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                                                                   EXHIBIT 10.47

                          REGISTRATION RIGHTS AGREEMENT

Made and entered into this __________ day of August 1997 by and and among AG
Associates (Israel) Ltd., an Israeli company of Ramat Gabriel Industrial Park,
P.O.B. 171, Migdal Haemek 10551, Israel (the "Company"), AG Associates Inc., a
California corporation of 4425 Fortran Drive, San Jose, California 95134, USA
("AGA,'), Clal Electronics Industries Ltd., an Israeli company of Druyanov 5,
Tel Aviv, Israel ("CLAL"), and each of the Subscribers (as defined herein). All
of the above parties, are collectively referred to herein as the "Parties" and
each party is individually referred to herein as a "Party".

The parties hereby covenant and agrees as follows:

1.    Binding Effect

     This Registration Rights Agreement shall become effective, be valid and
     binding, among and between the Company, AGA, CLAL and each of the
     Subscribers (as defined herein), only if and when a Closing under the
     Subscription Agreement (as hereinbelow defined), has been held, ipso facto.

2.    Definitions

      2.1  The "Subscription Agreement" - the Preferred Shares Subscription
           Agreement executed by subscribers for the purchase of the Company's
           Preferred Shares, to which the form of this Registration Rights
           Agreement is attached as an Annex thereto.

      2.2  Capitalized terms unless otherwise defined herein shall have the
           meanings ascribed to such terms in the Subscription Agreement.

      2.3  The term "Subscriber(s) " as used herein shall mean any and all
           Subscribers, as this term is defined in the Subscription Agreement
           (excluding CLAL), and each of the Subscribers shall herein be
           referred to as a "Subscriber".

      2.4  The term "Securities Act" as used herein shall mean the U.S.
           Securities Act of 1933, as amended, or any similar successor federal
           statute and the rules and regulations thereunder, all as the same
           shall be in effect from time to time.

      2.5  The term "Exchange Act" as used herein shall mean the U.S. Securities
           Exchange Act of 1934, as amended, or any similar successor federal
           statute and the rules and regulations thereunder, all as the same
           shall be in effect from time to time.

      2.6 The term "Registrable Securities" as used herein shall mean any of the
following:



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      (i)     all of the Ordinary Shares of the Company held on the date of
              execution hereof by each of CLAL and AGA; and

      (ii)    all of the Ordinary Shares issued upon conversion of the Preferred
              Shares purchased under the Subscription Agreement (and/or upon
              conversion of any preferred shares issued by virtue of the
              abovesaid Preferred Shares as a result of issuance under the
              Anti-Dilution provision set forth in Section 6.2 to the
              Shareholders Agreement any stock split, bonus shares or the like);
              and

      (iii)   all Ordinary Shares purchased pursuant to a pre-emptive right and
              right of first refusal by virtue of the shares described in this
              Section 2.6, and all Ordinary Shares issued on conversion of other
              securities so purchased; and

      (iv)    all Ordinary Shares issued by virtue of such Ordinary Shares
              described in clauses (i), (ii) and (iii) above, as a result of any
              stock split, bonus shares or the like;

      excluding in all cases: (i) any shares sold in a transaction, in which the
      rights under this Agreement are not assigned in accordance herewith; and
      (ii) shares which have previously been registered; and (iii) shares sold
      to the public or pursuant to Rule 144, promulgated under the Securities
      Act.

 2.7  The term "AGA's Registrable Securities" as used herein shall mean
      Registrable Securities which are held by AGA at the time in question and
      by any assignee(s) to whom AGA's Registrable Securities were transferred,
      provided that such transfer was made in accordance with the terms herein
      and in accordance with the terms of any other applicable agreement,
      including, without limitation, the Company's Articles of Association.

 2.8  The term "CLAL's Registrable Securities" as used herein shall mean
      Registrable Securities which are held by CLAL at the time in question and
      by any assignee(s) to whom CLAL's Registrable Securities were transferred,
      provided that such transfer was made in accordance with the terms herein
      and in accordance with the terms of any other applicable agreement,
      including, without limitation, the Companys Articles of Association.

 2.9  The term "the Subscribers' Registrable Securities" 'as used herein shall
      mean Registrable Securities which are held by the Subscribers at the time
      in question and by any assignee(s) to whom the Subscribers' Registrable
      Securities were transferred, provided that such transfer was made in
      accordance with the terms herein and in accordance with the terms of any
      other applicable agreement, including, without limitation, the Company's
      Articles of Association.



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2.10  The term "Majority Holders" as used herein shall mean holders of
      Registrable Securities holding, at the time in question, more than 50% of
      the shareholdings of the particular Registrable Securities in question.

2.11  The term "SEC" as used herein means the securities exchange commission or
      successor agency that administers the Securities Act.

3.    Demand Registration
      (a) Request by holders

          If the Company receives at any time after the lapse of one hundred and
          eighty (180 days) following the Company's initial public offering of
          securities, a written demand from the Majority Holders of AGA's
          Registrable Securities, or from the Majority Holders of CLAL's
          Registrable Securities, or from the Majority Holders of the
          Subscribers' Registrable Securities, or from the Majority Holders of
          all Registrable Securities (the "Initiating Holders"), that the
          Company effect a registration under the Securities Act covering all or
          part of the Registrable Securities of such Initiating Holders, the
          Company will promptly give each of the holders of Registrable
          Securities written notice thereof and as soon as practicable, and
          subject to the terms and limitations set forth herein, shall act to
          effect such registration of the Registrable Securities requested to be
          registered by the Initiating Holders, in the aforesaid written demand
          together with the Registrable Securities of holders who are joining in
          such request as provided in such holder's written reply received by
          the Company within 20 days after deliver of the Company's abovesaid
          notice.

          The Company shall not be obligated to effect more than a total of four
          (4) registrations, in response to a demand made hereunder of which:
          one (1) registrations demanded by the Majority Holders of AGA's
          Registrable Securities, one (1) registrations demanded by the Majority
          Holders of CLAL's Registrable Securities, one (1) registrations
          demanded by the Majority Holders of the Subscribers' Registrable
          Securities and one (1) registration demanded by the Majority Holders
          of all Registrable Securities.

(b)  Limitation on demands

     The Company shall not be obligated to effect, or to take any action to
     effect, any registration in any of the following periods or events:

      1.     If the demand was made before the lapse of one (1) year after the
             Company's initial public offering of securities - in any case,
             where the aggregate proceeds of such registration do not exceed US$
             10,000,000 (ten million U.S. Dollars); and if the demand was made
             after the lapse of one (1) year after the Company's initial public
             offering of securities - in any case where the aggregate proceeds
             of such registration do not exceed US$ 5,000,000 (five million U.S.
             Dollars).

     2.      During the period beginning upon the Company's receipt of a demand
             for registration from any of its shareholders or upon the



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            actual beginning of the process of preparing for or actual filing
            and effecting of a registration, for its own account (where such
            registration is of the kind which, according to Section 4(a)
            hereinbelow, may be joined by holders of Registrable Securities),
            and ending on a date one hundred and eighty (180) days following the
            effective date of any such registration.

      3.    If in the good faith judgment of the Board of Directors of the
            Company, the registration would be seriously detrimental to the
            Company, and the Board of Directors of the Company, as a result,
            concludes, that it is essential to defer the filing of such
            registration statement at such time, and the Company shall furnish
            to the Initiating Holders of such demand a certificate signed by the
            President or Chief Executive Officer of the Company stating the
            above, then the Company shall have the right to defer such filing
            for a period of not more than one hundred twenty (120) days after
            receipt of the demand of the Initiating Holders, and, provided
            further, that the Company shall not defer its obligation in this
            manner more than once in any eighteen month period.

      (c) Underwriting
           If the Initiating Holders intend to distribute the Registrable
           Securities, covered by their demand, by means of an underwriting,
           then they shall so advise the Company as a part of their demand made
           pursuant to clause (a) above, and the Company shall include such
           information in its written notice to the other holders of Registrable
           Securities as set forth in section 3(a) above. In such event, the
           right of any holder of Registrable Securities to join the demand and
           to include Registrable Securities in the registration shall be
           conditioned upon its participation in the underwriting and the
           inclusion of the Registrable Securities, requested by it to be
           included, in the underwriting, to the extent provided herein. All
           holders proposing to distribute their Registrable Securities in whole
           or in part, by joining the demand, shall enter into an underwriting
           agreement, in customary form, with the managing underwriter(s)
           selected for the offering by the Initiating Holders and provided such
           selected underwriter(s) is/are acceptable to the Company.

           It is agreed that the underwriter who served as the underwriter for
           the Company's IPO and any underwriter who, during the previous
           calendar year, executed at least 20 public offerings, each resulting
           in gross proceeds to the issuer of at least US $15,000,000, under a
           firm commitment underwriting, shall be acceptable to the Company.

4.    Piggyback Registrations

      (a)  If the Company proposes to register any of its securities, either for
           its own account or for the account of any of its shareholders, (other
           than a registration relating solely to benefit plans, on Form S-8 or
           the like a registration in connection with an exchange offer or
           merger or a registration on any form which does not include
           substantially the same information about the Company as would be
           required to be included in a registration covering



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      the sale of a Registrable Securities), it shall promptly give to each
      holder of Registrable Securities written notice thereof, and shall act to
      include in such registration, except as otherwise provided herein, all the
      Registrable Securities specified in the written request made by any such
      holder of Registrable Securities to whom it sent the aforesaid notice,
      which request is delivered to the Company within twenty (20) days after
      the written notice of the Company is delivered. The Company may also
      include securities for its own account in registrations initiated by
      shareholders.

(b)   Underwriting. If the registration of which the Company gives notice for
      pursuant to this Section 4 is for an underwritten registration, the
      Company shall so advise the holders of Registrable Securities, as part of
      the Company's notice set forth in clause (a) above. In such event, the
      right of any holder of Registrable Securities, to be included in the
      registration, shall be conditioned upon such holder's participation in
      such underwriting and the inclusion of such holder's Registrable
      Securities, which it requested to include in the registration, in the
      underwriting, to the extent-provided herein. All holders proposing to
      distribute their Registrable Securities, in whole or in part, by joining
      the registration, shall enter into an underwriting agreement, in customary
      form, with the managing underwriter(s) selected for the offering by the
      Company, in case of registration for its own account or by the initiating
      shareholders in case of registration for the account of shareholders.

5. Underwriter's cut-back and withdrawal from registration

      (a)   Notwithstanding any provision herein, if the underwriter(s)
            advise(s) the Company that market factors require a limitation of
            the number of securities to be underwritten, then the number of
            securities that may be included in the underwriting and the
            registration shall be reduced as required by the underwriter(s) and
            allocated as follows:

            (i)   If the Company initiated the registration; there will be
                  included in

                  the underwritten registration, first all of the securities to
                  be issued by the Company and second if remaining, the
                  Registrable Securities of holders executing their piggyback
                  registration rights, pursuant to Section 4 herein,. pro rata
                  to their shareholdings of Registrable Securities having
                  piggyback rights at the time in question.

            (ii)  If shareholder(s) of the Company initiated the registration
                  pursuant to Section 3 herein - there will be included in the
                  underwritten registration, first the securities of the
                  Initiating Holders and the other joining Holders of
                  registrable Securities who are joining the registration by
                  exercising their right under Section 3 and second if
                  remaining, the securities to be issued by the Company.

     (b)   If the registration is an underwritten registration, then any holder
           who disapproves of the terms of the underwriting, may elect to
           withdraw therefrom by written notice to the Company and the
           underwriter(s),



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delivered at least ten (10) business days prior to the effective date of the
registration statement. Any securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the registration.

If shares are so withdrawn from the registration and if the number of shares to
be included in such registration was previously reduced as a result of marketing
factors as provided in clause (a) above, then the Company shall offer to all
holders who have retained rights to include securities in the registration, the
right to include the additional securities they would have been entitled to
include had the number of shares not been reduced, in the registration, in an
aggregate amount equal to the number of shares so withdrawn, with such shares to
be allocated among such holders requesting additional inclusion, in accordance
with the allocation set forth in Clause (a) above.

6.    Expenses

      All expenses incurred in effecting a registration pursuant to one demand
      initiated hereunder, by each of (i) the holders of AGA's Registrable
      Securities; (ii) the holders of CLAL's Registrable Securities; and (iii)
      the holders of the Subscribers' Registrable Securities, (i.e., a total of
      up to three demands) including, without limitation, all registration,
      filing and qualification fees, printing expenses, reasonable fees of one
      counsel for the shareholders who are including their shares in such
      registration pursuant to Section 3 herein, blue sky fees and expenses,
      costs of any regular or special audit if required, shall be paid for and
      borne by the Company; provided however that all underwriters' discounts
      and commissions, and stock transfer taxes, applicable to the securities of
      shareholders included in the registration, and such shareholders' counsel
      fees (other than the counsel fees which are to be borne by the Company as
      provided in this Section 6 above), shall be paid for by the shareholders
      who are including their shares in the registration, pro rata to the number
      of shares of such shareholders included in the registration, and shall not
      be paid for by the Company.

      It is hereby clarified that all expenses incurred in effecting a
      registration which is made in response to the demand made by the Majority
      Holders of all Registrable Securities, shall be paid for by the
      shareholders who are including their shares in such registration, pro rata
      to the number of shares of such shareholders included in the registration,
      and shall not be paid for by the Company.

      Furthermore, in effecting any registration of Registrable Securities which
      are included therein as a result of an exercise of the right to join the
      registration under Section 4 (a) herein, the additional expenses incurred
      as a result of the inclusion thereof in the registration, shall be paid
      for by the holders of such Registrable Securities, pro rata. to the number
      of shares of such holders included in the registration, and shall not be
      paid for by the Company.

7.    Obligations of the Company

      Whenever required to effect registration of Registrable Securities
      pursuant to the terms herein, the Company shall as soon as practicable:



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(a)   Prepare and file with the SEC a registration statement with respect to
      such Registrable Securities and use all reasonable efforts to cause such
      registration statement to become effective, within ninety (90) days after
      the lapse of the twenty (20) days period given in Section 4 hereof for the
      reply of holders of Registrable Securities to join the registration, and
      shall keep such registration effective for a period of ninety (90) days,
      or until the holder(s) whom Registrable Securities are included in the
      registration have completed the distribution, whichever first occurs;

(b)   Prepare and file with the SEC such amendments and supplements to such
      registration statement and the prospectus used in connection with such
      registration statement as may be necessary to comply with the provisions
      of the Securities Act with respect to the disposition of the securities
      covered by such registration statement;

(c)   Furnish to the holders of Registrable Securities included in the
      registration such number of prospectuses and other documents incident
      thereto, including any amendment of or supplement to the prospectus, which
      such a holder may reasonably request, from time to time, in order to
      facilitate the disposition of the securities;

(d)   Notify each holder of Registrable Securities covered by such registration
      statement at any time when a prospectus relating thereto is required to be
      delivered under the Securities Act of the happening of any event, as a
      result of which the prospectus included in such registration statement, as
      then in effect, includes an untrue statement of a material fact or omits
      to state a material fact required to be stated therein or necessary to
      make the statements therein not misleading in the fight of the
      circumstances then existing, and at the request of any such holder prepare
      and furnish to such holder copies of a supplement to or an amendment of
      such prospectus as may be necessary so that, as thereafter delivered to
      the purchasers of such shares, such prospectus shall not include an untrue
      statement of a material fact or omit to state a material fact required to
      be stated therein or necessary to make the statements therein not
      misleading or incomplete in the fight of the circumstances then existing;

(e)   In the event that the Initiating Holders require that the registration
      which the Company shall effect in response to their demand, made under
      Section 3 herein, shall be underwritten, the Company will, without
      derogating from Section 4(b) herein, enter into an underwriting agreement
      in form reasonably necessary to effect the offer and sale of the
      Registrable Securities to be included in the registration, provided such
      underwriting agreement contains customary underwriting provisions, and
      that all the shareholders whose Registrable Securities are included in the
      registration shall enter into such agreement and perform their obligations
      thereunder.

(f)   Cause all Registrable Shares registered pursuant hereunder to be fisted on
      each securities exchange or NASDAQ on which same class of securities
      issued by the Company are then listed.



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(g)   Provide a transfer agent and registrar for all Registrable Securities
      registered pursuant hereunder and a CUSIP number for all such Registrable
      Securities, in each case not later than the effective date of such
      registration.

8.    Indemnification

      (a)   To the extent permitted by law, the Company will indemnify each
            holder of Registrable Securities which are included in a
            registration effected pursuant to the terms herein, each of its
            officers, directors and partners, and each person controlling such
            holder within the meaning of Section 15 of the Securities Act, and
            each underwriter of such registration, if any, and each person who
            controls within the meaning of Section 15 of the Securities Act such
            underwriter (all of the above entities and persons shall hereinafter
            be referred to as the "Holder's Indemnified Persons"), against all
            losses and damages by virtue of any liabilities to which they shall
            become subject under the Securities Act, the Exchange Act or other
            federal or state law insofar as such liabilities arising out of or
            based on: (i) any untrue statement (or alleged untrue statement in
            case of amounts paid in settlement of liability) of a material fact
            contained in such registration statement, including any prospectus,
            and any amendments and supplements thereto, or other document
            incident to any such registration; or (ii) any omission (or alleged
            omission in case of amounts paid in settlement of liability) to
            state therein a material fact required to be stated therein or
            necessary to make the statements therein not misleading; or (iii)
            any violation by the Company of the Securities Act the Exchange Act
            any federal or state securities law or any rule or regulation
            thereunder applicable to the Company and relating to action or
            inaction required of the Company in connection with any such
            registration, and will promptly reimburse each of the Holder's
            Indemnified Persons for any reasonable legal and other expenses,
            incurred by them by reason of defending or settling any such
            liability, or action in respect thereof, provided that the Company
            will not be liable in any such case to the extent that any such
            liability arises out of or is based on any untrue statement or
            omission made in reliance upon or in conformity with information
            furnished to the Company by any of the Holder's Indemnified Persons
            stated to be used with such registration, or in any case where any
            of the Holder's Indemnified Persons had an obligation to deliver a
            prospectus, amended or supplemented by the Company, to the
            purchasers of the shares, prior to or at the time the sale is
            confirmed, and failed to do so, if such amended or supplemented
            prospectus would have cured the defect giving rise to such
            liability. It is agreed that the indemnity agreement contained in
            this Section 8(a) shall not apply to amounts paid in settlement of
            any such liability or action in respect thereof if such settlement
            is effected without the written consent of the Company (which
            consent shall not be unreasonably withheld).

      (b)   To the extent permitted by law, each holder of Registrable
            Securities included in the registration which is being effected,
            shall indemnify the Company, each other holder of shares included in
            the registration, and each of their respective directors, officers,
            partners, and representatives (including counsels and accountants)
            and each underwriter of such registration, if any,



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      and each person who controls the Company, the other holder(s) or such
      underwriter, within the meaning of Section 15 of the Securities Act, (all
      of the above entities and persons shall hereinafter be referred to as the
      "Company's Indemnified Persons") against all losses and damages by virtue
      of any liabilities to which they shall become subject under the Securities
      Act, the Exchange Act or other federal or state law, insofar as such
      liabilities arising out of or based on: (i) any untrue statement (or
      alleged untrue statement in case of amounts paid in settlement of
      liability) of a material fact contained in any such registration statement
      including any prospectus and any amendments and supplements thereto or
      other document incident to any such registration; (ii) or any omission (or
      alleged omission in case of amounts paid in settlement of liability) to
      state therein a material fact required to be stated therein or necessary
      to make the statements therein not misleading, and will promptly reimburse
      the Company's Indemnified Persons for any reasonable legal and other
      expenses, incurred in connection with defending any such liability, or
      action in respect thereof in each case to the extent, but only to the
      extent, that such untrue statement or omission is made in reliance upon
      and in conformity with information furnished in writing to the Company by
      any of the Holder's Indemnified Persons stated to be used with the
      registration, or in any case where any of the Holder's Indemnified Persons
      had an obligation to deliver a prospectus, amended or supplemented by the
      Company, to the purchasers of the shares, prior to or at the time the sale
      is confirmed, and failed to do so, if such amended or supplemented
      prospectus would have cured the defect giving rise to such liability. It
      is agreed that the indemnity agreement contained in this Section 8(b)
      shall not apply to amounts paid in settlement of any such liability or
      action in respect thereof if such settlement is effected without the
      consent of the indemnifying holder(s) (which consent shall not be
      unreasonably withheld), and that the indemnification amounts to be paid by
      such holders under this provision, shall not exceed the gross proceeds
      received by such holder from the offering with respect to which the
      registration was effected.

(c)   Each party entitled to indemnification under this Section 8 (the
      "Indemnified Party") shall give notice to the party required to provide
      indemnification (the "Indemnifying Party") promptly after such Indemnified
      Party has actual knowledge of any claim or action as to which indemnity
      may be sought, and shall permit the Indemnifying Party to assume the
      defense of such claim or any litigation resulting therefrom, provided that
      counsel for the Indemnifying Party, who shall conduct the defense of such
      claim or any litigation resulting therefrom, shall be approved by the
      Indemnified Party (whose approval shall not unreasonably be withheld);
      provided that the failure of any Indemnified Party to give notice as
      provided above shall not relieve the Indemnifying Party of its obligations
      under this Section 8, to the extent such failure is not prejudicial. The
      Indemnified Party may participate in such defense at such Indemnified
      Party's expense; however it is provided that in the event where the
      defendants in an action include both the Indemnified Party and the
      Indemnifying Party and there is a conflict of interest which would prevent
      counsel for the Indemnifying Party from also representing the Indemnified
      Party, then to the extent that the Company has to indemnify such party;
      such



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            indemnification shall also apply to the reasonable attorneys fees of
            one counsel on behalf of all Indemnified Parties who shall
            participate in the defense of such parties in such case. No
            Indemnifying Party, in the defense of any such claim or litigation,
            shall, except with the consent of each Indemnified Party, enter into
            any settlement that does not include as an unconditional term
            thereof the giving by the claimant or plaintiff to such Indemnified
            Party of a release from all liability in respect to such claim or
            litigation. Each Indemnified Party shall furnish such information
            regarding itself or the claim in question, as an Indemnifying Party
            may reasonably request and as shall be reasonably required in
            connection with defense of such claim and litigation resulting
            therefrom.

      (d)   The foregoing indemnity agreement with respect to any preliminary
            prospectus, shall not inure to the benefit of any Holders'
            Indemnified Persons if a copy of the prospectus as then amended or
            supplemented, eliminating or remedying the untrue statement,
            omission, or other violation, was furnished to the holder of
            Registrable Securities in question.

      (e)   If recovery is not available under the foregoing indemnification
            provisions, for any reason, except for a reason as specified therein
            or except by reason of the exercise of any right or remedy available
            to any party - such party which is entitled to indemnification by
            the terms hereof shall be entitled to receive contribution to its
            liabilities and expenses. In determining the amount of contribution
            to which the respective parties are entitled, there shall be
            considered the parties' relative knowledge and access to information
            concerning the matter with respect to which the underlying claim was
            asserted, the opportunity to correct and prevent any statement or
            omission, and any other equitable consideration appropriate under
            the circumstances.

9.    Information by Selling Shareholders

      9.1  The Company's obligation to take action pursuant to Sections 3 and 4
           hereto, shall be conditioned and subject to the furnishing by the
           selling shareholders to the Company, information regarding
           themselves, their Registrable Securities and other securities held by
           them, if any, and the intended method of disposition of the
           securities, which is required for the purpose of the registration.

      9.2  Each holder of Registrable Securities undertakes to furnish the
           Company, with respect to the registration of such holder's shares,
           true and correct information, such that the information contained
           therein which was furnished by such holder shall be true and correct
           and shall not omit to state any material fact required to be stated
           therein or necessary to not make the statement misleading.

10. Delay of Registration

     No holder of Registrable Securities shall have any right to obtain or seek
     an injunction remaining or otherwise delaying any registration as the
     result of any controversy that might arise with respect to the
     interpretation or implementation of this Agreement.



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11. Rule 144 Reporting

     With a view of making available the benefits of certain rules and
     regulations permitting the sale of the Registrable Securities to the
     public, without registration, after such time as the Company shall
     consummate a public offering for its shares, the Company agrees to:

      (i)  make and keep public information regarding the Company available, as
           those terms are understood and defined in Rule 144 promulgated under
           the Securities Act, at all times from and after ninety (90) days
           following the effective date of the first registration under the
           Securities Act filed by the Company for an offering of its securities
           to the general public;

      (ii) use reasonable efforts to file with the SEC in a timely manner all
           reports and other documents required of the Company under the
           Securities Act and the Exchange Act (at any time after it has become
           subject to such reporting requirements);

      (iii)so long as a holder owns any Registrable Securities, to furnish to
           such holder forthwith upon its written request, a written statement
           by the Company as to the Company's compliance with the reporting
           requirements of said Rule 144 (at any time after 90 days after the
           effective date of the first registration statement filed by the
           Company for an offering of its securities to the general public), and
           of the Securities Act and the Exchange Act (at any time after it has
           become subject to the reporting requirements of the Exchange Act), a
           copy of the most recent annual or quarterly report of the Company,
           and such other reports and documents of the Company as a holder may
           reasonably request in availing itself of any rule or regulation
           allowing a holder to sell any such securities without registration
           (at any time after the Company has become subject to the reporting
           requirements of the Exchange Act).

12. Termination of the Company's Obligations

     The Company shall have no obligations pursuant to Sections 3 and 4 herein
     with respect to: (a) any request or requests for registration made after
     the lapse of a seven year period after the closing date of the Company's
     initial public offering; or (b) any Registrable Securities that in the
     opinion of counsel to the Company, may be sold in a three-month period
     without registration under the Securities Act pursuant to Rule 144
     promulgated thereunder.

13. Market stand off Agreement

     If requested by the Company or by the underwriter(s) of securities of the
     Company, any shareholder of the Company shall not sell or otherwise
     transfer or dispose of any securities of the Company held by such
     shareholder (other than securities sold pursuant to a registration
     statement), during the one hundred and eighty (180) day period following
     the effective date of a registration statement of the Company filed under
     the Securities Act, or for a longer period if requested by the
     underwriter(s)s, which shall not exceed the market stand off period which
     is customary at the time so requested, and provided that all of the
     executive officers and directors of the Company, then holding securities of
     the Company, enter into



<PAGE>   12
                                       12

agreements with similar terms and that no other parties entering into a market
stand-off agreement, if any, shall be subject to a shorter period.

In order to enforce the foregoing covenants, the Company shall have the right to
place restrictive legends on the certificates representing the shares subject to
this Section and to impose stop transfer instructions with respect to such
securities until the end of such period.

14. Assignment of Registration Rights

     The rights to demand that the Company register securities, granted herein,
     and the right to join a registration provided under Sections 3 and 4
     herein, may be assigned by a holder only to a transferee of Registrable
     Securities of the transferor and with respect to such Registrable
     Securities transferred only, provided further that the Company is promptly
     given written notice of said transfer of the Registrable Securities and the
     assignment of the registration rights, stating the name and address of the
     assignee and identifying the securities with respect to which such
     registration rights are being assigned, and, provided further, that the
     assignee of such rights shall receive such rights subject to all of the
     terms and conditions herein and shall assume in writing the obligations of
     the transferor hereunder, with respect to the Registrable Securities
     transferred, including those under this Section 14. It is provided that the
     Company shall not have any obligation to any assignee or transferee,
     pursuant to the terms of this agreement until it has received the aforesaid
     written notice.

15. Amendment of Rights

     Any provision of this Agreement may be amended only with the written
     consent of the Company and the Majority Holders of each type of Registrable
     Securities (i.e. the Majority Holders of AGA's Registrable Securities, the
     Majority Holders of CLAL's Registrable Securities and the Majority Holders
     of the other Registrable Securities).

16. Governing Law and Forum

     This Registration Rights Agreement, its interpretation, validity and breach
     shall be governed by the laws of the State of New York, USA, without regard
     to its choice of law rules, and any dispute or claim with respect thereto
     shall be submitted to the competent courts in New York, USA, who shall have
     exclusive jurisdiction in such matter.

17. Entire Agreement

     This Registration Rights Agreement constitutes the entire agreement between
     the Parties with respect to the subject matter hereof, and no previous
     agreements, terms, memoranda, promises, negotiations, consents,
     undertakings, representations, warranties and/or any other documents
     exchanged or provided prior to the execution hereof between any of the
     Parties, shall have any force or effect.

18. Captions

     The captions to sections herein have been inserted for identification and
     reference purposes only and shall not be used to construe or interpret this
     Agreement.



<PAGE>   13
                                       13

19. Adjustments for Stock Splits, etc.

     Wherever in this Agreement there is a reference to a specific number of
     shares of the Company of any class or series then, upon the occurrence of
     any subdivision, combination or stock dividend of such class or series of
     shares, the specific number of shares so referenced in this Agreement shall
     automatically be proportionally adjusted to reflect the affect on the
     issued and outstanding shares of such class or series of stock by such
     subdivision, combination or stock dividend.

20. Public Offering Not in the U.S.A.

     If relevant, and to the extent possible, the provisions of this
     Registration Rights Agreement shall apply, mutatis mutandis, on any
     registration of securities of the Company, made in any territory other
     than the U.S.A. e.g. in the event the Company registers its securities in
     Israel then the Company shall also register for trading all of the
     Registrable Securities, subject to any applicable law.

21. Counterparts

     This Agreement may be executed in any number of counterparts, each of
     which shall be an original, but all of which together shall constitute one
     instrument.

22. Notices

     AU notices given by one Party to the other hereunder will be given in
     writing, and will be deemed to have been delivered to the addressee
     immediately on their delivery, if delivered by hand, or upon transmission
     if sent by facsimile and confirmed by machine printout verifying such
     sending or by written reply by facsimile, or within seven (7) business days
     after being sent by mail, express airmail, or via international courier, as
     per the addresses indicated herein, or to such other address or facsimile
     number as a Party may thereafter give notice in writing, to the other
     Parties hereto.

     IN WITNESS WHEREOF the Parties have signed this Registration Rights
     Agreement as of the date first hereinabove set forth:

     -----------------------------           -------------------------------
     AG Associates (Israel) Ltd.             AG Associates, Inc.
     By:__________________                   By:__________________
     
     -----------------------------           -------------------------------
     Clal Electronics Industries Ltd.        Charter AGI L.L.C.
     By:___________________                  By:___________________
     
     -----------------------------           -------------------------------
     The Israel Private Equity Fund L.P.     Evergreen International Investments
                                             N.V.
     By:___________________                  By:____________________
     


<PAGE>   14
                                       14


-----------------------------              -------------------------------
The Israel Private Equity Fund             Yarok Az Investment (1994) Ltd.
(Cayman) L.P.
By:_____________________                   By:_________________________


                                           -------------------------------
                                            UT Technologies Ltd. Fund
                                            By:_____________________



<PAGE>   15
                                    Annex "A"

<TABLE>
<CAPTION>
                                      Investment     Preferred Shares    Preferred Shares
                                        Amount           Serial A            Serial B
                                        ------           --------            --------
<S>                                   <C>          <C>                   <C>
Clal Electronics AGA                  $4,000,000   2,000,000             0
Charterhouse AGI L.L.C.               $4,000,000   1,600,000             400,000
IJT Technologies Ltd. Fund            $1,000,000   500,000               0
Yarok Az Investment (1994) Ltd.       $500,000     250,000               0
Evergreen International Investment    $500,000     250,000               0
N.V.
The Israel Private Equity Fund L.P.   $2,098,800   1,049,400             0
The Israel Private Equity Fund        $901,200     450,600               0
(Cayman) L.P.
Option reserved for employees
Options reserved for the CEO
Total Investment Amount               $13,000,000
Total Shares                                       6,100,000             400,000
</TABLE>