE OF RIGHTS AGENT.
  
       The Rights Agent or any successor Rights Agent was resign and be discharged
       from its duties under this Agreement upon 30 days' notice in writing mailed
       to  the  Company  and to  each  transfer  agent  of the  Common  Shares  by
       registered or certified mail, and to the holders of the Right  Certificates
       by  first-class  mail.  The  Company  may remove  the  Rights  Agent or any
       successor  Rights  Agent  upon 30 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 by registered or certified mail, and to
       the 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 Company shall  appoint a successor to the Right Agent.  If the
       Company  shall  fail to make  such  appointment  within a period of 30 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 Company),  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  Company or by such a
       court,  shall be a corporation  organized and doing business under the laws
       of the  United  States  or any state of the  United  States so long as such
       corporation  is  authorized  to do  business as a banking  institution,  is
       authorized  under such laws to exercise  corporate  trust or stock transfer
       powers,  is in good standing,  and is subject to supervision or examination
       by federal or state  authority,  and has at the time of its  appointment as
       Rights Agent a combined capital and surplus of at least $50 million.  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 Company shall
       file notice with the  predecessor  Rights Agent and each transfer  agent of
       the Common  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 Company 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
  
  
                                         23
  
  
  <PAGE>
  
       or other securities or property  purchasable  under the Right  Certificates
       made in accordance with the provisions of this Agreement.
  
  Section 23. REDEMPTION.
  
       (a)  The Company  may, at its option and with the  approval of the Board of
            Directors,  at any time prior to the close of  business on the earlier
            of (i) the tenth day after the Shares Acquisition Date, (or such later
            date as may be  determined  by action of a majority of the  Continuing
            Directors then in office prior to the expiration of said tenth day, or
            any such extended  period,  and publicly  announced by the Company) or
            (ii) the Final Expiration  Date,  redeem all but not less than all the
            then  outstanding  Rights  at a  redemption  price of $.01 per  Right,
            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");
            PROVIDED,  however,  that if,  following  the  occurrence  of a Shares
            Acquisition  Date  and  following  the  expiration  of  the  right  of
            redemption  hereunder but prior to any event described in clauses (A),
            (B) or (C) of Section  11(a)(ii) or clauses (a), (b) or (c) of Section
            hereof, (i) a Person who is an Acquiring Person shall have transferred
            or  otherwise  disposed of a number of shares of Common  Shares in one
            transaction  or series of  transactions,  not  directly or  indirectly
            involving the Company or any of its Subsidiaries, which did not result
            in the occurrence of an event  described in clauses (A), (B) or (C) of
            Section 11(a)(ii) or clauses (a), (b) or (c) of Section 13 hereof such
            that such Person is  thereafter a  Beneficial  Owner of 20% or less of
            the  outstanding  Common Shares,  and (ii) there are no other Persons,
            immediately  following the occurrence of the event described in clause
            (i), who are Acquiring Persons,  then the right of redemption shall be
            reinstated and thereafter be subject to the provisions of this Section
            23. The redemption of the Rights by the Board of Directors may be made
            effective at such time, on such basis and with such  conditions as the
            Board of Directors in its sole discretion may establish.
  
       (b)  Immediately  upon the action of the Board of  Directors of the Company
            ordering the  redemption  of the Rights  pursuant to paragraph  (a) of
            this  Section  23, 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  shall be to receive  the
            Redemption Price. The Company shall promptly give public notice 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 10 days after such action of the Board of Directors
            ordering the redemption of the Rights, the Company shall mail a notice
            of  redemption  of the  Rights,  the  Company  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 book 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.
  
  Section 24. EXCHANGE.
  
       (a)  The Company  may, at its option,  by majority  vote of the  Continuing
            Directors  then in  office,  at any time after an event  described  in
            clauses  (A),  (B) or (C) or Section  11(a)(ii) or clauses (a), (b) or
            (c) of Section 13 hereof, exchange all or part of the then outstanding
  
  
                                         25
  
  
  <PAGE>
  
            and  exercisable  Rights  (which  shall not  include  Rights that have
            become void pursuant to the  provisions of Section  11(a)(ii)  hereof)
            for Common Shares 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  shall not be
            empowered to effect such  exchange at any time after any Person (other
            than the Company,  any Subsidiary of the Company, any employee benefit
            plan  of the  Company  or of any  such  Subsidiary,  or of any  entity
            holding  Common Shares for or pursuant to the terms of any such 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 Company
            ordering  the  exchange of any Rights  pursuant to Section (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 a holder 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 Company shall promptly
            give public notice 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 Company 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 which will be exchanged.  Any
            partial  exchange  shall be  effected  pro rata based on the number of
            Rights  (other  than Rights  which have  become  void  pursuant to the
            provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
  
       (c)  In the  event  that  there  shall  not  be  sufficient  Common  Shares
            authorized   but   unissued  to  permit  any  exchange  of  Rights  as
            contemplated in accordance with this Section 24, the Company shall use
            its best  efforts  to  cause  all  such  action  to be taken as may be
            necessary  to authorize  additional  Common  Shares for issuance  upon
            exchange of the Rights.
  
       (d)  The Company shall not be required to issue  fractions of Common Shares
            or to distribute certificates which evidence fractional Common Shares.
            In lieu of such fractional Common Shares, the Company shall pay to the
            registered holders of the Right Certificates with regard to which such
            fractional Common Shares would otherwise be issuable an amount in cash
            equal to the same  fraction  of the  current  market  value of a whole
            Common  Share.  For the  purpose of this  paragraph  (e),  the current
            market value of a whole  Common Share shall be the closing  price of a
            Common Share (as determined pursuant to the second sentence of Section
            11(d)  hereof) for the Trading  Day  immediately  prior to the date of
            exchange pursuant to this Section 24.
  
  Section 25. NOTICE OF CERTAIN EVENTS.
  
       (a)  In case the Company shall  propose (i) to pay any dividend  payable in
            stock of any class to the holders of its Common  Shares or to make any
            other  distribution  to the holders of its Common Shares (other than a
            regular periodic cash dividend), (ii) to offer to the  holders  of its
  
  
                                         25
  
  
  <PAGE>
  
            Common Shares rights to warrants to subscribee  for or to purchase any
            additional  Common Shares or shares of stock of any class or any other
            securities,  rights or options,  (iii) to effect any  reclassification
            involving only the subdivision of outstanding Common Shares),  (iv) to
            effect any consolidation or merger into or with, or to effect any sale
            or the  transfer  (or to  permit  one or more if 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  Company  and its
            Subsidiaries  (taken as a whole) to, any other  Person,  (v) to effect
            the  liquidation,  dissolution or winding up of the Company,  then, in
            each such  case,  the  Company  shall  give to each  holder of a Right
            Certificate,  in accordance  with Section 26 hereof,  a notice of such
            proposed action,  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 Common 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 10
            days prior to the record  date for  determining  holders of the Common
            Shares for purposes of such action,  and in the case of any such other
            action,  at least 10 days  prior  to the  date of the  taking  of such
            proposed action or the date of participation therein by the holders of
            the Common Shares, whichever shall be the earlier.
  
       (b)  In case any of the events set forth in Section  11(a)(ii) hereof shall
            occur,  then the Company 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.
  
  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 Company
       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:
  
                             ILC Technology, Inc
                             399 Java Drive
                             Sunnyvale, California 94089
                             Attention:  Corporate Secretary
  
       Subject  to the  provisions  of  Section  21  hereof,  any notice or demand
       authorized  by this  Agreement to be given or made by the Company 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 Company) as
       follows:
  
                             Security Pacific National Bank
                             701 South Western Avenue
                             Glendale, California 91201
                             Attention:  Equity Administration
  
       Notices or demands  authorized by this Agreement to be given or made by the
       Company or the Rights Agent to the holder of any Right Certificate shall be
       sufficiently given or made if sent by  first-class  mail, postage  prepaid,
  
  
                                         26
  
  
  <PAGE>
  
       addressed  to such  holder at the  address  of such  holder as shown on the
       registry books of the Company.
  
  Section 27.  SUPPLEMENTS  AND  AMENDMENTS.
  
       The  Company  may from  time to time  supplement  or amend  this  Agreement
       without the approval of any holders of Right  Certificates in order to cure
       any  ambiguity,  to correct or supplement  any provision  contained  herein
       which may be defective or inconsistent with any other provisions herein, or
       to make any other  provisions  with respect to the Rights which the Company
       may deem  necessary or  desirable,  any such  supplement or amendment to be
       evidenced  by a  writing  signed  by the  Company  and  the  Rights  Agent;
       PROVIDED,  however,  that  from  and  after  the  Distribution  Date,  this
       Agreement shall not be amended in any manner which would  adversely  affect
       the  interests  of the  holders  of  Rights;  PROVIDED  FURTHER,  that  any
       amendment to shorten or lengthen any time period  hereunder  following  the
       Distribution Date shall be effective only if there are Continuing Directors
       and  shall  require  the  concurrence  of a  majority  of  such  Continuing
       Directors; PROVIDED FURTHER, that this Agreement may not be supplemented or
       amended  to  lengthen  a time  period  relating  to when the  Rights may be
       redeemed  at such time as the Rights are not then  redeemable  or any other
       time period  unless  such  lengthening  is for the  purpose of  protecting,
       enhancing or clarifying  the rights of, and/or the benefits to, the holders
       of Rights;  and PROVIDED FURTHER,  that no amendment to Section  11(a)(iii)
       hereof may be effected  except with the  unanimous  written  consent of the
       Board of Directors  of the Company.  Without  limiting the  foregoing,  the
       Company  may at any  time  prior  to such  time as any  Person  becomes  an
       Acquiring  Person amend this Agreement to lower the thresholds set forth in
       Sections  1(a) and 3(a) to not less than the greater of (i) any  percentage
       greater than the largest  percentage of the outstanding  Common Shares then
       known by the Company to be beneficially owned by any Person (other than the
       Company,  any Subsidiary of the Company,  any employee  benefit plan of the
       Company or of any  Subsidiary of the Company or any entity  holding  Common
       Shares for or pursuant to the terms of any such plan) and (ii) 15%.
  
  Section 28. REGISTRATION OF SECURITIES.
  
       The Company  may  temporarily  suspend,  for a period of time not to exceed
       ninety (90) days, the  exercisability of the Rights in order to prepare and
       file, if deemed necessary by the Company, such registration  statements and
       other  filings  under  the  Securities  Act of 1933,  as  amended,  and the
       securities or "blue sky" laws of any state,  with respect to any securities
       purchasable  upon the  exercise  of the  Rights,  and to permit the same to
       become  effective.  Upon any such  suspension,  the  Company  shall issue a
       public announcement  stating that the exercisability of the Rights has been
       temporarily suspended, as well as a public announcement at such time as the
       suspension  is no longer in effect.  Notwithstanding  any provision of this
       Agreement  to the  contrary,  the Rights  shall not be  exercisable  in any
       jurisdiction  unless the requisite  qualification in such  jurisdiction has
       been  obtained,  or  an  exemption  therefrom  shall  be  available,  and a
       registration statement has been declared effective.
  
  Section 29.  DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
  
       The Board of Directors of the Company (and, where specifically provided for
       herein,  the  Continuing  Directors)  shall  have the  exclusive  power and
       authority  to  administer  this  Agreement  and to exercise  all rights and
       powers  specifically  granted to the Board or to the  Company  (and,  where
       specifically provided for herein, the Continuing  Directors),  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  a
       determination to redeem or  to not  redeem  the  Rights  or  to  amend  the
  
  
                                         27
  
  
  <PAGE>
  
       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 (or,
       where  specifically  provided for herein,  by the Continuing  Directors) in
       good faith, shall (x) be final,  conclusive and binding on the Company, the
       Rights Agent, the holders of the Rights and all other parties,  and (y) not
       subject  the Board or the  Continuing  Directors  to any  liability  to the
       holders of the Rights.
  
  Section 30. SUCCESSORS.
  
       All the covenants and provisions of this Agreement by or for the benefit of
       the  Company or the  Rights  Agent  shall bind and inure to the  benefit of
       their respective successors and assigns hereunder.
  
  Section 31.  BENEFITS  OF THIS  AGREEMENT.
  
       Nothing  in this  Agreement  shall be  construed  to give to any  person or
       corporation  other than the Company,  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 Company,  the Rights Agent and the  registered  holders of the Right
       Certificates (and, prior to the Distribution Date, the Common Shares).
  
  Section 32.  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;  PROVIDED,  HOWEVER,
       that  notwithstanding  anything in this  Agreement to the contrary,  if any
       such term,  provision,  covenant  or  restriction  is held by such court of
       authority to be invalid,  void or unenforceable  and the Board of Directors
       of the Company  determines  in its good faith  judgment  that  severing the
       invalid  language from this Agreement would adversely affect the purpose or
       effect of this  Agreement,  the right of redemption set forth in Section 23
       hereof shall be  reinstated if such right has  previously  lapsed and shall
       not expire until the close of business on the tenth day  following the date
       of such determination by the Board of Directors.
  
  Section 33.  GOVERNING  LAW.
  
       This Agreement and each Right Certificate  issued hereunder shall be deemed
       to be a contract made under the laws of the State of California 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.
  
  Section 34.  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 35. DESCRIPTIVE  HEADINGS.
  
       Descriptive headings of the several Sections of this Agreement are inserted
       for  convenience  only and  shall not  control  or affect  the  meaning  of
       construction of any of the provisions hereof.
  
       IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
  duly executed and attested, all as of the day and year first above written.
  
  
  
  
  
                                         28
  
  
  <PAGE>
  
  
                                          ILC TECHNOLOGY, INC.
  
  
  
                                           By:__________________________________
  
                                              __________________________________
                                              Title:
  
  
  
                                           SECURITY PACIFIC NATIONAL BANK
  
  
  
                                           By: _________________________________
  
                                               _________________________________
                                               Title:
  
  
  
                                         29
  
  
  <PAGE>
  
  
  
                                      EXHIBIT A
  
  
                              FORM OF RIGHT CERTIFICATE
  
  Certificate No. R-                                             _______ Rights
  
  
  
  NOT  EXERCISABLE  AFTER  SEPTEMBER 29, 1999 OR EARLIER IF REDEMPTION OR EXCHANGE
  OCCURS.  THE RIGHTS ARE SUBJECT TO  REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
  ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
  
  
  
                                  RIGHT CERTIFICATE
  
                                ILC TECHNOLOGY, INC.
  
       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 September 29, 1989 (the "Rights  Agreement"),
  between ILC Technology,  Inc., a California  corporation  (the  "Company"),  and
  Security  Pacific  National  Bank (the  "Rights  Agent"),  to purchase  from the
  Company at any time after the Distribution  Date (as such term is defined in the
  Rights  Agreement) and prior to 5:00 P.M., San Francisco  time, on September 29,
  1999 at the  principal  office  of the  Rights  Agent,  or at the  office of its
  successor as Rights Agent, one fully paid non-assessable  share of Common Stock,
  no par value (the "Common Shares"),  of the Company,  at a purchase price of $30
  per Common  Share (the  "Purchase  Price")  payable  as  provided  in the Rights
  Agreement,  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 Common Shares 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  ________________,  199___, based on the
  Common Shares as constituted at such date. As provided in the Rights  Agreement,
  the Purchase  Price and the number of Common Shares which may be purchased  upon
  the exercise of the Rights  evidenced by this Right  Certificate  are subject to
  modifications and adjustment upon the happening of certain events.
  
       This Right  Certificate  is subject  to all of the  terms,  provisions  and
  conditions of the Rights Agreement,  which terms,  provisions and conditions 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 Company and the holders of the Right  Certificates.  Copies of
  the  Rights  Agreement  are on file at the  principal  executive  offices of the
  Company and the above-mentioned offices of the Rights Agent.
  
  
                                         30
  
  <PAGE>
  
       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
  Common  Shares  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  (i) may be redeemed by the Company at a  redemption  price of
  $.01 per Right or (ii) may be exchanged in whole or in part for Common Shares.
  
       No  fractional  Common Shares will be issued upon the exercise of any Right
  or Rights evidenced hereby,  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 Common Shares or of any
  other  securities  of the  Company  which  may at any  time be  issuable  on the
  exercise hereof,  nor shall anything contained in the Rights Agreement or herein
  by construed to confer upon the holder  hereof,  as such, any of the rights of a
  shareholder of the Company or any right to vote for the election of directors or
  upon any matter submitted to shareholders at any meeting thereof,  or to give or
  withhold consent to any corporation  action, or to receive notice of meetings or
  other  actions  affecting   shareholders  (except  as  provided  in  the  Rights
  Agreement), or to receive dividends 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.
  
       WITNESS the facsimile  signature of the proper  officers of the Company and
  its corporate seal. Dated as of __________________, 199__.
  
  ATTEST:                                      ILC TECHNOLOGY, INC.
  
  
  
  _______________________________              By: ______________________________
  
  
  
  Countersigned:
  
  
  _______________________________
  
  
  By: ___________________________
           Authorized Signature
  
  
  
  
  
                                         31
  
  <PAGE>
  
  
                      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  _____________________________________________  this  Right
  Certificate,  (Please  print name and address of  transferee)  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  Company,  with  full  power of
  substitution.
  
  Dated:____________________________, 19__
  
  
                                                 _________________________________
                                                 Signature
  
  
  
  Signature Guaranteed:
  
       Signatures  must be  guaranteed  by a member firm of a registered  national
  securities exchange, a member of the National Association of Securities Dealers,
  Inc., or a commercial bank or trust company having an office or correspondent in
  the United States.
  
  
  
       The undersigned  hereby  certifies that the Rights  evidenced by this Right
  Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
  Associate thereof (as defined in the Rights Agreement).
  
  
                                                 _________________________________
                                                 Signature
  
  
  
  
  
  
  
  
                                          32
  
  
  <PAGE>
  
  
  
               Form of Reverse Side of Right Certificate -- continued
  
                            FORM OF ELECTION TO PURCHASE
  
                        (To be executed if holder desires to
                          exercise the Right Certificate.)
  
  To ILC TECHNOLOGY, INC.:
  
       The undersigned hereby irrevocably elects to exercise _____________________
  Rights  represented  by this Right  Certificate  to purchase  the Common  Shares
  issuable  upon the exercise of such Rights and requests  that  certificates  for
  such Common Shares 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)
  
  
  
  
  
  Dated: ____________________________, 19__.
  
  
  
                                            ______________________________________
                                            Signature
  
  
  
  Signature Guaranteed:
  
       Signatures  must be  guaranteed  by a member firm of a registered  national
  securities exchange, a member of the National Association of Securities Dealers,
  Inc., or a commercial bank or trust company having an office or correspondent in
  the United States.
  
                                          33
  
  
  <PAGE>
  
  
               Form of Reverse Side of Right Certificate -- continued
  
       The undersigned  hereby  certifies that the Rights  evidenced by this Right
  Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
  Associate thereof (as defined in the Rights Agreement).
  
  
  
  
                                               __________________________________
                                               Signature
  
  
  
  
  
  
  
                                       NOTICE
  
  
       The  signature in the  foregoing  Forms of  Assignment  and  Election  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
  Company  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 defined in the Rights  Agreement) and such  Assignment of
  Election to Purchase will not be honored.
  
  
  
                                         34
  
  
  <PAGE>
  
  
  
                                      EXHIBIT B
  
                     SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
  
  
       In 1989,  the Board of Directors of ILC  Technology,  Inc. (the  "Company")
  declared and paid a dividend of one common share  purchase right (a "Right") for
  each outstanding share of common stock, no par value (the "Common  Shares"),  of
  the Company.  Each Right  entitles the  registered  holder to purchase  from the
  Company  one Common  Share at a price of $55 per share (the  "Purchase  Price"),
  subject to adjustment.  The description and terms of the Rights are set forth in
  a Rights  Agreement  dated as of  September  29,  1989  between  the Company and
  Security  Pacific National Bank, as Rights Agent (with  ChaseMellon  Shareholder
  Services  L.L.C.  currently  serving as Rights Agent) (the "Rights  Agent"),  as
  amended as of February 25, 1997 (the "Rights Agreement").
  
       Until the earlier to occur of the close of business on (i) 10 days (or such
  later date as may be determined by action of the Board of Directors) following a
  public  announcement that a person or group of affiliated or associated  persons
  (an "Acquiring Person") have acquired beneficial ownership of 15% or more of the
  outstanding Common Shares or (ii) 10 business days (or such later date as may be
  determined by action of the Board of Directors)  following the  commencement of,
  or  announcement  of an intention to make, a tender offer or exchange  offer the
  consummation  of which would result in the  beneficial  ownership by a person or
  group of 15% or more of such  outstanding  Common  Shares  (the  earlier of such
  dates being called the "Distribution Date"), the Rights will be evidenced,  with
  respect to any of the Common Shares  certificates  outstanding  as of the Record
  Date, by such Common Share  certificate  regardless of whether such  certificate
  has a copy of this Summary of Rights attached thereto.
  
       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  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
  such separate Right Certificates alone will evidence the Rights.
  
       The Rights are not exercisable until the Distribution Date. The rights will
  expire on December 31, 2006 (the "Final Expiration Date"), unless the Rights are
  earlier redeemed or exchanged by the Company, in each case, as described below.
  
       The  Purchase  Price  payable,  and the  number of  Common  Shares or other
  securities  or  property  issuable,  upon  exercise of the Rights are subject to
  adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
  dividend  on, or a subdivision,  combination or reclassification  of, the Common
  
  
                                        35
  <PAGE>
  
  
  Shares (ii) upon the grant to holders of the Common Shares of certain  rights or
  warrants to subscribe for or purchase  Common  Shares at a price,  or securities
  convertible  into Common  Shares  with a  conversion  price,  less than the then
  current  market  price of the Common  Shares or (iii) upon the  distribution  to
  holders of the Common Shares of evidences of indebtedness  or assets  (excluding
  regular  periodic cash  dividends  paid out of earnings or retained  earnings or
  dividends payable in Common Shares) or of subscription rights or warrants (other
  than those referred to above).
  
       The number of outstanding  Rights and the number of Common Shares  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 a subdivision,  consolidation  or combination of the
  Common Shares occurring, in any such case, prior to the Distribution Date.
  
       Common  Shares  purchasable  upon  exercise  of  the  Rights  will  not  be
  redeemable.
  
       In the event that the  Company is  acquired  in a merger or other  business
  combination  transaction  or 50% or more of its  consolidated  assets or earning
  power are sold after a person becomes an Acquiring Person, proper provision will
  be made so that each holder of Right will  thereafter have the right to receive,
  upon the exercise thereof at the then current exercise price of the Right,  that
  number of shares of common stock of the  acquiring  company which at the time of
  such transaction will have a market value of two times the exercise price of the
  Right.  In the event that (i) any person or group of  affiliated  or  associated
  persons becomes the beneficial  owner of 15% or more of the  outstanding  Common
  Shares (unless such person first acquires 15% or more of the outstanding  Common
  Shares by a purchase pursuant to a tender offer for all of the Common Shares for
  cash, which purchase increases such person's beneficial ownership to 90% or more
  of the outstanding  Common Shares),  (ii) an Acquiring  Person engages in one or
  more  "self-dealing"  transactions as set forth in the Rights Agreement or (iii)
  during  such  time  as  there  is  an  Acquiring   Person,   there  shall  be  a
  reclassification  of securities or a  recapitalization  or reorganization of the
  Company or other  transaction  or series of  transactions  involving the Company
  which has the effect of  increasing by more than 3% the  proportionate  share of
  the outstanding  shares of any class of equity  securities of the Company or any
  of its subsidiaries beneficially owned by the Acquiring Person, proper provision
  shall be made so that each  holder of a Right,  other than  Rights  beneficially
  owned by the Acquiring  Person (which will thereafter be void),  will thereafter
  have the right to receive upon exercise that number of Common Shares (or, in the
  event  that  there  are  insufficient   authorized  Common  Shares,   substitute
  consideration such as cash,  property or other securities of the Company) have a
  market value of two times the exercise price of the Right.
  
       At any time  after the  occurrence  of any of the events  described  in the
  preceding  paragraph and prior to the acquisition by such person or group of 50%
  or more of the outstanding  Common Shares, the Board of Directors of the Company
  may exchange  the Rights  (other than Rights owned by such person or group which
  have become void), in whole or in part, at an exchange ratio of one Common Share
  per Right (subject to adjustment).
  
       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 Common  Shares will  be  issued and  in  lieu
  
  
                                         36
  
  
  <PAGE>
  
  thereof,  an  adjustment  in cash will be made based on the market  price of the
  Common Shares on the last trading day prior to the date of exercise.
  
       At any time prior to 10 days (or such later  date as may be  determined  by
  action of the Board of Directors)  following a public announcement that a person
  has become an Acquiring Person, the Board of Directors of the Company may redeem
  the  Rights  in  whole,  but not in  part,  at a price of $.01  per  Right  (the
  "Redemption  Price").  After the  redemption  period has expired,  the Company's
  rights of redemption  may be reinstated  if, prior to any event  triggering  the
  right to receive upon exercise of a Right that number of Common Shares or shares
  of an acquiring company having a market value of two times the exercise price of
  the Right, an Acquiring  Person reduces its beneficial  ownership to 15% or less
  of the outstanding  Common Shares in a transaction or series of transactions not
  involving the Company.  The  redemption  of the rights may be made  effective at
  such time,  on such basis and with such  conditions as the Board of Directors in
  its sole  discretion  may  establish.  Immediately  upon any  redemption  of the
  Rights,  the right to exercise the Rights will  terminate  and the only right of
  the holders of Rights will be to receive the Redemption Price.
  
       The terms of the Rights may be  amended  by the Board of  Directors  of the
  Company without the consent of the holders of the Rights, including an amendment
  to lower certain thresholds  described above to not less than the greater of (i)
  any percentage  greater than the largest  percentage of the  outstanding  Common
  Shares then known to the Company to be beneficially owned by any person or group
  of  affiliated or  associated  persons and (ii) 15%,  except that from and after
  such time as any  person  becomes  an  Acquiring  Person no such  amendment  may
  adversely affect the interests of the holders of the Rights.
  
       Until a Right is  exercised,  the holder of a Right will not,  by reason of
  being such a holder,  have rights as a  shareholder  of the Company,  including,
  without limitation, the right to vote or to receive dividends.
  
       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 filed
  October 2, 1989 and amended by an amendment to such registration statement filed
  March 7, 1997. A copy of the Rights  Agreement is available  free of charge from
  the  Company.  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.
  
  
  
                                          37
  
  
  <PAGE>
  
  
                                     EXHIBIT C
  
  
  Sunnyvale, California - September 21, 1989.
  
  The Board of Directors of ILC  Technology,  Inc.  (NASDAQ:ILCT)  announced today
  that it has  adopted a  Shareholder  Rights  Plan and  retained  the  investment
  banking firm of Robert  Fleming  Pacific Inc. to assist the Board in  evaluating
  strategic  alternatives for the Company.  Such alternatives include the possible
  divestiture of the Company's United Detector  Technology (UDT) division based in
  Hawthorne, California and El Paso, Texas.
  
  The  Rights  Plan is similar to those  adopted  by many other  companies  and is
  triggered by any person or group  acquiring 20% or more of the Company's  common
  stock or the  announcement  of a tender  offer for 30% or more of the  Company's
  stock. The Plan gives  shareholders the right to purchase  additional  shares of
  the Company's common stock or shares of an acquiring  company at half the market
  price. The Rights Plan is intended to encourage  interested parties to bring any
  bona  fide  acquisition  plans  directly  to the  Board  in  order  to  maximize
  shareholder value.
  
  The Board also authorized  severance  agreements for certain key managers in the
  event of a change  of  control  of the  Company  or the  divestiture  of a major
  business.  Severance pay, in most cases,  will be six months and, in some cases,
  12 months. The  change-of-control  severance agreements are intended to maintain
  employment incentives for key managers during any negotiation process.
  
  Henry C. Baumgartner,  Chairman of the Board,  stated,  "The Board believes that
  the  retention  of  Flemings,   the  adoption  of  the  Rights  Plan,   and  the
  change-of-control severance agreements are helpful tools in our on-going efforts
  to protect and improve the value of ILCT shares."
  
  ILC Technology,  Inc.  incurred second and third quarter losses  associated with
  its  UDT  division,   which  manufactures  light  sensing  and   opto-electronic
  components and instruments. The ILC Light Source division, located in Sunnyvale,
  California, has grown profitably during the same period.
  
  For further information:
  
  Henry C. Baumgartner
  ILC Technology, Inc.
  
  399 Java Drive
  Sunnyvale, California 94089
  Telephone (408) 745-7900
  
  
                                         38
  
  
  
  <PAGE>
                                      EXHIBIT 2
  
  
                         FIRST AMENDMENT TO RIGHTS AGREEMENT
  
  
       This  First   Amendment,   dated  as  of  February  25,  1997  (the  "First
  Amendment"),  is to the Rights  Agreement  dated as of  September  29, 1989 (the
  "Agreement"),  between ILC  Technology,  Inc.,  a  California  corporation  (the
  "Company")  and  ChaseMellon  Shareholder  Services,  L.L.C.,  as  successor  to
  Security Pacific National Bank (the "Rights Agent").
  
       WHEREAS,  on  November  21,  1996,  the Board of  Directors  of the Company
  determined that it is in the best interests of the Company and its  shareholders
  to amend the  Agreement  in order to increase the  "Purchase  Price," as defined
  pursuant  to the terms of the  Agreement,  from $15.00 to $55.00  (after  giving
  effect  to the  Company's  two-for-one  stock  split  declared  by the  Board of
  Directors of the Company in 1991), to extend the Final Expiration Date under the
  Agreement  to  December  31,  2006  and to  reduce  certain  percentages  in the
  definition of "Acquiring  Person" and elsewhere to 15%, and the Rights Agent has
  agreed to such amendments; and
  
       WHEREAS, the Company and the Rights Agent have determined that, pursuant to
  Section 27 of the  Agreement,  the  Agreement may be amended as set forth herein
  without the approval of the holders of the Rights (as defined in the Agreement).
  
       NOW, THEREFORE,  in consideration of the premises and the mutual agreements
  set forth, the Agreement is hereby amended as follows:
  
       1.   Section 1(a) of the  Agreement is hereby  amended to change 20% to 15%
            throughout  such  Section,  so that such Section is hereby  amended to
            read in its entirety as follows:
  
            "(a) "Acquiring  Person"  shall  mean  any  Person  (as  such  term is
                 hereinafter  defined) who or which,  together with all Affiliates
                 and  Associates (as such terms are  hereinafter  defined) of such
                 Person,   shall  be  the  Beneficial   Owner  (as  such  term  is
                 hereinafter  defined)  of 15% more of the  Common  Shares  of the
                 Company then outstanding,  but shall not include the Company, any
                 Subsidiary (as such term is hereinafter  defined) of the Company,
                 any employee  benefit plan of the Company or of any Subsidiary of
                 the  Company,  or of any  entity  holding  Common  Shares  for or
                 pursuant  to the  terms of any  such  plan.  Notwithstanding  the
                 foregoing,  no Person shall become an  "Acquiring  Person" as the
                 result of an  acquisition  of Common Shares by the Company which,
                 by  reducing  the  number of shares  outstanding,  increases  the
                 proportionate  number of shares beneficially owned by such Person
                 to  15% or  more  of  the  Common  Shares  of  the  Company  then
                 outstanding; provided, however, that if a Person shall become the
                 Beneficial  Owner  of 15% or more  of the  Common  Shares  of the
                 Company  then  outstanding  by reason of share  purchases  by the
                 Company and shall,  after such share  purchases  by the  Company,
                 become the Beneficial  Owner of any  additional  Common Shares of
                 the Company, then such Person shall be deemed to be an "Acquiring
                 Person"."
  
  
                                         40
    <PAGE>
  
  
  
            2.   Section 1(k) of the  Agreement  is hereby  amended to read in its
                 entirety as follows:
  
                 (k)  "Final Expiration Date" shall mean December 31, 2006.
  
            3.   Section 1(r) of the Agreement is hereby  amended to change 30% to
                 15%  throughout  such  Section,  so that such  Section  is hereby
                 amended to read in its entirety as follows:
  
                 "(r) A "Trigger  Event" shall be deemed to have occurred upon any
                      Person  (other  than  the  Company,  any  Subsidiary  of the
                      Company,  any employee benefit plan of the Company or of any
                      Subsidiary of the Company,  or of any entity  holding Common
                      Shares  for or  pursuant  to the  terms of any  such  plan),
                      together with all  Affiliates and Associates of such Person,
                      becoming the  Beneficial  Owner of 15% or more of the Common
                      Shares of the Company then outstanding.  Notwithstanding the
                      foregoing, no Trigger Event shall be deemed to have occurred
                      as the  result of an  acquisition  of  Common  Shares by the
                      Company which, by reducing the number of shares outstanding,
                      increases the  proportionate  number of shares  beneficially
                      owned by such Person to 15% or more of the Common  Shares of
                      the Company then outstanding; provided, however, that in the
                      even that a Person shall become the Beneficial  Owner of 15%
                      or more of the Common Shares of the Company then outstanding
                      by reason of share purchases by the Company, a Trigger Event
                      shall be deemed to have  occurred  upon such  Person,  after
                      such share purchases by the Company, becoming the Beneficial
                      Owner of any additional Common Shares of the Company."
  
            4.   Section  3(a) of the  agreement  is hereby  amended to delete the
                 reference therein to "30%" and to insert in lieu thereof "15%."
  
            5.   Section 7(b) of the  agreement  is hereby  amended to read in its
                 entirety as follows  (the effect of this  amendment  is to change
                 the Purchase  Price as of the date of this First  Amendment  from
                 $15 to $55):
  
                 "(b) The  Purchase  Price for each Common  Share  pursuant to the
                      exercise of a Right shall be $55 as of the date of the First
                      Amendment to this Agreement,  shall be subject to adjustment
                      from time to time as  provided  in Sections 11 and 13 hereof
                      and shall be payable in lawful money of the United States of
                      America in accordance with paragraph (c) below."
  
            6.   Section  11(a)(i) of the  Agreement is hereby  amended to replace
                 "the date of this Agreement",  in the second line of such Section
                 with "the date of the First Amendment to this Agreement."
  
            7.   The form of Right Certificate attached as Exhibit A to the Rights
                 Agreement is hereby replaced in its entirety by the form of Right
                 Certificate attached as Exhibit A hereto.
  
            8.   As promptly as practicable  following the date of this Amendment,
                 the Company  shall cause the legend on the  certificates  for the
                 Common Stock referring to the Rights Agreement to be supplemented
                 so as to make reference to this Amendment.
  
  
  
                                          41
  
  
  <PAGE>
  
  
  
            9.   This Amendment  shall be limited solely to the matters  expressly
                 set forth herein and shall not (a)  prejudice any right or rights
                 which the Company may now have or may in the future have under or
                 in connection with the Agreement or any instruments or agreements
                 referred to therein or (b) except to the extent  expressed as set
                 forth  herein,  modify  the  Agreement  or  any  Rights,  or  any
                 instruments or agreements referred to therein.
  
            10.  Unless defined herein,  all defined terms shall have the meanings
                 provided in the Agreement.
  
            11.  This  Amendment  shall be deemed to be a contract  made under the
                 laws of the State of  California  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.
  
            12.  This Amendment 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. Signatures are deemed acceptable
                 from the facsimile transmission.
  
            13.  This Amendment shall be for the sole and exclusive benefit of the
                 Company,  the  Rights  Agent and the  registered  holders  of the
                 Rights  Certificates  (and, prior to the  Distribution  Date, the
                 Common  Shares).  Nothing in this Agreement shall be construed to
                 give any person other than the Company,  the Rights Agent and the
                 registered holders of the Rights  Certificates (and, prior to the
                 Distribution  Date,  the Common  Shares)  any legal or  equitable
                 right, remedy or claim under this Amendment.
  
       IN WITNESS  WHEREOF,  the parties  have caused  this  Amendment  to be duly
  executed and their respective corporate seals to be hereto affixed and attested,
  all as of the date and year first above written.
  
  
  ILC TECHNOLOGY, INC.                    CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
  
  
  By:    /s/ Ronald E. Fredianelli        By:     /s/ Asa Drew
  ---    -------------------------        ---     ------------
  
  Name:   Ronald E. Fredianelli           Name:   Asa Drew
  
  Title:    Chief Financial Officer       Title:    Assistant Vice President
  
  
                                         42
  
  
  <PAGE>
  
  
                                      EXHIBIT A
  
                              FORM OF RIGHT CERTIFICATE
  Certificate No. R-                                          _______ Rights
  
  NOT  EXERCISABLE  AFTER  DECEMBER 31, 2006 OR EARLIER IF  REDEMPTION OR EXCHANGE
  OCCURS.  THE RIGHTS ARE SUBJECT TO  REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
  ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
  
                                  RIGHT CERTIFICATE
  
       ILC TECHNOLOGY, INC. 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 September 29,
  1989 and amended as of February ___, 1997 (the "Rights Agreement"),  between ILC
  Technology,  Inc., a California  corporation  (the  "Company"),  and ChaseMellon
  Shareholder Services,  L.L.C. (the "Rights Agent"), to purchase from the Company
  at any time after the  Distribution  Date (as such term is defined in the Rights
  Agreement) and prior to 5:00 P.M.,  San Francisco  time, on December 31, 2006 at
  the principal  office of the Rights Agent,  or at the office of its successor as
  Rights Agent, one fully paid non-assessable  share of Common Stock, no par value
  (the "Common Shares"),  of the Company,  at a purchase price of $____ per Common
  Share (the "Purchase Price") payable as provided in the Rights  Agreement,  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 Common  Shares  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 _______________,  based on the Common Shares
  as constituted at such date. As provided in the Rights  Agreement,  the Purchase
  Price and the number of Common  Shares 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.
  
       This Right  Certificate  is subject  to all of the  terms,  provisions  and
  conditions of the Rights Agreement,  which terms,  provisions and conditions 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 Company and the holders of the Right  Certificates.  Copies of
  the  Rights  Agreement  are on file at the  principal  executive  offices of the
  Company and the above-mentioned offices of the Rights Agent.
  
  
                                         43
  
  
  <PAGE>
  
  
  
       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
  Common  Shares  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  (i) may be redeemed by the Company at a  redemption  price of
  $.01 per Right or (ii) may be exchanged  in whole or in part for Common  Shares.
  
       No  fractional  Common Shares will be issued upon the exercise of any Right
  or Rights evidenced hereby,  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 Common Shares or of any
  other  securities  of the  Company  which  may at any  time be  issuable  on the
  exercise hereof,  nor shall anything contained in the Rights Agreement or herein
  be construed to confer upon the holder  hereof,  as such, any of the rights of a
  shareholder of the Company or any right to vote for the election of directors or
  upon any matter submitted to shareholders at any meeting thereof,  or to give or
  withhold  consent to any corporate  action,  or to receive notice of meetings or
  other  actions  affecting   shareholders  (except  as  provided  in  the  Rights
  Agreement), or to receive dividends 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.
  
       WITNESS the facsimile  signature of the proper  officers of the Company and
  its  corporate  seal.  Dated  as  of   __________________,   19__.
  
  ATTEST:                                      ILC TECHNOLOGY, INC.
  
  
  
  ___________________________________          By:   ____________________________
  
  
  
  
  Countersigned:
  
  
  ___________________________________
  
  
  
  By:  ______________________________
       Authorized Signature
  
  
  
  
  
                                         44
  
  
  <PAGE>
  
  
  
                      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  _____________________________________________  this  Right
  Certificate,  (Please  print name and address of  transferee)
  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  Company,  with full
  power of substitution.
  
  
  Dated:  _____________________________, 19__
  
  
  
                                               __________________________________
                                               Signature
  
  
  
  Signature Guaranteed:
  
       Signatures  must be  guaranteed  by a member firm of a registered  national
  securities exchange, a member of the National Association of Securities Dealers,
  Inc., or a commercial bank or trust company having an office or correspondent in
  the United States.
  
  
  
       The undersigned  hereby  certifies that the Rights  evidenced by this Right
  Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
  Associate thereof (as defined in the Rights Agreement).
  
  
  
                                               __________________________________
                                               Signature
  
  
  
  
                                         45
  <PAGE>
  
  
  
  
  
               Form of Reverse Side of Right Certificate -- continued
  
                            FORM OF ELECTION TO PURCHASE
  
                        (To be executed if holder desires to
                          exercise the Right Certificate.)
  
  To ILC TECHNOLOGY, INC.:
  
       The undersigned hereby irrevocably elects to exercise _____________________
  Rights  represented  by this Right  Certificate  to purchase  the Common  Shares
  issuable  upon the exercise of such Rights and requests  that  certificates  for
  such Common Shares 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)
  
  
  
  
  
  Dated: _________________________, 19__.
  
  
  
                                          _______________________________________
                                          Signature
  
  
  
  Signature Guaranteed:  ________________________________________________________
  
       Signatures  must be  guaranteed  by a member firm of a registered  national
  securities exchange, a member of the National Association of Securities Dealers,
  Inc., or a commercial bank or trust company having an office or correspondent in
  the United States.
  
                                         46
  
  
  <PAGE>
  
  
               Form of Reverse Side of Right Certificate -- continued
  
       The undersigned  hereby  certifies that the Rights  evidenced by this Right
  Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
  Associate thereof (as defined in the Rights Agreement).
  
  
  
                                               __________________________________
                                               Signature
  
  
  
  
  
                                       NOTICE
                                       ------
  
       The  signature in the  foregoing  Forms of  Assignment  and  Election  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
  Company  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 defined in the Rights  Agreement) and such  Assignment of
  Election to Purchase will not be honored.
  
  
  
                                          47
  
  
  <PAGE>
  
  
  
  
                                      EXHIBIT B
                                      ---------
  
                     SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
  
  
       In 1989,  the Board of Directors of ILC  Technology,  Inc. (the  "Company")
  declared and paid a dividend of one common share  purchase right (a "Right") for
  each outstanding share of common stock, no par value (the "Common  Shares"),  of
  the Company.  Each Right  entitles the  registered  holder to purchase  from the
  Company  one Common  Share at a price of $55 per share (the  "Purchase  Price"),
  subject to adjustment.  The description and terms of the Rights are set forth in
  a Rights  Agreement  dated as of  September  29,  1989  between  the Company and
  Security  Pacific National Bank, as Rights Agent (with  ChaseMellon  Shareholder
  Services  L.L.C.  currently  serving as Rights Agent) (the "Rights  Agent"),  as
  amended as of February 25, 1997 (the "Rights Agreement").
  
       Until the earlier to occur of the close of business on (i) 10 days (or such
  later date as may be determined by action of the Board of Directors) following a
  public  announcement that a person or group of affiliated or associated  persons
  (an "Acquiring Person") have acquired beneficial ownership of 15% or more of the
  outstanding Common Shares or (ii) 10 business days (or such later date as may be
  determined by action of the Board of Directors)  following the  commencement of,
  or  announcement  of an intention to make, a tender offer or exchange  offer the
  consummation  of which would result in the  beneficial  ownership by a person or
  group of 15% or more of such  outstanding  Common  Shares  (the  earlier of such
  dates being called the "Distribution Date"), the Rights will be evidenced,  with
  respect to any of the Common Shares  certificates  outstanding  as of the Record
  Date, by such Common Share  certificate  regardless of whether such  certificate
  has a copy of this Summary of Rights attached thereto.
  
       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  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
  such separate Right Certificates alone will evidence the Rights.
  
       The Rights are not exercisable until the Distribution Date. The rights will
  expire on December 31, 2006 (the "Final Expiration Date"), unless the Rights are
  earlier redeemed or exchanged by the Company, in each case, as described below.
  
       The  Purchase  Price  payable,  and the  number of  Common  Shares or other
  securities  or  property  issuable,  upon  exercise of the Rights are subject to
  adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
  dividend on, or a subdivision, combination  or  reclassification  of, the Common
  
  
                                         48
  <PAGE>
  
  
  
  Shares (ii) upon the grant to holders of the Common Shares of certain  rights or
  warrants to subscribe for or purchase  Common  Shares at a price,  or securities
  convertible  into Common  Shares  with a  conversion  price,  less than the then
  current  market  price of the Common  Shares or (iii) upon the  distribution  to
  holders of the Common Shares of evidences of indebtedness  or assets  (excluding
  regular  periodic cash  dividends  paid out of earnings or retained  earnings or
  dividends payable in Common Shares) or of subscription rights or warrants (other
  than those referred to above).
  
       The number of outstanding  Rights and the number of Common Shares  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 a subdivision,  consolidation  or combination of the
  Common Shares occurring, in any such case, prior to the Distribution Date.
  
       Common  Shares  purchasable  upon  exercise  of  the  Rights  will  not  be
  redeemable.
  
       In the event that the  Company is  acquired  in a merger or other  business
  combination  transaction  or 50% or more of its  consolidated  assets or earning
  power are sold after a person becomes an Acquiring Person, proper provision will
  be made so that each holder of Right will  thereafter have the right to receive,
  upon the exercise thereof at the then current exercise price of the Right,  that
  number of shares of common stock of the  acquiring  company which at the time of
  such transaction will have a market value of two times the exercise price of the
  Right.  In the event that (i) any person or group of  affiliated  or  associated
  persons becomes the beneficial  owner of 15% or more of the  outstanding  Common
  Shares (unless such person first acquires 15% or more of the outstanding  Common
  Shares by a purchase pursuant to a tender offer for all of the Common Shares for
  cash, which purchase increases such person's beneficial ownership to 90% or more
  of the outstanding  Common Shares),  (ii) an Acquiring  Person engages in one or
  more  "self-dealing"  transactions as set forth in the Rights Agreement or (iii)
  during  such  time  as  there  is  an  Acquiring   Person,   there  shall  be  a
  reclassification  of securities or a  recapitalization  or reorganization of the
  Company or other  transaction  or series of  transactions  involving the Company
  which has the effect of  increasing by more than 3% the  proportionate  share of
  the outstanding  shares of any class of equity  securities of the Company or any
  of its subsidiaries beneficially owned by the Acquiring Person, proper provision
  shall be made so that each  holder of a Right,  other than  Rights  beneficially
  owned by the Acquiring  Person (which will thereafter be void),  will thereafter
  have the right to receive upon exercise that number of Common Shares (or, in the
  event  that  there  are  insufficient   authorized  Common  Shares,   substitute
  consideration such as cash,  property or other securities of the Company) have a
  market value of two times the exercise price of the Right.
  
       At any time  after the  occurrence  of any of the events  described  in the
  preceding  paragraph and prior to the acquisition by such person or group of 50%
  or more of the outstanding  Common Shares, the Board of Directors of the Company
  may exchange  the Rights  (other than Rights owned by such person or group which
  have become void), in whole or in part, at an exchange ratio of one Common Share
  per Right (subject to adjustment).
  
       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  Common Shares will be issued and in lieu
  thereof,  an  adjustment  in cash will be made based on the market  price of the
  Common Shares on the last trading day prior to the date of exercise.
  
  
                                        49
  <PAGE>
  
       At any time prior to 10 days (or such later  date as may be  determined  by
  action of the Board of Directors)  following a public announcement that a person
  has become an Acquiring Person, the Board of Directors of the Company may redeem
  the  Rights  in  whole,  but not in  part,  at a price of $.01  per  Right  (the
  "Redemption  Price").  After the  redemption  period has expired,  the Company's
  rights of redemption  may be reinstated  if, prior to any event  triggering  the
  right to receive upon exercise of a Right that number of Common Shares or shares
  of an acquiring company having a market value of two times the exercise price of
  the Right, an Acquiring  Person reduces its beneficial  ownership to 15% or less
  of the outstanding  Common Shares in a transaction or series of transactions not
  involving the Company.  The  redemption  of the rights may be made  effective at
  such time,  on such basis and with such  conditions as the Board of Directors in
  its sole  discretion  may  establish.  Immediately  upon any  redemption  of the
  Rights,  the right to exercise the Rights will  terminate  and the only right of
  the holders of Rights will be to receive the Redemption Price.
  
       The terms of the Rights may be  amended  by the Board of  Directors  of the
  Company without the consent of the holders of the Rights, including an amendment
  to lower certain thresholds  described above to not less than the greater of (i)
  any percentage  greater than the largest  percentage of the  outstanding  Common
  Shares then known to the Company to be beneficially owned by any person or group
  of  affiliated or  associated  persons and (ii) 15%,  except that from and after
  such time as any  person  becomes  an  Acquiring  Person no such  amendment  may
  adversely affect the interests of the holders of the Rights.
  
       Until a Right is  exercised,  the holder of a Right will not,  by reason of
  being such a holder,  have rights as a  shareholder  of the Company,  including,
  without limitation, the right to vote or to receive dividends.
  
       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 filed
  October 2, 1989 and amended by an amendment to such registration statement filed
  March 10, 1997. A copy of the Rights Agreement is available  free of charge from
  the  Company.  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.
  
   
  
  
  
                                        50
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "FORM 8-K", "secsgml_size_bytes": 197478}]
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text: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                               Current Report Pursuant
                            to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934
  
         Date of Report (Date of Earliest Event Reported): FEBRUARY 25, 1997
  
                                ILC TECHNOLOGY, INC.
               (Exact name of Registrant as Specified in its Charter)
  
                                     CALIFORNIA
                   (State or Other Jurisdiction of Incorporation)
  
             0-11360                                 94-1655721
  (Commission File Number)             (I.R.S. Employer Identification Number)
  
                     399 JAVA DRIVE, SUNNYVALE, CALIFORNIA 94089
                      (Address of Principal Executive Offices)
  
                                   (408) 745-7900
                (Registrant's Telephone Number, Including Area Code)
  ITEM 5: OTHER EVENTS
  
       In 1989,  the Board of Directors of ILC  Technology,  Inc. (the  "Company")
  declared and paid a dividend of one common share  purchase right (a "Right") for
  each outstanding share of common stock, no par value (the "Common  Shares"),  of
  the Company.  Each Right  entitles the  registered  holder to purchase  from the
  Company  one Common  Share at a price of $55 per share (the  "Purchase  Price"),
  subject to adjustment.  The description and terms of the Rights are set forth in
  a Rights  Agreement  dated as of  September  29,  1989  between  the Company and
  Security  Pacific National Bank, as Rights Agent (with  ChaseMellon  Shareholder
  Services  L.L.C.  currently  serving as Rights Agent) (the "Rights  Agent"),  as
  amended as of February 25, 1997 (the "Rights Agreement").
  
       Until the earlier to occur of the close of business on (i) 10 days (or such
  later date as may be determined by action of the Board of Directors) following a
  public  announcement that a person or group of affiliated or associated  persons
  (an "Acquiring Person") have acquired beneficial ownership of 15% or more of the
  outstanding Common Shares or (ii) 10 business days (or such later date as may be
  determined by action of the Board of Directors)  following the  commencement of,
  or  announcement  of an intention to make, a tender offer or exchange  offer the
  consummation  of which would result in the  beneficial  ownership by a person or
  group of 15% or more of such  outstanding  Common  Shares  (the  earlier of such
  dates being called the "Distribution Date"), the Rights will be evidenced,  with
  respect to any of the Common Shares  certificates  outstanding  as of the Record
  Date, by such Common Share  certificate  regardless of whether such  certificate
  has a copy of this Summary of Rights attached thereto.
  
       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  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
  such separate Right Certificates alone will evidence the Rights.
  
       The Rights are not exercisable until the Distribution Date. The rights will
  expire on December 31, 2006 (the "Final Expiration Date"), unless the Rights are
  earlier redeemed or exchanged by the Company, in each case, as described below.
  
       The  Purchase  Price  payable,  and the  number of  Common  Shares or other
  securities  or  property  issuable,  upon  exercise of the Rights are subject to
  adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
  dividend on, or a subdivision,  combination or  reclassification  of, the Common
  Shares (ii) upon the grant to holders of the Common Shares of certain  rights or
  
                                         2
  warrants to subscribe for or purchase  Common  Shares at a price,  or securities
  convertible  into Common  Shares  with a  conversion  price,  less than the then
  current  market  price of the Common  Shares or (iii) upon the  distribution  to
  holders of the Common Shares of evidences of indebtedness  or assets  (excluding
  regular  periodic cash  dividends  paid out of earnings or retained  earnings or
  dividends payable in Common Shares) or of subscription rights or warrants (other
  than those referred to above).
  
       The number of outstanding  Rights and the number of Common Shares  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 a subdivision,  consolidation  or combination of the
  Common Shares occurring, in any such case, prior to the Distribution Date.
  
       Common  Shares  purchasable  upon  exercise  of  the  Rights  will  not  be
  redeemable.
  
       In the event that the  Company is  acquired  in a merger or other  business
  combination  transaction  or 50% or more of its  consolidated  assets or earning
  power are sold after a person becomes an Acquiring Person, proper provision will
  be made so that each holder of Right will  thereafter have the right to receive,
  upon the exercise thereof at the then current exercise price of the Right,  that
  number of shares of common stock of the  acquiring  company which at the time of
  such transaction will have a market value of two times the exercise price of the
  Right.  In the event that (i) any person or group of  affiliated  or  associated
  persons becomes the beneficial  owner of 15% or more of the  outstanding  Common
  Shares (unless such person first acquires 15% or more of the outstanding  Common
  Shares by a purchase pursuant to a tender offer for all of the Common Shares for
  cash, which purchase increases such person's beneficial ownership to 90% or more
  of the outstanding  Common Shares),  (ii) an Acquiring  Person engages in one or
  more  "self-dealing"  transactions as set forth in the Rights Agreement or (iii)
  during  such  time  as  there  is  an  Acquiring   Person,   there  shall  be  a
  reclassification  of securities or a  recapitalization  or reorganization of the
  Company or other  transaction  or series of  transactions  involving the Company
  which has the effect of  increasing by more than 3% the  proportionate  share of
  the outstanding  shares of any class of equity  securities of the Company or any
  of its subsidiaries beneficially owned by the Acquiring Person, proper provision
  shall be made so that each  holder of a Right,  other than  Rights  beneficially
  owned by the Acquiring  Person (which will thereafter be void),  will thereafter
  have the right to receive upon exercise that number of Common Shares (or, in the
  event  that  there  are  insufficient   authorized  Common  Shares,   substitute
  consideration such as cash,  property or other securities of the Company) have a
  market value of two times the exercise price of the Right.
  
       At any time  after the  occurrence  of any of the events  described  in the
  preceding  paragraph and prior to the acquisition by such person or group of 50%
  or more of the outstanding  Common Shares, the Board of Directors of the Company
  may exchange  the Rights  (other than Rights owned by such person or group which
  have become void), in whole or in part, at an exchange ratio of one Common Share
  per Right (subject to adjustment).
  
       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  Common Shares will be issued and in lieu
  thereof,  an adjustment in  cash  will be made  based on the market price of the
  
                                          3
  based on the market price of the Common  Shares on the last trading day prior to
  the date of exercise.
  
       At any time prior to 10 days (or such later  date as may be  determined  by
  action of the Board of Directors)  following a public announcement that a person
  has become an Acquiring Person, the Board of Directors of the Company may redeem
  the  Rights  in  whole,  but not in  part,  at a price of $.01  per  Right  (the
  "Redemption  Price").  After the  redemption  period has expired,  the Company's
  rights of redemption  may be reinstated  if, prior to any event  triggering  the
  right to receive upon exercise of a Right that number of Common Shares or shares
  of an acquiring company having a market value of two times the exercise price of
  the Right, an Acquiring  Person reduces its beneficial  ownership to 15% or less
  of the outstanding  Common Shares in a transaction or series of transactions not
  involving the Company.  The  redemption  of the rights may be made  effective at
  such time,  on such basis and with such  conditions as the Board of Directors in
  its sole  discretion  may  establish.  Immediately  upon any  redemption  of the
  Rights,  the right to exercise the Rights will  terminate  and the only right of
  the holders of Rights will be to receive the Redemption Price.
  
       The terms of the Rights may be  amended  by the Board of  Directors  of the
  Company without the consent of the holders of the Rights, including an amendment
  to lower certain thresholds  described above to not less than the greater of (i)
  any percentage  greater than the largest  percentage of the  outstanding  Common
  Shares then known to the Company to be beneficially owned by any person or group
  of  affiliated or  associated  persons and (ii) 15%,  except that from and after
  such time as any  person  becomes  an  Acquiring  Person no such  amendment  may
  adversely affect the interests of the holders of the Rights.
  
       Until a Right is  exercised,  the holder of a Right will not,  by reason of
  being such a holder,  have rights as a  shareholder  of the Company,  including,
  without limitation, the right to vote or to receive dividends.
  
       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 filed
  October 2, 1989 and amended by an amendment to such registration statement filed
  March 10, 1997. A copy of the Rights  Agreement is available free of charge from
  the  Company.  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.
  
       The Rights may have certain  anti-takeover  effects.  The Rights will cause
  substantial  dilution to a person or group that  attempts to acquire the Company
  on terms not approved by the Company's  Board of Directors,  unless the offer is
  conditioned  on a  substantial  number of Rights being  acquired.  However,  the
  rights  should  not  interfere  with any  merger or other  business  combination
  approved  by the Board of  Directors  since the  Rights may be  redeemed  by the
  Company at a price of $0.01 per Right at any time prior to the  acquisition by a
  person or group of affiliated or associated  persons of beneficial  ownership of
  15% or more of the outstanding Common Shares.
  
       The Rights Agreement, specifying the terms of the Rights, the Form of Right
  Certificate  (Exhibit A to the Rights  Agreement)  and the  Summary of Rights to
  Purchase Common Shares (Exhibit B to  the  Rights Agreement) is filed  herein as
  
                                          4
  Exhibit 1, and the  Amendment to the Rights  Agreement,  with the Form of Rights
  Certificate  (Exhibit A to the  Amendment) and the Summary of Rights to Purchase
  Common Shares (Exhibit B to the Amendment) is filed herein as Exhibit 2. Each of
  these exhibits is incorporated herein in its entirety by reference.
  
  ITEM 7:  FINANCIAL STATEMENTS AND EXHIBITS.
  
  (a)  Financial Statements of Business Acquired.
  
       Not Applicable.
  
  (b)  Pro Forma Financial Information.
  
       Not Applicable.
  
  (c)  Exhibits.
  
       The following exhibits are filed herewith:
  
       1.   Rights  Agreement  dated  as  of  September  29,  1989,   between  ILC
            Technology,  Inc. and Security Pacific National Bank, as Rights Agent,
            which includes the Form of Right Certificate (attached as Exhibit A to
            the Rights  Agreement),  and the Summary of Rights to Purchase  Common
            Shares (attached as Exhibit B to the Rights Agreement).
  
       2.   Amendment  to Rights  Agreement  dated as of February 25, 1997 between
            ILC Technology,  Inc. and ChaseMellon  Shareholder  Services L.L.C. as
            Rights Agent,  which includes the Form of Right Certificate  (attached
            as Exhibit A to the  Amendment)  and the Summary of Rights to Purchase
            Common Shares (attached as Exhibit B to the Rights Agreement).
  
                                          5
  SIGNATURES
  
       Pursuant to the  requirements  of the Securities  Exchange Act of 1934, the
  registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
  undersigned thereunto duly authorized.
  
  Date:  March 10, 1997
  
                                          ILC TECHNOLOGY, INC.
  
                                          By: /S/ RONALD E. FREDIANELLI
                                          -----------------------------
                                          Ronald E. Fredianelli,
                                          Chief Financial Officer
  
                                          6
  INDEX TO EXHIBITS
  
  EXHIBIT NO.           DESCRIPTION OF EXHIBIT
  
  1.                    Rights  Agreement dated as of September 29, 1989,  between
                        ILC Technology,  Inc. and Security  Pacific National Bank,
                        as  Rights  Agent,   which  includes  the  Form  of  Right
                        Certificate   (attached   as   Exhibit  A  to  the  Rights
                        Agreement),  and the Summary of Rights to Purchase  Common
                        Shares (attached as Exhibit B to the Rights Agreement).
  
  2.                    Amendment  to Rights  Agreement  dated as of February  25,
                        1997  between  ILC   Technology,   Inc.  and   ChaseMellon
                        Shareholder   Services  L.L.C.  as  Rights  Agent,   which
                        includes  the  Form  of  Right  Certificate  (attached  as
                        Exhibit A to the  Amendment)  and the Summary of Rights to
                        Purchase  Common  Shares  (attached  as  Exhibit  B to the
                        Rights Agreement).
  
                                        7
  EXHIBIT 1
  
                                ILC TECHNOLOGY, INC.
  
                                        and
  
                           SECURITY PACIFIC NATIONAL BANK
  
                                    Rights Agent
  
                                  Rights Agreement
  
                           Dated as of September 29, 1989
  TABLE OF CONTENTS
                                 -----------------
                                                                        Page
                                                                        ----
  
  Section 1.     Certain Definitions..................................  1
  
  Section 2.     Appointment of Rights Agent .........................  4
  
  Section 3.     Issue of Right Certificates .........................  4
  
  Section 4.     Form of Right Certificates ..........................  6
  
  Section 5.     Countersignature and Registration ...................  6
  
  Section 6.     Transfer, Split Up, Combination and Exchange of Right
                 Certificates; Mutilated, Destroyed, Lost or Stolen
                 Rights Certificates .................................  7
  
  Section 7.     Exercise of Rights; Purchase Price; Expiration Date
                 of Rights ...........................................  7
  
  Section 8.     Cancellation and Destruction of Right Certificates ..  8
  
  Section 9.     Availability of Commmon Shares ......................  8
  
  Section 10.    Common Shares Record Date ...........................  9
  
  Section 11.    Adjustment of Purchase Price, Number of Shares or
                 Number of Rights ....................................  9
  
  Section 12.    Certificate of Adjusted Purchase Price or
                 Number of Shares .................................... 17
  
  Section 13.    Consolidation Merger or Sale or Transfer of
                 Assets or Earning Power ............................. 17
  
  Section 14.    Fractional Rights and Fractional Shares ............. 19
  
  Section 15.    Rights of Action .................................... 19
  
  Section 16.    Agreement of Right Holders .......................... 20
  
  Section 17.    Right Certificate Holder Not Deemed a
                 Shareholder ......................................... 20
  
  Section 18.    Concerning the Rights Agent ......................... 20
  
  Section 19.    Merger or Consolidation or Change of Name of
                 Rights Agent ........................................ 21
  
                                         i
  Page
  
  Section 20.    Duties of Rights Agent ..............................  21
  Section 21.    Change of Rights Agent ..............................  23
  Section 22.    Issuance of New Right Certificates ..................  24
  Section 23.    Redemption ..........................................  24
  Section 24.    Exchange ............................................  25
  Section 25.    Notice of Certain Events ............................  26
  Section 26.    Notices .............................................  26
  Section 27.    Supplements and Amendments ..........................  27
  Section 28.    Registration of Securities ..........................  27
  Section 29.    Determinations and Actions by the Board of
                 Directors ...........................................  28
  Section 30.    Successors ..........................................  28
  Section 31.    Benefits of this Agreement ..........................  28
  Section 32.    Severability ........................................  28
  Section 33.    Governing Law .......................................  28
  Section 34.    Counterparts ........................................  28
  Section 35.    Descriptive Headings ................................  29
  Signatures     .....................................................  29
  
  Exhibit A - Form of Right Certificate
  
  Exhibit B - Summary of Rights to Purchase Common Shares
  
  Exhibit C - Press Release
  
                                         ii
  RIGHTS AGREEMENT
  
       Agreement, dated as of September 29, 1989, between ILC Technology,  Inc., a
  California corporation (the "Company"),  and Security Pacific National Bank (the
  "Rights Agent").
  
       The Board of  Directors  of the  Company  has  authorized  and  declared  a
  dividend of one common  share  purchase  right (a "Right") for each Common Share
  (as  hereinafter  defined)  of the Company  outstanding  on October 2, 1989 (the
  "Record Date"),  each Right  representing the right to purchase one Common 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 and
  the Final Expiration Date (as such terms are hereinafter defined).
  
       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 (as such term is hereinafter
            defined) who or which, together with all Affiliates and Associates (as
            such  terms are  hereinafter  defined)  of such  Person,  shall be the
            Beneficial Owner (as such term is hereinafter  defined) of 20% or more
            of the Common  Shares of the Company then  outstanding,  but shall not
            include  the  Company,  any  Subsidiary  (as such term is  hereinafter
            defined) of the Company,  any employee  benefit plan of the Company or
            of any  Subsidiary  of the Company,  or of any entity  holding  Common
            Shares for or pursuant to the terms of any such plan.  Notwithstanding
            the  foregoing,  no Person shall become an  "Acquiring  Person" as the
            result of an  acquisition  of Common Shares by the Company  which,  by
            reducing the number of shares outstanding, increases the proportionate
            number of shares  beneficially  owned by such Person to 20% or more of
            the Common Shares of the Company then outstanding;  PROVIDED, however,
            that if a Person shall become the  Beneficial  Owner of 20% or more of
            the Common Shares of the Company then  outstanding  by reason of share
            purchases by the Company and shall,  after such share purchases by the
            Company,  become the Beneficial Owner of any additional  Common Shares
            of the Company,  then such Person shall be deemed to be an  "Acquiring
            Person."
  
       (b)  "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 (the
            "Exchange Act"), as in effect on the date of this Agreement.
  
       (c)  A Person shall be deemed the "Beneficial Owner" of and shall be deemed
            to "beneficially own" any securities:
  
                                          1
  (i)  which  such  Person  or  any  of  such  Person's   Affiliates  or
                 Associates beneficially owns, directly or indirectly for purposes
                 of Section  13(d) of the Exchange  Act and Rule 13d-3  thereunder
                 (or any comparable or successor law or regulation);
  
            (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  (other
                 than  customary  agreements  with and  between  underwriters  and
                 selling group members with respect to a bona fide public offering
                 of  securities),  or upon  the  exercise  of  conversion  rights,
                 exchange  rights,  rights (other than these Rights),  warrants or
                 options, or otherwise; PROVIDED, however, that a Person shall not
                 be deemed the Beneficial  Owner of, or to  beneficially  own, (1)
                 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 (2) securities which a Person or any of
                 such Person's  Affiliates or Associates may be deemed to have the
                 right to  acquire  pursuant  to any  merger or other  acquisition
                 agreement  between the Company and such Person (or one or more of
                 its Affiliates or Associates) if such agreement has been approved
                 by a majority  of the  Continuing  Directors  of the Company at a
                 time when  Continuing  Directors are in office and prior to there
                 being an Acquiring  Person;  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  arises  solely  from  a
                 revocable  proxy or consent given to such Person in response to a
                 proxy  or  consent  solicitation  made  in  accordance  with  the
                 applicable rules and regulations  promulgated  under the Exchange
                 Act; or
  
            (iii)which are  beneficially  owned,  directly or  indirectly,  by any
                 other  Person  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) for the purpose of acquiring,
                 holding, voting (except to the extent contemplated by the proviso
                 to Section  1(c)(ii)(B))  or disposing of any  securities  of the
                 Company;  PROVIDED,  however, that in no case shall an officer or
                 director  of the  Company  be  deemed  the  Beneficial  Owner  of
                 securities held of record by the trustee of any employee  benefit
                 plan of the  Company or any  Subsidiary  of the  Company  for the
                 benefit of any employee of the Company or any  Subsidiary  of the
                 Company,  other than the  officer or  director,  by reason of any
                 influence  that such officer or director may have over the voting
                 of the securities held in the plan.
  
       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 Company, 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.
  
       (d)  "Business Day" shall mean any day other than a Saturday,  a Sunday, or
            a day on  which  banking  institutions  in the  State  of New  York or
            California  are  authorized or obligated by law or executive  order to
            close.
  
                                          2
  (e)  "Close of  business"  on any given  date  shall  mean 5:00  P.M.,  San
            Francisco time, on such date; PROVIDED,  HOWEVER, that if such date is
            not a Business Day it shall mean 5:00 P.M., San Francisco time, on the
            next succeeding Business Day.
  
       (f)  "Common Shares" when used with reference to the Company shall mean the
            shares of common stock, no par value, of the Company.  "Common Shares"
            when used with  reference to any Person  other than the Company  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.
  
       (g)  "Continuing  Director"  shall  mean  (i) any  member  of the  Board of
            Directors of the Company,  while a member of the Board,  who is not an
            Acquiring Person, or an Affiliate or Associate or an Acquiring Person,
            or a representative of or member of any group (as that term is defined
            in the Exchange Act) with an Acquiring Person or of any such Affiliate
            or  Associate,  and who is a member  of the  Board on the date of this
            Agreement, or (ii) any Person who subsequently becomes a member of the
            Board, while a member of the Board, who is not an Acquiring Person, or
            an Affiliate or Associate of an Acquiring  Person, or a representative
            of or member of any group  (as that term is  defined  in the  Exchange
            Act) with an Acquiring  Person or of any such  Affiliate or Associate,
            if such Person's  nomination  for election or election to the Board is
            recommended  or  approved  by  a  majority  of  the  then   Continuing
            Directors.
  
       (h)  "Distribution  Date"  shall  have the  meaning  set forth in Section 3
            hereof.
  
       (i)  "Equivalent  Shares" shall mean preferred shares or any other class or
            series  of  capital   stock  of  the  Company  which  is  entitled  to
            participate   in   dividends   and  other   distributions,   including
            distributions  upon the liquidation,  dissolution or winding up of the
            Company,   on  a  proportional   basis  with  the  Common  Shares.  In
            calculating  the  number of any class or series of  Equivalent  Shares
            which have dividend or distribution  rights for purposes of Section 11
            of this  Agreement,  the number of shares,  or fraction of a share, of
            such class or series of capital  stock  that is  entitled  to the same
            dividend or distribution as a whole Common Share shall be deemed to be
            one share.
  
       (j)  "Expiration Date" shall mean the earliest of (i) the close of business
            on the Final Expiration Date, (ii) 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 the  third
            paragraph of Section 13 hereof.
  
       (k)  "Final Expiration Date" shall mean September 29, 1999.
  
       (l)  "Person" shall mean any individual, firm, partnership,  joint venture,
            corporation  or other  entity,  and shall  include any  successor  (by
            merger or otherwise) of such entity.
  
       (m)  "Purchase Price" shall have the meaning set forth in Section 4 hereof.
  
       (n)  "Redemption Date" shall mean the time at which the Rights are redeemed
            as provided in Section 23 hereof.
  
                                          3
  (o)  "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 Section 13(d) of the
            Exchange Act) by the Company or an Acquiring  Person that an Acquiring
            Person  has become  such or such  earlier  date as a  majority  of the
            directors of the Company  shall  become  aware of the  existence of an
            Acquiring Person.
  
       (p)  "Subsidiary"  of any Person shall mean any corporation or other entity
            of  which  a  majority  of  the  voting  power  of the  voting  equity
            securities  or equity  interest  is  beneficially  owned,  directly or
            indirectly, by such Person.
  
       (q)  "Trading  Day"  shall  have the  meaning  set forth in  Section  11(d)
            hereof.
  
       (r)  A "Trigger  Event"  shall be deemed to have  occurred  upon any Person
            (other than the Company,  any Subsidiary of the Company,  any employee
            benefit plan of the Company or of any Subsidiary of the Company, or of
            any entity  holding  Common Shares for or pursuant to the terms of any
            such  plan),  together  with all  Affiliates  and  Associates  of such
            Person,  becoming  the  Beneficial  Owner of 30% or more of the Common
            Shares of the Company then outstanding. Notwithstanding the foregoing,
            no Trigger  Event shall be deemed to have occurred as the result of an
            acquisition  of Common  Shares by the Company  which,  by reducing the
            number of shares  outstanding,  increases the proportionate  number of
            shares  beneficially owned by such Person to 30% or more of the Common
            Shares of the Company then outstanding; PROVIDED, however, that in the
            event that a Person shall become the  Beneficial  Owner of 30% or more
            of the Common  Shares of the  Company  then  outstanding  by reason of
            share  purchases  by the Company,  a Trigger  Event shall be deemed to
            have  occurred  upon such  Person,  after such share  purchases by the
            Company, becoming the Beneficial Owner of any additional Common Shares
            of the Company.
  
  Section 2.  APPOINTMENT OF RIGHTS AGENT.
  
       The  Company  hereby  appoints  the  Rights  Agent to act as agent  for the
       Company in accordance with the terms and conditions  hereof, and the Rights
       Agent hereby  accepts such  appointment.  The Company may from time to time
       appoint such co-Rights Agent as it may deem necessary or desirable.
  
  Section 3. ISSUE OF RIGHT CERTIFICATES.
  
       (a)  Until the  earlier of the close of  business  on (i) the tenth day (or
            such  later  date as may be  determined  by  action of a  majority  of
            Continuing  Directors  then in office prior to the  expiration of said
            tenth day or any such extended period, and publicly announced by the
  
                                          4
  Company) after the Shares  Acquisition Date or (ii) the tenth Business
            Day (or such later date as may be  determined  by action of a majority
            of the Continuing  Directors then in office prior to the expiration of
            said tenth  Business  Day, or any such extended  period,  and publicly
            announced by the Company)  after the date of the  commencement  by any
            Person (other than the Company,  any  Subsidiary  of the Company,  any
            employee  benefit  plan of the  Company  or of any  Subsidiary  of the
            Company or any entity  holding  Common  Shares for or  pursuant to the
            terms of any such plan) or, or of the first public announcement of the
            intention of any Person (other than the Company, any Subsidiary of the
            Company, any employee benefit plan of the Company or of any Subsidiary
            of the Company or any entity  holding Common Shares for or pursuant to
            the terms of any such plan) to  commence,  a tender or exchange  offer
            the  consummation  of which would  result in any Person  becoming  the
            Beneficial Owner of Common Shares  aggregating 30% or more of the then
            outstanding  Common Shares  (irrespective of whether any Common Shares
            are actually  purchased  pursuant to such offer)  (including  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  provision  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 Common Shares.  As soon as practicable
            after the Distribution Date, the Company will prepare and execute, the
            Rights Agent will  countersign,  and the Company will send or cause to
            be  sent  (and  the  Rights  Agent  will,  if   requested,   send)  by
            first-class,  insured,  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  Company,  a
            Right  Certificate,  in substantially  the form of Exhibit A hereto (a
            "Right  Certificate"),  evidencing  one Right to each Common  Share so
            held. As of the Distribution Date, the Rights will be evidenced solely
            by such Right Certificates.
  
       (b)  On the Record Date, or as soon as practicable thereafter,  the Company
            will send a copy of a Summary of Rights to Purchase Common Shares,  in
            substantially  the form of Exhibit B 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  Company.  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  regardless  of
            whether a copy of the Summary of Rights is attached thereto. Until the
            earlier of the Distribution Date or the Expiration Date, the surrender
            for transfer of any certificates for Common Shares  outstanding on the
            Record  Date,  with  or  without  a copy  of  the  Summary  of  Rights
            associated with the Common Shares represented thereby.
  
       (c)  Certificates  for Common Shares which become  outstanding  (including,
            without  limitation,  reacquired Common Shares referred to in the last
            sentence of this paragraph (c)) after the Record Date but prior to the
            earlier of the  Distribution  Date or the  Expiration  Date shall have
            impressed on, printed on, written on or otherwise  affixed to them the
            following legend:
  
                 This certificate also evidences and entitles the holder hereof to
                 certain  rights as set forth in a Rights  Agreement  between  ILC
                 Technology,  Inc. and Security Pacific National Bank, dated as of
                 September  29,  1989 (the "Rights Agreement"), the  terms  of are
  
                                          5
  hereby incorporated herein by reference and a copy of which is on
                 file at the principal  executive offices of ILC Technology,  Inc.
                 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.  ILC
                 Technology,  Inc. will mail too the holder of this  certificate a
                 copy of the Rights  Agreement  without  charge after receipt of a
                 written request  therefor.  Under certain  circumstances,  as set
                 forth in the Rights  Agreement,  Rights  issued to or held by any
                 Person  who  becomes  an  Acquiring  Person or any  Affiliate  or
                 Associate thereof (as defined in the Rights Agreement) may become
                 null and void.
  
       With respect to such certificates  containing the foregoing  legend,  until
  the  earlier  of the  Distribution  Date  or the  Expiration  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 Company 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  Company  shall not be  entitled  to  exercise  any  Rights
  associated with such Common Shares which are no longer outstanding.
  
  Section 4. FORM OF RIGHT CERTIFICATES.
  
       The Right Certificates (and the forms of election to purchase Common Shares
       and  of  assignment  to  be  printed  on  the  reverse  thereof)  shall  be
       substantially  the same as  Exhibit  A hereto  and may have  such  marks of
       identification  or designation and such legends,  summaries or endorsements
       printed  thereon  as the  Company  may  deem  appropriate  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 with any rule or regulation  of any stock  exchange or
       other  organization  on which the Rights may from time to time be listed or
       quoted,  or to conform to usage.  Subject to the  provisions  of Section 22
       hereof,  the Right  Certificates  shall  entitle  the  holders  thereof  to
       purchase  such number of Common Shares as shall be set forth therein at the
       price per share set forth therein (the  "Purchase  Price"),  but the number
       and  kind of such  shares  and the  Purchase  Price  shall  be  subject  to
       adjustment as provided herein.
  
  Section 5.  COUNTERSIGNATURE  AND REGISTRATION.
  
       The Right  Certificates  shall be  executed on behalf of the Company by its
       Chairman of the Board, its Chief Executive Officer, its President or any of
       its  Executive  Vice  Presidents,  and by  the  Secretary  or an  Assistant
       Secretary of the Company,  either manually or by facsimile  signature,  and
       shall have affixed thereto the Company's seal or a facsimile  thereof.  The
       Right Certificates shall be manually  countersigned by the Rights Agent and
       shall  not be valid  for any  purposes  unless  countersigned.  In case any
       officer of the Company who shall have signed any of the Right  Certificates
       shall cease to be such officer of the Company  before  countersignature  by
       the Rights  Agent and  issuance  and  delivery by the  Company,  such Right
       Certificates,  nevertheless,  may be  countersigned by the Rights Agent and
       issued  and  delivered  by the  Company  with the same  force and effect as
       though the person who signed such right  Certificates  had not ceased to be
       such officer of the  Company;  and any Right  Certificate  may be signed on
       behalf  of the  Company  by any  person  who,  at the  actual  date  of the
       execution  of such  Right Certificate, shall be a  proper officer  of  the 
  
                                          6
  Company  to  sign  such  Right  Certificate,  although  at the  date of the
       execution of this Rights Agreement any such person was not such an officer.
  
       Following the Distribution  Date, the Rights Agent will keep or cause to be
       kept, at its principal  office,  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
       date of each of the Right Certificates.
  
  Section 6. TRANSFER,  SPLIT UP, COMBINATION AND EXCHANGE OF RIGHT  CERTIFICATES;
       MUTILATED,  DESTROYED,  LOST OR STOLEN RIGHT  CERTIFICATES.
  
       Subject to the provisions of 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  Expiration   Date,   any  Right   Certificate  or  Right
       Certificates  (other than Right Certificates  representing Rights that have
       become  void  pursuant  to  Section  11  (a)(ii)  hereof  or that have been
       exchanged  pursuant  to Section 24 hereof)  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 Common Shares
       as the Right Certificate or Rights  Certificates  surrendered then entitled
       such holder 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  principal  office of the Rights
       Agent.  Thereupon  the Rights  Agent shall  countersign  and deliver to the
       person entitled thereto a Right Certificate or Right  Certificates,  as the
       case may be, as so  requested.  The Company  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 or Right
       Certificates.
  
       Upon  receipt by the  Company and the Rights  Agent of evidence  reasonably
       satisfactory  to them of the loss,  theft,  destruction  or mutilation of a
       Right Certificate, and, in case of loss, theft or destruction, of indemnity
       or security reasonably satisfactory to them, and, at the Company's request,
       reimbursement  to the  Company  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 Company will make
       and deliver a new Right  Certificate  of like tenor to the Rights Agent for
       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)  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  on the
            reverse  side  thereof  duly  executed,  to the  Rights  Agent  at the
            principal  office of the Rights  Agent,  together  with payment of the
            Purchase  Price  for each  Common  Share as to which  the  Rights  are
            exercised, at or prior to the Expiration Date.
  
       (b)  The Purchase Price for each Common Share pursuant to the exercise of a
            Right shall initially be $30, shall be subject to adjustment from time
            to time as provided in Sections 11 and 13 hereof and shall be payable
  
                                          7
  in lawful  money of the United  States of America in  accordance  with
            paragraph (c) below.
  
       (c)  Upon receipt of a Right Certificate  representing  exercisable Rights,
            with the form of election to purchase duly  executed,  accompanied  by
            payment of the  Purchase  Price for the number of Common  Shares to be
            purchased and an amount equal to any applicable  transfer tax required
            to be paid by the holder of such Right  Certificate in accordance with
            Section 9 hereof by certified  check,  cashier's  check or money order
            payable to the order of the Company,  the Rights Agent shall thereupon
            promptly (i) (A)  requisition  from any  transfer  agent of the Common
            Shares  certificates  for the number of Common  Shares to be purchased
            and the Company  hereby  irrevocably  authorizes its transfer agent to
            comply  with all  such  requests,  or (B) if the  Company  shall  have
            elected to deposit the total number of Common Shares  hereunder with a
            depositary  agent,  requsition  from the depositary  agent  depositary
            receipts  representing  such  number  of  Common  Shares  as are to be
            purchased   (in  which  case   certificates   for  the  Common  Shares
            represented  by such receipts shall be deposited by the transfer agent
            with  the  depositary  agent)  and  the  Company  hereby  directs  the
            depositary agent to comply with such request,  (ii) when  appropriate,
            requisition  from the Company 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,
            delivery  such cash to or upon the order of the  registered  holder of
            such Right Certificate.  In the event that the Company is obligated to
            issue other  securities  of the  Company,  pay cash and/or  distribute
            other property pursuant to Section 11(a) hereof, the Company will make
            all arrangements necessary so that such other securities,  cash and/or
            other property are available for  distribution by the Rights Agent, if
            and when appropriate.
  
       (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 14 hereof.
  
       (e)  The Company  covenants  and agrees  that it will use its best  efforts
            (subject to the provisions of Section 11(a)(iv) hereof) to cause to be
            reserved and kept  available out of its  authorized  Common Shares not
            reserved for another purpose, the number of Common Shares that will be
            sufficient to permit the exercise in full of all outstanding Rights in
            accordance with this Section 7.
  
  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 Company 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 Rights Agreement.  The
       Company 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  by the Company  otherwise  than upon the  exercise
       thereof. The Rights Agent shall deliver all canceled Rights Certificates to
       the Company, or shall, at the written request of the Company, destroy such
  
                                          8
  canceled Right  Certificates,  and in such case shall deliver a certificate
       of destruction thereof to the Company.
  
  Section 9. AVAILABILITY OF COMMON SHARES.
  
       The Company  covenants  and agrees that it will take all such action as may
       be necessary to ensure that all Common  Shares  delivered  upon exercise of
       Rights shall, at the time of delivery of the  certificates  for such Common
       Shares  (subject  to payment of the  Purchase  Price),  be duly and validly
       authorized and issued and fully paid and nonassessable shares.
  
       So long as the Common  Shares  issuable  upon the exercise of Rights may be
       listed on any national securities exchange,  the Company 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  Company  further  covenants  and agrees  that it will pay when due and
       payable any and all federal and state  transfer taxes and charges which may
       be payable in respect of the issuance or delivery of the Right Certificates
       or of any Common Shares upon the exercise of Rights. The Company shall not,
       however,  be  required  to pay any  transfer  tax 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 Common Shares 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 Common
       Shares upon the  exercise of any Rights  until any such tax shall have been
       paid (any such tax being payable by the holder of such Right Certificate at
       the time of  surrender) or until it has been  established  to the Company's
       reasonable satisfaction that no such tax is due.
  
  Section 10. COMMON  SHARES  RECORD DATE.
  
       Each person in whose name any  certificate for Common Shares is issued upon
       the  exercise of Rights shall for all purposes be deemed to have become the
       holder of record of the  Common  Shares  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  multiplied  by the number of Common Shares with respect to which the
       Rights have been exercised (and any  applicable  transfer  taxes) was made;
       PROVIDED, however, that if the date of such surrender and payment is a date
       upon which the Common Shares transfer books of the Company 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 Common Shares  transfer  books of the Company are open.  Prior to
       the  exercise  of the  Rights  evidenced  thereby,  the  holder  of a Right
       Certificate  shall  not be  entitled  to any  rights  of a holder of Common
       Shares  for which  the  Rights  shall be  exercisable,  including,  without
       limitation,  the right to vote, to receive dividends or other  distribution
       or to exercise any preemptive  rights, and shall not be entitled to receive
       any notice of any proceedings of the Company, except as provided herein.
  
  Section 11. ADJUSTMENT OF PURCHASE PRICE, NUMBER OF SHARES OR NUMBER OF RIGHTS.
  
       The Purchase Price, the number and kind of shares or other property covered
       by each  Right  and  the  number  of  Rights  outstanding  are  subject  to
       adjustment from time to time as provided in this Section 11.
  
                                         9
  (a)  (i) In the event the Company  shall at any time after the date of this
            Agreement  (A)  declare a  dividend  on the Common  Shares  payable in
            Common  Shares,  (B)  subdivide the  outstanding  Common  Shares,  (C)
            combine the outstanding  Common Shares into a smaller number of Common
            Shares  or  (D)  issue  any   shares  of  its   capital   stock  in  a
            reclassification   of  the   Common   Shares   (including   any   such
            reclassification in connection with a consolidation or merger in which
            the Company is the continuing or surviving corporation), then, in each
            such event,  except as otherwise  provided in this Section 11(a):  (1)
            each of the Rights outstanding at the time of the record date for such
            dividend or the  effective  date of such  subdivision  combination  or
            reclassification  shall be proportionately  adjusted to that number of
            Rights (calculated to the nearest one  ten-thousandth  (1/10,000) of a
            Right) equal to the result obtained by multiplying  each such Right by
            a fraction (the "Adjustment  Ratio"),  the numerator of which shall be
            the total number of Common Shares or shares of capital stock issued in
            such  reclassification  of the Common Shares  outstanding  immediately
            following  such time and the  denominator  of which shall be the total
            number of Common Shares  outstanding  immediately  prior to such time,
            and the number of Rights that shall  thereafter be issued with respect
            to each Common Share or share of such other  capital  stock that shall
            become outstanding  thereafter prior to the Distribution Date shall be
            equal to the total number of outstanding Rights immediately after such
            event (as  adjusted  pursuant to this clause (1)) divided by the total
            number of  outstanding  Common  Shares or shares of such other capital
            stock  immediately  after such event  (subject  to further  adjustment
            pursuant to the provisions of this Agreement);  (2) 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
            shall be adjusted so that the Purchase  Price  thereafter  shall equal
            the  result   obtained  by  dividing  the  Purchase  Price  in  effect
            immediately  prior to such  time by the  Adjustment  Ratio;  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 (if any) of
            the shares of capital  stock of the Company  issuable upon exercise of
            such  Right;  and (3) the  number of  Common  Shares or shares of such
            other  capital  stock  issuable  upon the exercise of each Right shall
            remain unchanged  immediately after such event, but, in the event of a
            reclassification,  the kind of shares  issuable  upon the  exercise of
            each Right immediately after such  reclassification  shall be adjusted
            to be the kind of shares of such other  capital  stock  issued in such
            reclassification,  rather than Common Shares. 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) Subject to Section 24 of this Agreement, in the event:
  
                 (A)  any  Acquiring  Person or any  Associate or Affiliate of any
                      Acquiring  Person,  at any  time  after  the  date  of  this
                      Agreement, directly or indirectly, (1) shall merger into the
                      Company  or  otherwise  combine  with  the  Company  and the
                      Company shall be the continuing or surviving  corporation of
                      such merger or combination  and Common Shares of the Company
                      shall remain  outstanding  and unchanged,  (2) shall, in one
                      transaction  or a  series  of  transactions,  other  than in
                      connection with the exercise of Rights or in connection with
                      the exercise or  conversion  of  securities  exercisable  or
                      convertible into equity  securities of the Company or any of
                      its  Subsidiaries,  transfer any assets to the Company or to
                      any of its  Subsidiaries  in exchange  (in whole or in part)
                      for shares of Common Shares of the Company, for other equity
                      securities of the Company or of any such Subsidiary,  or for
                      securities  exercisable  for or  convertible  into shares of
                      equity   securities   of  the  Company  or  of  any  of  its
                      Subsidiaries  (whether  Common  Shares  of  the  Company  or
  
                                         10
  otherwise)  or  otherwise  obtain from the Company or any of
                      its  Subsidiaries,   with  or  without  consideration,   any
                      additional shares of such equity securities  exercisable for
                      or  convertible  into such  equity  securities  (other  than
                      pursuant to a pro rata distribution to all holders of Common
                      Shares of the  Company),  (3) shall sell,  purchase,  lease,
                      exchange, mortgage, pledge, transfer or otherwise acquire or
                      dispose of, in one transaction or a series of  transactions,
                      to,  from or with (as the case may be) the Company or any of
                      its  Subsidiaries or any employee benefit plan maintained by
                      the  Company or any of its  Subsidiaries  or any  trustee of
                      fiduciary with respect to such plan acting in such capacity,
                      assets  (including  securities) on terms and conditions less
                      favorable  to the  Company or such  Subsidiary  or plan than
                      those  that  could  have  been   obtained  in   arm's-length
                      negotiations  with an unaffiliated  third party,  other than
                      pursuant to a transaction set forth in Section 13(a) hereof,
                      (4) shall sell, purchase, lease, exchange, mortgage, pledge,
                      transfer  or   otherwise   acquire  or  dispose  of  in  one
                      transaction  or a series of  transactions,  to, from or with
                      (as the case  may be) the  Company  or any of the  Company's
                      Subsidiaries or any employee  benefit plan maintained by the
                      Company  or any  of  its  Subsidiaries  or  any  trustee  or
                      fiduciary with respect to such plan acting in such capacity,
                      any material  trademark or material service mark, other than
                      pursuant to a transaction set forth in Section 13(a) hereof,
                      (6) shall receive any  compensation  from the Company or any
                      of its  Subsidiaries  other than  compensation for full-time
                      employment  as  a  regular  employee  or  for  serving  as a
                      director at rates in  accordance  with the Company's (or its
                      Subsidiaries')  past  practices,  or (7) shall  receive  the
                      benefit, directly or indirectly (except proportionately as a
                      shareholder   or  as   required   by  law  or   governmental
                      regulation), of any loans, advances,  guarantees, pledges or
                      other  financial  assistance or any tax credits or other tax
                      advantage provided by the Company or any of its Subsidiaries
                      or any employee  benefit plan  maintained  by the Company or
                      any of its Subsidiaries; or
  
                 (B)  a Trigger Event shall have  occurred  (other than through an
                      acquisition   described  in   subparagraph   (iii)  of  this
                      paragraph (a)); or
  
                 (C)  during  such  time as there is an  Acquiring  Person,  there
                      shall be any  reclassification of securities  (including any
                      reverse stock split), or  recapitalization or reorganization
                      of  the   Company   or  other   transaction   or  series  of
                      transactions of any kind involving the Company which has the
                      effect,  directly or indirectly,  of increasing by more than
                      3% the proportionate  share of the outstanding shares of any
                      class of  equity  securities  of the  Company  or any of its
                      Subsidiaries  beneficially  owned by any Acquiring Person or
                      any Affiliate or Associate thereof,
  
  then,  and in each such case,  each  holder of a Right shall  thereafter  have a
  right to receive,  upon exercise  thereof in  accordance  with the terms of this
  Agreement, such number of Common Shares of the Company as shall equal the result
  obtained by (x)  multiplying  the then current  Purchase  Price by the number of
  Common  Shares  for  which a Right is then  exercisable  and (y)  dividing  that
  product  by 50% of the then  current  per share  market  price of the  Company's
  Common Shares  (determined  pursuant to Section 11(d) hereof) on the date of the
  occurrence  of the earliest of the events  described in clauses (A), (B) and (C)
  above; 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 shall apply and no  adjustment
  shall be made pursuant to this Section 11(a)(ii).
  
                                         11
  From and after the  occurrence  of the earlier of the events  described  in
  clauses  (A),  (B) and (C)  above,  any  Rights  that  are or were  acquired  or
  beneficially  owned by any  Acquiring  Person (or any  Associate or Affiliate of
  such  Acquiring  Person) shall be void and any holder of such Rights  (including
  any  subsequent  transferee)  shall  thereafter  have no right to exercise  such
  Rights under any  provision of this  Agreement.  No Right  Certificate  shall be
  issued pursuant to Section 3 that  represents  Rights  beneficially  owned by an
  Acquiring  Person whose Rights would be void pursuant to the preceding  sentence
  or any Associate or Affiliate  thereof;  no Right Certificate shall be issued at
  any time upon the  transfer of any Rights to an  Acquiring  Person  whose Rights
  would be void pursuant to the  preceding  sentence or any Associate or Affiliate
  thereof or to any nominee or such Acquiring Person,  Associate or Affiliate; and
  any Right Certificate delivered to the Rights Agent for transfer to an Acquiring
  Person whose Rights would be void  pursuant to the preceding  sentence  shall be
  canceled.
  
            (iii)The  right  to buy  Common  Shares  of the  Company  pursuant  to
                 subparagraph  (ii) of this  paragraph  (a)  shall  not arise as a
                 result of any  Person  becoming  an  Acquiring  Person  through a
                 purchase of Common Shares  pursuant to a tender offer made in the
                 manner  prescribed  by Section  14(d) of the Exchange Act and the
                 rules and regulations promulgated thereunder;  PROVIDED, however,
                 that (A) such tender offer shall provide for the  acquisition  of
                 all of the  outstanding  Common  Shares held by any Person  other
                 than such Person and its  Affiliates or Associates  for cash, (B)
                 such  tender  offer is held open for a minimum  of 60 days  after
                 commencement  of the  tender  offer and (C) such  purchase  shall
                 cause such Person, together with all Affiliates and Associates of
                 such  Person,  to be the  Beneficial  Owner of 90% or more of the
                 Common Shares then outstanding.
  
            (iv) In lieu of  issuing  Common  Shares in  accordance  with  Section
                 11(a)(ii)  hereof,  the Company  may,  if the Board of  Directors
                 determines  that such action is necessary or appropriate  and not
                 contrary to the interest of holders of Rights (and,  in the event
                 that the  number of Common  Shares  which are  authorized  by the
                 Company's  Articles  of  Incorporation  but  not  outstanding  or
                 reserved for issuance  for purposes  other than upon  exercise of
                 the Rights are not  sufficient  to permit the exercise in full of
                 the Rights,  or if any  necessary  regulatory  approval  for such
                 issuance  has not  been  obtained  by the  Company,  the  Company
                 shall):  (A)  determine the excess of (1) the value of the Common
                 Shares  issuable  upon  the  exercise  of a Right  (the  "Current
                 Value"),   over  (2)  the  Purchase   Price  (such  excess  being
                 hereinafter referred to as the "Spread"), and (B) with respect to
                 each  Right,  make  adequate  provision  to  substitute  for such
                 unavailable  Common  Shares,   upon  payment  of  the  applicable
                 Purchase Price,  (1) cash, (2) a reduction in the Purchase Price,
                 (3) other  equity  securities  of the  Company,  if any, (4) debt
                 securities  of  the  Company,   (5)  other  assets,  or  (6)  any
                 combination  of the foregoing,  having,  together with the Common
                 Shares  issued upon  exercise of such Right,  an aggregate  value
                 equal to the Current Value,  where such aggregate  value has been
                 determined  by the Board of Directors  of the Company  based upon
                 the advice of a  nationally  recognized  investment  banking firm
                 selected  by the Board of  Directors  of the  Company;  PROVIDED,
                 however, if the Company shall have not made adequate provision to
                 deliver  value  pursuant  to  clause  (B)  above  within  30 days
                 following  the  date of the  occurrence  of the  earliest  of the
                 events   described  in  clauses  (A),  (B)  and  (C)  of  Section
                 11a(a)(ii) above, then the Company shall be obligated to deliver,
                 upon the surrender for exercise of a Right and without  requiring
                 payment of the Purchase Price,  Common Shares (to the extent such
                 shares are available) and then, if necessary,  cash, which shares
                 and/or cash have an aggregate  value equal to the Spread.  If the
                 Board of Directors of the Company shall determine in  good  faith
  
                                         12
  that it is likely that sufficient  additional Common Shares could
                 be  authorized  for issuance upon exercise in full of the Rights,
                 the 30 day period set forth  above may be  extended to the extent
                 necessary,  but not more than 120 days  following the date of the
                 occurrence  of the  earliest of the events  described  in clauses
                 (A), (B) and (C) of Section  11(a)(ii)  above,  in order that the
                 Company may seek  shareholder  approval for the  authorization of
                 such  additional  shares  (such  period,  as it may be  extended,
                 hereinafter  referred to as the  "Substitution  Period").  To the
                 extent that the Company  determines  that action need to be taken
                 pursuant to the first  and/or  second  sentences  of this Section
                 11(a)(iv),  the  Company  (x) shall  provide,  subject to Section
                 11(a)(ii)  hereof,  that such action shall apply uniformly to all
                 outstanding Rights, and (y) may suspend the exercisability of the
                 Rights until the expiration of the  Substitution  Period in order
                 to seek any  authorization of additional  shares and/or to decide
                 the appropriate  form of distribution to be made pursuant to such
                 first sentence and to determine the value  thereof.  In the event
                 of  any  such  suspension,  the  Company  shall  issue  a  public
                 announcement  stating that the  exercisability  of the Rights has
                 been temporarily  suspended,  as well as a public announcement at
                 such time as the suspension,  as well as a public announcement at
                 such time as the suspension is no longer in effect.  For purposes
                 of this Section  11(a)(iv),  the value of the Common Shares shall
                 be the current per share market price (as determined  pursuant to
                 Section  11(d)  hereof)  per  Common  Share  on the  date  of the
                 occurrence  of the  earliest of the events  described  in clauses
                 (A), (B) and (C) of Section 11(a)(ii) above.
  
       (b)  In case the  Company  shall  fix a record  date  for the  issuance  of
            rights,  option or warrants to all holders of Common  Shares or of any
            class or  series of  Equivalent  Shares  entitling  them (for a period
            expiring  within 45 calendar days after such record date) to subscribe
            for or  purchase  Common  Shares or  Equivalent  Shares or  securities
            convertible  into Common  Shares or  Equivalent  Shares or  securities
            convertible  into Common  Shares or  Equivalent  Shares at a price per
            Common Share or  Equivalent  Share (or having a  conversion  price per
            share,  if a security  convertible  into Common  Shares or  Equivalent
            Shares)  less  than the then  current  per share  market  price of the
            Common Shares (as defined in Section 11(d)) on such record date, then,
            in each such  case,  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 Common Shares and Equivalent
            Shares (if any)  outstanding  on such  record  date plus the number of
            Common  Shares or  Equivalent  Shares,  as the case may be,  which the
            aggregate  offering  price of the total number of Common Shares and/or
            Equivalent  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  market price and the  denominator  of which
            shall be the number of Common  Shares and  Equivalent  Shares (if any)
            outstanding  on such record date plus the number of additional  Common
            Shares  and/or  Equivalent  Shares to be offered for  subscription  or
            purchase (or into which the  convertible  securities  so to be offered
            are initially  convertible).  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 as determined in
            good  faith  by  the  Board  of  Directors   of  the  Company,   whose
            determination  shall be described in a statement filed with the Rights
            Agent. Such adjustment shall be made successively whenever such 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.
  
                                         13
  (c)  In case the  Company  shall  fix a record  date  for the  making  of a
            distribution  to all  holders of the Common  Shares or of any class or
            series of Equivalent  Shares  (including any such distribution made in
            connection with a consolidation  or merger in which the Company is the
            continuing or surviving  corporation)  of evidence of  indebtedness or
            assets  (other  than a regular  periodic  cash  dividend or a dividend
            payable  in  Common  Shares)  or   subscription   rights  or  warrants
            (excluding  those referred to in Section 11(b) hereof),  then, in each
            such case,  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 of the Common
            Shares or Equivalent  Shares on such record date, less the fair market
            value (as  determined  in good faith by the Board of  Directors of the
            Company,  whose  determination shall be described in a statement filed
            with the Rights  Agent) of the portion of the assets or  evidences  of
            indebtedness  so to be distributed or of such  subscription  rights or
            warrants  applicable to one Common Share or Equivalent  Share,  as the
            case may be, and the  denominator  of which shall be such  current per
            share market price of the Common  Shares or  Equivalent  Shares.  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)  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) on any date  shall be deemed to be the  average  of the
            daily closing prices per share of such Security for the 30 consecutive
            Trading Days (as such term is hereinafter  defined)  immediately prior
            to 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 30 Trading Days after the ex-dividend  date
            for  such  dividend  or  distribution,  or the  record  date  for such
            subdivision,  combination or  reclassification,  the, 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 in the  over-the-counter
            market, as reported by the National Association of Securities Dealers,
            Inc. Automated Quotations Systems ("NASDAQ") or such other 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 Company.  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. If the Common Shares are not publicly  held or  not so
  
                                         14
  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 Company,  whose determination shall be described in a statement
            filed with the Rights Agent.
  
       (e)  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  ten-thousandths  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 years from the date of
            the transaction which requires such adjustment or (ii) the date of the
            expiration of the right to exercise any Rights.
  
       (f)  If as a result of an adjustment made pursuant to Section 12(a) hereof,
            the holder of any Right thereafter  exercised shall become entitled to
            receive any shares of capital  stock of the Company  other than Common
            Shares,  thereafter the number of such other shares so receivable upon
            exercise of any Right and if required,  payment of the Purchase  Price
            thereof,  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 Common Shares  contained in Sections  11(a),  (b),
            (c),  (e),  (h),  (i),  (j),  (k),  (l) and  (m),  inclusive,  and the
            provisions  of Sections 7, 9, 10, 13 and 14 with respect to the Common
            Shares shall apply on like terms to any such other shares.
  
       (g)  All  Rights  originally  issued  by  the  Company  subsequent  to  any
            adjustment  made to the Purchase  Price  hereunder  shall evidence the
            right to  purchase,  at the  adjusted  Purchase  Price,  the number of
            Common Shares purchasable from time to time hereunder upon exercise of
            the Rights, all subject to further adjustment as provided herein.
  
       (h)  Unless the Company  shall have  exercised  its election as provided in
            Section 11(i),  upon each adjustment of the Purchase Price as a result
            of the  calculations  made in Section  11(b),  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 Common  Shares  (calculated  to the nearest  ten-thousandth)
            obtained  by (i)  multiplying  (x) the  number of shares  covered by a
            Right  immediately  prior to this adjustment by (y) 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  Company may elect on or after the date of any  adjustment  of the
            Purchase Price as a result of the  calculations  made in Section 11(b)
            to adjust the number of Rights,  in substitution for any adjustment in
            the number of Common Shares  purchasable upon the exercise of a Right.
            Each of the Rights  outstanding after such adjustment of the number or
            Rights shall be exercisable  for the number of Common Shares 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 ten-
            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 Company shall make a public announcement of its election to adjust
            the number of Rights, indicating the record  date for  the adjustment,
  
                                         15
  and, if known at the time,  the amount of the  adjustments to be made.
            The  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  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
            Company 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  Company,  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 Company,
            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
            number of Common Shares 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 Common Shares 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 Common Shares
            issuable  upon  exercise  of the Rights,  the  Company  shall take any
            corporate  action  which  may,  in  the  opinion  of its  counsel,  be
            necessary  in order that the Company  may  validly  and legally  issue
            fully paid and  nonassessable  Common Shares 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 Company may elect to defer until the occurrence
            of such event the issuing to the holder of any Right  exercised  after
            such  record  date of the  Common  Shares and other  capital  stock or
            securities  of the Company,  if any,  issuable upon such exercise over
            and above the Common  Shares and other  capital stock or securities of
            the Company,  if any,  issuable upon such exercise on the basis of the
            Purchase Price in effect prior to such adjustment;  PROVIDED, however,
            that the  Company  shall  deliver  to such  holder a due bill or other
            appropriate  instrument evidencing such holder's right to receive such
            additional  shares upon the  occurrence  of the event  requiring  such
            adjustment.
  
       (m)  Anything  in this  Section  11 to the  contrary  notwithstanding,  the
            Company  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  any   consolidation  or
            subdivision of the Common Shares,  issuance  wholly for cash of Common
            Shares or  securities  which by their  terms are  convertible  into or
            exchangeable for Common Shares, stock dividends or issuance of rights,
            options or  warrants  referred  to  hereinabove  in this  Section  11,
            hereafter  made by the Company to holders of its Common  Shares  shall
            not be taxable to such shareholders.
  
                                         16
  (n)  The Company  covenants and agrees that it shall not, at any time after
            the Distribution  Date, (i) consolidate  with, or merge with and into,
            any  other  Person  (other  than  a  Subsidiary  of the  Company  in a
            transaction  that complies with Section  11(o)),  (ii) permit or cause
            any Person to consolidate with the Company, or merge with and into the
            Company (other than a Subsidiary of the Company in a transaction  that
            complies with Section 11(o)), or (iii) sell or otherwise  transfer (or
            permit  any   Subsidiary  to  sell  or  transfer),   in  one  or  more
            transactions,  assets or earning power  aggregating 50% or more of the
            assets or earning power of the Company and its Subsidiaries  (taken as
            a whole) to any other Person or Persons (other than the Company and/or
            any of its  Subsidiaries  in one or more  transactions  each of  which
            complies  with Section  11(o)),  if (i) at the time of or  immediately
            after  such  consolidation,  merger  or sale  there  are  any  rights,
            warrants or other instruments or securities  outstanding or agreements
            in effect that would substantially diminish or otherwise eliminate the
            benefits  intended to be  afforded  by the  Rights,  or (ii) prior to,
            simultaneously  with or after any such event,  the shareholders of the
            Person who constitutes,  or would constitute, the "Principal Party" or
            purposes of Section 13 hereof shall have  received a  distribution  of
            Rights  previously  owned by such Person or any of its  Affiliates and
            Associates.
  
       (o)  The Company 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  of the  Company to take) any
            action  if  at  the  time  such  action  is  taken  it  is  reasonably
            foreseeable that such action will diminish  substantially or otherwise
            eliminate the benefits intended to be afforded by the Rights.
  
  Section 12. CERTIFICATE OF ADJUSTED PURCHASE PRICE OR NUMBER OF SHARES.
  
       Whenever  an  adjustment  is made as provided in Sections 11 and 13 hereof,
       the Company  shall  promptly (a) prepare a  certificate  setting forth such
       adjustment,  and a  brief  statement  of  the  facts  accounting  for  such
       adjustment, (b) file with the Rights Agent and with each transfer agent for
       the Common 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 not be deemed
       to have  knowledge  of any such  adjustment  unless and until it shall have
       received such certificate.
  
  Section 13.  CONSOLIDATION, MERGER OR SALE OR TRANSFER OF ASSETS OR EARNING
               POWER.
  
       In the event  that,  following  the Shares  Acquisition  Date,  directly or
       indirectly, (a) the Company shall consolidate with, or merge with and into,
       any other Person  (other than a Subsidiary  of the Company in a transaction
       the principal  purpose of which is to change the state of  incorporation of
       the Company of which complies with Section 11(o)  hereof),  and the Company
       shall not be the continuing or surviving  corporation of such consolidation
       or merger,  (b) any Person  (other  than a  Subsidiary  of the Company in a
       transaction that complies with Section 11(o) hereof) shall consolidate with
       the  Company,  or merge with and into the Company and the Company  shall be
       the  continuing or surviving  corporation of such merger and, in connection
       with such  consolidation or merger,  all or part of the Common Shares shall
       be changed into or  exchanged  for stock or other  securities  of any other
       Person (or the Company) or cash or any other  property,  or (c) the Company
       shall sell or otherwise  transfer (or one or more of its Subsidiaries shall
       sell or otherwise transfer), in one or more transactions, assets or earning
       power aggregating 50% or more of the assets or earning power of the Company
       and its Subsidiaries (taken as a whole) to any other Person (other than the
       Company or  one or  more of its  wholly-owned  Subsidiaries in  one or more
  
                                         17
  transactions,  each of which complies with Section 11(o) hereof), then, and
       in each such case,  proper  provision shall be made so that (i) each holder
       of a Right (except as otherwise  provided herein) shall thereafter have the
       right to receive,  upon the  exercise  thereof at a price equal to the then
       current  Purchase Price multiplied by the number of Common Shares for which
       a  Right  is  then  exercisable,  in  accordance  with  the  terms  of this
       Agreement, such number of validly authorized,  fully paid and nonassessable
       Common Shares of the Principal Party (as hereinafter defined),  free of 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 Common  Shares  for which a Right is then
       exercisable  immediately  prior  to  such  consolidation,  merger,  sale or
       transfer and (B) dividing that product by 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
       consolidation,  merger,  sale or transfer;  (ii) such Principal Party shall
       thereafter   by  liable  for,   and  shall   assume,   by  virtue  of  such
       consolidation,  merger, sale or transfer, all the obligations and duties of
       the Company  pursuant to this  Agreement;  (iii) the term  "Company"  shall
       thereafter  be  deemed  to refer to such  Principal  Party;  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 accordance with
       Section 9 hereof) in connection with such  consummation as may be necessary
       to assure that the provisions  hereof shall  thereafter be  applicable,  as
       nearly as reasonably  may be, in relation to the Common  Shares  thereafter
       deliverable  upon  the  exercise  of the  Rights.  The  Company  shall  not
       consummate any such  consolidation,  merger,  sale or transfer unless prior
       thereto the  Company  and such  Principal  Party  shall have  executed  and
       delivered to the Rights Agent a  supplemental  agreement so providing.  The
       Company  shall not enter into any  transaction  of the kind  referred to in
       this  Section 13 if at the time of such  transaction  there are any rights,
       warrants,  instruments  or  securities  outstanding  or any  agreements  or
       arrangements  which, as a result of the  consummation of such  transaction,
       would  eliminate or  substantially  diminish  the  benefits  intended to be
       afforded by the Rights.  The provisions of this Section 13 shall  similarly
       apply to successive mergers or consolidations or sales or other transfers.
  
       "Principal  Party" shall mean, in the case of any transaction  described in
       clause (a), (b) or (c) of this  Section 13, the Person  referred to therein
       (or such Person's  successor,  including the Company),  PROVIDED,  HOWEVER,
       that  in any  such  case,  (i) if  such  Person  is a  direct  or  indirect
       Subsidiary of another Person,  "Principal  Party" shall refer to such other
       Person  and  (ii)  in  case  such  Person  is  a  Subsidiary,  directly  or
       indirectly,  of more than one  Person,  "Principal  Party"  shall  refer to
       whichever  of such  Persons is the issuer of the Common  Shares  having the
       greatest aggregate market value.
  
       Notwithstanding anything in this Agreement to the contrary, this Section 13
       shall not be applicable to a transaction described in clauses (a) or (b) of
       this Section 13 if: (i) such  transaction is  consummated  with a Person or
       Persons who acquired  Common  Shares  pursuant to an offer  satisfying  the
       requirements of Section 11(a)(iii) hereof (or a wholly-owned  Subsidiary of
       any such  Person or  Persons)  within 120 days of the  termination  of said
       offer;  (ii)  the  price  per  share  of  Common  Shares  offered  in  such
       transaction  is not less than the price per share of Common  Shares paid to
       all holders of Common Shares whose shares were  purchased  pursuant to such
       offer; and (iii) the form of  consideration  being offered to the remaining
       holders  of  Common  Shares  pursuant  to such  transaction  in cash.  Upon
       consummation of any such  transaction  contemplated by this third paragraph
       of Section 13, all Rights hereunder shall immediately expire.
  
                                         18
  Section 14. FRACTIONAL RIGHTS AND FRACTIONAL SHARES.
  
       (a)  The Company  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 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 in the  over-the-counter
            market,  as reported by NASDAQ or such other 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  Company.  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 Company shall be used.
  
       (b)  The Company shall not be required to issue  fractions of Common Shares
            upon  exercise  of the  Rights  or to  distribute  certificates  which
            evidence  fractional  Common  Shares.  In  lieu of  fractional  Common
            Shares,  the  Company  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 Common Share.  For the purpose of this Section 14(b), the
            current market value of a Common Share shall be the closing price of a
            Common Share (as determined pursuant to the second sentence of Section
            11(d)  hereof) for the Trading  Day  immediately  prior to the date of
            such exercise.
  
       (c)  The holder of a Right by the acceptance of the Right expressly  waives
            his right to receive any fractional  Rights or any  fractional  shares
            upon exercise of a Right (except as provided above).
  
  Section 15. RIGHTS OF ACTION.
  
       All rights of action in respect of this Agreement,  excepting the rights of
       action give 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 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 Company
       to enforce,  or  otherwise  act in respect  of, his right to  exercise  the
       Rights  evidenced by such Right  Certificate 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
  
                                                         20
  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 Company 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 on the registry  books of the Rights Agent if  surrendered at the
            principal office of the Rights Agent,  duly endorsed or accompanied by
            a proper instrument of transfer; and
  
       (c)  the  Company  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  Certificates  or the  associated
            Common Shares certificate made by anyone other than the Company or the
            Rights Agent) for all purposes whatsoever, and neither the Company nor
            the Rights Agent shall be affected by any notice to the contrary.
  
  Section 17. RIGHT CERTIFICATE HOLDER NOT DEEMED A SHAREHOLDER.
  
       No  holder of any  Right  Certificate,  by reason of being a holder of such
       Right  Certificate,  shall be entitled  to vote,  receive  dividends  or be
       deemed  for any  purpose  the  holder  of the  Common  Shares  or any other
       securities of the Company 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,  by reason of being a holder of such Right Certificate,
       any of the rights of a shareholder  of the Company or any right to vote for
       the election of directors or upon any matter  submitted to  shareholders at
       any  meeting  thereof,  or to give or  withhold  consent  to any  corporate
       action,  or to  receive  notice  of  meetings  or other  actions  affecting
       shareholders  (except as  provided  in Section  25  hereof),  or to receive
       dividends 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.
  
       The Company 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  administration  and  execution  of  this
       Agreement and the exercise and  performance  of its duties  hereunder.  The
       Company  also  agrees to  indemnify  the Rights  Agent for,  and to hold it
       harmless  against,  any  loss,  liability,  or  expense,  incurred  without
       negligence,  bad  faith or  willful  misconduct  on the part of the  Rights
       Agent,  for anything done or omitted by the Rights Agent in connection with
       the acceptance and  administration  of this Agreement,  including the costs
       and expenses of defending against any claim of liability in the premises.
  
       The Rights Agent shall be  protected  and shall incur no ability for, or in
       respect of any action taken,  suffered or omitted by it in connection with,
       its administration of this Agreement in reliance upon any Right Certificate
  
                                         20
  or  certificate  for the  Common  Shares  or for  other  securities  of the
       Company,   instrument  of  assignment  or  transfer,   power  of  attorney,
       endorsement,  affidavit, letter, notice, direction,  consent,  certificate,
       statement,  or other paper or document  believed by it to be genuine and to
       be signed, executed and, where necessary,  verified or acknowledged, by the
       proper  person or persons,  or otherwise  upon the advice of counsel as set
       forth in Section 20 hereof.
  
  Section 19.  MERGER OR CONSOLIDATION OR CHANGE OF NAME OF RIGHTS AGENT.
  
       Any corporation  into which the Rights Agent or any successor  Rights Agent
       may be  merged or with  which it may be  consolidated,  or any  corporation
       resulting from any merger or consolidation to which the Rights Agent or any
       successor  Rights Agent shall be a party, or any corporation  succeeding to
       the stock  transfer or corporate  trust 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
       corporation  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 the  predecessor  Rights  Agent and deliver such Right
       Certificates  so  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  Rights Agent 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 Certificate 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  the duties and  obligations  imposed by this
       Agreement  upon the  following  terms and  conditions,  by all of which the
       Company 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  Company),  and the opinion of such  counsel  shall be
            full and complete  authorization and protection to the Rights Agent as
            to any action  taken 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 be  proved or  established  by the  Company  prior to taking or
            suffering  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 Executive Vice President or the Secretary
            of the Company and delivered to the Rights Agent; and such certificate
  
                                         21
  shall be full  authorization  to the Rights Agent for any action taken
            or suffered in good faith by it under the provisions of this Agreement
            in reliance upon such certificate.
  
       (c)  The Rights  Agent  shall be liable  hereunder  to the  Company and any
            other  Person  only  for its own  negligence,  bad  faith  or  willful
            misconduct.
  
       (d)  The  Rights  Agent  shall not be liable for or by reason of any of the
            statements of fact or recitals  contained in this  Agreement or in the
            Right  Certificates  (except  its  countersignature   thereof)  or  be
            required to verify the same, but all such  statements and recitals are
            and shall be deemed to have been made by the Company only.
  
       (e)  The Rights Agent shall not be under any  responsibility  in respect of
            the validity of the  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  Company  of any  covenant  or  condition  contained  in  this
            Agreement or in any Right Certificate; nor shall it be responsible for
            any change in the  exercisability  of the Rights (including the Rights
            becoming void pursuant to Section  11(a)(ii) hereof) or any adjustment
            in the terms of the Rights  (including  the  manner,  method or amount
            thereof)  provided  for  in  Section  3,  11,  13,  23 or  24,  or the
            ascertaining  of the  existence  of facts that would  require any such
            change or  adjustment  (except  with respect to the exercise of Rights
            evidenced by Right  Certificates  after actual notice that such change
            or  adjustment  is  required);  nor shall it by any act  hereunder  be
            deemed to make any  representation or warranty as to the authorization
            or  reservation  of any Common  Shares to be issued  pursuant  to this
            Agreement or any Right  Certificate or as to whether any Common Shares
            will, when issued,  be validly  authorized and issued,  fully paid and
            nonassessable.
  
       (f)  The Company  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 Executive Vice President or the Secretary
            of  the  Company,  and  to  apply  to  such  officers  for  advice  or
            instruction in connection with its duties,  and it shall not be liable
            for any action  taken or  suffered  by it in good faith in  accordance
            with instructions of any such officer or for any delay in acting while
            waiting for those instructions.
  
       (h)  The Rights Agent and any shareholder, director, officer or employee of
            the Rights  Agent may buy,  sell or deal in any of the Rights or other
            securities  of the  Company or become  pecuniarily  interested  in any
            transaction in which the Company may be  interested,  or contract with
            or lend money to the Company 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 Company or for any other 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
  
                                         22
  answerable or accountable for any act, default,  neglect or misconduct
            of any  such  attorneys  or  agents  or for any  loss  to the  Company
            resulting from any such act, default, neglect or misconduct,  provided
            reasonable   care  was   exercised  in  the  selection  and  continued
            employment thereof.
  
       (j)  At any time and from time to time after the  Distribution  Date,  upon
            the request of the Company, the Rights Agent shall promptly deliver to
            the Company a list, as of the most recent  practicable  date (or as of
            such earlier date as may be specified by the Company),  of the holders
            of record of Rights.
  
  Section 21.  CHANGE OF RIGHTS AGENT.
  
       The Rights Agent or any successor Rights Agent was resign and be discharged
       from its duties under this Agreement upon 30 days' notice in writing mailed
       to  the  Company  and to  each  transfer  agent  of the  Common  Shares  by
       registered or certified mail, and to the holders of the Right  Certificates
       by  first-class  mail.  The  Company  may remove  the  Rights  Agent or any
       successor  Rights  Agent  upon 30 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 by registered or certified mail, and to
       the 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 Company shall  appoint a successor to the Right Agent.  If the
       Company  shall  fail to make  such  appointment  within a period of 30 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 Company),  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  Company or by such a
       court,  shall be a corporation  organized and doing business under the laws
       of the  United  States  or any state of the  United  States so long as such
       corporation  is  authorized  to do  business as a banking  institution,  is
       authorized  under such laws to exercise  corporate  trust or stock transfer
       powers,  is in good standing,  and is subject to supervision or examination
       by federal or state  authority,  and has at the time of its  appointment as
       Rights Agent a combined capital and surplus of at least $50 million.  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 Company shall
       file notice with the  predecessor  Rights Agent and each transfer  agent of
       the Common  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 Company 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
  
                                         23
  or other securities or property  purchasable  under the Right  Certificates
       made in accordance with the provisions of this Agreement.
  
  Section 23. REDEMPTION.
  
       (a)  The Company  may, at its option and with the  approval of the Board of
            Directors,  at any time prior to the close of  business on the earlier
            of (i) the tenth day after the Shares Acquisition Date, (or such later
            date as may be  determined  by action of a majority of the  Continuing
            Directors then in office prior to the expiration of said tenth day, or
            any such extended  period,  and publicly  announced by the Company) or
            (ii) the Final Expiration  Date,  redeem all but not less than all the
            then  outstanding  Rights  at a  redemption  price of $.01 per  Right,
            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");
            PROVIDED,  however,  that if,  following  the  occurrence  of a Shares
            Acquisition  Date  and  following  the  expiration  of  the  right  of
            redemption  hereunder but prior to any event described in clauses (A),
            (B) or (C) of Section  11(a)(ii) or clauses (a), (b) or (c) of Section
            hereof, (i) a Person who is an Acquiring Person shall have transferred
            or  otherwise  disposed of a number of shares of Common  Shares in one
            transaction  or series of  transactions,  not  directly or  indirectly
            involving the Company or any of its Subsidiaries, which did not result
            in the occurrence of an event  described in clauses (A), (B) or (C) of
            Section 11(a)(ii) or clauses (a), (b) or (c) of Section 13 hereof such
            that such Person is  thereafter a  Beneficial  Owner of 20% or less of
            the  outstanding  Common Shares,  and (ii) there are no other Persons,
            immediately  following the occurrence of the event described in clause
            (i), who are Acquiring Persons,  then the right of redemption shall be
            reinstated and thereafter be subject to the provisions of this Section
            23. The redemption of the Rights by the Board of Directors may be made
            effective at such time, on such basis and with such  conditions as the
            Board of Directors in its sole discretion may establish.
  
       (b)  Immediately  upon the action of the Board of  Directors of the Company
            ordering the  redemption  of the Rights  pursuant to paragraph  (a) of
            this  Section  23, 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  shall be to receive  the
            Redemption Price. The Company shall promptly give public notice 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 10 days after such action of the Board of Directors
            ordering the redemption of the Rights, the Company shall mail a notice
            of  redemption  of the  Rights,  the  Company  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 book 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.
  
  Section 24. EXCHANGE.
  
       (a)  The Company  may, at its option,  by majority  vote of the  Continuing
            Directors  then in  office,  at any time after an event  described  in
            clauses  (A),  (B) or (C) or Section  11(a)(ii) or clauses (a), (b) or
            (c) of Section 13 hereof, exchange all or part of the then outstanding
  
                                         25
  and  exercisable  Rights  (which  shall not  include  Rights that have
            become void pursuant to the  provisions of Section  11(a)(ii)  hereof)
            for Common Shares 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  shall not be
            empowered to effect such  exchange at any time after any Person (other
            than the Company,  any Subsidiary of the Company, any employee benefit
            plan  of the  Company  or of any  such  Subsidiary,  or of any  entity
            holding  Common Shares for or pursuant to the terms of any such 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 Company
            ordering  the  exchange of any Rights  pursuant to Section (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 a holder 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 Company shall promptly
            give public notice 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 Company 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 which will be exchanged.  Any
            partial  exchange  shall be  effected  pro rata based on the number of
            Rights  (other  than Rights  which have  become  void  pursuant to the
            provisions of Section 11(a)(ii) hereof) held by each holder of Rights.
  
       (c)  In the  event  that  there  shall  not  be  sufficient  Common  Shares
            authorized   but   unissued  to  permit  any  exchange  of  Rights  as
            contemplated in accordance with this Section 24, the Company shall use
            its best  efforts  to  cause  all  such  action  to be taken as may be
            necessary  to authorize  additional  Common  Shares for issuance  upon
            exchange of the Rights.
  
       (d)  The Company shall not be required to issue  fractions of Common Shares
            or to distribute certificates which evidence fractional Common Shares.
            In lieu of such fractional Common Shares, the Company shall pay to the
            registered holders of the Right Certificates with regard to which such
            fractional Common Shares would otherwise be issuable an amount in cash
            equal to the same  fraction  of the  current  market  value of a whole
            Common  Share.  For the  purpose of this  paragraph  (e),  the current
            market value of a whole  Common Share shall be the closing  price of a
            Common Share (as determined pursuant to the second sentence of Section
            11(d)  hereof) for the Trading  Day  immediately  prior to the date of
            exchange pursuant to this Section 24.
  
  Section 25. NOTICE OF CERTAIN EVENTS.
  
       (a)  In case the Company shall  propose (i) to pay any dividend  payable in
            stock of any class to the holders of its Common  Shares or to make any
            other  distribution  to the holders of its Common Shares (other than a
            regular periodic cash dividend), (ii) to offer to the  holders  of its
  
                                         25
  Common Shares rights to warrants to subscribee  for or to purchase any
            additional  Common Shares or shares of stock of any class or any other
            securities,  rights or options,  (iii) to effect any  reclassification
            involving only the subdivision of outstanding Common Shares),  (iv) to
            effect any consolidation or merger into or with, or to effect any sale
            or the  transfer  (or to  permit  one or more if 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  Company  and its
            Subsidiaries  (taken as a whole) to, any other  Person,  (v) to effect
            the  liquidation,  dissolution or winding up of the Company,  then, in
            each such  case,  the  Company  shall  give to each  holder of a Right
            Certificate,  in accordance  with Section 26 hereof,  a notice of such
            proposed action,  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 Common 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 10
            days prior to the record  date for  determining  holders of the Common
            Shares for purposes of such action,  and in the case of any such other
            action,  at least 10 days  prior  to the  date of the  taking  of such
            proposed action or the date of participation therein by the holders of
            the Common Shares, whichever shall be the earlier.
  
       (b)  In case any of the events set forth in Section  11(a)(ii) hereof shall
            occur,  then the Company 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.
  
  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 Company
       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:
  
                             ILC Technology, Inc
                             399 Java Drive
                             Sunnyvale, California 94089
                             Attention:  Corporate Secretary
  
       Subject  to the  provisions  of  Section  21  hereof,  any notice or demand
       authorized  by this  Agreement to be given or made by the Company 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 Company) as
       follows:
  
                             Security Pacific National Bank
                             701 South Western Avenue
                             Glendale, California 91201
                             Attention:  Equity Administration
  
       Notices or demands  authorized by this Agreement to be given or made by the
       Company or the Rights Agent to the holder of any Right Certificate shall be
       sufficiently given or made if sent by  first-class  mail, postage  prepaid,
  
                                         26
  addressed  to such  holder at the  address  of such  holder as shown on the
       registry books of the Company.
  
  Section 27.  SUPPLEMENTS  AND  AMENDMENTS.
  
       The  Company  may from  time to time  supplement  or amend  this  Agreement
       without the approval of any holders of Right  Certificates in order to cure
       any  ambiguity,  to correct or supplement  any provision  contained  herein
       which may be defective or inconsistent with any other provisions herein, or
       to make any other  provisions  with respect to the Rights which the Company
       may deem  necessary or  desirable,  any such  supplement or amendment to be
       evidenced  by a  writing  signed  by the  Company  and  the  Rights  Agent;
       PROVIDED,  however,  that  from  and  after  the  Distribution  Date,  this
       Agreement shall not be amended in any manner which would  adversely  affect
       the  interests  of the  holders  of  Rights;  PROVIDED  FURTHER,  that  any
       amendment to shorten or lengthen any time period  hereunder  following  the
       Distribution Date shall be effective only if there are Continuing Directors
       and  shall  require  the  concurrence  of a  majority  of  such  Continuing
       Directors; PROVIDED FURTHER, that this Agreement may not be supplemented or
       amended  to  lengthen  a time  period  relating  to when the  Rights may be
       redeemed  at such time as the Rights are not then  redeemable  or any other
       time period  unless  such  lengthening  is for the  purpose of  protecting,
       enhancing or clarifying  the rights of, and/or the benefits to, the holders
       of Rights;  and PROVIDED FURTHER,  that no amendment to Section  11(a)(iii)
       hereof may be effected  except with the  unanimous  written  consent of the
       Board of Directors  of the Company.  Without  limiting the  foregoing,  the
       Company  may at any  time  prior  to such  time as any  Person  becomes  an
       Acquiring  Person amend this Agreement to lower the thresholds set forth in
       Sections  1(a) and 3(a) to not less than the greater of (i) any  percentage
       greater than the largest  percentage of the outstanding  Common Shares then
       known by the Company to be beneficially owned by any Person (other than the
       Company,  any Subsidiary of the Company,  any employee  benefit plan of the
       Company or of any  Subsidiary of the Company or any entity  holding  Common
       Shares for or pursuant to the terms of any such plan) and (ii) 15%.
  
  Section 28. REGISTRATION OF SECURITIES.
  
       The Company  may  temporarily  suspend,  for a period of time not to exceed
       ninety (90) days, the  exercisability of the Rights in order to prepare and
       file, if deemed necessary by the Company, such registration  statements and
       other  filings  under  the  Securities  Act of 1933,  as  amended,  and the
       securities or "blue sky" laws of any state,  with respect to any securities
       purchasable  upon the  exercise  of the  Rights,  and to permit the same to
       become  effective.  Upon any such  suspension,  the  Company  shall issue a
       public announcement  stating that the exercisability of the Rights has been
       temporarily suspended, as well as a public announcement at such time as the
       suspension  is no longer in effect.  Notwithstanding  any provision of this
       Agreement  to the  contrary,  the Rights  shall not be  exercisable  in any
       jurisdiction  unless the requisite  qualification in such  jurisdiction has
       been  obtained,  or  an  exemption  therefrom  shall  be  available,  and a
       registration statement has been declared effective.
  
  Section 29.  DETERMINATIONS AND ACTIONS BY THE BOARD OF DIRECTORS.
  
       The Board of Directors of the Company (and, where specifically provided for
       herein,  the  Continuing  Directors)  shall  have the  exclusive  power and
       authority  to  administer  this  Agreement  and to exercise  all rights and
       powers  specifically  granted to the Board or to the  Company  (and,  where
       specifically provided for herein, the Continuing  Directors),  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  a
       determination to redeem or  to not  redeem  the  Rights  or  to  amend  the
  
                                         27
  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 (or,
       where  specifically  provided for herein,  by the Continuing  Directors) in
       good faith, shall (x) be final,  conclusive and binding on the Company, the
       Rights Agent, the holders of the Rights and all other parties,  and (y) not
       subject  the Board or the  Continuing  Directors  to any  liability  to the
       holders of the Rights.
  
  Section 30. SUCCESSORS.
  
       All the covenants and provisions of this Agreement by or for the benefit of
       the  Company or the  Rights  Agent  shall bind and inure to the  benefit of
       their respective successors and assigns hereunder.
  
  Section 31.  BENEFITS  OF THIS  AGREEMENT.
  
       Nothing  in this  Agreement  shall be  construed  to give to any  person or
       corporation  other than the Company,  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 Company,  the Rights Agent and the  registered  holders of the Right
       Certificates (and, prior to the Distribution Date, the Common Shares).
  
  Section 32.  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;  PROVIDED,  HOWEVER,
       that  notwithstanding  anything in this  Agreement to the contrary,  if any
       such term,  provision,  covenant  or  restriction  is held by such court of
       authority to be invalid,  void or unenforceable  and the Board of Directors
       of the Company  determines  in its good faith  judgment  that  severing the
       invalid  language from this Agreement would adversely affect the purpose or
       effect of this  Agreement,  the right of redemption set forth in Section 23
       hereof shall be  reinstated if such right has  previously  lapsed and shall
       not expire until the close of business on the tenth day  following the date
       of such determination by the Board of Directors.
  
  Section 33.  GOVERNING  LAW.
  
       This Agreement and each Right Certificate  issued hereunder shall be deemed
       to be a contract made under the laws of the State of California 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.
  
  Section 34.  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 35. DESCRIPTIVE  HEADINGS.
  
       Descriptive headings of the several Sections of this Agreement are inserted
       for  convenience  only and  shall not  control  or affect  the  meaning  of
       construction of any of the provisions hereof.
  
       IN WITNESS  WHEREOF,  the parties  hereto have caused this  Agreement to be
  duly executed and attested, all as of the day and year first above written.
  
                                         28
  ILC TECHNOLOGY, INC.
  
                                           By:__________________________________
  
                                              __________________________________
                                              Title:
  
                                           SECURITY PACIFIC NATIONAL BANK
  
                                           By: _________________________________
  
                                               _________________________________
                                               Title:
  
                                         29
  EXHIBIT A
  
                              FORM OF RIGHT CERTIFICATE
  
  Certificate No. R-                                             _______ Rights
  
  NOT  EXERCISABLE  AFTER  SEPTEMBER 29, 1999 OR EARLIER IF REDEMPTION OR EXCHANGE
  OCCURS.  THE RIGHTS ARE SUBJECT TO  REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
  ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
  
                                  RIGHT CERTIFICATE
  
                                ILC TECHNOLOGY, INC.
  
       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 September 29, 1989 (the "Rights  Agreement"),
  between ILC Technology,  Inc., a California  corporation  (the  "Company"),  and
  Security  Pacific  National  Bank (the  "Rights  Agent"),  to purchase  from the
  Company at any time after the Distribution  Date (as such term is defined in the
  Rights  Agreement) and prior to 5:00 P.M., San Francisco  time, on September 29,
  1999 at the  principal  office  of the  Rights  Agent,  or at the  office of its
  successor as Rights Agent, one fully paid non-assessable  share of Common Stock,
  no par value (the "Common Shares"),  of the Company,  at a purchase price of $30
  per Common  Share (the  "Purchase  Price")  payable  as  provided  in the Rights
  Agreement,  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 Common Shares 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  ________________,  199___, based on the
  Common Shares as constituted at such date. As provided in the Rights  Agreement,
  the Purchase  Price and the number of Common Shares which may be purchased  upon
  the exercise of the Rights  evidenced by this Right  Certificate  are subject to
  modifications and adjustment upon the happening of certain events.
  
       This Right  Certificate  is subject  to all of the  terms,  provisions  and
  conditions of the Rights Agreement,  which terms,  provisions and conditions 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 Company and the holders of the Right  Certificates.  Copies of
  the  Rights  Agreement  are on file at the  principal  executive  offices of the
  Company and the above-mentioned offices of the Rights Agent.
  
                                         30
  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
  Common  Shares  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  (i) may be redeemed by the Company at a  redemption  price of
  $.01 per Right or (ii) may be exchanged in whole or in part for Common Shares.
  
       No  fractional  Common Shares will be issued upon the exercise of any Right
  or Rights evidenced hereby,  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 Common Shares or of any
  other  securities  of the  Company  which  may at any  time be  issuable  on the
  exercise hereof,  nor shall anything contained in the Rights Agreement or herein
  by construed to confer upon the holder  hereof,  as such, any of the rights of a
  shareholder of the Company or any right to vote for the election of directors or
  upon any matter submitted to shareholders at any meeting thereof,  or to give or
  withhold consent to any corporation  action, or to receive notice of meetings or
  other  actions  affecting   shareholders  (except  as  provided  in  the  Rights
  Agreement), or to receive dividends 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.
  
       WITNESS the facsimile  signature of the proper  officers of the Company and
  its corporate seal. Dated as of __________________, 199__.
  
  ATTEST:                                      ILC TECHNOLOGY, INC.
  
  _______________________________              By: ______________________________
  
  Countersigned:
  
  _______________________________
  
  By: ___________________________
           Authorized Signature
  
                                         31
  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  _____________________________________________  this  Right
  Certificate,  (Please  print name and address of  transferee)  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  Company,  with  full  power of
  substitution.
  
  Dated:____________________________, 19__
  
                                                 _________________________________
                                                 Signature
  
  Signature Guaranteed:
  
       Signatures  must be  guaranteed  by a member firm of a registered  national
  securities exchange, a member of the National Association of Securities Dealers,
  Inc., or a commercial bank or trust company having an office or correspondent in
  the United States.
  
       The undersigned  hereby  certifies that the Rights  evidenced by this Right
  Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
  Associate thereof (as defined in the Rights Agreement).
  
                                                 _________________________________
                                                 Signature
  
                                          32
  Form of Reverse Side of Right Certificate -- continued
  
                            FORM OF ELECTION TO PURCHASE
  
                        (To be executed if holder desires to
                          exercise the Right Certificate.)
  
  To ILC TECHNOLOGY, INC.:
  
       The undersigned hereby irrevocably elects to exercise _____________________
  Rights  represented  by this Right  Certificate  to purchase  the Common  Shares
  issuable  upon the exercise of such Rights and requests  that  certificates  for
  such Common Shares 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)
  
  Dated: ____________________________, 19__.
  
                                            ______________________________________
                                            Signature
  
  Signature Guaranteed:
  
       Signatures  must be  guaranteed  by a member firm of a registered  national
  securities exchange, a member of the National Association of Securities Dealers,
  Inc., or a commercial bank or trust company having an office or correspondent in
  the United States.
  
                                          33
  Form of Reverse Side of Right Certificate -- continued
  
       The undersigned  hereby  certifies that the Rights  evidenced by this Right
  Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
  Associate thereof (as defined in the Rights Agreement).
  
                                               __________________________________
                                               Signature
  
                                       NOTICE
  
       The  signature in the  foregoing  Forms of  Assignment  and  Election  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
  Company  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 defined in the Rights  Agreement) and such  Assignment of
  Election to Purchase will not be honored.
  
                                         34
  EXHIBIT B
  
                     SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
  
       In 1989,  the Board of Directors of ILC  Technology,  Inc. (the  "Company")
  declared and paid a dividend of one common share  purchase right (a "Right") for
  each outstanding share of common stock, no par value (the "Common  Shares"),  of
  the Company.  Each Right  entitles the  registered  holder to purchase  from the
  Company  one Common  Share at a price of $55 per share (the  "Purchase  Price"),
  subject to adjustment.  The description and terms of the Rights are set forth in
  a Rights  Agreement  dated as of  September  29,  1989  between  the Company and
  Security  Pacific National Bank, as Rights Agent (with  ChaseMellon  Shareholder
  Services  L.L.C.  currently  serving as Rights Agent) (the "Rights  Agent"),  as
  amended as of February 25, 1997 (the "Rights Agreement").
  
       Until the earlier to occur of the close of business on (i) 10 days (or such
  later date as may be determined by action of the Board of Directors) following a
  public  announcement that a person or group of affiliated or associated  persons
  (an "Acquiring Person") have acquired beneficial ownership of 15% or more of the
  outstanding Common Shares or (ii) 10 business days (or such later date as may be
  determined by action of the Board of Directors)  following the  commencement of,
  or  announcement  of an intention to make, a tender offer or exchange  offer the
  consummation  of which would result in the  beneficial  ownership by a person or
  group of 15% or more of such  outstanding  Common  Shares  (the  earlier of such
  dates being called the "Distribution Date"), the Rights will be evidenced,  with
  respect to any of the Common Shares  certificates  outstanding  as of the Record
  Date, by such Common Share  certificate  regardless of whether such  certificate
  has a copy of this Summary of Rights attached thereto.
  
       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  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
  such separate Right Certificates alone will evidence the Rights.
  
       The Rights are not exercisable until the Distribution Date. The rights will
  expire on December 31, 2006 (the "Final Expiration Date"), unless the Rights are
  earlier redeemed or exchanged by the Company, in each case, as described below.
  
       The  Purchase  Price  payable,  and the  number of  Common  Shares or other
  securities  or  property  issuable,  upon  exercise of the Rights are subject to
  adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
  dividend  on, or a subdivision,  combination or reclassification  of, the Common
  
                                        35
  Shares (ii) upon the grant to holders of the Common Shares of certain  rights or
  warrants to subscribe for or purchase  Common  Shares at a price,  or securities
  convertible  into Common  Shares  with a  conversion  price,  less than the then
  current  market  price of the Common  Shares or (iii) upon the  distribution  to
  holders of the Common Shares of evidences of indebtedness  or assets  (excluding
  regular  periodic cash  dividends  paid out of earnings or retained  earnings or
  dividends payable in Common Shares) or of subscription rights or warrants (other
  than those referred to above).
  
       The number of outstanding  Rights and the number of Common Shares  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 a subdivision,  consolidation  or combination of the
  Common Shares occurring, in any such case, prior to the Distribution Date.
  
       Common  Shares  purchasable  upon  exercise  of  the  Rights  will  not  be
  redeemable.
  
       In the event that the  Company is  acquired  in a merger or other  business
  combination  transaction  or 50% or more of its  consolidated  assets or earning
  power are sold after a person becomes an Acquiring Person, proper provision will
  be made so that each holder of Right will  thereafter have the right to receive,
  upon the exercise thereof at the then current exercise price of the Right,  that
  number of shares of common stock of the  acquiring  company which at the time of
  such transaction will have a market value of two times the exercise price of the
  Right.  In the event that (i) any person or group of  affiliated  or  associated
  persons becomes the beneficial  owner of 15% or more of the  outstanding  Common
  Shares (unless such person first acquires 15% or more of the outstanding  Common
  Shares by a purchase pursuant to a tender offer for all of the Common Shares for
  cash, which purchase increases such person's beneficial ownership to 90% or more
  of the outstanding  Common Shares),  (ii) an Acquiring  Person engages in one or
  more  "self-dealing"  transactions as set forth in the Rights Agreement or (iii)
  during  such  time  as  there  is  an  Acquiring   Person,   there  shall  be  a
  reclassification  of securities or a  recapitalization  or reorganization of the
  Company or other  transaction  or series of  transactions  involving the Company
  which has the effect of  increasing by more than 3% the  proportionate  share of
  the outstanding  shares of any class of equity  securities of the Company or any
  of its subsidiaries beneficially owned by the Acquiring Person, proper provision
  shall be made so that each  holder of a Right,  other than  Rights  beneficially
  owned by the Acquiring  Person (which will thereafter be void),  will thereafter
  have the right to receive upon exercise that number of Common Shares (or, in the
  event  that  there  are  insufficient   authorized  Common  Shares,   substitute
  consideration such as cash,  property or other securities of the Company) have a
  market value of two times the exercise price of the Right.
  
       At any time  after the  occurrence  of any of the events  described  in the
  preceding  paragraph and prior to the acquisition by such person or group of 50%
  or more of the outstanding  Common Shares, the Board of Directors of the Company
  may exchange  the Rights  (other than Rights owned by such person or group which
  have become void), in whole or in part, at an exchange ratio of one Common Share
  per Right (subject to adjustment).
  
       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 Common  Shares will  be  issued and  in  lieu
  
                                         36
  thereof,  an  adjustment  in cash will be made based on the market  price of the
  Common Shares on the last trading day prior to the date of exercise.
  
       At any time prior to 10 days (or such later  date as may be  determined  by
  action of the Board of Directors)  following a public announcement that a person
  has become an Acquiring Person, the Board of Directors of the Company may redeem
  the  Rights  in  whole,  but not in  part,  at a price of $.01  per  Right  (the
  "Redemption  Price").  After the  redemption  period has expired,  the Company's
  rights of redemption  may be reinstated  if, prior to any event  triggering  the
  right to receive upon exercise of a Right that number of Common Shares or shares
  of an acquiring company having a market value of two times the exercise price of
  the Right, an Acquiring  Person reduces its beneficial  ownership to 15% or less
  of the outstanding  Common Shares in a transaction or series of transactions not
  involving the Company.  The  redemption  of the rights may be made  effective at
  such time,  on such basis and with such  conditions as the Board of Directors in
  its sole  discretion  may  establish.  Immediately  upon any  redemption  of the
  Rights,  the right to exercise the Rights will  terminate  and the only right of
  the holders of Rights will be to receive the Redemption Price.
  
       The terms of the Rights may be  amended  by the Board of  Directors  of the
  Company without the consent of the holders of the Rights, including an amendment
  to lower certain thresholds  described above to not less than the greater of (i)
  any percentage  greater than the largest  percentage of the  outstanding  Common
  Shares then known to the Company to be beneficially owned by any person or group
  of  affiliated or  associated  persons and (ii) 15%,  except that from and after
  such time as any  person  becomes  an  Acquiring  Person no such  amendment  may
  adversely affect the interests of the holders of the Rights.
  
       Until a Right is  exercised,  the holder of a Right will not,  by reason of
  being such a holder,  have rights as a  shareholder  of the Company,  including,
  without limitation, the right to vote or to receive dividends.
  
       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 filed
  October 2, 1989 and amended by an amendment to such registration statement filed
  March 7, 1997. A copy of the Rights  Agreement is available  free of charge from
  the  Company.  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.
  
                                          37
  EXHIBIT C
  
  Sunnyvale, California - September 21, 1989.
  
  The Board of Directors of ILC  Technology,  Inc.  (NASDAQ:ILCT)  announced today
  that it has  adopted a  Shareholder  Rights  Plan and  retained  the  investment
  banking firm of Robert  Fleming  Pacific Inc. to assist the Board in  evaluating
  strategic  alternatives for the Company.  Such alternatives include the possible
  divestiture of the Company's United Detector  Technology (UDT) division based in
  Hawthorne, California and El Paso, Texas.
  
  The  Rights  Plan is similar to those  adopted  by many other  companies  and is
  triggered by any person or group  acquiring 20% or more of the Company's  common
  stock or the  announcement  of a tender  offer for 30% or more of the  Company's
  stock. The Plan gives  shareholders the right to purchase  additional  shares of
  the Company's common stock or shares of an acquiring  company at half the market
  price. The Rights Plan is intended to encourage  interested parties to bring any
  bona  fide  acquisition  plans  directly  to the  Board  in  order  to  maximize
  shareholder value.
  
  The Board also authorized  severance  agreements for certain key managers in the
  event of a change  of  control  of the  Company  or the  divestiture  of a major
  business.  Severance pay, in most cases,  will be six months and, in some cases,
  12 months. The  change-of-control  severance agreements are intended to maintain
  employment incentives for key managers during any negotiation process.
  
  Henry C. Baumgartner,  Chairman of the Board,  stated,  "The Board believes that
  the  retention  of  Flemings,   the  adoption  of  the  Rights  Plan,   and  the
  change-of-control severance agreements are helpful tools in our on-going efforts
  to protect and improve the value of ILCT shares."
  
  ILC Technology,  Inc.  incurred second and third quarter losses  associated with
  its  UDT  division,   which  manufactures  light  sensing  and   opto-electronic
  components and instruments. The ILC Light Source division, located in Sunnyvale,
  California, has grown profitably during the same period.
  
  For further information:
  
  Henry C. Baumgartner
  ILC Technology, Inc.
  
  399 Java Drive
  Sunnyvale, California 94089
  Telephone (408) 745-7900
  
                                         38
  EXHIBIT 2
  
                         FIRST AMENDMENT TO RIGHTS AGREEMENT
  
       This  First   Amendment,   dated  as  of  February  25,  1997  (the  "First
  Amendment"),  is to the Rights  Agreement  dated as of  September  29, 1989 (the
  "Agreement"),  between ILC  Technology,  Inc.,  a  California  corporation  (the
  "Company")  and  ChaseMellon  Shareholder  Services,  L.L.C.,  as  successor  to
  Security Pacific National Bank (the "Rights Agent").
  
       WHEREAS,  on  November  21,  1996,  the Board of  Directors  of the Company
  determined that it is in the best interests of the Company and its  shareholders
  to amend the  Agreement  in order to increase the  "Purchase  Price," as defined
  pursuant  to the terms of the  Agreement,  from $15.00 to $55.00  (after  giving
  effect  to the  Company's  two-for-one  stock  split  declared  by the  Board of
  Directors of the Company in 1991), to extend the Final Expiration Date under the
  Agreement  to  December  31,  2006  and to  reduce  certain  percentages  in the
  definition of "Acquiring  Person" and elsewhere to 15%, and the Rights Agent has
  agreed to such amendments; and
  
       WHEREAS, the Company and the Rights Agent have determined that, pursuant to
  Section 27 of the  Agreement,  the  Agreement may be amended as set forth herein
  without the approval of the holders of the Rights (as defined in the Agreement).
  
       NOW, THEREFORE,  in consideration of the premises and the mutual agreements
  set forth, the Agreement is hereby amended as follows:
  
       1.   Section 1(a) of the  Agreement is hereby  amended to change 20% to 15%
            throughout  such  Section,  so that such Section is hereby  amended to
            read in its entirety as follows:
  
            "(a) "Acquiring  Person"  shall  mean  any  Person  (as  such  term is
                 hereinafter  defined) who or which,  together with all Affiliates
                 and  Associates (as such terms are  hereinafter  defined) of such
                 Person,   shall  be  the  Beneficial   Owner  (as  such  term  is
                 hereinafter  defined)  of 15% more of the  Common  Shares  of the
                 Company then outstanding,  but shall not include the Company, any
                 Subsidiary (as such term is hereinafter  defined) of the Company,
                 any employee  benefit plan of the Company or of any Subsidiary of
                 the  Company,  or of any  entity  holding  Common  Shares  for or
                 pursuant  to the  terms of any  such  plan.  Notwithstanding  the
                 foregoing,  no Person shall become an  "Acquiring  Person" as the
                 result of an  acquisition  of Common Shares by the Company which,
                 by  reducing  the  number of shares  outstanding,  increases  the
                 proportionate  number of shares beneficially owned by such Person
                 to  15% or  more  of  the  Common  Shares  of  the  Company  then
                 outstanding; provided, however, that if a Person shall become the
                 Beneficial  Owner  of 15% or more  of the  Common  Shares  of the
                 Company  then  outstanding  by reason of share  purchases  by the
                 Company and shall,  after such share  purchases  by the  Company,
                 become the Beneficial  Owner of any  additional  Common Shares of
                 the Company, then such Person shall be deemed to be an "Acquiring
                 Person"."
  
                                         40
  2.   Section 1(k) of the  Agreement  is hereby  amended to read in its
                 entirety as follows:
  
                 (k)  "Final Expiration Date" shall mean December 31, 2006.
  
            3.   Section 1(r) of the Agreement is hereby  amended to change 30% to
                 15%  throughout  such  Section,  so that such  Section  is hereby
                 amended to read in its entirety as follows:
  
                 "(r) A "Trigger  Event" shall be deemed to have occurred upon any
                      Person  (other  than  the  Company,  any  Subsidiary  of the
                      Company,  any employee benefit plan of the Company or of any
                      Subsidiary of the Company,  or of any entity  holding Common
                      Shares  for or  pursuant  to the  terms of any  such  plan),
                      together with all  Affiliates and Associates of such Person,
                      becoming the  Beneficial  Owner of 15% or more of the Common
                      Shares of the Company then outstanding.  Notwithstanding the
                      foregoing, no Trigger Event shall be deemed to have occurred
                      as the  result of an  acquisition  of  Common  Shares by the
                      Company which, by reducing the number of shares outstanding,
                      increases the  proportionate  number of shares  beneficially
                      owned by such Person to 15% or more of the Common  Shares of
                      the Company then outstanding; provided, however, that in the
                      even that a Person shall become the Beneficial  Owner of 15%
                      or more of the Common Shares of the Company then outstanding
                      by reason of share purchases by the Company, a Trigger Event
                      shall be deemed to have  occurred  upon such  Person,  after
                      such share purchases by the Company, becoming the Beneficial
                      Owner of any additional Common Shares of the Company."
  
            4.   Section  3(a) of the  agreement  is hereby  amended to delete the
                 reference therein to "30%" and to insert in lieu thereof "15%."
  
            5.   Section 7(b) of the  agreement  is hereby  amended to read in its
                 entirety as follows  (the effect of this  amendment  is to change
                 the Purchase  Price as of the date of this First  Amendment  from
                 $15 to $55):
  
                 "(b) The  Purchase  Price for each Common  Share  pursuant to the
                      exercise of a Right shall be $55 as of the date of the First
                      Amendment to this Agreement,  shall be subject to adjustment
                      from time to time as  provided  in Sections 11 and 13 hereof
                      and shall be payable in lawful money of the United States of
                      America in accordance with paragraph (c) below."
  
            6.   Section  11(a)(i) of the  Agreement is hereby  amended to replace
                 "the date of this Agreement",  in the second line of such Section
                 with "the date of the First Amendment to this Agreement."
  
            7.   The form of Right Certificate attached as Exhibit A to the Rights
                 Agreement is hereby replaced in its entirety by the form of Right
                 Certificate attached as Exhibit A hereto.
  
            8.   As promptly as practicable  following the date of this Amendment,
                 the Company  shall cause the legend on the  certificates  for the
                 Common Stock referring to the Rights Agreement to be supplemented
                 so as to make reference to this Amendment.
  
                                          41
  9.   This Amendment  shall be limited solely to the matters  expressly
                 set forth herein and shall not (a)  prejudice any right or rights
                 which the Company may now have or may in the future have under or
                 in connection with the Agreement or any instruments or agreements
                 referred to therein or (b) except to the extent  expressed as set
                 forth  herein,  modify  the  Agreement  or  any  Rights,  or  any
                 instruments or agreements referred to therein.
  
            10.  Unless defined herein,  all defined terms shall have the meanings
                 provided in the Agreement.
  
            11.  This  Amendment  shall be deemed to be a contract  made under the
                 laws of the State of  California  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.
  
            12.  This Amendment 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. Signatures are deemed acceptable
                 from the facsimile transmission.
  
            13.  This Amendment shall be for the sole and exclusive benefit of the
                 Company,  the  Rights  Agent and the  registered  holders  of the
                 Rights  Certificates  (and, prior to the  Distribution  Date, the
                 Common  Shares).  Nothing in this Agreement shall be construed to
                 give any person other than the Company,  the Rights Agent and the
                 registered holders of the Rights  Certificates (and, prior to the
                 Distribution  Date,  the Common  Shares)  any legal or  equitable
                 right, remedy or claim under this Amendment.
  
       IN WITNESS  WHEREOF,  the parties  have caused  this  Amendment  to be duly
  executed and their respective corporate seals to be hereto affixed and attested,
  all as of the date and year first above written.
  
  ILC TECHNOLOGY, INC.                    CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
  
  By:    /s/ Ronald E. Fredianelli        By:     /s/ Asa Drew
  ---    -------------------------        ---     ------------
  
  Name:   Ronald E. Fredianelli           Name:   Asa Drew
  
  Title:    Chief Financial Officer       Title:    Assistant Vice President
  
                                         42
  EXHIBIT A
  
                              FORM OF RIGHT CERTIFICATE
  Certificate No. R-                                          _______ Rights
  
  NOT  EXERCISABLE  AFTER  DECEMBER 31, 2006 OR EARLIER IF  REDEMPTION OR EXCHANGE
  OCCURS.  THE RIGHTS ARE SUBJECT TO  REDEMPTION AT $.01 PER RIGHT AND TO EXCHANGE
  ON THE TERMS SET FORTH IN THE RIGHTS AGREEMENT.
  
                                  RIGHT CERTIFICATE
  
       ILC TECHNOLOGY, INC. 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 September 29,
  1989 and amended as of February ___, 1997 (the "Rights Agreement"),  between ILC
  Technology,  Inc., a California  corporation  (the  "Company"),  and ChaseMellon
  Shareholder Services,  L.L.C. (the "Rights Agent"), to purchase from the Company
  at any time after the  Distribution  Date (as such term is defined in the Rights
  Agreement) and prior to 5:00 P.M.,  San Francisco  time, on December 31, 2006 at
  the principal  office of the Rights Agent,  or at the office of its successor as
  Rights Agent, one fully paid non-assessable  share of Common Stock, no par value
  (the "Common Shares"),  of the Company,  at a purchase price of $____ per Common
  Share (the "Purchase Price") payable as provided in the Rights  Agreement,  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 Common  Shares  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 _______________,  based on the Common Shares
  as constituted at such date. As provided in the Rights  Agreement,  the Purchase
  Price and the number of Common  Shares 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.
  
       This Right  Certificate  is subject  to all of the  terms,  provisions  and
  conditions of the Rights Agreement,  which terms,  provisions and conditions 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 Company and the holders of the Right  Certificates.  Copies of
  the  Rights  Agreement  are on file at the  principal  executive  offices of the
  Company and the above-mentioned offices of the Rights Agent.
  
                                         43
  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
  Common  Shares  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  (i) may be redeemed by the Company at a  redemption  price of
  $.01 per Right or (ii) may be exchanged  in whole or in part for Common  Shares.
  
       No  fractional  Common Shares will be issued upon the exercise of any Right
  or Rights evidenced hereby,  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 Common Shares or of any
  other  securities  of the  Company  which  may at any  time be  issuable  on the
  exercise hereof,  nor shall anything contained in the Rights Agreement or herein
  be construed to confer upon the holder  hereof,  as such, any of the rights of a
  shareholder of the Company or any right to vote for the election of directors or
  upon any matter submitted to shareholders at any meeting thereof,  or to give or
  withhold  consent to any corporate  action,  or to receive notice of meetings or
  other  actions  affecting   shareholders  (except  as  provided  in  the  Rights
  Agreement), or to receive dividends 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.
  
       WITNESS the facsimile  signature of the proper  officers of the Company and
  its  corporate  seal.  Dated  as  of   __________________,   19__.
  
  ATTEST:                                      ILC TECHNOLOGY, INC.
  
  ___________________________________          By:   ____________________________
  
  Countersigned:
  
  ___________________________________
  
  By:  ______________________________
       Authorized Signature
  
                                         44
  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  _____________________________________________  this  Right
  Certificate,  (Please  print name and address of  transferee)
  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  Company,  with full
  power of substitution.
  
  Dated:  _____________________________, 19__
  
                                               __________________________________
                                               Signature
  
  Signature Guaranteed:
  
       Signatures  must be  guaranteed  by a member firm of a registered  national
  securities exchange, a member of the National Association of Securities Dealers,
  Inc., or a commercial bank or trust company having an office or correspondent in
  the United States.
  
       The undersigned  hereby  certifies that the Rights  evidenced by this Right
  Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
  Associate thereof (as defined in the Rights Agreement).
  
                                               __________________________________
                                               Signature
  
                                         45
  Form of Reverse Side of Right Certificate -- continued
  
                            FORM OF ELECTION TO PURCHASE
  
                        (To be executed if holder desires to
                          exercise the Right Certificate.)
  
  To ILC TECHNOLOGY, INC.:
  
       The undersigned hereby irrevocably elects to exercise _____________________
  Rights  represented  by this Right  Certificate  to purchase  the Common  Shares
  issuable  upon the exercise of such Rights and requests  that  certificates  for
  such Common Shares 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)
  
  Dated: _________________________, 19__.
  
                                          _______________________________________
                                          Signature
  
  Signature Guaranteed:  ________________________________________________________
  
       Signatures  must be  guaranteed  by a member firm of a registered  national
  securities exchange, a member of the National Association of Securities Dealers,
  Inc., or a commercial bank or trust company having an office or correspondent in
  the United States.
  
                                         46
  Form of Reverse Side of Right Certificate -- continued
  
       The undersigned  hereby  certifies that the Rights  evidenced by this Right
  Certificate are not beneficially owned by an Acquiring Person or an Affiliate or
  Associate thereof (as defined in the Rights Agreement).
  
                                               __________________________________
                                               Signature
  
                                       NOTICE
                                       ------
  
       The  signature in the  foregoing  Forms of  Assignment  and  Election  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
  Company  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 defined in the Rights  Agreement) and such  Assignment of
  Election to Purchase will not be honored.
  
                                          47
  EXHIBIT B
                                      ---------
  
                     SUMMARY OF RIGHTS TO PURCHASE COMMON SHARES
  
       In 1989,  the Board of Directors of ILC  Technology,  Inc. (the  "Company")
  declared and paid a dividend of one common share  purchase right (a "Right") for
  each outstanding share of common stock, no par value (the "Common  Shares"),  of
  the Company.  Each Right  entitles the  registered  holder to purchase  from the
  Company  one Common  Share at a price of $55 per share (the  "Purchase  Price"),
  subject to adjustment.  The description and terms of the Rights are set forth in
  a Rights  Agreement  dated as of  September  29,  1989  between  the Company and
  Security  Pacific National Bank, as Rights Agent (with  ChaseMellon  Shareholder
  Services  L.L.C.  currently  serving as Rights Agent) (the "Rights  Agent"),  as
  amended as of February 25, 1997 (the "Rights Agreement").
  
       Until the earlier to occur of the close of business on (i) 10 days (or such
  later date as may be determined by action of the Board of Directors) following a
  public  announcement that a person or group of affiliated or associated  persons
  (an "Acquiring Person") have acquired beneficial ownership of 15% or more of the
  outstanding Common Shares or (ii) 10 business days (or such later date as may be
  determined by action of the Board of Directors)  following the  commencement of,
  or  announcement  of an intention to make, a tender offer or exchange  offer the
  consummation  of which would result in the  beneficial  ownership by a person or
  group of 15% or more of such  outstanding  Common  Shares  (the  earlier of such
  dates being called the "Distribution Date"), the Rights will be evidenced,  with
  respect to any of the Common Shares  certificates  outstanding  as of the Record
  Date, by such Common Share  certificate  regardless of whether such  certificate
  has a copy of this Summary of Rights attached thereto.
  
       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  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
  such separate Right Certificates alone will evidence the Rights.
  
       The Rights are not exercisable until the Distribution Date. The rights will
  expire on December 31, 2006 (the "Final Expiration Date"), unless the Rights are
  earlier redeemed or exchanged by the Company, in each case, as described below.
  
       The  Purchase  Price  payable,  and the  number of  Common  Shares or other
  securities  or  property  issuable,  upon  exercise of the Rights are subject to
  adjustment  from time to time to  prevent  dilution  (i) in the event of a stock
  dividend on, or a subdivision, combination  or  reclassification  of, the Common
  
                                         48
  Shares (ii) upon the grant to holders of the Common Shares of certain  rights or
  warrants to subscribe for or purchase  Common  Shares at a price,  or securities
  convertible  into Common  Shares  with a  conversion  price,  less than the then
  current  market  price of the Common  Shares or (iii) upon the  distribution  to
  holders of the Common Shares of evidences of indebtedness  or assets  (excluding
  regular  periodic cash  dividends  paid out of earnings or retained  earnings or
  dividends payable in Common Shares) or of subscription rights or warrants (other
  than those referred to above).
  
       The number of outstanding  Rights and the number of Common Shares  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 a subdivision,  consolidation  or combination of the
  Common Shares occurring, in any such case, prior to the Distribution Date.
  
       Common  Shares  purchasable  upon  exercise  of  the  Rights  will  not  be
  redeemable.
  
       In the event that the  Company is  acquired  in a merger or other  business
  combination  transaction  or 50% or more of its  consolidated  assets or earning
  power are sold after a person becomes an Acquiring Person, proper provision will
  be made so that each holder of Right will  thereafter have the right to receive,
  upon the exercise thereof at the then current exercise price of the Right,  that
  number of shares of common stock of the  acquiring  company which at the time of
  such transaction will have a market value of two times the exercise price of the
  Right.  In the event that (i) any person or group of  affiliated  or  associated
  persons becomes the beneficial  owner of 15% or more of the  outstanding  Common
  Shares (unless such person first acquires 15% or more of the outstanding  Common
  Shares by a purchase pursuant to a tender offer for all of the Common Shares for
  cash, which purchase increases such person's beneficial ownership to 90% or more
  of the outstanding  Common Shares),  (ii) an Acquiring  Person engages in one or
  more  "self-dealing"  transactions as set forth in the Rights Agreement or (iii)
  during  such  time  as  there  is  an  Acquiring   Person,   there  shall  be  a
  reclassification  of securities or a  recapitalization  or reorganization of the
  Company or other  transaction  or series of  transactions  involving the Company
  which has the effect of  increasing by more than 3% the  proportionate  share of
  the outstanding  shares of any class of equity  securities of the Company or any
  of its subsidiaries beneficially owned by the Acquiring Person, proper provision
  shall be made so that each  holder of a Right,  other than  Rights  beneficially
  owned by the Acquiring  Person (which will thereafter be void),  will thereafter
  have the right to receive upon exercise that number of Common Shares (or, in the
  event  that  there  are  insufficient   authorized  Common  Shares,   substitute
  consideration such as cash,  property or other securities of the Company) have a
  market value of two times the exercise price of the Right.
  
       At any time  after the  occurrence  of any of the events  described  in the
  preceding  paragraph and prior to the acquisition by such person or group of 50%
  or more of the outstanding  Common Shares, the Board of Directors of the Company
  may exchange  the Rights  (other than Rights owned by such person or group which
  have become void), in whole or in part, at an exchange ratio of one Common Share
  per Right (subject to adjustment).
  
       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  Common Shares will be issued and in lieu
  thereof,  an  adjustment  in cash will be made based on the market  price of the
  Common Shares on the last trading day prior to the date of exercise.
  
                                        49
  At any time prior to 10 days (or such later  date as may be  determined  by
  action of the Board of Directors)  following a public announcement that a person
  has become an Acquiring Person, the Board of Directors of the Company may redeem
  the  Rights  in  whole,  but not in  part,  at a price of $.01  per  Right  (the
  "Redemption  Price").  After the  redemption  period has expired,  the Company's
  rights of redemption  may be reinstated  if, prior to any event  triggering  the
  right to receive upon exercise of a Right that number of Common Shares or shares
  of an acquiring company having a market value of two times the exercise price of
  the Right, an Acquiring  Person reduces its beneficial  ownership to 15% or less
  of the outstanding  Common Shares in a transaction or series of transactions not
  involving the Company.  The  redemption  of the rights may be made  effective at
  such time,  on such basis and with such  conditions as the Board of Directors in
  its sole  discretion  may  establish.  Immediately  upon any  redemption  of the
  Rights,  the right to exercise the Rights will  terminate  and the only right of
  the holders of Rights will be to receive the Redemption Price.
  
       The terms of the Rights may be  amended  by the Board of  Directors  of the
  Company without the consent of the holders of the Rights, including an amendment
  to lower certain thresholds  described above to not less than the greater of (i)
  any percentage  greater than the largest  percentage of the  outstanding  Common
  Shares then known to the Company to be beneficially owned by any person or group
  of  affiliated or  associated  persons and (ii) 15%,  except that from and after
  such time as any  person  becomes  an  Acquiring  Person no such  amendment  may
  adversely affect the interests of the holders of the Rights.
  
       Until a Right is  exercised,  the holder of a Right will not,  by reason of
  being such a holder,  have rights as a  shareholder  of the Company,  including,
  without limitation, the right to vote or to receive dividends.
  
       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 filed
  October 2, 1989 and amended by an amendment to such registration statement filed
  March 10, 1997. A copy of the Rights Agreement is available  free of charge from
  the  Company.  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.
  
   
  
                                        50