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                                                                   EXHIBIT 10.18


                         APPLIED SIGNAL TECHNOLOGY, INC.

                        1993 EMPLOYEE STOCK PURCHASE PLAN

                          (As Amended January 25, 1997)


         1. Purpose. The Applied Signal Technology, Inc. 1993 Employee Stock
Purchase Plan (the "Plan") is established to provide eligible employees of
Applied Signal Technology, Inc., a California corporation, and any successor
corporation thereto (collectively, "Applied Signal"), and any current or future
parent corporation or subsidiary corporations of Applied Signal (collectively
referred to as the "Company"), with an opportunity to acquire a proprietary
interest in the Company by the purchase of common stock of Applied Signal.
Applied Signal and any parent or subsidiary corporation shall be individually
referred to as a "Participating Company." For purposes of the Plan, a parent
corporation and a subsidiary corporation shall be as defined in sections 424(e)
and 424(f), respectively, of the Internal Revenue Code of 1986, as amended (the
"Code").

         The Company intends that the Plan shall qualify as an "employee stock
purchase plan" under section 423 of the Code (including any amendments or
replacements of such section), and the Plan shall be so construed. Any term not
expressly defined in the Plan but defined for purposes of section 423 of the
Code shall have the same definition herein.

         An employee participating in the Plan (a "Participant") may withdraw
such Participant's accumulated payroll deductions (if any) and terminate
participation in the Plan or any Offering (as defined below) therein at any time
during a Purchase Period (as defined below). Accordingly, each Participant is,
in effect, granted an option pursuant to the Plan (a "Purchase Right") which may
or may not be exercised at the end of a Purchase Period.

         2. Administration. The Plan shall be administered by the Board of
Directors of Applied Signal (the "Board") and/or by a duly appointed committee
of the Board having such powers as shall be specified by the Board. Any
subsequent references to the Board shall also mean the committee if a committee
has been appointed. All questions of interpretation of the Plan or of any
Purchase Right shall be determined by the Board and shall be final and binding
upon all persons having an interest in the Plan and/or any Purchase Right.
Subject to the provisions of the Plan, the Board shall determine all of the
relevant terms and conditions of Purchase Rights granted pursuant to the Plan;
provided, however, that all Participants granted Purchase Rights pursuant to the
Plan shall have the same rights and privileges within the meaning of section
423(b)(5) of the Code. All expenses incurred in connection with the
administration of the Plan shall be paid by the Company.

         3. Share Reserve. The maximum number of shares which may be issued
under the Plan shall be 1,600,000 shares of Applied Signal's authorized but
unissued common stock (the 





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"Shares"). In the event that any Purchase Right for any reason expires or is
canceled or terminated, the Shares allocable to the unexercised portion of such
Purchase Right may again be subjected to a Purchase Right.

         4.       Eligibility. Any employee of a Participating Company is 
eligible to participate in the Plan except employees who own or hold options to
purchase or who, as a result of participation in the Plan, would own or hold
options to purchase, stock of the Company possessing five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company within the meaning of section 423(b)(3) of the Code. Notwithstanding
anything herein to the contrary, any individual performing services for a
Participating Company solely through a leasing agency or employment agency shall
not be deemed an "employee" of such Participating Company.

         5.       Offering Dates.

                  (a) Offering Periods. Except as otherwise set forth below, the
Plan shall be implemented by offerings (individually, an "Offering") of
twenty-four (24) months duration (an "Offering Period"). The initial Offering
shall commence on June 1, 1993 and end on May 31, 1995 (the "Initial Offering
Period"). Subsequent Offerings shall commence on June 1 and December 1 of each
year and end on the second May 31 and November 30, respectively, occurring
thereafter. Notwithstanding the foregoing, the Board may establish a different
term for one or more Offerings and/or different commencing and/or ending dates
for such Offerings. An employee who becomes eligible to participate in the Plan
after an Offering Period has commenced shall not be eligible to participate in
such Offering but may participate in any subsequent Offering provided such
employee is still eligible to participate in the Plan as of the commencement of
any such subsequent Offering. Eligible employees may not participate in more
than one Offering at a time. The first day of an Offering Period shall be the
"Offering Date" for such Offering Period. In the event the first and/or last day
of an Offering Period is not a business day, Applied Signal shall specify the
business day that will be deemed the first or last day, as the case may be, of
the Offering Period.

                  (b) Purchase Periods. Each Offering Period shall consist of
four (4) consecutive purchase periods of six (6) months duration (individually,
a "Purchase Period"). The last day of each Purchase Period shall be the
"Purchase Date" for such Purchase Period. A Purchase Period commencing on June 1
shall end on the next November 30. A Purchase Period commencing on December 1
shall end on the next May 31. Notwithstanding the foregoing, the Board may
establish a different term for one or more Purchase Periods and/or different
commencing dates and/or Purchase Dates for such Purchase Periods. In the event
the first and/or last day of a Purchase Period is not a business day, Applied
Signal shall specify the business day that will be deemed the first or last day,
as the case may be, of the Purchase Period.

                  (c) Governmental Approval; Shareholder Approval.
Notwithstanding any other provision of the Plan to the contrary, any Purchase
Right granted pursuant to the Plan shall 



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be subject to (i) obtaining all necessary governmental approvals and/or
qualifications of the sale and/or issuance of the Purchase Rights and/or the
Shares, and (ii) obtaining shareholder approval of the Plan.

         6.       Participation in the Plan.

                  (a) Initial Participation. An eligible employee shall become a
Participant on the first Offering Date after satisfying the eligibility
requirements and delivering to the Company's payroll office not later than the
close of business for such payroll office on the last business day before such
Offering Date (the "Subscription Date") a subscription agreement indicating the
employee's election to participate in the Plan and authorizing payroll
deductions. An eligible employee who does not deliver a subscription agreement
to the Company's payroll office on or before the Subscription Date shall not
participate in the Plan for that Offering Period or for any subsequent Offering
Period unless such employee subsequently enrolls in the Plan by filing a
subscription agreement with the Company by the Subscription Date for such
subsequent Offering Period. Applied Signal may, from time to time, change the
Subscription Date as deemed advisable by Applied Signal in its sole discretion
for proper administration of the Plan.

                  (b) Continued Participation. A Participant shall automatically
participate in the Offering Period commencing immediately after the final
Purchase Date of each Offering Period in which the Participant participates
until such time as such Participant (i) ceases to be eligible as provided in
paragraph 4, (ii) withdraws from the Plan pursuant to paragraph 11(b) or (iii)
terminates employment as provided in paragraph 12. If a Participant is
automatically withdrawn from an Offering at the end of a Purchase Period of such
Offering pursuant to paragraph 11(d), then the Participant shall automatically
participate in the Offering Period commencing on the next business day. If a
Participant automatically may participate in a subsequent Offering Period
pursuant to this paragraph 6(b), then the Participant is not required to file
any additional subscription agreement for such subsequent Offering Period in
order to continue participation in the Plan. However, a Participant may file a
subscription agreement with respect to a subsequent Offering Period if the
Participant desires to change any of the Participant's elections contained in
the Participant's then effective subscription agreement.

         7. Right to Purchase Shares. Except as set forth below, during an
Offering Period each Participant in such Offering Period shall have a Purchase
Right consisting of the right to purchase that number of whole Shares arrived at
by dividing Fifty Thousand Dollars ($50,000.00) by the fair market value of a
share of the common stock of Applied Signal on the Offering Date of such
Offering Period. The fair market value of such share shall be determined in
accordance with paragraph 8 below. Shares may only be purchased through a
Participant's payroll withholding pursuant to paragraph 9 below.

         8. Purchase Price. The purchase price at which Shares may be acquired
in a given Purchase Period pursuant to the exercise of all or any portion of a
Purchase Right granted under the Plan (the "Offering Exercise Price") shall be
set by the Board; provided, however, that the 



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Offering Exercise Price shall not be less than eighty-five percent (85%) of the
lesser of (a) the fair market value of the Shares on the Offering Date of the
Offering Period of which the Purchase Period is a part, or (b) the fair market
value of the Shares on the Purchase Date for such Purchase Period. Unless
otherwise provided by the Board prior to the commencement of an Offering Period,
the Offering Exercise Price for each Purchase Period in that Offering Period
shall be eighty-five percent (85%) of the lesser of (a) the fair market value of
the Shares on the Offering Date of such Offering Period or (b) the fair market
value of the Shares on the given Purchase Date. The fair market value of the
Shares on the applicable dates shall be the closing price quoted on the National
Association of Securities Dealers Automated Quotation System (or the average of
the closing bid and asked prices if the Shares are so quoted instead), or as
reported on such other stock exchange or market system if the Shares are traded
on such other exchange or system instead, or as determined by the Board if the
Shares are not so reported.

         9. Payment of Purchase Price. Shares which are acquired pursuant to the
exercise of all or any portion of a Purchase Right may be paid for only by means
of payroll deductions from the Participant's Compensation accumulated during the
Offering Period. For purposes of the Plan, a Participant's "Compensation" with
respect to an Offering (a) shall include the Participant's base salary before
deduction for any contributions to any plan maintained by a Participating
Company and described in Section 401(k) or Section 125 of the Code, and (b)
shall not include overtime, bonuses, annual awards, other incentive payments,
shift premiums, long-term disability, worker's compensation or any other
payments not specifically referenced in (a). Except as set forth below, the
amount of Compensation to be withheld from a Participant's Compensation during
each pay period shall be determined by the Participant's subscription agreement.

                  (a) Election to Increase or Decrease Withholding. During an
Offering Period, a Participant may elect to increase or decrease the amount
withheld from his or her Compensation by filing an amended subscription
agreement with the Company on or before the "Change Notice Date." The "Change
Notice Date" shall initially be the seventh (7th) day prior to the end of the
first pay period for which such election is to be effective; however, the
Company may change such Change Notice Date from time to time. Notwithstanding
the foregoing, the ability of a Participant to increase the amount withheld from
his or her Compensation during an Offering Period shall be effective only for
Offering Periods beginning on or after June 1, 1997.

                  (b) Limitations on Payroll Withholding. The amount of payroll
withholding with respect to the Plan for any Participant during any pay period
shall be in one percent (1%) increments not to exceed ten percent (10%) of the
Participant's Compensation for such pay period. Notwithstanding the foregoing,
the Board may change the limits on payroll withholding effective as of a future
Offering Date, as determined by the Board. Amounts withheld shall be reduced by
any amounts contributed by the Participant and applied to the purchase of
Company stock pursuant to any other employee stock purchase plan qualifying
under section 423 of the Code.



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                  (c) Payroll Withholding. Payroll deductions shall commence on
the first payday following the Offering Date and shall continue to the end of
the Offering Period unless sooner altered or terminated as provided in the Plan.

                  (d) Participant Accounts. Individual accounts shall be
maintained for each Participant. All payroll deductions from a Participant's
Compensation shall be credited to such account and shall be deposited with the
general funds of the Company. All payroll deductions received or held by the
Company may be used by the Company for any corporate purpose.

                  (e) No Interest Paid. Interest shall not be paid on sums
withheld from a Participant's Compensation, unless the Board elects to make such
payments to all Participants on a non-discriminatory basis.

                  (f) Exercise of Purchase Right. On each Purchase Date of an
Offering Period, each Participant who has not withdrawn from the Offering or
whose participation in the Offering has not terminated on or before such
Purchase Date shall automatically acquire pursuant to the exercise of the
Participant's Purchase Right the number of whole Shares arrived at by dividing
the total amount of the Participant's accumulated payroll deductions for the
Purchase Period by the Offering Exercise Price; provided, however, in no event
shall the number of Shares purchased by the Participant exceed the number of
Shares subject to the Participant's Purchase Right. No Shares shall be purchased
on a Purchase Date on behalf of a Participant whose participation in the
Offering or the Plan has terminated on or before such Purchase Date.

                  (g) Return of Cash Balance. Any cash balance remaining in the
Participant's account shall be refunded to the Participant as soon as
practicable after the Purchase Date. In the event the cash to be returned to a
Participant pursuant to the preceding sentence is an amount less than the amount
necessary to purchase a whole Share, the Company may establish procedures
whereby such cash is maintained in the Participant's account and applied toward
the purchase of Shares in the subsequent Purchase Period or Offering Period.

                  (h) Tax Withholding. At the time the Purchase Right is
exercised, in whole or in part, or at the time some or all of the Shares are
disposed of, the Participant shall make adequate provision for the foreign,
federal and state tax withholding obligations of the Company, if any, which
arise upon exercise of the Purchase Right and/or upon disposition of Shares,
respectively. The Company may, but shall not be obligated to, withhold from the
Participant's Compensation the amount necessary to meet such withholding
obligations.

                  (i) Company Established Procedures. The Company may, from time
to time, establish (i) a minimum required withholding amount for participation
in an Offering, (ii) limitations on the frequency and/or number of changes in
the amount withheld during an Offering, (iii) an exchange ratio applicable to
amounts withheld in a currency other than U.S. dollars, (iv) payroll withholding
in excess of or less than the amount designated by a Participant in order to
adjust for delays or mistakes in the Company's processing of subscription
agreements, and/or (v) such other limitations or procedures as deemed advisable
by the Company in the 



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Company's sole discretion which are consistent with the Plan and in accordance
with the requirements of Section 423 of the Code.

                  (j) Expiration of Purchase Right. Any portion of a
Participant's Purchase Right remaining unexercised after the end of the Offering
Period to which such Purchase Right relates shall expire immediately upon the
end of such Offering Period.

         10.      Limitations on Purchase of Shares; Rights as a Shareholder.

                  (a) Fair Market Value Limitation. Notwithstanding any other
provision of the Plan, no Participant shall be entitled to purchase Shares under
the Plan (or any other employee stock purchase plan which is intended to meet
the requirements of section 423 of the Code sponsored by Applied Signal or a
parent or subsidiary corporation of Applied Signal) at a rate which exceeds
$25,000 in fair market value, which fair market value is determined for Shares
purchased during a given Offering Period as of the Offering Date for such
Offering Period (or such other limit as may be imposed by the Code), for each
calendar year in which Participant participates in the Plan (or any other
employee stock purchase plan described in this sentence).

                  (b) Pro Rata Allocation. In the event the number of Shares
which might be purchased by all Participants in the Plan exceeds the number of
Shares available in the Plan, the Company shall make a pro rata allocation of
the remaining Shares in as uniform a manner as shall be practicable and as the
Company shall determine to be equitable.

                  (c) Rights as a Shareholder and Employee. A Participant shall
have no rights as a shareholder by virtue of the Participant's participation in
the Plan until the date of the issuance of a stock certificate(s) for the Shares
being purchased pursuant to the exercise of the Participant's Purchase Right. No
adjustment shall be made for cash dividends or distributions or other rights for
which the record date is prior to the date such stock certificate(s) are issued.
Nothing herein shall confer upon a Participant any right to continue in the
employ of the Company or interfere in any way with any right of the Company to
terminate the Participant's employment at any time.



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         11.      Withdrawal.

                  (a) Withdrawal From an Offering. A Participant may withdraw
from an Offering by signing and delivering to the Company's payroll office, a
written notice of withdrawal on a form provided by the Company for such purpose.
Such withdrawal may be elected at any time prior to the end of an Offering
Period; provided, however, if a Participant withdraws after the Purchase Date
for a Purchase Period of an Offering, the withdrawal shall not affect Shares
acquired by the Participant in such Purchase Period. Unless otherwise indicated,
withdrawal from an Offering shall not result in a withdrawal from the Plan or
any succeeding Offering therein. By withdrawing from an Offering effective as of
the close of a given Purchase Date, a Participant may have Shares purchased on
such Purchase Date and immediately commence participation in the new Offering
commencing immediately after such Purchase Date. A Participant is prohibited
from again participating in an Offering at any time upon withdrawal from such
Offering. The Company may impose, from time to time, a requirement that the
notice of withdrawal be on file with the Company's payroll office for a
reasonable period prior to the effectiveness of the Participant's withdrawal
from an Offering.

                  (b) Withdrawal from the Plan. A Participant may withdraw from
the Plan by signing a written notice of withdrawal on a form provided by the
Company for such purpose and delivering such notice to the Company's payroll
office. Withdrawals made after a Purchase Date for a Purchase Period shall not
affect Shares acquired by the Participant on such Purchase Date. In the event a
Participant voluntarily elects to withdraw from the Plan, the Participant may
not resume participation in the Plan during the same Offering Period, but may
participate in any subsequent Offering under the Plan by again satisfying the
requirements of paragraphs 4 and 6(a) above. The Company may impose, from time
to time, a requirement that the notice of withdrawal be on file with the
Company's payroll office for a reasonable period prior to the effectiveness of
the Participant's withdrawal from the Plan.

                  (c) Return of Payroll Deductions. Upon withdrawal from an
Offering or the Plan pursuant to paragraphs 11(a) or 11(b), respectively, the
withdrawn Participant's accumulated payroll deductions which have not been
applied toward the purchase of Shares shall be returned as soon as practicable
after the withdrawal, without the payment of any interest (unless the Board
decides otherwise pursuant to paragraph 9(e) above), to the Participant, and the
Participant's interest in the Offering and/or the Plan, as applicable, shall
terminate. Such accumulated payroll deductions may not be applied to any other
Offering under the Plan.

                  (d) Automatic Withdrawal From an Offering. If the fair market
value of the Shares on a Purchase Date of an Offering (other than the final
Purchase Date of such Offering) is less than the fair market value of the Shares
on the Offering Date for such Offering, then every Participant shall
automatically (i) be withdrawn from such Offering at the close of such Purchase
Date and after the acquisition of Shares for such Purchase Period and (ii) be
enrolled in the Offering commencing on the first business day subsequent to such
Purchase Period.



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         12. Termination of Employment. Termination of a Participant's
employment with the Company for any reason, including retirement, disability or
death or the failure of a Participant to remain an employee eligible to
participate in the Plan, shall terminate the Participant's participation in the
Plan immediately. In such event, the payroll deductions credited to the
Participant's account since the last Purchase Date shall, as soon as
practicable, be returned to the Participant or, in the case of the Participant's
death, to the Participant's legal representative, and all of the Participant's
rights under the Plan shall terminate. Interest shall not be paid on sums
returned to a Participant pursuant to this paragraph 12 unless the Board elects
otherwise pursuant to paragraph 9(e) above. A Participant whose participation
has been so terminated may again become eligible to participate in the Plan by
again satisfying the requirements of paragraphs 4 and 6(a) above.

         13. Transfer of Control. A "Transfer of Control" shall be deemed to
have occurred in the event any of the following occurs with respect to Applied
Signal.

                  (a) a merger or consolidation in which Applied Signal is not 
the surviving corporation; or

                  (b) a reverse triangular merger or consolidation in which
Applied Signal is the surviving corporation where the shareholders of Applied
Signal before such merger or consolidation do not retain, directly or
indirectly, at least a majority of the beneficial interest in the voting stock
of Applied Signal; or

                  (c) the sale, exchange, or transfer of all or substantially
all of Applied Signal's assets (other than a sale, exchange, or transfer to one
(1) or more corporations where the shareholders of Applied Signal before such
sale, exchange, or transfer retain, directly or indirectly, at least a majority
of the beneficial interest in the voting stock of the corporation(s) to which
the assets were transferred); or

                  (d) the direct or indirect sale or exchange by the
shareholders of Applied Signal of all or substantially all of the stock of
Applied Signal where the shareholders of Applied Signal before such sale or
exchange do not retain, directly or indirectly, at least a majority of the
beneficial interest in the voting stock of Applied Signal after such sale or
exchange; or

                  (e)      the liquidation or dissolution of Applied Signal.

         In the event of a Transfer of Control, the Board, in its sole
discretion, may arrange with the surviving, continuing, successor, or purchasing
corporation, as the case may be (the "Acquiring Corporation"), that such
corporation assume the Company's rights and obligations under the Plan. In the
event the Acquiring Corporation elects not to assume the Company's rights and
obligations under the Plan in connection with a merger described in (a) or (b)
above, the Board shall provide that all outstanding Purchase Rights shall be
immediately exercisable as of a date prior to the Transfer of Control, as the
Board so determines. The exercise of a Purchase 



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Right that was permissible solely by reason of this paragraph 13 shall be
conditioned upon the consummation of the Transfer of Control. All Purchase
Rights shall terminate effective as of the date of the Transfer of Control to
the extent that the Purchase Right is neither exercised as of the date of the
Transfer of Control nor assumed by the surviving, continuing, successor, or
purchasing corporation, as the case may be.

         14. Capital Changes. In the event of changes in the common stock of the
Company due to a stock split, reverse stock split, stock dividend,
recapitalization, combination, reclassification, or like change in the Company's
capitalization, or in the event of any merger (including a merger effected for
the purpose of changing Applied Signal's domicile), sale or other
reorganization, appropriate adjustments shall be made by the Company in the
securities subject to purchase under a Purchase Right, the Plan's share reserve,
the number of shares subject to a Purchase Right, and in the purchase price per
share.

         15. Non-Transferability. A Purchase Right may not be transferred in any
manner otherwise than by will or the laws of descent and distribution and shall
be exercisable during the lifetime of the Participant only by the Participant.
The Company, in its absolute discretion, may impose such restrictions on the
transferability of the Shares purchasable upon the exercise of a Purchase Right
as it deems appropriate and any such restriction shall be set forth in the
respective subscription agreement and may be referred to on the certificates
evidencing such Shares.

         16. Reports. Each Participant who exercised all or part of his or her
Purchase Right for a Purchase Period shall receive, as soon as practicable after
the Purchase Date of such Purchase Period, a report of such Participant's
account setting forth the total payroll deductions accumulated, the number of
Shares purchased, the fair market value of such Shares, the date of purchase and
the remaining cash balance to be refunded or retained in the Participant's
account pursuant to paragraph 9(g) above, if any. Each Participant shall be
provided information concerning the Company equivalent to that information
generally made available to the Company's common shareholders.

         17. Plan Term. This Plan shall continue until terminated by the Board
or until all of the Shares reserved for issuance under the Plan have been
issued.

         18. Restriction on Issuance of Shares. The issuance of shares under the
Plan shall be subject to compliance with all applicable requirements of federal
or state law with respect to such securities. A Purchase Right may not be
exercised if the issuance of shares upon such exercise would constitute a
violation of any applicable federal or state securities laws or other law or
regulations. In addition, no Purchase Right may be exercised unless (i) a
registration statement under the Securities Act of 1933, as amended, shall at
the time of exercise of the Purchase Right be in effect with respect to the
shares issuable upon exercise of the Purchase Right, or (ii) in the opinion of
legal counsel to the Company, the shares issuable upon exercise of the Purchase
Right may be issued in accordance with the terms of an applicable exemption from
the registration requirements of said Act. As a condition to the exercise of a
Purchase Right, the Company may 



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require the Participant to satisfy any qualifications that may be necessary or
appropriate, to evidence compliance with any applicable law or regulation, and
to make any representation or warranty with respect thereto as may be requested
by the Company.

         19. Legends. The Company may at any time place legends or other
identifying symbols referencing any applicable foreign, federal and/or state
securities restrictions or any provision convenient in the administration of the
Plan on some or all of the certificates representing shares of stock issued
under the Plan. The Participant shall, at the request of the Company, promptly
present to the Company any and all certificates representing shares acquired
pursuant to a Purchase Right in the possession of the Participant in order to
carry out the provisions of this paragraph. Unless otherwise specified by the
Company, legends placed on such certificates may include but shall not be
limited to the following:

         "THE SHARES EVIDENCED BY THIS CERTIFICATE WERE ISSUED BY THE
CORPORATION TO THE REGISTERED HOLDER UPON THE PURCHASE OF SHARES UNDER THE
EMPLOYEE STOCK PURCHASE PLAN AS DEFINED IN SECTION 423 OF THE INTERNAL REVENUE
CODE OF 1986, AS AMENDED. THE TRANSFER AGENT FOR THE SHARES EVIDENCED HEREBY
SHALL NOTIFY THE CORPORATION IMMEDIATELY OF ANY TRANSFER OF THE SHARES BY THE
REGISTERED HOLDER HEREOF MADE ON OR BEFORE , 19 . THE REGISTERED HOLDER SHALL
HOLD ALL SHARES PURCHASED UNDER THE OPTION IN THE REGISTERED HOLDER'S NAME (AND
NOT IN THE NAME OF ANY NOMINEE) PRIOR TO THIS DATE."

         20. Notification of Sale of Shares. The Company may require the
Participant to give the Company prompt notice of any disposition of Shares
acquired by exercise of a Purchase Right within two years from the date of
granting such Purchase Right or one year from the date of exercise of such
Purchase Right. The Company may direct that the certificates evidencing Shares
acquired by exercise of a Purchase Right refer to such requirement to give
prompt notice of disposition.

         21. Amendment or Termination of the Plan. The Board of Directors of
Applied Signal may at any time amend or terminate the Plan, except that such
termination shall not affect Purchase Rights previously granted under the Plan,
nor may any amendment make any change in a Purchase Right previously granted
under the Plan which would adversely affect the right of any Participant (except
as may be necessary to qualify the Plan as an employee stock purchase plan
pursuant to section 423 of the Code or to obtain qualification or registration
of the Shares under applicable federal or state securities laws). In addition,
an amendment to the Plan must be approved by the shareholders of the Company
within twelve (12) months of the adoption of such amendment if such amendment
would authorize the sale of more shares than are authorized for issuance under
the Plan or would change the definition of the corporations that may be
designated by the Board as Participating Companies.



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         IN WITNESS WHEREOF, the undersigned Secretary of Applied Signal
Technology, Inc. certifies that the foregoing Applied Signal Technology, Inc.
1993 Employee Stock Purchase Plan was duly adopted by the Board on January 22,
1993 and amended by the Board on January 25, 1997.


                                                 -------------------------------
                                                 Secretary





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                                  PLAN HISTORY


January 22, 1993        Board adopts Plan, with an initial reserve of 1,000,000 
                        shares.

February 22, 1993       Shareholders approve Plan, with an initial reserve of 
                        1,000,000 shares.

January 25, 1997        Board amends Plan to increase reserve to 1,600,000 
                        shares and to permit participants to increase rate of 
                        withholding during an offering.

March 6, 1997           Shareholders approve Plan, with a reserve of 1,600,000 
                        shares.




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