BEC GROUP INC, S-4/A, 1998-01-28

BEC GROUP INC
S-4/A, 1998-01-28
METAL FORGINGS & STAMPINGS

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<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JANUARY 28, 1998

REGISTRATION NO. 333-40519

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

AMENDMENT NO. 2
TO
FORM S-4

REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

BEC GROUP, INC.

(Exact name of registrant as specified in charter)

<TABLE>
<CAPTION>
DELAWARE 3648 13-3868804
<S> <C> <C>
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of incorporation or organization) Classification Code Number) Identification No.)

</TABLE>

SUITE B-302,
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
(914) 967-9400

(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)

MARTIN E. FRANKLIN
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
BEC GROUP, INC.
SUITE B-302
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580
(914) 967-9400

(Name, address, including zip code, and telephone number,
including area code, of agent for service)

Copy to:
ROBERT L. LAWRENCE, ESQ.
KANE KESSLER, P.C.
1350 AVENUE OF THE AMERICAS
NEW YORK, NY 10019
(212) 541-6222

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO PUBLIC: As soon as
practicable after the effectiveness of this Registration Statement and the
effective time of the merger of ILC Technology, Inc. with and into a wholly
owned subsidiary of BEC Group, Inc. as described in the Agreement and Plan of
Merger described in the enclosed Joint Proxy Statement/Prospectus.

If the securities being registered on this Form are to be offered in
connection with the formation of a holding company and there is compliance
with General Instruction G, check the following box [ ]

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE
COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
<PAGE>
STOCKHOLDER LETTER
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT

BEC GROUP, INC.

[Date]
Dear Stockholder:

You are cordially invited to attend a Special Meeting of Stockholders
(the "BEC Special Meeting") of BEC Group, Inc. ("BEC") to be held at
12:30 p.m. on February , 1998, at 555 Theodore Fremd Avenue, Rye,
New York 10580.

At the BEC Special Meeting you will be asked to consider and vote, among
other things, on a proposal to approve and adopt an Agreement and Plan of
Merger, dated as of October 30, 1997 as amended by Amendment No. 1 to the
Merger Agreement dated January 6, 1998 (the "Merger Agreement"), by and among
ILC Technology, Inc. ("ILC"), BEC and BILC Acquisition Corp. ("Acquisition
Corp.") a wholly owned subsidiary of BEC, pursuant to which ILC will merge
(the "Merger") with and into Acquisition Corp. Upon consummation of the
Merger, each outstanding share of ILC will be converted into the right to
receive 4.36 shares of common stock of BEC or 2.18 shares after completion of
the one for two reverse split proposed by BEC (the "Exchange Ratio"),
assuming in each case conversion of all of BEC's 8% Convertible Notes. In
addition to voting to approve the Merger, contingent upon the approval of the
Merger, you are also being asked to consider and vote for the following other
proposals, related to the Merger and the transactions contemplated thereby,
which if adopted at the BEC Special Meeting, will become effective upon the
actual or impending effectiveness of the Merger: (i) approval of an amendment
to the Restated Certificate of Incorporation of BEC (the "BEC Certificate")
to effect a one-for-two reverse stock split (the "Reverse Split") of the BEC
Common Stock; (ii) election of four (4) additional members to the BEC Board;
(iii) approval of an amendment to the BEC Certificate to change the name of
BEC Group, Inc. to Lumen Technologies, Inc. and (iv) approval of an amendment
to the BEC 1996 Stock Incentive Plan, including an increase to the number of
shares available for option grants thereunder by 2,075,000 to 4,250,000
(after giving effect to the Reverse Split).

IMMEDIATELY PRIOR TO THE MERGER, BEC ALSO INTENDS TO (I) TRANSFER TO ITS
SUBSIDIARY, BOLLE INC. ("BOLLE"), ALL OF ITS ASSETS AND LIABILITIES OTHER
THAN THOSE SPECIFICALLY RELATING TO THE CONDUCT OF BEC'S SPECIALTY LIGHTING,
ELECTRONIC, AND ELECTROFORMED PRODUCTS BUSINESSES AND CERTAIN ADDITIONAL
ASSETS AND LIABILITIES TO BE RETAINED BY BEC AND (II) DISTRIBUTE, PRO RATA,
TO ITS STOCKHOLDERS ALL OF ITS EQUITY INTEREST IN BOLLE (THE "SPINOFF"). NO
ACTION ON THE PART OF THE BEC STOCKHOLDERS WILL BE REQUIRED TO APPROVE OR
CONSUMMATE THE SPINOFF. THE SPINOFF WILL PROCEED REGARDLESS OF WHETHER THE
MERGER IS COMPLETED.

At the time of the Merger, BEC's business will consist of its specialty
lighting, electronic and electroformed products units and its investment in
Voltarc Technologies, Inc. all of which are complementary with the business
of ILC. Following the Merger, the existing BEC stockholders will own
approximately 50% of the combined company and the Board of Directors of BEC
will consist of nine directors, of whom four will be existing BEC directors,
four will be proposed by ILC and one will be elected by the BEC Board after
the Merger. It is proposed that BEC will change its name to Lumen
Technologies, Inc. after the closing of the Merger.

A summary of the basic terms and conditions of the Merger, certain
financial and other information relating to ILC and BEC and a copy of the
Merger Agreement are set forth in the enclosed Joint Proxy
Statement/Prospectus. Please review and consider the enclosed materials
carefully. The preliminary prospectus of Bolle relating to the Spinoff is
also enclosed for your review.

In connection with its approval of the Merger on October 30, 1997, the
Board of Directors received and took into account the opinion of Raymond
James & Associates, Inc. ("RJ"), an investment banking firm retained by BEC,
that, as of such date, the terms of the transaction set forth in the Merger
Agreement are fair to BEC and its stockholders from a financial point of
view. A copy of the RJ opinion is included in the accompanying Joint Proxy
Statement/Prospectus as Annex D.

The Board of Directors has unanimously approved the Merger Agreement and
the related transactions. THE BOARD OF DIRECTORS AND MANAGEMENT BELIEVE THAT
THE PROPOSED MERGER IS IN THE BEST INTEREST OF BEC AND THE STOCKHOLDERS OF
BEC AND UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE MERGER AGREEMENT
AND THE ISSUANCE OF SHARES OF BEC COMMON STOCK IN CONNECTION WITH THE MERGER.

WHETHER OR NOT YOU PLAN TO ATTEND THE BEC SPECIAL MEETING, IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED AND VOTED. ACCORDINGLY, WE ASK THAT YOU MARK,
DATE, SIGN AND RETURN YOUR PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. If you
have multiple stockholder accounts and receive more than one set of these
materials, please be sure to vote each proxy and return it in the respective
postage-paid envelope provided.

Thank you for your continued interest and cooperation.

Very truly yours,

Martin E. Franklin

Chairman and Chief Executive Officer

<PAGE>
SHAREHOLDER LETTER
MERGER PROPOSED -- YOUR VOTE IS VERY IMPORTANT

ILC TECHNOLOGY, INC.

[Date]

Dear Shareholder:

You are cordially invited to attend a Special Meeting of Shareholders (the
"ILC Special Meeting") of ILC Technology, Inc. ("ILC") to be held at 11:00
a.m. on February , 1998 at the offices of Donaldson, Lufkin & Jenrette
Securities Corporation, 277 Park Avenue, 18th Floor, New York, New York.

At the ILC Special Meeting you will be asked to consider and vote upon a
proposal to approve and adopt an Agreement and Plan of Merger, dated as of
October 30, 1997, as amended by Amendment No. 1 to the Merger Agreement dated
January 6, 1998 (the "Merger Agreement"), by and among ILC, BEC Group, Inc.
("BEC") and BILC Acquisition Corp. ("Acquisition Corp.") a wholly owned
subsidiary of BEC, pursuant to which ILC will merge (the "Merger") with and
into Acquisition Corp. Upon consummation of the Merger, each outstanding
share of ILC will be converted into the right to receive 4.36 shares of
common stock of BEC assuming conversion of all of BEC's 8% Convertible Notes
or 2.18 shares of BEC common stock after completion of the one-for-two
reverse split proposed by BEC (the "Exchange Ratio").

Immediately prior to the Merger, BEC is required to (i) transfer to its
subsidiary, Bolle Inc. ("Bolle"), all of its assets and liabilities other
than those specifically relating to the conduct of BEC's specialty lighting,
electronic, and electroformed products businesses and certain additional
assets and liabilities to be retained by BEC and (ii) distribute, pro rata,
to only the BEC stockholders all of its equity interest in Bolle (the
"Spinoff"). The ILC shareholders will not participate in the Spinoff and will
therefore not receive any equity interest of Bolle in exchange for their
shares of ILC Common Stock.

At the time of the Merger, BEC's business will consist of its specialty
lighting, electronic and electroformed products units and its investment in
Voltarc Technologies, Inc. all of which are complementary with the business
of ILC. Following the Merger, existing ILC shareholders will own
approximately 50% of the combined company and the Board of Directors of BEC
will consist of nine directors, of whom four will be proposed by ILC, four
will be existing BEC directors and one will be elected by the BEC Board after
the Merger. It is proposed that BEC will change its name to Lumen
Technologies, Inc. after the closing of the Merger.

In connection with its approval of the Merger on October 30, 1997, the
Board of Directors received and took into account the opinion of Donaldson,
Lufkin & Jenrette Securities Corporation ("DLJ"), an investment banking firm
retained by ILC, that, as of such date, the Exchange Ratio was fair to the
shareholders of ILC from a financial point of view. A copy of the DLJ opinion
is included in the accompanying Joint Proxy Statement/Prospectus as Annex E.

The Board of Directors has unanimously approved the Merger Agreement and
the related transactions. THE BOARD OF DIRECTORS AND MANAGEMENT BELIEVE THAT
THE PROPOSED MERGER IS IN THE BEST INTEREST OF ILC AND THE SHAREHOLDERS OF
ILC AND UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR ITS APPROVAL.

WHETHER OR NOT YOU PLAN TO ATTEND THE ILC SPECIAL MEETING, IT IS IMPORTANT
THAT YOUR SHARES BE REPRESENTED AND VOTED. ACCORDINGLY, WE ASK THAT YOU MARK,
DATE, SIGN AND RETURN YOUR PROXY AT YOUR EARLIEST CONVENIENCE IN THE ENVELOPE
PROVIDED, WHICH REQUIRES NO POSTAGE IF MAILED IN THE UNITED STATES. If you
have multiple shareholder accounts and receive more than one set of these
materials, please be sure to vote each proxy and return it in the respective
postage-paid envelope provided.

Thank you for your continued interest and cooperation.

Very truly yours,

Henry C. Baumgartner

Chairman and Chief Executive Officer
<PAGE>
BEC GROUP, INC.
SUITE B-302
555 THEODORE FREMD AVENUE
RYE, NEW YORK 10580

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS

To Our Stockholders:

A Special Meeting of Stockholders of BEC Group, Inc., a Delaware
corporation ("BEC"), will be held at 555 Theodore Fremd Avenue, Suite B-302,
Rye, New York 10580, at 12:30 P.M., local time, on February , 1998, or any
adjournment or postponement thereof (the "BEC Special Meeting"), for the
following purposes:

1. To approve and adopt an Agreement and Plan of Merger, dated as of
October 30, 1997 as amended by the Amendment No. 1 to the Merger
Agreement dated January 6, 1998 (the "Merger Agreement"), among BEC,
BILC Acquisition Corp., a Delaware corporation and ILC Technology,
Inc., a California corporation ("ILC") and the issuance of shares of
BEC common stock, par value $0.01 per share (the "BEC Common Stock")
pursuant to the Merger Agreement (the "Merger").

The following proposals, if adopted at the BEC Special Meeting will become
effective only upon consummation of the Merger:

2. To approve an amendment to the Restated Certificate of Incorporation of
BEC (the "BEC Certificate".) to effect a one-for-two reverse stock
split of the issued and outstanding shares of BEC Common Stock (the
"Reverse Split").

3. To elect four (4) additional members to BEC's Board of Directors.

4. To approve an amendment to the Restated Certificate of Incorporation of
BEC (the "BEC Certificate") to change the name of BEC Group, Inc. to
Lumen Technologies, Inc.

5. To approve an amendment to BEC's 1996 Stock Incentive Plan (the "BEC
Option Plan") to, among other things, increase the number of shares of
BEC Common Stock available for option grants thereunder by 2,075,000 to
4,250,000 (after giving effect to the Reverse Split).

6. To transact such other business as may properly come before the BEC
Special Meeting.

The BEC Board of Directors has fixed the close of business on January 12,
1998 as the record date for the determination of the holders of BEC common
stock entitled to notice of, and to vote at, the BEC Special Meeting. Your
attention is directed to the accompanying Joint Proxy Statement and
Prospectus.

A list of BEC stockholders of record will be available for examination by
any BEC stockholder for any purpose germane to the BEC Special Meeting
beginning on January , 1998 at BEC's offices at Suite B-302, 555 Theodore
Fremd Avenue, Rye, New York.

ALL STOCKHOLDERS ARE CORDIALLY INVITED TO ATTEND THE BEC SPECIAL MEETING. TO
ENSURE YOUR REPRESENTATION AT THE BEC SPECIAL MEETING, HOWEVER, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE. A POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE. ANY
STOCKHOLDER ATTENDING THE BEC SPECIAL MEETING MAY VOTE IN PERSON EVEN IF THAT
STOCKHOLDER HAS RETURNED A PROXY CARD.

By Order of the Board of Directors

Peter H. Trembath,
Vice President, Secretary and
General Counsel

New York, New York
Dated: January , 1998
<PAGE>
ILC TECHNOLOGY, INC.
399 JAVA DRIVE
SUNNYVALE, CALIFORNIA 94089

NOTICE OF SPECIAL MEETING OF SHAREHOLDERS

To Our Shareholders:

NOTICE IS HEREBY GIVEN that a Special Meeting of Shareholders (the "ILC
Special Meeting") of ILC Technology, Inc., a California corporation ("ILC"),
will be held at 277 Park Avenue, 18th Floor, New York, New York, on February
, 1998, at 11:00 a.m., local time.

At the ILC Special Meeting, you will be asked to consider and vote upon
the following matters:

1. A proposal to approve and adopt an Agreement and Plan of Merger,
dated as of October 30, 1997, as amended by Amendment No. 1 to the
Merger Agreement dated January 6, 1998, among BEC Group, Inc., a
Delaware corporation, BILC Acquisition Corp., a Delaware
corporation, and ILC pursuant to which ILC will merge with and into
BILC Acquisition Corp. and ILC shareholders will receive shares of
BEC Group, Inc. common stock on the terms set forth in the
accompanying Joint Proxy Statement/Prospectus; and

2. Such other matters as may properly come before the ILC Special
Meeting or any postponements or adjournments thereof.

The ILC Board of Directors has fixed the close of business on January 12,
1998 (the "ILC Record Date") as the record date for the determination of the
holders of ILC Common Stock entitled to notice of, and to vote at, the ILC
Special Meeting or any postponements or adjournments thereof. Your attention
is directed to the accompanying Joint Proxy Statement/Prospectus.

ALL SHAREHOLDERS ARE CORDIALLY INVITED TO ATTEND THE ILC SPECIAL MEETING. TO
ENSURE YOUR REPRESENTATION AT THE ILC SPECIAL MEETING, HOWEVER, YOU ARE URGED
TO COMPLETE, DATE, SIGN AND RETURN THE ENCLOSED PROXY CARD AS PROMPTLY AS
POSSIBLE. A POSTAGE-PREPAID ENVELOPE IS ENCLOSED FOR THAT PURPOSE. ANY
SHAREHOLDER ATTENDING THE ILC SPECIAL MEETING MAY VOTE IN PERSON EVEN IF THAT
SHAREHOLDER HAS RETURNED A PROXY CARD.

By Order of the Board of Directors

Ronald E. Fredianelli
Secretary

Sunnyvale, California
January , 1998
<PAGE>

PROSPECTUS

BEC GROUP, INC.

UP TO 23,000,000 SHARES OF COMMON STOCK

PROXY STATEMENT FOR
SPECIAL MEETINGS OF STOCKHOLDERS

ILC TECHNOLOGY, INC.
TO BE HELD ON FEBRUARY , 1998, ]
BEC GROUP, INC.
TO BE HELD ON FEBRUARY , 1998

This Joint Proxy Statement/Prospectus of BEC Group, Inc. ("BEC") and Proxy
Statement of ILC Technology, Inc. ("ILC") is furnished in connection with the
solicitation by the Board of Directors of BEC (the "BEC Board") of proxies
from holders of common stock, par value $0.01 per share of BEC (the "BEC
Common Stock") for use at the special meeting of BEC stockholders to be held
on February , 1998 or any adjournment or postponement thereof (the "BEC
Special Meeting") and in connection with the solicitation by the Board of
Directors of ILC (the "ILC Board") of proxies from holders of common stock,
no par value per share of ILC ("ILC Common Stock") for use at the special
meeting of ILC shareholders to be held on February , 1998 (the "ILC Special
Meeting"). This Joint Proxy Statement/Prospectus relates to the merger (the
"Merger") of ILC with and into BILC Acquisition Corp., a Delaware corporation
wholly-owned by BEC ("Acquisition Corp."), pursuant to the Agreement and Plan
of Merger, dated as of October 30, 1997, as amended by Amendment No. 1 to the
Merger Agreement dated January 6, 1998 (the "Merger Agreement"), among BEC,
Acquisition Corp. and ILC. At the ILC Special Meeting, the holders of ILC
Common Stock will be asked to vote to approve and adopt the Merger Agreement.
At the BEC Special Meeting the holders of BEC Common Stock will be asked to
vote to approve and adopt the Merger Agreement and the issuance of shares of
BEC Common Stock in connection with the Merger (the "Merger Proposal") and,
contingent upon the approval of the Merger Proposal, the following proposals
will be brought to the stockholders for approval, which if adopted at the BEC
Special Meeting, will become effective only upon the consummation of the
Merger: (i) approve an amendment to the Restated Certificate of Incorporation
of BEC (the "BEC Certificate") to effect a one-for-two reverse stock split
(the "Reverse Split") of the BEC Common Stock (the "Reverse Split Proposal");
(ii) elect four (4) additional members to the BEC Board (the "Director
Election Proposal"); (iii) approve an amendment to the BEC Certificate to
change the name of BEC Group, Inc. to Lumen Technologies, Inc. (the "Name
Change Proposal"); and (iv) approve an amendment to the BEC 1996 Stock
Incentive Plan (the"BEC Option Plan") to increase the number of shares
available for option grants pursuant to the BEC Option Plan by 2,075,000 to
4,250,000 (after giving effect to the Reverse Split) (the "1996 Stock
Incentive Plan Proposal"). The approximate date of mailing of this Joint
Proxy Statement/Prospectus is on or about [ , ].

THE BOARD OF DIRECTORS AND MANAGEMENT OF ILC BELIEVE THAT THE PROPOSED
MERGER IS IN THE BEST INTEREST OF ILC AND THE SHAREHOLDERS OF ILC AND
UNANIMOUSLY RECOMMEND THAT SHAREHOLDERS VOTE FOR ITS APPROVAL.

THE BOARD OF DIRECTORS AND MANAGEMENT OF BEC BELIEVE THAT THE PROPOSED
MERGER IS IN THE BEST INTEREST OF BEC AND THE STOCKHOLDERS OF BEC AND
UNANIMOUSLY RECOMMEND THAT YOU VOTE IN FAVOR OF THE MERGER AGREEMENT AND THE
ISSUANCE OF SHARES OF BEC COMMON STOCK IN CONNECTION WITH THE MERGER, THE
REVERSE SPLIT PROPOSAL, THE DIRECTOR ELECTION PROPOSAL, THE NAME CHANGE
PROPOSAL, AND THE 1996 STOCK INCENTIVE PLAN PROPOSAL.

In making the foregoing recommendations to their respective shareholders,
each of the BEC Board and the ILC Board assumed that the Spinoff of Bolle
would be consummated prior to the Merger and accordingly, the value of BEC
Common Stock to be delivered to ILC Shareholders pursuant to the Merger
excludes any value attributable to Bolle.

This Proxy Statement of BEC also serves as a prospectus under the
Securities Act of 1933, as amended (the "Securities Act"), for the issuance
and registration of up to 23,000,000 shares of BEC Common Stock upon the
exchange of each outstanding share of ILC Common Stock for 4.36 shares of BEC
Common Stock, assuming, in each case, conversion of all of BEC's 8%
Convertible Subordinated Notes (the "Convertible Notes") or 2.18 shares after
giving effect to the Reverse Split (the "Exchange Ratio"). Cash will be paid
in lieu of fractional shares. The maximum consideration payable by BEC to
consummate the Merger is 23,000,000 shares of BEC Common Stock (before giving
effect to the Reverse Split). Each outstanding option to purchase ILC Common
Stock under ILC's Option Plans (as hereinafter defined) will be assumed by
BEC and will become an option to purchase BEC Common Stock, with appropriate
adjustments to be made to the number of shares issuable thereunder and the
exercise price thereof, based on the Exchange Ratio. Based on the number of
shares of ILC Common Stock outstanding as of January 12, 1998, and assuming
conversion of all of the Convertible Notes and giving effect to the Reverse
Split, a total of shares of BEC Common Stock will be issued in connection
with the Merger, representing approximately 50% of the total outstanding
shares of BEC post-Merger.

As a condition to the Merger, BEC is required to (i) transfer to its
subsidiary, Bolle Inc. ("Bolle"), all of its assets and liabilities other
than those specifically relating to the conduct of BEC's specialty lighting,
electronic, and electroformed products businesses and certain additional
assets and liabilities to be retained by BEC and (ii) distribute, pro rata,
to its stockholders all of its equity interest in Bolle (the "Spinoff"). No
action on the part of the BEC stockholders or the ILC shareholders will be
required to approve or consummate the Spinoff. While consummation of the
Spinoff is a condition precedent to the Merger, the approval of the Merger
and the other matters put before the stockholders of BEC is not a condition
precedent to the Spinoff. Accordingly, the Spinoff will proceed regardless of
whether the Merger is completed.

The ILC shareholders will not participate in the Spinoff and will
therefore not receive any equity interest of Bolle in exchange for their
shares of ILC Common Stock.

Holders of BEC Common Stock are not entitled to appraisal rights under
Delaware law in connection with the Merger. Pursuant to California law,
holders of ILC Common Stock may be entitled to certain dissenters' rights in
connection with the Merger. The consummation of the Merger is subject to
several conditions precedent.

If the Merger Agreement is approved by the shareholders of ILC and
stockholders of BEC at their respective meetings, and if the other conditions
specified in the Merger Agreement are satisfied or waived, ILC will become a
wholly-owned subsidiary of BEC as a result of the Merger.

BEC Common Stock is traded on the New York Stock Exchange, Inc. ("NYSE")
and ILC Common Stock is traded on the Nasdaq National Market ("Nasdaq"). On
October 30, 1997, the last trading day before the public announcement of the
proposed Merger, the last reported sale price for BEC Common Stock was $5.625
per share and the last reported sale price for ILC Common Stock was $11.75
per share. On , 1998, prior to the Spinoff, and the most recent practical
date before the printing of this Joint Proxy Statement/Prospectus, the last
reported prices for BEC Common Stock and ILC Common Stock were and per
share, respectively. Stockholders are encouraged to obtain current quotations
for the market prices of BEC Common Stock and ILC Common Stock before voting
on the Merger. As of the BEC Record Date, BEC had 50,000,000 shares of common
stock authorized and 17,631,139 shares issued and outstanding. As of the ILC
Record Date, ILC had 10,000,000 shares of ILC Common Stock authorized and
4,903,591 shares issued and outstanding.

All information in this Joint Proxy Statement/Prospectus concerning BEC
and its affiliates has been furnished by BEC and all information concerning
ILC and its affiliates has been furnished by ILC.

THE ABOVE MATTERS ARE DISCUSSED IN DETAIL IN THIS JOINT PROXY STATEMENT/
PROSPECTUS. THE STOCKHOLDERS OF BEC AND SHAREHOLDERS OF ILC ARE URGED TO READ
AND CONSIDER CAREFULLY THIS JOINT PROXY STATEMENT/PROSPECTUS IN ITS ENTIRETY
INCLUDING THE RISK FACTORS REFERRED TO BEGINNING ON PAGE [26] UNDER "RISK
FACTORS".

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS JOINT PROXY STATEMENT/PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT
BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR
THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE
SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE
UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF
ANY SUCH STATE.

The date of this Joint Proxy Statement/Prospectus is , 1998

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<S> <C>
Incorporation of Certain Documents by Reference......................................... 10
Available Information................................................................... 10
Trademarks.............................................................................. 11
Forward-Looking Statements.............................................................. 11
Summary................................................................................. 12
Meetings of the Stockholders of BEC and Shareholders of ILC............................ 12
BEC Record Date........................................................................ 12
ILC Record Date........................................................................ 13
Overview .............................................................................. 13
Parties to the Merger.................................................................. 13
The Spinoff............................................................................ 13
Reverse Split.......................................................................... 14
Terms of the Merger; Exchange Ratio.................................................... 14
Treatment and Effect of Convertible Notes and BEC Preferred Stock and Warrants ........ 15
ILC Stock Options...................................................................... 15
Closing and Effective Time of the Merger............................................... 16
Risk Factors........................................................................... 16
Stock Ownership Following the Merger................................................... 16
Conduct of Business Prior to the Merger................................................ 16
Conditions to the Merger............................................................... 17
Voting Agreements and Proxies.......................................................... 17
No Solicitation........................................................................ 17
Termination; Fees...................................................................... 17
Interests of Certain Persons in the Merger............................................. 17
Opinion of BEC's Financial Advisor .................................................... 18
Opinion of ILC's Financial Advisor..................................................... 18
Exchange of Stock Certificates......................................................... 19
Stock Exchange Listing................................................................. 19
Regulatory Approvals................................................................... 19
Comparative Rights of Stockholders..................................................... 19
Federal Income Tax Consequences ....................................................... 19
Accounting Treatment................................................................... 20
Appraisal and Dissenters' Rights....................................................... 20
Delisting of ILC Stock................................................................. 20
Board of Directors and Management Following the Merger................................. 20
BEC Option Plan Amendment.............................................................. 21
BEC Name Change........................................................................ 21
Reasons for and Against the Merger; Recommendation of the Boards of Directors of BEC
and ILC............................................................................... 21
Comparative Per Share Financial Information ........................................... 23
BEC Selected Historical and Pro Forma Consolidated Financial Data ..................... 24
ILC Selected Historical Consolidated Financial Data ................................... 25
Risk Factors............................................................................ 26
Risk Factors Relating to the Merger and to both BEC and ILC............................ 26
Risk Factors Relating Only to BEC...................................................... 29
Risk Factors Relating Only to ILC...................................................... 32
Market Prices of BEC and ILC Common Stock .............................................. 34
Market Prices of BEC Common Stock and Dividend Policy.................................. 34
Market Prices of ILC Common Stock and Dividend Policy.................................. 35

2
<PAGE>
PAGE
--------
BEC Selected Historical and Pro Forma Financial Data.................................... 36
ILC Selected Historical Consolidated Financial Data..................................... 37
BEC Special Meeting..................................................................... 38
Date, Time and Place of BEC Special Meeting............................................ 38
Purpose................................................................................ 38
Record Date and Outstanding Shares..................................................... 38
Quorum................................................................................. 38
Required Vote.......................................................................... 38
Proxies................................................................................ 39
Solicitation of Proxies; Expenses...................................................... 39
ILC Special Meeting..................................................................... 40
Date, Time and Place of ILC Special Meeting............................................ 40
Purpose................................................................................ 40
Record Date and Outstanding Shares..................................................... 40
Quorum................................................................................. 40
Required Vote.......................................................................... 40
Proxies................................................................................ 40
Solicitation of Proxies; Expenses...................................................... 41
Recent Material Developments of BEC .................................................... 42
PROPOSAL NUMBER ONE FOR BEC STOCKHOLDERS AND THE
ONLY PROPOSAL FOR ILC SHAREHOLDERS--APPROVAL OF THE MERGER ............................. 45
The Merger.............................................................................. 45
Joint Reasons for the Merger........................................................... 45
BEC's Reasons for the Merger........................................................... 46
ILC's Reasons for the Merger........................................................... 47
Material Contacts and Board Deliberations.............................................. 48
Opinion of BEC's Financial Advisor..................................................... 50
Opinion of ILC's Financial Advisor..................................................... 53
Certain Federal Income Tax Considerations for ILC Shareholders ........................ 57
Accounting Treatment................................................................... 59
Amendment to BEC By-laws............................................................... 59
Stock Exchange Listing................................................................. 59
Board of Directors and Management of BEC Following the Merger.......................... 59
Voting Agreements and Proxies.......................................................... 60
Employment and Consulting Agreements................................................... 60
Restrictions on Sale of BEC Common Stock by Affiliates................................. 60
Conversion of Convertible Notes and Other BEC Capitalization Changes ................. 61
Dilution of Voting Power; Conversion of Convertible Notes.............................. 61
The Merger Agreement.................................................................... 62
The Merger............................................................................. 62
Effective Time......................................................................... 62
Conditions to the Merger............................................................... 62
Basis of Converting Shares of ILC ..................................................... 63
Exchange Ratio ........................................................................ 63
Stock Options.......................................................................... 64
Surrender and Payment.................................................................. 64
No Fractional Shares................................................................... 65
Representations and Warranties......................................................... 65
Conduct of BEC's and ILC's Businesses Prior to the Merger.............................. 65
No Solicitation ....................................................................... 66
Covenants.............................................................................. 66

3
<PAGE>
PAGE
--------
Termination; Fees and Expenses......................................................... 68
ILC Shareholder's Dissenters' Rights................................................... 68
Appraisal Rights of BEC's Stockholders................................................. 70
INFORMATION CONCERNING BEC.............................................................. 71
BEC Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................ 71
Results of Operations.................................................................. 72
Business of BEC........................................................................ 75
Description of the Convertible Notes .................................................. 79
Certain Relationships and Related Transactions......................................... 81
INFORMATION CONCERNING ILC.............................................................. 82
ILC Management's Discussion and Analysis of Financial Condition and Results of
Operations............................................................................ 82
Business of ILC........................................................................ 85
Security Ownership of Certain Beneficial Owners and Management of ILC ................. 90
Management of BEC Following the Merger.................................................. 91
Directors.............................................................................. 92
Committees of the Board of Directors................................................... 92
Summary Compensation Table ............................................................ 93
Option Grants in Fiscal 1997........................................................... 93
Aggregated Option Exercises in Last Fiscal Year-End Option Values...................... 94
ILC Director Compensation.............................................................. 94
Certain Transactions .................................................................. 94
Comparison of Capital Stock ............................................................ 95
Description of BEC Capital Stock....................................................... 95
BEC Common Stock....................................................................... 95
Preferred Stock........................................................................ 95
Transfer Agent of Registrar............................................................ 95
Description of ILC Capital Stock ...................................................... 95
ILC Common Stock ...................................................................... 95
ILC Common Stock Purchase Rights ...................................................... 96
Comparison of Stockholder Rights ....................................................... 97
ADDITIONAL MATTERS BEING SUBMITTED TO A VOTE OF ONLY BEC'S STOCKHOLDERS
PROPOSAL NUMBER TWO--AMEND THE BEC CERTIFICATE TO EFFECT THE REVERSE SPLIT ............ 104
General................................................................................ 104
Effects of the Reverse Split........................................................... 104
Federal Income Tax Consequences........................................................ 105
Exchange of Shares..................................................................... 106
PROPOSAL NUMBER THREE--TO ELECT FOUR ADDITIONAL DIRECTORS TO THE BEC BOARD ............ 106
PROPOSAL NUMBER FOUR--TO AMEND THE BEC CERTIFICATE TO CHANGE THE NAME OF BEC GROUP,
INC. ................................................................................... 107
PROPOSAL NUMBER FIVE--TO AMEND THE BEC OPTION PLAN ..................................... 107
Proposed Amendment to the BEC Option Plan ............................................. 107
Description of the Plan ............................................................... 108
Federal Tax Consequences .............................................................. 109
New Plan Benefits ..................................................................... 110
Independent Accountants................................................................. 111
Legal Matters........................................................................... 111
Experts................................................................................. 111
Stockholder Proposals................................................................... 111
</TABLE>

4
<PAGE>
LIST OF DEFINED TERMS

<TABLE>
<CAPTION>
PAGE
-------------------
<S> <C>
1996 Stock Incentive Plan Proposal ...... 1
AAi ...................................... 41, A-44, 1, 4
AAi Common Stock ......................... A-41, 1
Acquiring Person ......................... 96, F-51
Acquisition Corp ......................... 1, F-52
Acquisition Transaction .................. 66, A-25
Act ...................................... 1
Agreement ................................ A-1, E-1
Antitrust Division ....................... 19
Ashfield ................................. F-27
Asset Sale ............................... 75
Asset Transfer ........................... A-1
Assignee ................................. A-41, 1
Assignor ................................. A-41, 1
Assignor Shares .......................... A-41, 1
Audited Company Financial Statements .... A-30
Average .................................. 55
Average Common Stock Price ............... 79
BEC ...................................... 1, F-52, A-1, A-39,
A-44, E-1, 4, 1
BEC 1996 Plan ............................ A-3
BEC Acquisition Person ................... A-34
BEC Balance Sheet ........................ A-8
BEC Board ................................ A-1
BEC Bylaws ............................... 97
BEC Certificate .......................... 1
BEC Common Stock ......................... 1, A-1, E-1
BEC Group Notes .......................... F-30
BEC Income Statements .................... A-8
BEC Intellectual Property ................ A-14
BEC Nominees ............................. 21, A-29
BEC Option Plan .......................... 1
BEC Options .............................. 44
BEC Plans ................................ A-10
BEC Record Date .......................... 12
BEC SEC Reports .......................... A-8
BEC Special Meeting ...................... 1
BEC Spinoff .............................. 75
BEC Stock Option Plan Amendment .......... 21
BEC Stockholders Meeting ................. A-2, A-11
BEC Voting Agreement ..................... 17, A-1
BEC Warrants ............................. 44
Benson ................................... 29, A-43, 3
Benson Notes ............................. 61
Benson Optical ........................... F-26
Bolle .................................... 1

5
<PAGE>
PAGE
-------------------
Bolle America ............................ F-25
Bolle .................................... F-12
Bolle France ............................. 44
Bolle Group .............................. A-1
California Law ........................... A-1
CERCLA ................................... F-34
Certificate of Merger .................... A-2
Certificates ............................. 64, A-4
CGCL ..................................... 14
Closing .................................. 16, A-2
Closing Date ............................. 16
Code ..................................... A-3, A-10, A-19
Combined Company ......................... 13
Commission ............................... 10, 1
Committee ................................ 108
Company .................................. A-1, A-39, E-1, 1
Company Acquisition Person ............... A-33
Company Balance Sheet .................... A-17
Company Board ............................ A-1
Company Common Stock ..................... A-1, E-1
Company Income Statements ................ A-17
Company Nominees ......................... A-29
Company Plans ............................ A-3
Company SEC Reports ...................... A-17
Company Shareholders Meeting ............. A-2
Company Voting Agreement ................. A-1
Confidentiality Agreement ................ A-28
Contribution Agreement ................... 13
Conversion Price ......................... 79
Convertible Notes ........................ 1
CPI ...................................... 82
Credit Agreement ......................... 34
CVR ...................................... F-22
Delaware Law ............................. A-1
Director Election Proposal ............... 1
Director Options. ........................ 108
Dissenting Shareholders .................. 68
Dissenting Shares ........................ 69, A-4
DLJ ...................................... 18, A-19, E-2
DLJ Comparable Companies ................. 55
DLJ Comparable Transactions .............. 56
DLJ Engagement Letter .................... 58
DLJ Opinion .............................. 18
EBIT ..................................... 52
EBITDA ................................... 51
Effective Time ........................... 16
Engagement Letter ........................ 54
EPA ...................................... F-34

6
<PAGE>
PAGE
-------------------
EPS ...................................... 52
Essilor .................................. F-21
Essilor Merger ........................... 75
Essilor of America ....................... F-21
Essilor Sub .............................. F-21
Exchange Act ............................. A-7
Exchange Agent ........................... 19, A-4
Exchange Ratio ........................... 1, A-3, E-1
Exchange Ratio Adjustment Formula ....... 63
Expenses ................................. A-33
Eyecare Products ......................... F-27
FDA ...................................... 33
Fee ...................................... A-33
FGG ...................................... F-21
FGH ...................................... A-44, 4
FGH Preferred Stock ...................... A-41, 1
FTC ...................................... 19
GAAP ..................................... A-8
GMP ...................................... 33
Guarantors ............................... 77
Holdings ................................. 75, F-21
HSR Act .................................. 19, A-7
ILC ...................................... 1, F-12, F-42
ILC Articles ............................. 97
ILC Bylaws ............................... 97
ILC Common Stock ......................... 1
ILC Nominees ............................. 21
ILC Option Plans ......................... 15
ILC Record Date .......................... 13
ILC Special Meeting ...................... 1
ILC Stock Options ........................ 15
ILC Sunnyvale ............................ 82
ILC Voting Agreement ..................... 17
Indemnification Agreement ................ 43
Indemnified Parties ...................... A-28
Indemnifying Party ....................... 43, A-28
Indenture ................................ 79
Intellectual Property .................... A-22
Interest Payment Date .................... 79
IPO ...................................... F-21
ISOs ..................................... 108
Joint Proxy Statement-Prospectus ........ A-11
Lantis ................................... F-27
LCD ...................................... 86
Lenders .................................. 34
Liens .................................... A-12
LTM ...................................... 52
Management Services Agreement ............ 44
Marlin ................................... 81

7
<PAGE>
PAGE
-------------------
Merger ................................... 1, F-52, A-1, E-1
Merger Agreement ......................... 1, A-39
Merger Consideration ..................... A-3
Merger Proposal .......................... 1
Merger Synergies ......................... 54
MH ....................................... 81
Mortgage ................................. 77
Name Change Proposal ..................... 1
Nasdaq ................................... 1
NationsBank .............................. F-28
New Shares ............................... 105
Non-ORC Business ......................... A-1
NQSOs .................................... 108
NYSE ..................................... 1, A-5
Obligations .............................. 77
OCA ...................................... F-23
OEMs ..................................... 86
ORC ...................................... 13
ORC Balance Sheet ........................ A-8
ORC Business ............................. 13
ORC Group ................................ 13, 42
ORC Income Statement ..................... A-8
Original Credit Agreement ................ F-28
Other Filings ............................ A-26
Outstanding Convertible Notes ............ 63, A-3
Pembridge Optical ........................ F-26
Permitted Liens .......................... A-12
Plan ..................................... F-48
Plans .................................... A-19
PLI ...................................... 82, F-42
Preferred Stock .......................... F-21
Proceeds ................................. A-41, 1
PRP ...................................... F-34
Purchaser ................................ A-1, A-39
Q-Arc .................................... 33
Raymond James ............................ A-11
Registration Statement ................... 11, 1
Representatives .......................... A-11
Retirement Plan .......................... F-47
Reverse Split ............................ 1
Reverse Split Proposal ................... 1
Reverse Stock Split ...................... A-29
Right .................................... 96
Rights Agreement ......................... 96
RJ ....................................... 18
RJ Comparable Companies .................. 51
RJ Comparable Transactions ............... 52
RJ Opinion ............................... 50
SAR ...................................... 109

8
<PAGE>
PAGE
-------------------
SEC ...................................... A-8
Section 203 .............................. 98
Securities Act ........................... 1, A-7
Sellers .................................. 44
Series A Preferred Stock ................. 44
SFAS ..................................... F-25
Share Purchase Agreement ................. 44
Shares ................................... A-3
site ..................................... F-34
Spinoff .................................. 1, F-21, A-1
Spinoff Record Date ...................... 13
Staff Letter ............................. 1
Stock Purchase Plan ...................... 31
Superior Optical ......................... F-26
Superior Proposal ........................ 66
Surviving Corporation .................... A-2
SVS ...................................... F-28
Synergies ................................ 51
Tax Opinion .............................. 20
Term Loan Facility ....................... 77
Transactions ............................. A-8
Transfer Agreements ...................... A-1
UV ....................................... 86
Voltarc .................................. 13, A-9
Voltarc Purchase Agreement ............... 75
Voltarc Stockholders ..................... 76
Voting Agreements ........................ 17
</TABLE>

9
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents previously filed with the Securities and Exchange
Commission (the "Commission") by BEC (File No. 1-14360) pursuant to the
Security and Exchange Act of 1934, as amended (the "Exchange Act") are
incorporated by reference in this Joint Proxy Statement/Prospectus:

1. BEC's Annual Report on Form 10-K for the fiscal year ended December 31,
1996;

2. BEC's Quarterly Reports on Form 10-Q for the quarters ended March 31,
1997 and June 30, 1997;

3. BEC's Quarterly Report on Form 10-Q for the quarter ended September 30,
1997 and Form 10-Q/A for the quarter ended September 30, 1997;

4. BEC's Current Reports on Form 8-K (Date of Event--July 10, 1997) filed
on July 24, 1997, Form 8-K/A filed on September 22, 1997 and Form 8-K/A-2
filed on January 15, 1998;

5. BEC's Proxy Statement for 1997, mailed to stockholders on or about June
19, 1997; and

6. Description of BEC's Common Stock contained in BEC's Registration
Statement on Form 8-A dated April 29, 1996.

All documents and reports subsequently filed by BEC pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act after the date of this Joint
Proxy Statement/Prospectus prior to the date of the BEC Special Meeting shall
be deemed to be incorporated by reference in this Joint Proxy
Statement/Prospectus and to be part hereof from the dates of filing of such
documents and reports.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes hereof to the extent that a statement contained herein (or in
any other subsequently filed document that is or is deemed to be incorporated
by reference herein) modifies or supersedes such previous statement. Any
statement so modified or superseded shall not be deemed to constitute a part
hereof except as so modified or superseded.

THIS JOINT PROXY STATEMENT/PROSPECTUS INCORPORATES DOCUMENTS BY REFERENCE
THAT ARE NOT PRESENTLY CONTAINED HEREIN OR DELIVERED HEREWITH. THESE
DOCUMENTS (OTHER THAN EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE
SPECIFICALLY INCORPORATED BY REFERENCE HEREIN) ARE AVAILABLE, WITHOUT CHARGE,
UPON ORAL OR WRITTEN REQUEST BY ANY PERSON TO WHOM THIS JOINT PROXY
STATEMENT/PROSPECTUS HAS BEEN DELIVERED. IN THE CASE OF DOCUMENTS RELATING TO
BEC, FROM BEC GROUP, INC., SUITE B-302, 555 THEODORE FREMD AVENUE, RYE, NEW
YORK, ATTENTION: DESIREE DESTEFANO, TELEPHONE NUMBER: (914) 967-9400. IN
ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS PRIOR TO THE BEC SPECIAL
MEETING ANY SUCH REQUEST SHOULD BE MADE BY [ ].

AVAILABLE INFORMATION

BEC and ILC are each subject to the informational requirements of the
Exchange Act, and, in accordance therewith, file reports and other
information with the Commission. Reports, proxy statements and other
information filed by BEC and ILC with the Commission can be inspected and
copied at the public reference facilities maintained by the Commission, at
Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549
and at the following regional offices of the Commission: Midwest Regional
Office: Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661; and Northeast Regional Office: 7 World Trade Center, Suite
1300, New York, New York 10048. Copies of such material can be obtained from
the Public Reference Section of the Commission, at Room 1024, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates.
The Commission also maintains a site on the World Wide Web at http:
//www.sec.gov that contains reports, proxy and information statements and
other information regarding registrants, including BEC and ILC, that file
electronically with the Commission. In addition, material filed by BEC can be
inspected at the offices of the New York Stock Exchange, 20 Broad Street, New
York, New York 10005. Material filed by ILC can be inspected at the offices
of Nasdaq Operations, 1735 K Street, N.W., Washington, D.C. 20006.

10
<PAGE>
BEC has filed with the Commission a Registration Statement on Form S-4
(herein, together with all amendments and exhibits, the "Registration
Statement") under the Securities Act covering the BEC Common Stock to be
issued pursuant to the Merger Agreement. As permitted by the rules and
regulations of the Commission, this Joint Proxy Statement/Prospectus does not
contain all information set forth in the Registration Statement and exhibits
thereto, all of which are available for inspection at the offices of the
Commission at the addresses set forth above. For further information, please
refer to the Registration Statement including the exhibits thereto.
Statements contained in this Joint Proxy Statement/ Prospectus relating to
the contents of any contract or other document referred to herein are not
necessarily complete, and reference is made to the copy of such contract or
other document filed as an exhibit to the Registration Statement or such
other document, each such statement being qualified in all respects by such
reference.

No person has been authorized to give any information or to make any
representation not contained in, or incorporated by reference in, this Joint
Proxy Statement/Prospectus, and, if given or made, such information or
representation should not be relied upon as having been authorized. Under the
rules and regulations of the Commission pursuant to the Securities Act, the
proposal to approve the Merger Agreement constitutes an offer of BEC Common
Stock to holders of ILC Common Stock. The delivery of this Joint Proxy
Statement/Prospectus does not constitute an offer to sell, or the
solicitation of an offer to purchase, the securities offered hereby or a
solicitation of a proxy in any jurisdiction where such offer or solicitation
would be unlawful. Neither the delivery of this Joint Proxy
Statement/Prospectus nor the issuance of any securities hereunder shall under
any circumstances create any implication that there has been no change in the
information regarding BEC or ILC set forth herein or incorporated herein by
reference since the date hereof.

TRADEMARKS

This Joint Proxy Statement/Prospectus contains references to trademarks of
BEC and ILC and may contain references to trademarks of others.
Cermax(Registered Trademark) and Daymax(Registered Trademark) are registered
trademarks of ILC. Bolle(Registered Trademark), OptiBeam(Registered
Trademark) and Pro Form(Registered Trademark) are registered trademarks of
BEC.

FORWARD-LOOKING STATEMENTS

This Joint Proxy Statement/Prospectus contains forward-looking statements
within the meaning of Section 27A of the Securities Act and Section 21E of
the Exchange Act. Words such as "anticipates", "expects", "intends", "plans",
"believes", "seeks", "estimates", variations of such words and similar
expressions are intended to identify such forward-looking statements.
Additionally, statements concerning future matters such as the development of
new products, enhancements or technologies, and other statements regarding
matters that are not historical fact are forward-looking statements. The
forward-looking statements reflect the best judgment of the management of BEC
or ILC, as appropriate, based on factors currently known. These statements
are not guarantees of future performance and are subject to certain risks,
uncertainties and assumptions that are difficult to predict. Actual results
and outcomes may differ materially from the results and outcomes discussed in
the forward-looking statements. The matters set forth under the captions
"Risk Factors", "Information Concerning BEC--BEC Management's Discussion and
Analysis of Financial Condition and Results of Operations," "Information
Concerning ILC--ILC Management's Discussion and Analysis of Financial
Condition and Results of Operations," "The Merger--Joint Reasons for the
Merger," "--BEC's Reasons for the Merger," and "--ILC's Reasons for the
Merger," in this Joint Proxy Statement/Prospectus, as well as those discussed
elsewhere in this Joint Proxy Statement/Prospectus or in documents that are
incorporated herein by reference, constitute cautionary statements
identifying important factors with respect to such forward-looking
statements, including certain risks and uncertainties, that could cause
actual results or outcomes to differ materially from those in such
forward-looking statements.

Readers are cautioned not to place undue reliance on the forward-looking
statements contained herein, which reflect the analysis of the management of
BEC and ILC, as appropriate, only as of the date hereof. Neither BEC nor ILC
undertakes any obligation to revise or update these forward-looking
statements to reflect any events or circumstances after the date hereof or to
reflect the occurrence of unanticipated events.

11
<PAGE>
SUMMARY

The following is a brief summary of the more detailed information
contained in this Joint Proxy Statement/Prospectus with respect to the Merger
Agreement attached hereto as Annex A and the transactions contemplated
thereby. This Summary is not intended to be complete and is qualified in its
entirety by the more detailed information contained elsewhere herein, the
Annexes hereto and other documents referred to herein. Terms used but not
defined in this Summary have the meanings ascribed to them elsewhere in this
Joint Proxy Statement/Prospectus. Cross references in this Summary are to the
captions of sections of this Joint Proxy Statement/Prospectus. As used
herein, "BEC" means BEC and its subsidiaries, excluding Bolle Inc. and
Bolle's subsidiaries and "ILC" means ILC and its subsidiaries unless the
context requires otherwise. Unless otherwise indicated, all share numbers of
BEC Common Stock are pre-Reverse Split.

BEC STOCKHOLDERS AND ILC SHAREHOLDERS SHOULD CAREFULLY READ THIS JOINT
PROXY STATEMENT/PROSPECTUS AND THE ANNEXES HERETO IN THEIR ENTIRETY.

MEETINGS OF THE STOCKHOLDERS OF BEC AND SHAREHOLDERS OF ILC

The BEC Special Meeting will be held at 12:30 p.m., local time, on
February , 1998, at Suite B-302, 555 Theodore Fremd Avenue, Rye, New York
10580.

The ILC Special Meeting will be held at 11:00 a.m., local time, on
February , 1998 at 277 Park Avenue, 18th Floor, New York, New York.

At the ILC Special Meeting, shareholders of ILC will be asked to consider
and vote upon a proposal to approve and adopt the Merger Agreement. At the
BEC Special Meeting stockholders of BEC will be asked to consider and approve
upon the following matters: (i) the Merger Proposal; (ii) the Reverse Split
Proposal; (iii) the Director Election Proposal; (iv) the Name Change
Proposal; and (v) the 1996 Stock Incentive Plan Proposal.

All shares of BEC Common Stock and ILC Common stock represented by
properly executed proxies will be voted at the respective BEC Special Meeting
and ILC Special Meeting in accordance with the directions on the proxies,
unless such proxies have been previously revoked. If no direction is
indicated, in the case of BEC, the shares will be voted FOR (i) the Merger
Proposal, (ii) the Reverse Split Proposal; (iii) the Director Election
Proposal; (iv) the Name Change Proposal; and (v) the 1996 Stock Incentive
Plan Proposal. If no direction is indicated, in the case of ILC, the shares
will be voted FOR the Merger Agreement. Any BEC stockholder or ILC
shareholder giving a proxy may revoke his or her proxy at any time before its
exercise at the BEC Special Meeting or the ILC Special Meeting, as the case
may be, by (1) filing written notice of such revocation with the Secretary of
BEC or ILC, as the case may be, (2) signing and delivering to such Secretary
a proxy bearing a later date or (3) voting in person at such meeting.
However, the mere presence at the BEC Special Meeting of a BEC stockholder or
at the ILC Special Meeting of an ILC shareholder who has delivered a valid
proxy will not of itself revoke the proxy. An aggregate of 2,217,428
(including 536,250 shares subject to option exercisable within 60 days)
shares of BEC Common Stock is beneficially owned by BEC's executive officers
and directors representing 12.2% of the total outstanding shares of BEC
Common Stock. As of the ILC Record Date, the directors and executive officers
of ILC beneficially owned, in the aggregate, 673,517 shares of ILC Common
Stock (including 288,750 shares subject to options exercisable within 60 days
after the ILC Record Date), representing 13.0% of the total number of shares
outstanding. See "The BEC Special Meeting--Proxies" and "The ILC Special
Meeting--Proxies."

BEC RECORD DATE

The record date for stockholders of BEC entitled to notice of and to vote
at the BEC Special Meeting is January 12, 1998 (the "BEC Record Date"). See
"BEC Special Meeting."

12
<PAGE>
ILC RECORD DATE

The record date for shareholders of ILC entitled to notice of and to vote
at the ILC Special Meeting is January 12, 1998 (the "ILC Record Date"). See
"ILC Special Meeting."

OVERVIEW

Pursuant to the Merger Agreement, ILC will merge with and into Acquisition
Corp. At the time of the Merger, BEC will consist of its ORC Business (as
hereinafter defined) which includes its specialty lighting, electronic and
electroformed products businesses and its investment in Voltarc Technologies,
Inc. ("Voltarc"), all of which are complementary with the business of ILC.
Substantially all of the other assets and liabilities of BEC will be
transferred to BEC's subsidiary, Bolle, which will be spun off to BEC's
stockholders on the record date of the spinoff, which is anticipated to be on
the date of the BEC Special Meeting, but prior to the Effective Time. In
addition, BEC intends to effect the Reverse Split immediately prior to the
Merger. Upon consummation of the Merger, BEC (which will change its name to
Lumen Technologies, Inc.) will consist of ILC and the ORC Business (the
"Combined Company").

PARTIES TO THE MERGER

BEC. BEC Group, Inc., a Delaware corporation, was incorporated on December
28, 1995 and is a holding company of (i) ORC Technologies, Inc., a Delaware
corporation ("ORC") and other related assets (collectively, the "ORC Group")
which supplies lighting, electronic and electroformed products to a diverse
customer base, and (ii) prior to the consummation of the Spinoff, Bolle, a
manufacturer and marketer of premium sunglasses, sports shields, goggles and
safety and tactical eyewear. BEC's executive offices are located at 555
Theodore Fremd Avenue, Suite B-302, Rye, New York 10580. BEC's telephone
number is (914) 967-9400.

BILC Acquisition Corp. BILC Acquisition Corp., a Delaware corporation, is
a wholly-owned subsidiary of BEC formed solely to effectuate the Merger. Its
executive officers are located at 555 Theodore Fremd Avenue, Suite B-302,
Rye, New York 10580. Acquisition Corp.'s telephone number is (914) 967-9400.
ILC will merge with and into Acquisition Corp. after which Acquisition Corp.
will remain a wholly owned subsidiary of BEC. Acquisition Corp. will then
change its name to "ILC Technology, Inc."

ILC. ILC Technology, Inc. was incorporated under the laws of the State of
California on September 15, 1967. ILC designs, develops, manufactures and
markets high intensity lamps and lighting products for the medical,
industrial, aerospace, scientific, entertainment and military industries. Its
principal manufacturing and executive facilities are located at 399 Java
Drive, Sunnyvale, California 94089. ILC's telephone number is (408) 745-7900.

THE SPINOFF

As a condition to the Merger, prior to the Effective Time (as hereinafter
defined), BEC intends to complete the Spinoff of Bolle to its stockholders.
The Spinoff is expected to be effective on the record date of the Spinoff
(the "Spinoff Record Date"), which is anticipated to be on the date of the
BEC Special Meeting, but prior to the Effective Time of the Merger. Prior to
the Spinoff, BEC intends, pursuant to the Merger Agreement to enter into a
Bill of Sale and Assignment Agreement (the "Contribution Agreement") with its
subsidiary Bolle, pursuant to which, among other things, BEC will transfer to
Bolle all of its business, assets and liabilities other than those relating
to the ORC Business. A copy of the form of Contribution Agreement is included
as Exhibit A to Amendment No. 1 to the Merger Agreement in Annex A to this
Joint Proxy Statement/Prospectus. The "ORC Business" generally means BEC's
business of manufacturing and marketing specialty lighting, electronic and
electroformed products. Pursuant to the terms of the Contribution Agreement,
BEC will retain the ORC Business which consists of (i) all of the outstanding
capital stock of ORC and certain subsidiaries of ORC (the "ORC Group"),
including BEC's investment in Voltarc Technologies, Inc., and all the
business, assets and liabilities of or directly related to such entities, and
(ii) all assets and liabilities included in BEC's pro forma balance sheet to
be attached

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as an exhibit to the Contribution Agreement. Except as noted below, all other
assets of BEC will be assigned to, and all of BEC's liabilities prior to the
Spinoff, other than related to the ORC Business will be assumed by Bolle.
Assigned assets and assumed liabilities include without limitation all
interests, rights, duties and obligations of BEC relating to Accessories
Associates, Inc. (which purchased Foster Grant) and to Superior Vision
Services, Inc.; certain assets, rights, and obligations relating to Sterling
Vision, Inc.; the Management Agreement between BEC and Eyecare Products, plc.
("Eyecare Products"), as well as all of BEC's right, title and interest in
and to shares of stock of Eyecare Products; and all rights and interests in
and to rental payments received by BEC (as assignee) pursuant to an
Industrial Lease by and between Bartley Optical Sales, Inc. and ORC dated as
of December 8, 1995 and a Lease Agreement, dated as of May 3, 1996, between
Monsanto Company and ORC. In addition, prior to the Spinoff BEC intends,
pursuant to the Merger Agreement, to enter into (i) an Indemnification
Agreement whereby Bolle and BEC will each agree, under certain circumstances,
to indemnify the other for liabilities relating to their respective
obligations and (ii) enter into a Management Services Agreement with Bolle
whereby BEC will agree to provide certain management and advisory services to
Bolle. See "Information Concerning BEC--Recent Material Developments" and
"--Certain Relationships and Related Transactions." No action on the part of
the BEC common stockholders or the ILC shareholders will be required to
approve or consummate the Spinoff. While the consummation of the Spinoff is a
condition precedent for the Merger, the approval of the Merger and the other
matters put before the stockholders of BEC is not a condition precedent for
the Spinoff. The Spinoff will proceed regardless of whether the Merger is
completed. Furthermore, the ILC shareholders will not participate in the
Spinoff and will therefore not receive any equity interest of Bolle in
exchange for their shares of ILC Common Stock.

REVERSE SPLIT

At the BEC Special Meeting, BEC stockholders also will consider and vote
upon an amendment to the BEC Certificate to effect a one-for-two reverse
split, which BEC intends to occur immediately prior to at the Effective Time.
The Reverse Split will make available a greater number of shares of BEC
Common Stock for issuance which will facilitate the Merger and the
transactions contemplated thereby. See "Proposal Number Two--Amend the BEC
Certificate to Effect the Reverse Split."

TERMS OF THE MERGER; EXCHANGE RATIO

At the Effective Time of the Merger, ILC will merge with and into
Acquisition Corp., with Acquisition Corp. being the surviving corporation.
Once the Merger is consummated, ILC will cease to exist as a corporation, and
all of the business, assets, liabilities and obligations of ILC will be
assumed by Acquisition Corp. Acquisition Corp. will remain a Delaware
corporation and will change its name to ILC Technology, Inc. As a result of
the Merger, each outstanding share of ILC Common Stock (other than shares as
to which dissenters' rights pursuant to the California General Corporation
Law ("CGCL") have been perfected) will be converted to 4.36 shares of BEC
Common Stock, assuming the,conversion of all of BEC's outstanding Convertible
Notes, or 2.18 shares if the one for two Reverse Split is approved. BEC has
undertaken to use its reasonable commercial efforts to effect the conversion
of the Convertible Notes. In the event that any of the Convertible Notes are
outstanding as of the Effective Time, the Merger consideration will be
adjusted and calculated in accordance with the Exchange Ratio Adjustment
Formula (as hereinafter defined). The Merger Agreement does not contain any
provisions for adjustment of the Exchange Ratio based upon fluctuations in
the market price of BEC Common Stock or ILC Common Stock prior to the
Effective Time. See "The Merger Agreement--Exchange Ratio." In addition, each
outstanding option to purchase ILC Common Stock under ILC's stock option
plans will be converted into an option to purchase BEC Common Stock, with
appropriate adjustments to be made to the number of shares issuable
thereunder and the exercise price thereof based on the Exchange Ratio. See
"The Merger Agreement--Stock Options."

The shares of BEC Common Stock to be given in exchange for the ILC shares
will be post-Spinoff shares. Accordingly, such shares will no longer reflect
the economic value of Bolle. It is anticipated that

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the shares of BEC Common Stock after the Spinoff will trade at a lower per
share price than the current (pre-Spinoff) per share price of BEC Common
Stock as of the date of the mailing of this Joint Proxy Statement/Prospectus.
The BEC Board and the ILC Board and their respective advisors considered the
impact of the Spinoff in evaluating the Exchange Ratio. See "Information
Concerning BEC--Recent Material Developments--The Spinoff."

On October 30, 1997, the last full trading day prior to the public
announcement of the execution of the Merger Agreement, the last reported sale
prices of BEC Common Stock and ILC Common Stock on the NYSE and Nasdaq,
respectively, were $5.625 and $11.75 per share. On , 1998, the most
recent practicable date prior to the printing of this Joint Proxy
Statement/Prospectus, the last reported sale price of BEC Common Stock
(pre-Spinoff) on the NYSE and ILC Common Stock on Nasdaq, respectively, were
$ and $ per share. Because the Exchange Ratio is fixed, changes in the
market price of BEC Common Stock prior to the consummation of the Merger will
affect the value of the BEC Common Stock to be received by shareholders of
ILC in the Merger. There will be no adjustment with respect to the Exchange
Ratio for changes in the stock price of BEC Common Stock or ILC Common Stock.
BEC stockholders and ILC shareholders are encouraged to obtain current market
quotations for BEC Common Stock and ILC Common Stock prior to the BEC Special
Meeting and the ILC Special Meeting.

As of the BEC Record Date, BEC had 50,000,000 shares of common stock
authorized and 17,631,139 shares issued and outstanding. As of the ILC Record
Date, ILC had 10,000,000 shares of ILC Common Stock authorized and 4,903,591
shares issued and outstanding.

TREATMENT AND EFFECT OF CONVERTIBLE NOTES AND BEC PREFERRED STOCK AND
WARRANTS

The Exchange Ratio is calculated assuming the conversion of all of the
Convertible Notes into BEC Common Stock prior to the Effective Time. Assuming
the current conversion price of $5.75 per share of BEC Common Stock and the
conversion of all of, or 50% of, the Convertible Notes, the Convertible Notes
may be converted into an aggregate of approximately 3,655,402 shares or
1,827,701 shares, respectively, of BEC Common Stock. If all of the holders of
the Convertible Notes do not agree to convert prior to the Effective Time,
the Exchange Ratio will be adjusted upward pursuant to the Exchange Ratio
Adjustment Formula (as hereinafter defined). The Exchange Ratio Adjustment
Formula will increase the number of shares of BEC Common Stock exchanged for
each share of ILC Common Stock pursuant to the Merger to compensate for (i)
the additional shares of BEC Common Stock issuable after the Effective Time
upon the conversion of the Convertible Notes as a result of the reduction in
the conversion price triggered by the Spinoff, or (ii) the additional
indebtedness remaining in the Combined Company if the Convertible Notes are
not converted. BEC has undertaken to use its reasonable commercial efforts to
effect the conversion of the Convertible Notes. It is a condition of the
Merger that at least 50% of the Convertible Notes are converted. See "The
Merger Agreement--Exchange Ratio," and "Information Concerning
BEC--Description of the Convertible Notes" and "Risk Factors--Risk Factors
Relating Only to BEC--Potential Dilutive Effect to Stockholders." See the
ProForma Combined Financial Statements for a calculation of the adjusted
exchange ratio at different conversion levels.

The Convertible Notes are held primarily by a small number of
institutional investors, none of whom upon conversion of their holdings of
Convertible Notes, both individually and as a group, would become a
beneficial owner of more than five percent of the common stock of the
Combined Company.

BEC has undertaken as part of the Merger Agreement to arrange for the
cancellation of all outstanding shares of BEC Series A Preferred Stock (as
hereinafter defined) and BEC Warrants (as hereinafter defined) prior to the
Effective Time. The Series A Preferred Stock and BEC Warrants were issued as
part of BEC's acquisition of Bolle France (as hereinafter defined) to the
sellers thereof. BEC intends to cause Bolle to issue to those sellers shares
of series A preferred stock and warrants in exchange for the Series A
Preferred Stock and BEC Warrants to be cancelled.

ILC STOCK OPTIONS

Pursuant to the terms of ILC's 1983 Employee Incentive Stock Option Plan
and 1992 Stock Option Plan (collectively, the "ILC Option Plans"), the stock
options (the "ILC Stock Options") granted under

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the ILC Option Plans vest immediately upon the change in control resulting
from the Merger. All holders of stock options under the ILC Option Plans
shall have the right to have such options converted into options pursuant to
the BEC Option Plan, with appropriate adjustment to the number of shares
issuable thereunder and the exercise price thereof, based upon the Exchange
Ratio. See "The Merger Agreement--Stock Options."

Prior to the Effective Time, BEC and ILC and the stock option committees
of their respective boards of directors shall effect the conversion of all
unexercised options outstanding under the ILC Option Plans at the Effective
Time. Upon such conversion, the options granted under the BEC Option Plan to
the former holders of options pursuant to the ILC Option Plans shall, except
to the extent required to maintain the status of such options as "incentive
stock options," in all respects be subject to the terms, provisions and
conditions of the BEC Option Plan; provided, however, that such holders shall
be deemed to have been granted such options as of the date the original
options were granted under the ILC Option Plans.

CLOSING AND EFFECTIVE TIME OF THE MERGER

The Merger will become effective upon the filing of a merger agreement or
a certificate of merger with the Secretary of State of the State of
California and with the Secretary of State of the State of Delaware (the date
and time of such filing, or such later time as may be agreed in writing by
the parties and specified in the Agreement of Merger or Certificate of
Merger, being the "Effective Time"). Assuming that the Merger is approved by
the stockholders/shareholders of both companies, the closing (the "Closing")
will be held as soon as practicable after the BEC Special Meeting and the ILC
Special Meeting (the "Closing Date") for the purpose of confirming the
satisfaction or waiver of the other conditions to the Merger. See "The Merger
Agreement--Effective Time."

RISK FACTORS

In considering whether to approve the Merger, BEC stockholders and ILC
shareholders should carefully review and consider the information under the
caption "Risk Factors." Among the risks facing both the BEC stockholders and
ILC shareholders should the merger be consummated are: (i) the difficulties
inherent in combining two separate companies; (ii) the potential adverse
affect of financial results from the transaction costs of the Merger; and
(iii) the potential negative affects of a fixed Exchange Ratio. The BEC
stockholders will also face certain unique risks including: (i) the potential
dilutive effect to BEC stockholders due to the issuance of shares to current
ILC shareholders and the failure of less than all of the holders of the
Convertible Notes to convert their notes; (ii) operational issues arising
from rapid changes through acquisitions and divestures; and (iii) the loss of
opportunity for BEC as a stand-alone entity. In addition, the shareholders of
ILC face certain unique risks including: (i) the potential conflict of
interest of certain senior management in the Merger; (ii) the loss of
opportunity for ILC as a stand-alone entity; and (iii) the change in ILC's
governing law to Delaware which is potentially less advantageous than
California governing law to ILC shareholders. See "Risk Factors."

STOCK OWNERSHIP FOLLOWING THE MERGER

Based upon the number of outstanding shares of BEC Common Stock and ILC
Common Stock as of the record dates established for the meetings, assuming
that no cash is paid in lieu of fractional shares and without regard to
options or warrants to purchase, or securities convertible into, BEC Common
Stock or ILC Common Stock and after giving effect to the Reverse Split and
assuming the conversion of all of the Convertible Notes, approximately 7.4
million shares of BEC Common Stock will be outstanding upon consummation of
the Merger, of which approximately 50% of the total will be held by former
ILC shareholders and approximately 50% of such shares will be held by the BEC
stockholders. The holders of stock options under the ILC Option Plans (as
hereinafter defined) shall have the right to have such options converted into
options pursuant to the BEC Option Plan to purchase an aggregate of
approximately 1.8 million shares of BEC Common Stock. See "The Merger
Agreement--Stock Options."

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CONDUCT OF BUSINESS PRIOR TO THE MERGER

Pursuant to the Merger Agreement, until the earlier of the termination of
the Merger Agreement pursuant to its terms and the Effective Time, each of
ILC and BEC has agreed, except (i) as indicated in its respective disclosure
schedules or (ii) to the extent that the other party shall otherwise consent
in writing, to conduct its respective business in the ordinary course and
consistent with past practice. In addition, except as provided in their
respective disclosure schedules, without the prior written consent of the
other, ILC and BEC have each agreed to refrain from certain actions described
in the Merger Agreement. See "The Merger Agreement--Conduct of BEC's and
ILC's Business Prior to the Merger."

CONDITIONS TO THE MERGER

In addition to approval of the Merger by the stockholders of BEC and the
shareholders of ILC, respectively, the consummation of the Merger is subject
to a number of other conditions which, if not fulfilled or waived, permit
termination of the Merger Agreement. Neither party to the Merger has any
present intention to waive a condition. However, in the event that any
condition to the Merger is waived, it is not the intent of the parties to
resolicit the stockholders of BEC and ILC prior to the BEC and ILC Special
Meetings with information concerning the waiver of any conditions to the
Merger, except that each of BEC and ILC shall resolicit for approval by their
respective stockholders in the event of a waiver of the delivery of the Tax
Opinion (as hereinafter defined). See "The Merger--Certain Federal Income Tax
Considerations for ILC Shareholders" and "The Merger Agreement--Conditions to
the Merger".

VOTING AGREEMENTS AND PROXIES

Martin E. Franklin, Chairman of the Board of Directors and Chief Executive
Officer of BEC, has entered into a Voting Agreement (the "BEC Voting
Agreement") with ILC. Pursuant to the BEC Voting Agreement, Mr. Franklin has
agreed to vote all shares of BEC Common Stock of which he is the beneficial
owner and all shares of BEC Common Stock of which he subsequently acquires
beneficial ownership in favor of the Merger. In addition, Mr. Franklin has
granted an irrevocable proxy to Henry C. Baumgartner and Richard D. Capra,
both directors and executive officers of ILC, to vote Mr. Franklin's BEC
Common Stock in accordance with the terms of the BEC Voting Agreement. Henry
C. Baumgartner, Chairman of the ILC Board and Chief Executive Officer of ILC,
has also entered into a Voting Agreement with BEC (the "ILC Voting Agreement"
and, collectively with the BEC Voting Agreement, the "Voting Agreements").
Pursuant to the ILC Voting Agreement, Mr. Baumgartner has agreed to vote all
shares of ILC Common Stock of which he is the beneficial owner and all shares
of ILC Common Stock of which he subsequently acquires beneficial ownership in
favor of the Merger. In addition, Mr. Baumgartner has granted an irrevocable
proxy to Martin E. Franklin and Ian G.H. Ashken, both directors and executive
officers of BEC, to vote Mr. Baumgartner's ILC Common Stock in accordance
with the terms of the ILC Voting Agreement. See "The Merger--Voting
Agreements and Proxies" and Annexes B and C attached hereto.

NO SOLICITATION

Pursuant to the terms of the Merger Agreement, except under certain
limited circumstances, each of BEC and ILC has agreed that it will not engage
in certain activities relating to the solicitation or initiation of an
acquisition proposal from a third party. See "The Merger Agreement--No
Solicitation."

TERMINATION; FEES

The Merger Agreement may be terminated upon the occurrence of certain
circumstances as well as at any time prior to consummation of the Merger by
mutual consent. In addition, the Merger Agreement may be terminated by either
party if the Merger has not been consummated on or before March 31, 1998
(unless such date is extended by the mutual consent of the parties). If the
Merger is not consummated, each of BEC and ILC has agreed that it will pay,
under certain circumstances, the other party's expenses related to the
Merger, not to exceed $1.5 million and, under certain other circumstances, a
breakup fee of $3 million. See "The Merger Agreement--Termination; Fees and
Expenses."

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INTERESTS OF CERTAIN PERSONS IN THE MERGER

In considering the recommendation of the ILC Board with respect to the
Merger Agreement and the transactions contemplated thereby, ILC shareholders
should be aware that certain members of ILC's management and the ILC Board
have certain interests in the Merger that are in addition to the interests of
ILC shareholders generally. BEC will enter into an employment/consultant
agreement with Richard D. Capra, President and Chief Operating Officer of
ILC, and a consulting agreement with Henry C. Baumgartner, Chairman of the
Board and Chief Executive Officer of ILC, concurrently with the consummation
of the Merger. Mr. Baumgartner will serve as director of BEC but will not be
an officer of either BEC or ILC. After the Merger, Mr. Capra will serve as an
executive officer and director of BEC, subject to approval of the Merger
Agreement by the BEC stockholders. In addition, Harrison H. Augur and George
B. Clairmont, currently members of the ILC Board, will serve as directors of
BEC after the Merger subject to approval by the BEC stockholders. Although
certain members of ILC management and the ILC Board may have certain
interests in the Merger in addition to their interests as ILC shareholders
generally, the ILC Board did not consider itself subject to conflicts of
interest that impeded its ability to consider the proposed Merger in a proper
manner. See "Management of BEC Following the Merger." In addition, pursuant
to the terms of the ILC Option Plans, all ILC Stock Options, including those
held by the directors and executive officers of ILC, will vest upon the
consummation of the Merger.

No member of the BEC Board or BEC's management has any interest in the
Merger that is in addition to the interests of BEC stockholders generally.
See "The Merger--Employment and Consulting Agreements," "Board of Directors
and Management of BEC following the Merger" and "Risk Factors--Risk Factors
Relating Only to ILC--Interests of Certain Persons in the Merger."

OPINION OF BEC'S FINANCIAL ADVISOR

Raymond James & Associates Inc. ("RJ") delivered to the BEC Board its
written opinion (the "RJ Opinion"), dated October 30, 1997, to the effect
that, as of the date of such opinion and based upon and subject to certain
matters stated therein, the terms of the transaction set forth in the Merger
Agreement are fair, from a financial point of view, to BEC and its
stockholders. A copy of the RJ Opinion, which sets forth the assumptions
made, matters considered and limits on the review undertaken, is attached to
this Joint Proxy Statement/Prospectus as Annex D. BEC STOCKHOLDERS ARE URGED
TO CAREFULLY READ SUCH OPINION IN ITS ENTIRETY. See "The Merger--Opinion of
BEC's Financial Advisor."

In the ordinary course of business, RJ and its affiliates may actively
trade or hold the securities of ILC and BEC for their own account or for the
accounts of customers and accordingly, may at any time hold a long or short
position in such securities.

OPINION OF ILC'S FINANCIAL ADVISOR

Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") has acted as
financial advisor to ILC in connection with the Merger and rendered an oral
opinion to the ILC Board on October 30, 1997, which was subsequently
confirmed in writing in a written opinion to the ILC Board dated November 4,
1997 (the "DLJ Opinion"), to the effect that, as of the date of such opinion
and based upon and subject to the assumptions, limitations and qualifications
set forth in such written opinion, the Exchange Ratio is fair to the holders
of ILC Common Stock from a financial point of view. The full text of the DLJ
Opinion, which sets forth the assumptions made, procedures followed, other
matters considered and limits of the review undertaken, is attached as Annex
E to this Joint Proxy Statement/Prospectus and should be read carefully

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in its entirety. The DLJ Opinion is directed to the ILC Board and relates
only to the fairness of the Exchange Ratio to the holders of ILC Common Stock
from a financial point of view, does not address any other aspect of the
Merger or related transactions and does not constitute a recommendation to
any ILC shareholder as to how such shareholder should vote at the ILC Special
Meeting. A summary of the analyses presented by DLJ to the ILC Board at its
October 30, 1997 meeting is set forth in Section entitled "Opinion of ILC's
Financial Advisor ." All analyses discussed in the summary, unless
otherwise indicated, (i) assume that the Spinoff had been consummated and
accordingly excludes the financial results of Bolle, (ii) reflect the Reverse
Split and the conversion of all Convertible Notes and (iii) exclude the
estimated Merger Synergies. ILC SHAREHOLDERS ARE URGED TO CAREFULLY READ SUCH
OPINION IN ITS ENTIRETY. See "The Merger--Opinion of ILC's Financial
Advisor."

In the ordinary course of business, DLJ and its affiliates may actively
trade or hold the securities of ILC and BEC for their own account or for the
accounts of customers and accordingly, may at any time hold a long or short
position in such securities. DLJ in the past has provided certain investment
banking services to ILC prior to its retention in connection with the
proposed Merger.

EXCHANGE OF STOCK CERTIFICATES

Promptly after consummation of the Merger, National City Bank, or such
other bank or trust company designated by BEC and reasonably acceptable to
ILC (the "Exchange Agent"), will mail written transmittal materials
concerning the exchange of stock certificates to each record holder of
outstanding shares of ILC Common Stock. The transmittal materials will
contain instructions with respect to the proper method of surrender of
certificates formerly representing shares of ILC Common Stock in exchange for
certificates representing shares of BEC Common Stock. Upon surrender to the
Exchange Agent of certificates formerly representing shares of ILC Common
Stock for cancellation, together with properly completed transmittal
materials, each ILC shareholder will be entitled to receive a certificate
representing the number of whole shares of BEC Common Stock into which the
stockholder's shares of ILC Common Stock have been exchanged and a check for
cash in lieu of the issuance of any fractional share of BEC Common Stock. ILC
shareholders will not be entitled to receive interest on any such cash to be
received in the Merger. See "The Merger Agreement--Surrender and Payment."

STOCK EXCHANGE LISTING

It is a condition to the Merger that the shares of BEC Common Stock to be
issued in connection with the Merger be authorized for listing on a
nationally recognized stock exchange or Nasdaq, subject to official notice of
issuance. BEC intends to maintain its current listing on the NYSE after the
Merger. See "The Merger Agreement--Conditions to the Merger."

REGULATORY APPROVALS

Pursuant to the requirements of the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act"), BEC and ILC each filed
a Notification and Report Form for review under the HSR Act with the Federal
Trade Commission (the "FTC") and the Antitrust Division of the Department of
Justice (the "Antitrust Division"). BEC and ILC were granted early
termination of the HSR waiting period.

COMPARATIVE RIGHTS OF STOCKHOLDERS

The rights of ILC shareholders are currently governed by the CGCL, ILC's
Amended and Restated Articles of Incorporation and ILC's Bylaws. Upon
consummation of the Merger, ILC shareholders will become stockholders of BEC,
which is a Delaware corporation, and their rights as BEC stockholders will be
governed by the Delaware General Corporation Law (the "DGCL"), the BEC
Certificate as may be further amended by the various proposals submitted to
BEC's stockholders for approval at the BEC

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Special Meeting, and BEC's Bylaws, as amended. The material differences
between rights of ILC shareholders and BEC stockholders include (i) the size
of the BEC Board may be changed by the approval of the BEC Board acting
alone, but certain changes in the size of the ILC Board require shareholder
approval; (ii) stockholders of the BEC do not have cumulative voting rights
in the election of directors; (iii) the call of a special meeting of
stockholders of BEC requires the consent of a greater number of stockholders
than does the call of a special meeting of ILC shareholders; (iv) ILC
shareholders must comply with notice requirements to bring nominations or
other business before a shareholder meeting that are more stringent than the
requirements applicable to BEC stockholders; (v) a vacancy on the board of
directors created by removal of a director may not be filled by the ILC
Board, but may be filled by a majority of the directors on the BEC Board then
in office; and (vi) the dissenters' rights afforded under the CGCL apply in
more cases than stockholder appraisal rights afforded under the DGCL. For a
discussion of various differences between the rights of ILC shareholders and
the rights of BEC stockholders under applicable law and their respective
corporate governing instruments, see "Comparison of Stockholder Rights" and
"Comparison of Capital Stock."

FEDERAL INCOME TAX CONSEQUENCES

No ruling has been (or will be) sought from the Internal Revenue Service
as to the anticipated U.S. federal income tax consequences of the Merger. As
a condition to the consummation of the Merger, ILC must receive an opinion
from its counsel, Davis Polk & Wardwell, in form and substance reasonably
satisfactory to ILC, to the effect that the Merger will qualify as a
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code") and that ILC and BEC will each be a
party to that reorganization within the meaning of Section 368(b) of the Code
(the "Tax Opinion"). BEC and ILC have no present intention of waiving this
condition, but, if they cannot receive a Tax Opinion, they have agreed to
seek additional shareholder/stockholder consent to proceed with the Merger
without a Tax Opinion.

In rendering the Tax Opinion, Davis Polk & Wardwell will rely upon
representation letters from ILC, BEC, and certain shareholders of ILC
delivered for the purpose of rendering the opinion. The opinion will also
assume that the Merger will take place in accordance with the provisions of
the Merger Agreement.

In the opinion of Davis Polk & Wardwell, the Merger will be a
reorganization within the meaning of Section 368(a) of the Code, provided
that customary representation letters from each of ILC and BEC are delivered
at closing, the representations contained therein are correct as of the
Effective Time, the Merger is consummated in the manner contemplated by the
Merger Agreement and this Joint Proxy Statement/ Prospectus and there is no
change in the Code or applicable authority. Assuming the Merger qualifies as
a reorganization within the meaning of 368(a) of the Code, shareholders of
ILC will generally not recognize gain or loss for United States federal
income tax purposes on the exchange of their ILC Common Stock for BEC Common
Stock in the Merger, except to the extent that ILC shareholders receive cash
in lieu of fractional shares.

For more details of the tax consequences of the Merger, see "The
Merger--Certain Federal Income Tax Considerations for ILC shareholders."

ACCOUNTING TREATMENT

The Merger will be accounted for by BEC as a purchase of a business. Under
this method of accounting, the assets and liabilities of ILC will be recorded
at their fair value, and any excess of BEC's purchase price over such fair
value will be accounted for as goodwill. The results of operations and cash
flows of ILC will be included in BEC's financial statements from the date of
consummation of the Merger.

APPRAISAL AND DISSENTERS' RIGHTS

Holders of BEC Common Stock are not entitled to appraisal rights under the
DGCL in connection with the Merger. Pursuant to the CGCL, and as described in
greater detail in this Joint Proxy

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Statement/Prospectus, holders of ILC Common Stock may be entitled to certain
dissenters' rights in connection with the Merger. The obligations of BEC and
Acquisition Corp. to effect the Merger are subject to the condition that
holders of not more than 4.9% of the outstanding shares of ILC Common Stock
have exercised, or have a continued right to exercise, appraisal, dissenters'
or similar rights under applicable law with respect to their shares by virtue
of the Merger. While this condition is waivable, BEC and Acquisition Corp.
have no current intention to waive such condition. See "The Merger
Agreement--ILC Shareholder's Dissenters' Rights."

DELISTING OF ILC STOCK

If the Merger is consummated, ILC Common Stock will cease to be traded on
the Nasdaq. In such event, BEC will apply to the Commission for the
deregistration of the ILC Common Stock under the Exchange Act.

BOARD OF DIRECTORS AND MANAGEMENT FOLLOWING THE MERGER

Pursuant to the Merger Agreement, upon consummation of the Merger the BEC
Board will be expanded from seven (7) to nine (9) members. Four (4) members
will be existing BEC directors, four (4) members will be proposed by ILC, and
the ninth director will be elected by the BEC Board subsequent to the Merger
in accordance with the Bylaws of BEC. Martin E. Franklin, Ian G.H. Ashken,
David L. Moore and William T. Sullivan, all current directors of BEC, will
remain on the BEC Board as BEC's selected directors (the "BEC Nominees").
Nora A. Bailey, Richard W. Hanselman and Charles F. Sydnor, current directors
of BEC, have agreed to resign as of the Effective Time in order to facilitate
the Merger. BEC is seeking stockholder approval for the election of Harrison
H. Augur, Henry C. Baumgartner, Richard D. Capra and George B. Clairmont, who
are all current directors of ILC and are ILC's nominees for BEC's Board (the
"ILC Nominees"). After the Merger, the BEC Board will elect a ninth director
who will be appointed jointly by the BEC Nominees and the ILC Nominees to
serve as a director. See "BEC Special Meeting" and "Proposal Number Three--To
Elect Four Additional Directors to BEC Board."

Following the Merger, the following persons will serve in the following
management capacities of BEC: Martin E. Franklin, Chairman, Richard D. Capra,
Chief Executive Officer and Ian G.H. Ashken, Chief Financial Officer. See
"Management of BEC Following the Merger."

BEC OPTION PLAN AMENDMENT

At the BEC Special Meeting, BEC Stockholders also will consider and vote
upon an amendment to the BEC Option Plan (the "BEC Stock Option Plan
Amendment"), to increase the number of authorized shares of BEC Common Stock
authorized under the BEC Option Plan, from 2,175,000 to 4,250,000 (after
giving effect to the Reverse Split) in order to permit additional grants and
issuances pursuant to such plan in connection with the conversion of ILC
Stock Options into BEC Stock Options in the Merger and for other corporate
purposes. See "Proposal Number Five--To Amend the BEC Option Plan."

BEC NAME CHANGE

At the BEC Special Meeting, BEC stockholders will consider and vote upon
an amendment to the BEC Certificate which will change the name of BEC to
Lumen Technologies, Inc. See "Proposal Number Four--To Amend the BEC
Certificate to Change the Name of BEC Group, Inc."

REASONS FOR AND AGAINST THE MERGER; RECOMMENDATION OF THE BOARDS OF DIRECTORS
OF BEC AND ILC

Both the BEC Board and the ILC Board evaluated the potential benefits and
detriments related to the Merger. Among the positive factors identified by
both boards were: (i) the significant potential

21
<PAGE>
revenue enhancement and cost saving opportunities that will be available to
the Combined Company through broader marketing opportunities, enhanced
technological and product development capabilities, lower administrative and
purchasing costs, and the opportunity for greater operating efficiencies;
(ii) the benefits to the Combined Company which will result from its larger
revenue, customer and stockholder base; (iii) the combined experience,
financial resources, size and breadth of product offerings of the Combined
Company which will allow the Combined Company to respond more quickly and
effectively to technological change, increased competition and market demands
in an industry experiencing rapid innovation and evolution; and (iv) that
certain operating and manufacturing systems utilized within BEC will aid the
operations of ILC following completion of the transaction and that certain
operating and manufacturing systems utilized within ILC will aid the
operations of BEC following completion of the transaction.

In addition, the BEC Board has identified several potential negative
factors regarding the Merger including: (i) the risk that the potential
benefits sought in the Merger might not be fully realized; (ii) the effect of
public announcement of the Merger on BEC's sales and operating results; (iii)
the potential dilutive effect of the issuance of BEC Common Stock in the
Merger; and (iv) the difficulty of managing separate operations at different
geographic locations.

The ILC Board has also identified several potential negative factors
regarding the Merger including: (i) the risk that BEC and ILC would not be
able to successfully integrate their respective businesses and might not
realize the potential benefits sought in the Merger; (ii) the additional
leverage from the Combined Company as compared to ILC prior to the Merger;
and (iii) the fact that the Merger Agreement provides for a fixed Exchange
Ratio, thereby subjecting the ILC shareholders to the risk of volatility in
the markets for both ILC's and BEC's securities. For further discussion of
the potential benefits and detriments of the Merger including a
quantification of certain of the potential benefits see "The Merger--BEC's
Reasons for the Merger."

The BEC Board and ILC Board have each unanimously approved the Merger
Agreement and the transactions contemplated thereby and have separately
determined that the Merger is fair to and in the best interests of their
respective stockholders. ACCORDINGLY, THE BOARD OF DIRECTORS OF ILC
UNANIMOUSLY RECOMMENDS APPROVAL OF THE MERGER BY ITS SHAREHOLDERS, AND THE
BOARD OF DIRECTORS OF BEC UNANIMOUSLY RECOMMENDS APPROVAL OF THE MERGER
AGREEMENT AND THE ISSUANCE OF SHARES OF BEC COMMON STOCK IN CONNECTION WITH
THE MERGER BY ITS STOCKHOLDERS. In making the foregoing recommendations to
their respective shareholders, each of the BEC Board and the ILC Board
assumed the Spinoff would be consummated prior to the Merger and accordingly,
the value of BEC Common Stock to be delivered to ILC shareholders pursuant to
the Merger excludes any value attributable to Bolle. For a discussion of the
reasons considered by the Boards of Directors of BEC and ILC in approving the
Merger Agreement, see "The Merger--Joint Reasons for the Merger," "--BEC's
Reasons for the Merger," and "--ILC's Reasons for the Merger."

In addition, the BEC Board has unanimously approved the Reverse Split
Proposal, the Director Election Proposal, the Name Change Proposal and the
1996 Stock Incentive Plan Proposal. ACCORDINGLY, THE BEC BOARD UNANIMOUSLY
RECOMMENDS APPROVAL OF THESE
PROPOSALS.

22
<PAGE>
COMPARATIVE PER SHARE FINANCIAL INFORMATION(1)

The following table presents selected historical per common share data for
BEC and ILC, pro forma data per share of BEC Common Stock and equivalent pro
forma data per share of ILC Common Stock. The BEC and ILC data are derived
from the respective consolidated financial statements of BEC and ILC. The pro
forma consolidated per share data and the ILC pro forma equivalent per share
data are derived from the Unaudited Pro Forma Combined Financial Data,
included elsewhere herein, which reflect the Merger accounted for as a
purchase and the Spinoff. Additionally, the unaudited pro forma combined
statements of operations for the nine month period ended September 30, 1997
and for the year ended December 31, 1996 reflect the results of operations of
BEC combined with the results of operations of ILC as if such merger had
occurred at the beginning of each period. The ILC Pro Forma Equivalent data
are based on the respective pro forma (after the Reverse Split) amounts per
share of BEC Common Stock multiplied by 2.18 the number of shares of BEC
Common Stock issuable in exchange for one share of ILC Common Stock in the
Merger. All pro forma common share data have been restated to reflect stock
splits and stock dividends during the periods presented. This data should be
read in conjunction with the consolidated financial statements of BEC and ILC
and the Unaudited Pro Forma Combined Financial Data included elsewhere
herein.

<TABLE>
<CAPTION>
AS OF AND FOR THE
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
1997(2) 1996(2)
------------------- ------------------
<S> <C> <C>
BEC
Net income from continuing operations per share
attributable
to common stockholders..................................... $0.16 $0.19
Book value of common stock(3) .............................. $0.63

ILC(3)
Net income from continuing operations per common share ..... $0.90 $0.92
Book value of common stock.................................. $7.18

PRO FORMA CONSOLIDATED:
Net income attributable to common stockholders.............. $0.34 $0.37
Book value of common stock(4)............................... $2.41

ILC PRO FORMA EQUIVALENT(5):
Net income attributable to common stockholders.............. $0.74 $0.81
Book value of common stock.................................. $5.25
</TABLE>

(1) This comparison should be read in conjunction with the Pro Forma
Combined Financial Data included herein.
(2) Represents ILC as of and for the nine months ended September 27, 1997
and for the fiscal year ended September 30, 1997.
(3) Does not include $9.3 million of Preferred Stock included in total
Stockholders' equity of BEC.
(4) Assumes approximately 10,638,000 shares are issued to ILC shareholders
as Merger consideration in addition to BEC's outstanding shares of
approximately 10,643,000 (Post Reverse Split and assuming conversion of
100% of the Convertible Notes).
(5) Represents the pro forma equivalent of one share of ILC Common Stock
calculated by multiplying pro forma combined data by the exchange ratio
of 2.18.

23
<PAGE>
BEC GROUP, INC.
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS EXCEPT FOR PER SHARE DATA)

The following selected historical and pro forma combined financial data
have been derived from audited and unaudited historical financial statements
and should be read in conjunction with the unaudited pro forma combined and
audited and unaudited interim historical financial statements of BEC.

The unaudited pro forma combined financial statements give effect to the
Merger, Spinoff and Contribution Agreement as though they occurred at the
beginning of the periods presented.

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
---------------------------------
PRO FORMA ACTUAL ACTUAL
1997 1997 1996
----------- --------- ---------
<S> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales ................... $ 78,618 $ 35,221 $31,984
Cost of sales ............... 52,238 21,785 19,348
----------- --------- ---------
Gross profit ................ 26,380 13,436 12,636
Selling, general and
administrative expenses ... 17,187 7,746 7,929
Special charges ............. -- -- --
Interest expense ............ 1,328 2,567 2,117
Other expense (income) ..... (2,662) (878) (1,740)
----------- --------- ---------
Income (loss) from
continuing operations
before income taxes ........ 10,527 4,001 4,330
Provision for (benefit from)
income taxes ............... 2,965 1,271 1,295
----------- --------- ---------
Income (loss) from
continuing operations....... $ 7,562 2,730 3,035
===========
Income (loss) from
discontinued operations ... 371 79,102
--------- ---------
Net income (loss) ........... $ 3,101 $82,137
========= =========
Weighted average shares
outstanding ................ 22,125 17,659 17,671
Income (loss) per share:
Income (loss) from
continuing operations ...... $ 0.34 $ 0.16 $ 0.17
===========
Income (loss) from
discontinued operations ... .02 4.48
--------- ---------
Net income (loss) per share $ 0.18 $ 4.65
========= =========
BALANCE SHEET DATA:
Working capital ............. $ 15,829 $ 44,935
Total assets ................ 120,763 118,547
Long term debt .............. 32,628 32,938
Convertible subordinated
debt........................ -- 22,941
Long term liabilities........ 8,154 9,376
Stockholders' equity ........ 51,272 20,402
</TABLE>

<PAGE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------------
PRO FORMA ACTUAL ACTUAL ACTUAL ACTUAL ACTUAL
1996 1996(2) 1995 1994(1)(2) 1993(3) 1992(3)
----------- --------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA:
Net sales ................... $96,690 $42,574 $ 41,244 $ 39,047 $43,762 $16,742
Cost of sales ............... 62,585 25,676 23,725 14,405 14,417 5,909
----------- --------- ---------- ---------- ---------- ----------
Gross profit ................ 34,105 16,898 17,519 24,642 29,345 10,833
Selling, general and
administrative expenses ... 22,093 10,020 13,820 25,159 31,936 12,126
Special charges ............. -- -- 5,237 -- -- --
Interest expense ............ 1,737 2,942 4,087 3,142 492 231
Other expense (income) ..... (1,003) (1,378) (3,337) (1,169) (121) 231
----------- --------- ---------- ---------- ---------- ----------
Income (loss) from
continuing operations
before income taxes ........ 11,278 5,314 (2,288) (2,490) (2,962) (1,755)
Provision for (benefit from)
income taxes ............... 3,424 1,870 (1,339) (1,006) (291) 122
----------- --------- ---------- ---------- ---------- ----------
Income (loss) from
continuing operations....... $ 7,854 3,444 (949) (1,484) (2,671) (1,877)
===========
Income (loss) from
discontinued operations ... 79,312 (5,811) 11,650 1,519 (195)
--------- ---------- ---------- ---------- ----------
Net income (loss) ........... $82,756 $ (6,760) $ 10,166 $(1,152) $(2,072)
========= ========== ========== ========== ==========
Weighted average shares
outstanding ................ 22,221 17,669 17,600 17,600 17,600 6,008
Income (loss) per share:
Income (loss) from
continuing operations ...... $ 0.35 $ 0.19 $ (0.05) $ (0.08) $ (0.15) $ (0.31)
===========
Income (loss) from
discontinued operations ... 4.49 (0.33) 0.66 0.08 (0.03)
--------- ---------- ---------- ---------- ----------
Net income (loss) per share $ 4.68 $ (0.38) $ 0.58 $ (0.07) $ (0.34)
========= ========== ========== ========== ==========
BALANCE SHEET DATA:
Working capital ............. $ 2,385 $151,270 $110,712 $25,650 $ 5,370
Total assets ................ 75,071 269,739 214,630 57,717 18,438
Long term debt .............. 3,597 18,606 56,187 584 6,884
Convertible subordinated
debt........................ 21,922 40,950 40,950 -- --
Long term liabilities........ 10,754 5,517 5,868 2,705 274
Stockholders' equity ........ 7,604 131,134 111,093 41,054 5,725
</TABLE>

<PAGE>

- ------------
(1) Includes the results of operations of ORC from the date of purchase
October 12, 1994. Remaining results of operations represent divested
businesses. See the accompanying audited consolidated financial
statements of BEC.
(2) No dividends were declared or paid in the periods presented except for
the dividend paid in 1996 by Benson as a result of the Essilor Merger
in 1996 and $50 paid in 1994 by Bolle America before it was acquired by
Benson in a pooling of interests transaction.
(3) All results of operations shown represent divested business. See the
accompanying audited consolidated financial statements of BEC.

24
<PAGE>
ILC TECHNOLOGY, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

The following selected historical consolidated financial data of ILC,
which has been reclassified to reflect the continuing operations of ILC and
the discontinued operations of ILC's Precision Lamp, Inc. subsidiary has been
derived from audited historical financial statements. It should be read in
conjunction with the Consolidated Financial Statements and notes thereto and
ILC Management's Discussion and Analysis of Financial Condition and Results
of Operations included elsewhere herein.

<TABLE>
<CAPTION>
FISCAL YEAR ENDED
----------------------------------------------------
(IN THOUSANDS EXCEPT PER SHARE DATA)
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS
DATA
Net sales ................. $55,518 $54,206 $49,496 $44,331 $42,250
Income from continuing
operations ............... 4,839 4,546 4,637 3,727 4,509
Income (loss) from
discontinued operations . -- (4,239) (99) (3,536) 250
Net income................. 4,839 307 4,538 191 4,759
Earnings (loss) per share:
Continuing operations ... .96 .92 .97 .77 .91
Discontinued operations . -- (.86) (.02) (.73) .05
--------- --------- --------- --------- ---------
Net income per share ... $ .96 $ .06 $ .95 $ .04 $ .96
Weighted average shares
outstanding .............. 5,048 4,923 4,765 4,825 4,980

As of end of Fiscal Year
----------------------------------------------------
1997 1996 1995 1994 1993
--------- --------- --------- --------- ---------
BALANCE SHEET DATA
Working capital............ $13,337 $15,155 $14,618 $11,366 $17,543
Total assets............... 49,548 47,844 46,726 41,312 39,703
Total long-term debt....... 3,196 7,576 6,592 6,421 5,805
Total stockholders'
equity.................... $34,994 $29,791 $28,802 $23,624 $24,565
</TABLE>

25
<PAGE>
RISK FACTORS

The following risk factors should be considered carefully by shareholders
of ILC in evaluating whether to approve and adopt the Merger Agreement at the
ILC Special Meeting and by stockholders of BEC in evaluating whether to
approve and adopt the Merger Agreement and the other proposals at the BEC
Special Meeting. The risks described that are specific to ILC will be
additional risks faced by BEC stockholders following the Merger. The risks
described that are specific to BEC will be additional risks faced by ILC
shareholders following the Merger. This section contains forward-looking
statements that involve risks and uncertainties. Actual results could differ
materially from those anticipated in these forward-looking statements as a
result of certain factors, including those set forth in the following risk
factors and elsewhere herein. These factors should be considered in
conjunction with the other information included or incorporated by reference
in this Joint Proxy Statement/Prospectus. See "Forward-Looking Statements."

RISK FACTORS RELATING TO THE MERGER AND TO BOTH BEC AND ILC

JOINT OPERATIONS; ADVERSE EFFECT ON FINANCIAL RESULTS

The realization of the benefits sought from the Merger depends on the
ability of the Combined Company to use product development capabilities,
sales and marketing capabilities, administrative organizations and facilities
better than either company could do separately. There can be no assurance
that these benefits will be achieved or that the activities of BEC and ILC
will be coordinated in a timely and efficient manner. Combining the
operations of the two companies to realize the potential strategic benefits
of the Merger also will require the dedication of management resources, which
may temporarily distract such persons' attention from the day-to-day business
of the individual companies. There can be no assurance that such combination
will be completed without disrupting BEC's or ILC's business. Any inability
of the Combined Company to better use resources or to achieve such
combination in a timely and coordinated fashion could result in a material
adverse effect on the Combined Company's financial condition, operating
results and cash flows. See "BEC Selected Historical and Pro Forma Financial
Information."

BEC and ILC estimate that in connection with the Merger they will incur
direct transaction costs that currently are estimated in the aggregate to be
approximately $2.5 million, which primarily represent fees and expenses of
investment bankers, attorneys, accountants, consultants and financial
printers. In addition, it is expected that the Combined Company will incur
additional expenses upon consummation of the Merger to reflect the costs of
combining the two companies. Should the Merger not be consummated, each
company will charge its operations with its own direct transaction expenses
in the period incurred, although under certain circumstances, one company may
be entitled to reimbursement of such expenses from the other company pursuant
to the Merger Agreement. From and after consumation of the Merger, if the
anticipated savings in operating costs are not achieved, or if the Merger has
other adverse effects that are not currently anticipated, the Merger could
result in a reduction in per share earnings of the Combined Company as
compared to the per share earnings that either or both of BEC or ILC would
have achieved if the Merger had not occurred. Furthermore, even if the
results of the Merger are as anticipated, there can be no assurance that
future earnings will not be adversely affected by any number of economic,
market or other factors that are not related to the Merger.

RISKS ASSOCIATED WITH FUTURE ACQUISITIONS

A key element of the Combined Company's growth strategy is the acquisition
of businesses and assets that will complement its current businesses. There
can be no assurance that the Combined Company will be able to identify
attractive acquisition opportunities, obtain financing for acquisitions on
satisfactory terms or successfully acquire identified targets. In addition,
there can be no assurance that the Combined Company will be successful in
integrating acquired businesses into its existing operations or that such
integration will not result in unanticipated liabilities or unforeseen
operational difficulties, which may be material, or require a
disproportionate amount of management's attention. Such acquisitions may
result in the Combined Company incurring additional indebtedness or issuing
preferred stock or additional

26
<PAGE>
Common Stock. There can be no assurance that competition for acquisition
opportunities in the industry will not escalate, thereby increasing the cost
to the Combined Company of making acquisitions or causing the Combined
Company to refrain from making further acquisitions.

CONSTANT EXCHANGE RATIO RELATED TO BEC COMMON STOCK

Under the terms of the Merger Agreement, each share of ILC Common Stock
issued and outstanding at the Effective Time will be converted into the
appropriate number of shares of BEC Common Stock based on the Exchange Ratio.
At such time, the BEC Common Stock will represent post-Spinoff shares in BEC,
and will therefore not reflect the economic value of BEC's interest in Bolle
prior to the Spinoff. The Merger Agreement does not contain any provisions
for adjustment of the Exchange Ratio based on fluctuations in the price of
BEC Common Stock or ILC Common Stock prior to the Effective Time, including
fluctuations in the price of BEC Common Stock during the period after the
Spinoff and prior to the Effective Time. Accordingly, the value of the
consideration to be received by shareholders of ILC upon the Merger will
depend on the market price of BEC Common Stock at the Effective Time. See
"The Merger Agreement--Basis of Converting Shares of ILC." On October 30,
1997, the last trading day prior to the announcement of the execution of the
Merger Agreement, the closing prices of BEC Common Stock and ILC Common Stock
on the NYSE and Nasdaq were $5.625 and $11.75, respectively. On January 26,
1998, the closing prices of BEC Common Stock and ILC Common Stock on the NYSE
and Nasdaq were $5 7/8 and $14 1/2, respectively. There can be no assurance
as to the market price of ILC Common Stock just prior to the Effective Time
or the market price of BEC Common Stock at and after the Effective Time.

ACCOUNTING TREATMENT

On a pro forma basis, the Combined Company's total goodwill and intangible
assets are estimated to be $45.3 million. On a pro forma basis these assets
are currently being amortized at a rate of approximately $1.2 million a year.
This amortization expense will act to decrease the Combined Company's income
over the life of the assets being amortized. The carrying value of long lived
assets will be reviewed regularly and there is no guarantee that the Combined
Company will not suffer a significant charge in the future from the
impairment of long lived assets. The Combined Company may continue to acquire
businesses using purchase accounting which may create more intangible assets
and goodwill amortization. While the Company believes its accounting
treatment for goodwill and intangible assets has been and will continue to be
appropriate, there can be no assurance that additional goodwill and
intangible amortization or write-offs will not have a material adverse effect
on the Combined Company's results of operations.

CERTAIN REGULATORY MATTERS

Pursuant to the requirements of the HSR Act, BEC and ILC each filed a
Notification and Report Form for review under the HSR Act with the FTC and
the Antitrust Division. BEC and ILC were granted early termination of the 30
day HSR Act waiting period. BEC and ILC do not believe that any additional
filing relating to antitrust issues is or will be required with respect to
the Merger. Notwithstanding the termination of the HSR Act waiting period,
the FTC or the Antitrust Division could take such action under the antitrust
laws as it deems necessary or desirable in the public interest, including
seeking divestiture of assets of BEC or ILC. ILC and BEC do not believe that
consummation of the Merger will result in a violation of any applicable
antitrust laws. However, there can be no assurance that a challenge to the
Merger on antitrust grounds will not be made or, if such a challenge is made,
that the Combined Company will be ultimately be successful.

INTENSE COMPETITION

The markets for ILC's and BEC's products are highly competitive. Many of
ILC's and BEC's competitors have established operating histories, are larger
than the Combined Company and have financial and other resources
substantially greater than those of the Combined Company. There can be no
assurance that changes in market conditions or price competition will not
adversely affect the Combined

27
<PAGE>
Company's operations in the future and that the Combined Company will be able
to compete successfully. The customers of ILC and BEC are, in many cases,
competitors and, in some cases, compete with BEC or ILC. There can be no
assurance that customers of either ILC or BEC will continue to purchase
products from the Combined Company at pre-Merger unit volumes, or at all. See
"Information Concerning BEC--Business of BEC" and "Information Concerning
ILC--Business of ILC--Products" and "--Competition."

ENVIRONMENTAL CONTINGENCIES

The Combined Company's operations will be subject to federal, state and
local laws and regulations governing, among other things, emissions to air,
discharge to waters and the generation, handling, storage, transportation,
treatment and disposal of waste and other materials as well as laws relating
to occupational health and safety. ILC and BEC each believe that their
respective business, operations and facilities are being operated in
compliance in all material respects with environmental and health and safety
laws and regulations, many of which provide for substantial fines and
criminal sanctions for violations. However, the operation of manufacturing
plants entails risks in these areas, and there can be no assurance that the
Combined Company will not incur material costs or liabilities. In addition,
potentially significant expenditures could be required to comply with
evolving environmental and health and safety laws, regulations or
requirements that may be adopted or imposed in the future. See "Information
Concerning BEC--Business of BEC--Environmental Matters."

DEPENDENCE UPON NEW PRODUCT INTRODUCTIONS

The Combined Company's future success may depend upon its ability to
develop and introduce innovative products, and there can be no assurance of
the Combined Company's ability to do so. Even if new products are developed
for a particular type of lighting fixture or application, such products may
not be commercially successful. In addition, competitors occasionally have
followed ILC's or BEC's introduction of successful products with similar
product offerings. As a result of these and other factors, there can be no
assurance that the Combined Company will be successful in introducing new
products in a timely and cost-effective manner, or that any new products will
achieve or sustain market acceptance. See "Information Concerning
ILC--Business of ILC--Products," "Information Concerning BEC--Business of
BEC--ORC" and "--Voltarc."

LIMITED PROTECTION OF INTELLECTUAL PROPERTY RIGHTS

The Combined Company will rely on trade secret protection, trademark,
patent and intellectual property laws to protect its rights to certain
aspects of its products, including proprietary manufacturing processes and
technologies, product research and concepts and trademarks, all of which BEC
and ILC believe are important to the success of its products and its
competitive position. There can be no assurance that the actions taken by the
Combined Company to protect its proprietary rights will be adequate to
prevent imitation of its products, processes or technology; that the Combined
Company's proprietary information will not become known to competitors, that
the Combined Company can effectively protect its rights to unpatented
proprietary information; or, that others will not independently develop
substantially equivalent or better products that do not infringe on the
Combined Company's intellectual property rights. No assurance can be given
that others will not assert rights in, and ownership of, the patents and
other proprietary rights of the Combined Company. See "Information Concerning
BEC -- Business of BEC -- Intellectual Property" and "Information Concerning
ILC--Business of ILC--Patents and Trademarks."

CYCLICAL RESULTS

The industries in which the Combined Company will operate have been
cyclical in nature and historically have experienced periodic downturns. Such
downturns are characterized by diminished product demand, erosion of average
selling prices and production over-capacity. The Combined Company may also
experience substantial period-to-period fluctuations in future operating
results due to industry

28
<PAGE>
conditions or events occurring in the general economy. Even during periods of
reduced revenues, in order to remain competitive the Combined Company will be
required to continue to invest in research and development and to maintain
extensive ongoing worldwide customer service and support capability.

RESTRICTED DIVIDEND POLICY

BEC has not paid any cash dividends in the past, except for the proceeds
received by the holders of Benson Eyecare Corporation's (the predecessor
company of BEC) Common Stock in connection with the Essilor Merger (as
hereinafter defined), and except as contemplated by the Spinoff. BEC does not
currently intend to declare or pay any dividends on the shares of BEC Common
Stock. Pursuant to the terms of the Credit Agreement (as hereinafter
defined), BEC is restricted (and the Combined Company will be restricted)
from issuing dividends without the consent of its Lenders (as hereinafter
defined). See "Market Prices of BEC and ILC Common Stock--Market Prices of
BEC Common Stock and Dividend Policy" and "Information Concerning
BEC--Business--Credit Facility."

RISK FACTORS RELATING ONLY TO BEC

POTENTIAL DILUTIVE EFFECT TO STOCKHOLDERS

Although both BEC and ILC believe that strategic advantages will result
from the Merger, there can be no assurance that the combination of the two
companies' businesses, even if achieved in an efficient, effective and timely
manner, will result in combined results of operations and financial condition
superior to that which would have been achieved by each company
independently.

In addition, in the event that less than all of the Convertible Notes are
converted into BEC Common Stock prior to the Spinoff and consummation of the
Merger, then the Exchange Ratio will be adjusted upward pursuant to the
Exchange Ratio Adjustment Formula resulting in the issuance of additional
shares of BEC Common Stock to ILC shareholders and the Convertible Notes
conversion price will be adjusted downward resulting in more shares being
issuable to the holders of the Convertible Notes. Furthermore, in the event
that less than all of the Convertible Notes are converted into BEC Common
Stock, to the extent that interest accrues on such Convertible Notes,
interest may be paid at BEC's option, in cash or in shares of BEC Common
Stock.

The issuance of BEC Common Stock in connection with the Merger or with
respect to the Convertible Notes may have the effect of reducing BEC's
earnings per share from levels otherwise expected and could reduce the market
price of BEC Common Stock unless revenue growth, cost savings or other
business synergies sufficient to offset the effect of such issuance can be
achieved.

LIMITED TRADING HISTORY; MARKET PRICES

Prior to May 3, 1996 there was no public trading market for BEC Common
Stock. Although BEC has listed the BEC Common Stock on the NYSE, the stock of
new and relatively small issuers is frequently subject to sharp increases and
decreases in market value, and trading prices of the BEC Common Stock could
vary significantly over relatively short periods of time. BEC Common Stock
may also experience volatility subsequent to the Spinoff until trading values
have become established.

OPERATIONAL ISSUES ARISING FROM RAPID CHANGES THROUGH ACQUISITIONS AND
DIVESTITURES

BEC's predecessor, Benson Eyecare Corporation ("Benson"), expanded
primarily by means of acquisitions. Historically, this strategy also had
increased the asset base and debt of Benson significantly. Accordingly,
substantially all the current operations of BEC were acquired in a series of
transactions since 1994. As a result of the merger and asset sale consummated
by Benson in May 1996 and the sale by BEC of the Foster Grant Group, L.P. in
December 1996, BEC's business has contracted substantially. Since May 1996,
BEC has consummated a number of small acquisitions and intends to continue
its historic strategy of aggressive growth through strategic acquisitions.

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<PAGE>
There can be no assurance that BEC will be able to manage its growth and
development successfully or that BEC will continue with a strategy of growth
through acquisitions, of which the proposed Merger is a part. Furthermore,
there can be no assurance that BEC will be able to identify other suitable
acquisition candidates on acceptable terms, that it will be able to obtain
the necessary financing for any future acquisitions or that it will be able
to integrate effectively and profitably into BEC any operations that are
acquired in the future. Additionally, there can be no assurance that any
future acquisitions will not have a material adverse effect on BEC's
operating results or on the market price of BEC's Common Stock, particularly
during the period immediately following such acquisitions.

DEPENDENCE ON KEY PERSONNEL

BEC's business will be managed by a small number of executive officers and
key employees, most of whom have employment contracts with BEC. Although BEC
maintains $10 million of key man life insurance on the life of Martin E.
Franklin, its current Chairman of the Board and Chief Executive Officer, the
loss of Mr. Franklin's services or the services of other executive officers
or key employees could have a material adverse effect on BEC. BEC believes
that its future success will depend in large part on its ability to attract
and retain highly skilled and qualified personnel. Although BEC will
aggressively seek to attract and retain such personnel, there can be no
assurance that its recruiting efforts will be successful. Pursuant to his
employment agreement, although Messrs. Franklin and Ashken are required to
devote such time and energy to the business and affairs of BEC as deemed
reasonably necessary to perform the duties of their positions, Messrs.
Franklin and Ashken may not be required to devote their full time to BEC,
except as they, in the exercise of their business judgment, may deem
necessary or appropriate. In addition, as part of the Spinoff, Mr. Franklin
and Ian G. H. Ashken, BEC's Chief Financial Officer, will be providing
certain management services to Bolle pursuant to the Management Services
Agreement. Although such services are being rendered to Bolle in Messrs.
Franklin's and Ashken's capacity as officers of BEC, Messrs. Franklin and
Ashken will not devote their respective full time services to the Combined
Company's core business.

POTENTIAL ANTI-TAKEOVER EFFECT OF CERTAIN CHARTER PROVISIONS

BEC has 500,000 shares of authorized blank check preferred stock, of which
490,000 shares are available for issuance as of the BEC Record Date. The BEC
Board is authorized to determine the price, rights, preferences, privileges
and restrictions, including voting rights, of the shares of blank check
preferred stock without any further vote or action by the BEC stockholders.
The rights of the holders of BEC Common Stock will be subject to, and may be
adversely affected by, the rights of the holders of any preferred stock that
may be issued in the future. The issuance of preferred stock, while providing
desirable flexibility in connection with possible acquisitions and other
corporate purposes, could have the effect of making it more difficult for a
third party to acquire a majority of the outstanding voting stock of BEC. The
blank check preferred stock could be issued to a third party selected by
management or used as the basis for a stockholders' rights plan, which could
have the effect of deterring a potential acquirer. The ability of the BEC
Board to establish the terms and provisions of different series of preferred
stock could discourage unsolicited takeover bids from third parties.

SHARES ELIGIBLE FOR FUTURE SALE

Sales of substantial numbers of shares of BEC Common Stock in the public
market in the future could adversely affect the market price of BEC Common
Stock and could impair BEC's ability to raise additional capital through the
sale of its equity securities. As of the BEC Record Date, there were
17,631,139 shares of BEC Common Stock outstanding or, on a post-Reverse Split
basis, 8,815,570 shares of BEC Common Stock. BEC will issue up to 11,500,000
shares (post-Reverse Split) of BEC Common Stock in the Merger and up to
1,827,701 shares (post-Reverse Split) of BEC Common Stock upon conversion of
all the Convertible Notes. All of such shares are or will be freely tradeable
without restriction under the Securities Act, except for certain volume
limitations and manner of sale requirements that apply to the transfer of
shares of BEC Common Stock by affiliates of BEC and former affiliates of ILC.
As of the BEC Record Date, BEC had outstanding under the BEC Option Plan
options to

30
<PAGE>

purchase up to approximately 3,301,253 shares of BEC Common Stock or, on a
post-Reverse Split basis, 1,650,627 shares of BEC Common Stock. At the
Effective Time, BEC will assume outstanding options to purchase 830,000
shares of ILC Common Stock, as a result of which it is anticipated that
options to purchase up to an additional 1,844,280 shares (post-Reverse Split)
of BEC Common Stock will be outstanding. The shares issuable upon exercise of
these options, together with an additional 4,350,000 shares reserved for
issuance under the BEC Option Plan and 500,000 shares reserved for issuance
under BEC's 1996 Employee Stock Purchase Plan (the "Stock Purchase Plan"),
have been registered under the Securities Act. In addition, BEC's
stockholders are being asked to approve the 1996 Stock Incentive Plan
Proposal which, if approved, will increase the number of shares subject to
the BEC Option Plan to 4,250,000 shares. A significant portion of the options
could be exercisable at prices below the market prices for BEC Common Stock.
Since BEC in the past has issued, and BEC may continue to issue, a
significant number of shares of BEC Common Stock in connection with
acquisitions or otherwise, the number of outstanding shares of BEC Common
Stock that are likely to be eligible for sale in the future could increase
significantly.

In addition, to the extent that any Convertible Notes are not converted
into BEC Common Stock prior to the Effective Time, the holders of Convertible
Notes will retain their conversion rights, at an adjusted conversion price.
The shares issuable upon any such conversion have been registered under the
Securities Act and accordingly, will be freely tradable without restriction.
Assuming the current conversion price of $5.75 per share of BEC Common Stock
and the conversion of all of, or 50% of, the Convertible Notes, the
Convertible Notes may be converted into an aggregate of approximately
3,655,402 shares or 1,827,701 shares, respectively, of BEC Common Stock. In
addition, the accrued interest on the Convertible Notes is payable in cash or
stock at BEC's option. If the accrued interest is paid in stock, such stock
would have a further dilutive effect on BEC stockholders. See "Information
Concerning BEC--Description of the Convertible Notes."

LOSS OF OPPORTUNITY FOR BEC AS A STAND-ALONE ENTITY

As a consequence of the Merger, BEC stockholders will lose the chance to
invest in the development and exploitation of BEC's products on a stand-alone
basis. Additionally, the management of BEC will change as a result of the
Merger, and consequently the management of the Combined Company may make
strategic and operational decisions that differ from those of BEC's current
management. It is possible that, if BEC were to remain independent, it could
achieve economic performance superior to that of the Combined Company, and
therefore, there can be no assurance that stockholders of BEC would not
achieve greater returns on their investment if BEC were to remain an
independent company.

CREDIT AGREEMENT

BEC is party to a Credit Agreement (as hereinafter defined) pursuant to
which the lenders thereunder made available to BEC a credit facility in the
maximum aggregate principal amount at any time outstanding of $70 million. In
addition, any debt incurred by BEC prior to the Merger above the amount
permitted by the Merger Agreement requires the consent of ILC. BEC intends to
amend the Credit Agreement in connection with the Spinoff and the Merger and
is currently negotiating the terms of such amended credit facility. The
Credit Agreement contains numerous financial and operating covenants that
will limit the discretion of BEC's management with respect to certain
business matters. These covenants will place significant restrictions on,
among other things, the ability of BEC to incur additional indebtedness, to
create liens or other encumbrances, to make certain payments and investments,
to sell or otherwise dispose of assets, and to merge or consolidate with
other entities. The Credit Agreement also requires BEC to meet certain
financial ratios and tests. A failure to comply with the obligations
contained in the Credit Agreement could result in acceleration of the related
debt and the acceleration of debt under other instruments evidencing
indebtedness that may contain cross-acceleration or cross-default provisions.
See "Information Concerning BEC--Business of BEC--The Credit Facility."

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

The Company has international operations and sales. International business
is subject to a number of special risks, including foreign government
regulations, unexpected changes in, or imposition of,

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<PAGE>
regulatory requirements, tariffs, import and export restrictions and other
barriers and restrictions, longer payment cycles, greater difficulty in
collecting accounts receivable, potentially adverse tax consequences, the
burdens of complying with a variety of foreign laws, general geopolitical
risks, such as political and economic instability, hostilities with
neighboring countries and changes in diplomatic and trade relationships, and
other factors beyond the control of BEC. BEC's products, including those sold
internationally, are routinely invoiced and paid for in U.S. dollars. An
increase in the value of the U.S. dollar relative to foreign currencies could
make BEC's products more expensive and, therefore, potentially less
competitive in foreign markets.

POST-SPINOFF BEC WITHOUT CONSUMMATION OF THE MERGER

The Spinoff is intended to be implemented as part of a larger overall plan
whereby, upon successful implementation of the plan, BEC will focus on the
specialty lighting, electronic and electroformed products business. The
management of BEC believes that the Merger will provide economies of scale,
market presence, critical mass and other advantages not available to BEC or
ILC on a stand-alone basis. Should the stockholders of BEC fail to approve
the Merger, BEC will have as its principal asset the ORC Business. BEC
management believes such a company would be inherently weaker than BEC prior
to the Spinoff.

RISK FACTORS RELATING ONLY TO ILC

INTERESTS OF CERTAIN PERSONS IN THE MERGER

Certain members of ILC's management and the ILC Board may be deemed to
have an interest in the Merger in addition to their interests as ILC
shareholders generally, which may cause potential conflicts of interest. In
each case, the ILC Board was aware of these factors and considered them,
among other factors, in approving the Merger. Richard D. Capra, ILC's
President and Chief Operating Officer and a director of ILC, will be Chief
Executive Officer and a director of BEC after the Merger and will enter into
an employment/consulting agreement with BEC as part of the Merger. Henry C.
Baumgartner, ILC's Chairman and Chief Executive Officer and a director of
ILC, will be a director of BEC after the Merger (subject to approval by the
BEC stockholders) and will enter into a consulting agreement with BEC as part
of the Merger. Harrison H. Augur and George B. Clairmont, both of whom are
directors of ILC, will be directors of BEC after the Merger (subject to
approval by the BEC stockholders). In addition, in November 1996, ILC entered
into Compensation Agreements with eleven of its key employees, eight of whom
are currently employed by ILC, that provide for severance benefits upon
termination following a change in control of ILC. Six of the executive
officers of ILC, plus two additional key employees of ILC, are currently
covered by the Compensation Agreements. Each agreement provides that if,
during the two-year period following a change in control of ILC (as defined
in the compensation agreements), ILC terminates the employee's employment
without cause (other than for death, retirement or disability) or the
employee terminates the employee's employment for good reason (as defined in
the compensation agreements), the employee will receive from ILC a lump sum
payment as a severance benefit. The amount of such payment will be equal to
three times the employee's annual full base salary (excluding bonus) for
Messrs. Baumgartner, Capra and Ronald E. Fredianelli, ILC's Chief Financial
Officer, and two times the employee's annual full base salary (excluding
bonus) for Felix J. Schuda, Vice President and Chief Technical Officer of
ILC, John A. Lucero, Senior Vice President of Sales and Marketing of ILC and
Arthur O. Whipple, Vice President of Engineering of ILC. The Merger will be a
change in control of ILC for purposes of the Compensation Agreements. Messrs.
Baumgartner's and Capra's compensation agreements (and the compensation
payable under these agreements) will be superceded by their respective
consulting agreement and employment agreement entered into at the Effective
Time.

LOSS OF OPPORTUNITY FOR ILC AS A STAND-ALONE ENTITY

As a consequence of the Merger, ILC shareholders will lose the chance to
invest in the development and exploitation of ILC's products on a stand-alone
basis. Additionally, the Combined Company will have different management than
ILC's current management, and consequently the management of the Combined
Company may make strategic and operational decisions that differ from those
of ILC's current

32
<PAGE>
management. Moreover, after the Merger the former ILC shareholders will be
stockholders of BEC, a company that has significantly greater leverage than
ILC historically. In addition, any Convertible Notes not redeemed prior to
the Effective Date will be additional debt of the Combined Company. It is
possible that, if ILC were to remain independent, it could achieve economic
performance superior to that of the Combined Company. Therefore there can be
no assurance that shareholders of ILC would not achieve greater returns on
their investment if ILC were to remain an independent company.

RIGHTS AS HOLDERS OF BEC COMMON STOCK

Upon consummation of the Merger, the former ILC shareholders will become
BEC stockholders. The rights of the ILC shareholders who become BEC
stockholders will no longer be governed by California law and ILC's Amended
and Restated Certificate of Incorporation and Bylaws, but instead will be
governed by Delaware law and the BEC Certificate, as amended pursuant to the
Reverse Split Proposal and the Name Change Proposal, if these proposals are
adopted by the BEC stockholders. See "Comparison of Capital
Stock--Description of BEC Capital Stock" and "Comparison of Stockholder
Rights" for a summary comparison of certain differences between the rights of
ILC shareholders and the rights of BEC stockholders. It is expected that the
former ILC shareholders will own approximately 50% of the then outstanding
shares of BEC Common Stock.

RISKS RELATED TO THE MEDICAL MARKET

In the fiscal years ended September 27, 1997 and September 28, 1996, ILC
derived approximately 31% and 39%, respectively, of its net sales from sales
of products to the medical market. Products sold in the medical market are
incorporated into products sold into the healthcare and healthcare related
industries. These industries have recently been subject to significant
fluctuations in demand, which in turn affected the demand for components used
in these products. ILC expects sales to the medical market to continue to
decrease as a percentage of net sales for the foreseeable future. In
addition, the U.S. Food and Drug Administration (the "FDA") regulates the
manufacture and sale of medical products and components of medical products.
ILC must comply with Good Manufacturing Practices ("GMP") set by the FDA and
the California food and drug regulatory authorities in the manufacture of
certain of its products sold into the medical market. Failure of ILC to
comply with federal or state GMP could affect the ability of ILC to sell its
products into the medical market, result in fines and penalties and have a
material adverse effect on ILC's results of operations.

RISKS ASSOCIATED WITH INTERNATIONAL OPERATIONS

In the fiscal years ended September 27, 1997 and September 28, 1996,
international sales represented approximately 34.0% and 37.1%, respectively,
of ILC's net sales. Q-Arc Ltd., a wholly-owned subsidiary of ILC ("Q-Arc"),
is located in Cambridge, England. All of the revenues and expenses of Q-Arc
are pound sterling denominated and consequently ILC is exposed to
fluctuations in pound sterling exchange rates. ILC does not routinely hedge
against this currency exposure. The effect on ILC of fluctuations in currency
exchange rates has not been material to date; however, there can be no
assurance that currency exchange rate fluctuations will not have a material
adverse effect on ILC's results of operations in the future. In addition,
international business is subject to a number of special risks, including
foreign government regulations, unexpected changes in, or imposition of,
regulatory requirements, tariffs, import and export restrictions and other
barriers and restrictions, longer payment cycles, greater difficulty in
collecting accounts receivable, potentially adverse tax consequences, the
burdens of complying with a variety of foreign laws, general geopolitical
risks, such as political and economic instability, hostilities with
neighboring countries and changes in diplomatic and trade relationships, and
other factors beyond the control of ILC. ILC's products, including those sold
internationally, are routinely invoiced and paid for in U.S. dollars (other
than in relation to Q-Arc). An increase in the value of the U.S. dollar
relative to foreign currencies could make ILC's products more expensive and,
therefore, potentially less competitive in foreign markets.

33
<PAGE>
MARKET PRICES OF BEC AND ILC COMMON STOCK

MARKET PRICES OF BEC COMMON STOCK AND DIVIDEND POLICY

BEC Common Stock is listed for quotation on the NYSE under the symbol
"EYE." The following table sets forth the quarterly high and low sales price
of the BEC Common Stock for the fiscal quarters indicated. BEC Common Stock
started trading publicly after the BEC Spinoff in May 1996 (as hereinafter
defined).

<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
- ---------------------------------------- ------- -------
<S> <C> <C>
1998
First Quarter (through January 26,
1998) ................................. 5-7/8 5-11/16

1997
Fourth Quarter ......................... 6 4-15/16
Third Quarter .......................... 5-3/8 4-3/16
Second Quarter ......................... 4-5/8 4-1/8
First Quarter .......................... 4-7/8 4-1/4

1996
Fourth Quarter ......................... $5.25 $4.00
Third Quarter .......................... 5.75 3.63
Second Quarter ......................... 7.75 4.00
</TABLE>

On October 30, 1997, the last full trading day prior to the announcement
that the Merger Agreement had been executed, the closing stock price for BEC
Common Stock was 5.625. On [ ] 1998, prior to the Spinoff, and the most
recent practical day prior to printing this Joint Proxy Statement/
Prospectus, the last reported sales price for BEC Common Stock was $5 7/8.
BEC will consummate the Spinoff before the Merger. See "Recent Material
Developments--The Spinoff." STOCKHOLDERS ARE URGED TO OBTAIN CURRENT
QUOTATIONS FOR THE BEC COMMON STOCK.

As of BEC Record Date, there were approximately 580 stockholders of record
of BEC Common Stock (representing approximately 5,000 beneficial owners).

No dividends have ever been declared on BEC Common Stock. However, for
accounting purposes, cash proceeds received by the holders of Benson's (the
predecessor company of BEC) common stock in connection with the Essilor
Merger (as hereinafter defined) were reflected as dividends. BEC has no
intention of paying dividends in the foreseeable future. It is the present
policy of the BEC Board that any retained earnings accumulated will be used
to finance future acquisitions and expansion of BEC's operations. On July 10,
1997, BEC, NationsBank, National Association, and the other financial
institutions (collectively, the "Lenders"), entered into the Amended and
Restated Credit Agreement (the "Credit Agreement"), pursuant to the terms of
which BEC is restricted from paying dividends without the consent of the
Lenders. See "Information Concerning BEC--Business--The Credit Facility."

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<PAGE>
MARKET PRICES OF ILC COMMON STOCK AND DIVIDEND POLICY

ILC Common Stock is listed for quotation on Nasdaq under the symbol
"ILCT." The following table sets forth the quarterly high and low sales price
of ILC Common Stock for the fiscal quarters indicated.

<TABLE>
<CAPTION>
FISCAL YEAR HIGH LOW
- -------------------------------------- --------------------------
<S> <C> <C>
1998
Second Quarter (through , 1998).. 15-7/8 11-1/4
First Quarter ........................ 15-3/4 11-1/2
1997
Fourth Quarter ....................... 12-3/16 10-1/2
Third Quarter ........................ 12-1/8 9-1/8
Second Quarter ....................... 14-3/4 10
First Quarter ........................ 14-3/16 10-3/8
1996
Fourth Quarter ....................... 13-1/2 10-7/8
Third Quarter ........................ 14 10-11/16
Second Quarter........................ 11-7/8 8-7/8
First Quarter ........................ 11-1/2 8-3/4
</TABLE>

On October 30, 1997, the last full trading day prior to the announcement
that the Merger Agreement had been executed, the last reported sale price for
ILC Common Stock was $11.75. On [ ] 1998, the most recent practical day
prior to printing of this Joint Proxy Statement/Prospectus, the last reported
sale price for ILC Common Stock was 14-1/2. SHAREHOLDERS ARE URGED TO OBTAIN
CURRENT QUOTATIONS FOR THE ILC COMMON STOCK.

As of the ILC Record Date, there were approximately 400 shareholders of
record of ILC Common Stock (representing approximately 2,000 beneficial
owners).

ILC has not declared or paid cash dividends. ILC intends to retain
earnings for use in its business and does not expect to pay cash dividends in
the foreseeable future. ILC's credit agreement with Union Bank of California
provides that ILC shall not declare or pay any dividend or other distribution
on ILC Common Stock (other than a stock dividend) or purchase or redeem any
ILC Common Stock, without the bank's prior written consent.

35
<PAGE>
BEC GROUP, INC.
SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)

The unaudited pro forma combined financial statements give effect to the
Merger, Spinoff and Contribution Agreement as though they occurred at the
beginning of the periods presented.

<PAGE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

36
<PAGE>
ILC TECHNOLOGY, INC.
SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

37
<PAGE>
BEC SPECIAL MEETING
DATE, TIME AND PLACE OF BEC SPECIAL MEETING

The BEC Special Meeting will be held at 12:30 P.M., local time, on
February , 1998, at 555 Theodore Fremd Avenue, Rye, New York 10580.

PURPOSE

Holders of BEC Common Stock will be asked to consider and vote upon: (i)
the Merger Agreement and the issuance of shares of BEC Common Stock in
connection therewith; (ii) the Reverse Split Proposal; (iii) the Director
Election Proposal; (iv) the Name Change Proposal; and (v) the 1996 Stock
Incentive Plan Proposal.

RECORD DATE AND OUTSTANDING SHARES

The BEC Board has fixed the close of business on January 12, 1998, as the
BEC Record Date for determining stockholders entitled to notice of and to
vote at the BEC Special Meeting. As of the BEC Record Date, there were 580
stockholders of record of BEC Common Stock and 17,631,139 shares of BEC
Common Stock outstanding and entitled to vote, with each share entitled to
one vote.

QUORUM

The presence in person or by properly executed proxy of holders of a
majority of the votes entitled to be cast at the BEC Special Meeting is
necessary to constitute a quorum at the BEC Special Meeting.

REQUIRED VOTE

Pursuant to the DGCL, an affirmative vote of the majority of the shares of
BEC Common Stock present in person or represented by proxy at the BEC Special
Meeting and entitled to vote, is required for: (i) the approval and adoption
of the Merger Proposal and (ii) the approval and adoption of the 1996 Stock
Incentive Plan Proposal. Abstentions will have the legal effect of a vote
against the Merger Proposal and the 1996 Stock Incentive Plan Proposal. With
respect to a broker non-vote on the Merger Proposal and the 1996 Stock
Incentive Plan Proposal, such shares will not be considered present at the
BEC Special Meeting, and, since they will not be counted in the voting with
respect to such matter, will have the practical effect of reducing the number
of affirmative votes necessary to achieve the required majority vote by
reducing the total number of shares from which the majority is calculated.

The affirmative vote of a plurality of the shares of BEC Common Stock
present in person or represented by proxy at the BEC Special Meeting is
required for the election of the nominees for director under the Director
Election Proposal. Only shares of BEC Common Stock that are voted in favor of
a nominee will be counted toward that nominee's achievement of a plurality.
Shares of BEC Common Stock held by stockholders present in person at the
Meeting that are not voted for a nominee or shares held by stockholders of
BEC represented at the BEC Special Meeting by proxy from which authority to
vote for a nominee has been properly withheld (including broker non-votes)
will not be counted toward that nominee's achievement of a plurality.

The approval and adoption of the Name Change Proposal and the Reverse
Split Proposal each require the affirmative vote of the holders of a majority
of the outstanding shares of BEC Common Stock entitled to vote on said
amendment at the BEC Special Meeting. Abstentions and broker non-votes will
have the legal effect of a vote against the Name Change Proposal and the
Reverse Split Proposal.

As of the BEC Record Date the directors and officers of BEC own, in the
aggregate, approximately % of the outstanding shares of BEC Common Stock.
Pursuant to the Merger Agreement, BEC agreed to use its best efforts to cause
its directors and executive officers to vote any shares held by them in favor
of the Merger. See "The Merger -- Voting Agreements and Proxies" and Annex B.

If adopted at the BEC Special Meeting, the Reverse Split Proposal, the
Director Election Proposal, the Name Change Proposal and the 1996 Stock
Incentive Plan Proposal will become effective only if the Merger Agreement is
approved at the BEC Special Meeting and only upon consummation of the Merger.

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<PAGE>
NYSE rules require stockholder approval for the issuance of common stock,
or securities exercisable for or convertible into common stock in connection
with a transaction if the common stock has or will have upon issuance voting
power equal to or in excess of 20% of the voting power outstanding before the
issuance of such common stock or securities exercisable for or convertible
into common stock. The number of shares of BEC Common Stock to be issued in
the Merger would be in excess of 20% of the shares of BEC Common Stock
outstanding prior to the Merger.

PROXIES

All shares of BEC Common Stock represented at the BEC Special Meeting
either in person or by properly executed proxies received prior to or at the
BEC Special Meeting and not duly and timely revoked will be voted at the BEC
Special Meeting in accordance with the instructions in such proxies. If no
such instructions are indicated, such shares will be voted in favor of the
Merger Agreement and the issuance of shares of BEC Common Stock in connection
therewith and in favor of each of the other proposals and, in the discretion
of the proxy holders as to any other matter which may be incidental to the
BEC Special Meeting as may properly come before such meeting. BEC knows of no
matters other than as described in the Notice of BEC Special Meeting that are
to come before the BEC Special Meeting. If any other matter or matters are
properly presented for action at the BEC Special Meeting, the persons named
in the enclosed form of proxy and acting thereunder will have the discretion
to vote on such matters in accordance with their best judgment, unless such
authorization is withheld, including any adjournment or postponement of the
BEC Special Meeting.

A stockholder who has given a proxy may revoke it at any time prior to its
exercise by: (i) giving written notice thereof to the Secretary of BEC at or
prior to the taking of the vote at the BEC Special Meeting; (ii) signing and
returning to BEC a later dated proxy prior to the taking of the vote; or
(iii) voting in person at the BEC Special Meeting; however, mere attendance
at the BEC Special Meeting will not in and of itself have the effect of
revoking the proxy.

SOLICITATION OF PROXIES; EXPENSES

BEC will solicit proxies for the BEC Special Meeting. The cost of the
solicitation of BEC stockholders will be borne by BEC. Proxies may also be
solicited by certain BEC directors, officers and regular employees personally
or by telephone, telegram, letter or facsimile. Such persons will not receive
additional compensation, but may be reimbursed for reasonable out-of-pocket
expenses incurred in connection with such solicitation. Arrangements will
also be made with custodians, nominees, and fiduciaries for forwarding of
proxy solicitation materials to be beneficial owners of shares held of record
by such custodians, nominees and fiduciaries, and BEC will reimburse such
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.

39
<PAGE>
ILC SPECIAL MEETING
DATE, TIME AND PLACE OF ILC SPECIAL MEETING

The ILC Special Meeting will be held at 11:00 A.M., local time, on
February , 1998, at 277 Park Avenue, 18th Floor, New York, New York.

PURPOSE

The purpose of the ILC Special Meeting is to consider and vote upon the
approval and adoption of the Merger Agreement and such other matters as may
properly be brought before the ILC Special Meeting or any postponements or
adjournments thereof. ILC does not intend to bring any business other than
the approval and adoption of the Merger Agreement before the ILC Special
Meeting or any postponements or adjournments thereof.

RECORD DATE AND OUTSTANDING SHARES

The ILC Board has fixed the close of business on January 12, 1998, as the
ILC Record Date for determining shareholders entitled to notice of and to
vote at the ILC Special Meeting. As of the ILC Record Date, there were
approximately 400 shareholders of record of ILC Common Stock and 4,903,591
shares of ILC Common Stock outstanding and entitled to vote, with each share
entitled to one vote.

QUORUM

The presence in person or by properly executed proxy of holders of a
majority of the shares entitled to vote at the ILC Special Meeting is
necessary to constitute a quorum at the ILC Special Meeting. Abstentions and
broker non-votes are counted for purposes of determining the presence or
absence of a quorum for the transaction of business.

REQUIRED VOTE

Pursuant to the CGCL, the affirmative vote of the holders of a majority of
the shares of ILC Common Stock outstanding as of the ILC Record Date is
required to approve and adopt the Merger Agreement. Abstentions and broker
non-votes will have the effect of a vote against the adoption and approval of
the Merger Agreement.

As of the ILC Record Date, the directors and executive officers of ILC
beneficially owned, in the aggregate, approximately 13.0% of the outstanding
shares of ILC Common Stock. Pursuant to the Merger Agreement, ILC agreed to
use its best efforts to cause its directors and executive officers to vote
any shares held by them in favor of the Merger. See "The Merger-Voting
Agreements and Proxies" and Annex C.

PROXIES

All shares of ILC Common Stock represented at the ILC Special Meeting
either in person or by properly executed proxies received prior to or at the
ILC Special Meeting and not duly and timely revoked will be voted at the ILC
Special Meeting in accordance with the instructions indicated on such
proxies. If no such instructions are indicated, such shares will be voted for
the approval and adoption of the Merger Agreement and, in the discretion of
the proxy holders as to any other matter which may be incidental to the ILC
Special Meeting as may properly come before such meeting. ILC knows of no
matters other than as described in the ILC Notice of Special Meeting of
Shareholders that are to come before the ILC Special Meeting. If any other
matter or matters are properly presented for action at the ILC Special
Meeting, the persons named in the enclosed form of proxy and acting
thereunder will have the discretion to vote on such matters in accordance
with their best judgment, unless such authorization is withheld, including
any adjournment or postponement of the ILC Special Meeting.

A shareholder who has given a proxy may revoke it at any time prior to its
exercise by: (i) giving written notice thereof to the Secretary of ILC at or
prior to the taking of the vote at the ILC Special Meeting; (ii) signing and
returning to ILC a later dated proxy prior to the taking of the vote; or
(iii) voting in person at the ILC Special Meeting; however, mere attendance
at the ILC Special Meeting will not of itself have the effect of revoking the
proxy.

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SOLICITATION OF PROXIES: EXPENSES

ILC will solicit proxies for the ILC Special Meeting. The cost of the
solicitation of ILC shareholders will be borne by ILC. Proxies may be
solicited by certain ILC directors, officers and regular employees personally
or by telephone, telegram, letter or facsimile. Such persons will not receive
additional compensation, but may be reimbursed for reasonable out-of-pocket
expenses incurred in connection with such solicitation. Arrangements will
also be made with custodians, nominees, and fiduciaries for forwarding of
proxy solicitation materials to beneficial owners of shares held of record by
such custodians, nominees and fiduciaries, and ILC will reimburse such
custodians, nominees and fiduciaries for reasonable expenses incurred in
connection therewith.

THE FOLLOWING DISCUSSION SUMMARIZES THE PROPOSED MERGER AND RELATED
TRANSACTIONS. THE FOLLOWING IS NOT, HOWEVER, A COMPLETE STATEMENT OF ALL
PROVISIONS OF THE MERGER AGREEMENT AND RELATED AGREEMENTS. DETAILED TERMS OF
AND CONDITIONS TO THE MERGER AND CERTAIN RELATED TRANSACTIONS ARE CONTAINED
IN THE MERGER AGREEMENT, A CONFORMED COPY OF WHICH IS ATTACHED TO THIS JOINT
PROXY STATEMENT/PROSPECTUS AS ANNEX A. REFERENCE IS ALSO MADE TO THE VOTING
AGREEMENTS ATTACHED TO THIS JOINT PROXY STATEMENT/PROSPECTUS AS ANNEXES B AND
C, RESPECTIVELY, AND TO THE OTHER ANNEXES HERETO. STATEMENTS MADE IN THIS
JOINT PROXY STATEMENT/ PROSPECTUS WITH RESPECT TO THE TERMS OF THE MERGER AND
SUCH RELATED TRANSACTIONS ARE QUALIFIED IN THEIR RESPECTIVE ENTIRETIES BY
REFERENCE TO THE MORE DETAILED INFORMATION SET FORTH IN THE MERGER AGREEMENT
AND THE OTHER ANNEXES HERETO. THIS JOINT PROXY STATEMENT/PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND UNCERTAINTIES. ACTUAL
RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING THOSE
SET FORTH IN "RISK FACTORS" AND ELSEWHERE HEREIN OR INCORPORATED HEREIN BY
REFERENCE. SEE "FORWARD-LOOKING STATEMENTS."

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RECENT MATERIAL DEVELOPMENTS OF BEC

THE SPINOFF

Contribution to Bolle. As a condition to the Merger, in order to effect
the Spinoff, BEC is required pursuant to the Merger Agreement to enter into
the Contribution Agreement with Bolle, pursuant to which, among other things,
BEC will transfer to Bolle all of its business, assets and liabilities other
than those relating to the ORC Business. Pursuant to the terms of the
Contribution Agreement, Bolle will assume and agree to pay when and as due
and to discharge, all debts, liabilities, obligations and taxes in respect of
the assets and liabilities conveyed to it by BEC, as well as certain assets
and liabilities retained by BEC. In addition, Bolle agreed to execute and
deliver the Indemnification Agreement (as defined below).

Pursuant to the terms of the Contribution Agreement (as hereinafter
defined), BEC will retain the ORC Business (the "ORC Business") which
consists of (i) all of the outstanding capital stock of ORC and certain
subsidiaries of ORC (the "ORC Group"), including BEC's investment in Voltarc
Technologies, Inc., and all the business, assets and liabilities of or
directly related to such entities, and (ii) all assets and liabilities
included in BEC's pro forma balance sheet to be attached as an exhibit to the
Contribution Agreement. Except as noted below, all other assets of BEC will
be assigned to, and all of BEC's liabilities prior to the Spinoff, other than
related to the ORC Business will be assumed by Bolle. Assigned assets and
assumed liabilities include without limitation all interests, rights, duties
and obligations of BEC relating to Accessories Associates, Inc. (which
purchased Foster Grant) and to Superior Vision Services, Inc.; certain
assets, rights, and obligations relating to Sterling Vision, Inc.; the
Management Agreement between BEC and Eyecare Products, plc. ("Eyecare
Products"), as well as all of BEC's right, title and interest in and to
shares of stock of Eyecare Products; and all rights and interests in and to
rental payments received by BEC (as assignee) pursuant to an Industrial Lease
by and between Bartley Optical Sales, Inc. and ORC dated as of December 8,
1995 and a Lease Agreement, dated as of May 3, 1996, between Monsanto Company
and ORC.

Under the terms of the Contribution Agreement and the Indemnification
Agreement, BEC will retain rights in, but Bolle will assume liability for and
will indemnify BEC against, the following potential liabilities, which do not
involve any material present claims or known liabilities in connection with
BEC's indemnification obligations regarding the following: a guaranty of the
minimum display purchase requirements of Foster Grant from HMG World-Wide
Corporation and its subsidiary Intermark Corp., a Foster Grant supplier;
certain agreements and obligations under a $3.6 million Mortgage with Wells
Fargo Bank (Texas) and BEC as successor to Foster Grant; any remaining BEC or
Benson indemnification obligations relating and pursuant to (i) the Agreement
and Plan of Merger dated July 26, 1995, among Benson, BEC Acquisition Corp.
and Bolle America, (ii) the Asset Purchase Agreement dated May 3, 1996, among
Benson, BEC, and Monsanto Company, and (iii) the merger of Essilor into
Benson, effective May 3, 1996; certain immaterial pending litigation; and the
Stock Purchase Agreement between BEC and Lantis Eyewear Corporation, dated
November 14, 1996, as amended, relating to shares transferred to Bolle by the
Contribution Agreement. See "Risk Factors--Risks Associated with the
Spinoff."

In addition, pursuant to the terms of the Contribution Agreement, Bolle
agreed that to the extent Bolle exchanges all, but not less than all, of its
shares of Foster Grant Holdings, Inc. Series A Preferred Stock (the "FGH
Preferred Stock") for shares of common stock ("AAi Common Stock") of
Accessories Associates, Inc. ("AAi"), Bolle shall deliver to BEC 35.71% (such
portion of the shares of AAi Common Stock is hereinafter referred to as the
"AAi Shares") of all of such exchanged shares of AAi Common Stock received by
Bolle, together with any rights attaching thereto. However, the Contribution
Agreement provides that in the event that Bolle does not obtain the AAi
Shares, Bolle hereby agrees to pay to BEC the first $2.5 million received by
Bolle from proceeds (the "Proceeds") relating to (i) the sale by Bolle of the
FGH Preferred Stock or (ii) the redemption by Foster Grant Holdings, Inc. of
the FGH Preferred Stock. In the event that BEC does not receive either the
AAi Shares or $2.5 million from Bolle, as described above, on or before the
date that is five years after the effective date of BEC's merger with ILC,
Bolle shall promptly pay to BEC, an amount equal to $2.5 million less any
amount previously paid to BEC by Bolle from the Proceeds.

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Indemnification Agreement. As a condition to the Merger, BEC intends to
enter into an Indemnification Agreement (the "Indemnification Agreement")
with Bolle, effective as of the Spinoff, pursuant to which, among other
things, Bolle and BEC (either party, the "Indemnifying Party") each will
agree, under certain circumstances, to indemnify the other party for
liabilities relating to the Indemnifying Party's business. To date, none of
the indemnifiable items involve any material present claims or known
liabilities. Pursuant to the terms of the Indemnification Agreement, Bolle
will agree to indemnify BEC for, among other things, losses that are suffered
by BEC relating to: (i) the business of BEC (excluding the ORC Business)
prior to the Spinoff; (ii) the business of Bolle after the Spinoff; (iii)
enforcing BEC's rights under the Indemnification Agreement; (iv) any
environmental laws in connection with the business operations of BEC or its
subsidiaries (including any environmental laws in connection with the ORC
Business) or predecessors (including Benson Eyecare Corporation) prior to the
date of the Spinoff and the current past or future business operations of
Bolle and its subsidiaries or any of the past business operations of its
predecessor or their predecessors; (v) any claims by Monsanto Corporation for
indemnification in connection with the Asset Purchase Agreement among Benson
Eyecare Corporation, BEC, ORC and Monsanto Corporation dated February 11,
1996; (vi) certain matters identified in the Contribution Agreement; and
(vii) any untrue statement or omission of a material fact in the Form S-1
registration statement filed by Bolle in connection with the Spinoff. BEC
will agree to indemnify Bolle for all losses that are suffered by Bolle
related to; (i) BEC's business after the Spinoff; (ii) the ORC Business
before the Spinoff (other than environmental liabilities); or (iii) enforcing
Bolle's rights under the Indemnification Agreement. In addition, the
Indemnification Agreement will set forth each party's rights and obligations
with respect to payments and refunds relating to certain taxes and related
matters such as the filing of tax returns and the conduct of audits or other
proceedings involving claims made by taxing authorities. In general, Bolle
will agree to indemnify BEC for taxes relating to the business of BEC
(excluding the ORC Business) and for taxes attributable to the Spinoff and
certain other transactions, and BEC will agree to indemnify Bolle for taxes
relating to the ORC Business. The Indemnification Agreement will be in effect
until June 30, 2000, except in respect of environmental losses and tax
losses, for which the indemnification period will be seven years, and the
expiration of any applicable statutes of limitation, respectively. For the
term of the Indemnification Agreement, unless Bolle meets a certain net worth
test, Bolle is prohibited from making certain payments, including but not
limited to, dividends on its common stock, loans and acquisitions.

Consummation of the Spinoff. At a meeting of the BEC Board held on October
30, 1997, the BEC Board approved the Spinoff. The Spinoff is expected to be
effective on the Spinoff Record Date, which is anticipated to be on the date
of the BEC Special Meeting, but prior to the Effective Time. The Spinoff is
not conditioned upon the closing of the Merger. See "The Merger
Agreement--Conditions to the Merger." In the Spinoff, BEC Group will
distribute pro rata to its stockholders all of BEC Group's equity interest in
Bolle. As a result of the Spinoff, each holder of shares of BEC's Common
Stock will receive a distribution of one share of Bolle Common Stock for
every three shares of BEC Common Stock owned of record by such holder on the
Spinoff Record Date (without taking into effect the Reverse Split). Inasmuch
as the Spinoff will occur prior to the Merger, the ILC shareholders will not
participate in the distribution of Bolle.

BEC Preferred Stock and Warrants to Purchase BEC Common Stock. In
connection with the Spinoff, BEC intends to cancel, with the consent of the
holders thereof, all outstanding shares of its Series A Preferred Stock in
exchange for which BEC will cause Bolle to issue Bolle Series B Preferred
Stock in replacement thereof in proportion to the number of, and on terms and
conditions substantially the same as, shares of BEC Series A Preferred Stock
held by each holder prior to cancellation.

In connection with the Spinoff, BEC intends to cancel, with the consents
of the holders thereof, all outstanding warrants to purchase 2,130,000 shares
of BEC Common Stock and BEC will cause Bolle to issue warrants to purchase
Common Stock of Bolle as replacement thereof in proportion to the number of,
and on terms and conditions substantially the same as, warrants to purchase
BEC Common Stock held by each holder thereof prior to the cancellation.

Treatment of Stock Options. In connection with the Spinoff, it is
anticipated that the administrative committee of the BEC Option Plan will,
pursuant to the provisions of the BEC Option Plan, make

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adjustments to BEC options, (the "BEC Options") as follows: BEC Options
outstanding with respect to employees who will be employed by Bolle after the
Spinoff will be canceled in exchange for options to purchase Bolle Common
Stock on similar terms and conditions and with an equivalent economic value
to the cancelled BEC Options. BEC Options outstanding with respect to
employees who will continue to be employed by BEC after the Spinoff shall be
adjusted equitably to reflect the economic value of the Spinoff and the
effect of the Reverse Split.

Management Services Agreement. BEC intends to enter into a Management
Services Agreement with Bolle (the "Management Services Agreement"), having a
three year term, pursuant to the terms of which BEC will be engaged to
provide Bolle with managerial and other advisory services relating to Bolle
and its subsidiaries. See "Information Concerning BEC--Certain Relationships
and Related Transactions."

Amendment to Credit Facility. In connection with the Merger and the
Spinoff, BEC has entered into continuing discussions with its Lenders to
provide new credit facilities at or prior to the Effective Time. Such credit
facilities will amend BEC's current Credit Agreement. See "Information
Concerning BEC--Business of BEC--The Credit Facility."

Acquisition of Bolle France. Bolle and its subsidiaries design,
manufacture and market premium sunglasses, and sport shields, goggles, and
safety and tactical eyewear under the Bolle(Registered Trademark) brandname.
Bolle(Registered Trademark) products enjoy worldwide recognition and a high
quality image in the sport and active lifestyle markets, particularly skiing,
golf and cycling as well as a growing reputation in the larger,
fashion-driven recreational sun glass market. Bolle's safety and tactical
business, which accounts for approximately half of the Bolle's aggregate unit
sales, serves the specialty segment of the safety eyewear market, including
laser protection products and military applications. On July 10, 1997, BEC
expanded its premium sunglass, sport shields, goggle and safety and tactical
eyewear business by acquiring all of the issued and outstanding share capital
of Holding B.F., a corporation governed by the laws of France ("Bolle
France"), pursuant to terms of the Amended and Restated Share Purchase
Agreement (the "Share Purchase Agreement"), dated July 9, 1997, by and among
Bolle, on one hand, and Mr. Robert Bolle, Mr. Maurice Bolle, Mr. Franck
Bolle, Mrs. Patricia Bolle Pasaquay, Ms. Brigitte Bolle and Ms. Christelle
Roche (collectively, the "Sellers") on the other hand. Pursuant to the terms
of the Share Purchase Agreement, Bolle acquired from the Sellers all of the
issued and outstanding share capital of Bolle France, in exchange for
approximately $53 million, consisting of the following: (a) $30.4 million
(using the July 10, 1997 exchange rate of 5.9197 French Francs to the dollar)
in cash; (b) Warrants to the Sellers to purchase an aggregate of up to
2,130,000 shares of Common Stock of BEC at an exercise price of $3.10 per
share, subject to adjustment (the "BEC Warrants"); (c) 10,000 shares of
Series A Preferred Stock of BEC (the "Series A Preferred Stock") having a
value of approximately $9.3 million; (d) 100 shares of common stock of Bolle
valued at $1.8 million, being the equivalent of 5% of the issued and
outstanding shares of common stock of Bolle; and (e) 64,120 shares of Series
A Preferred Stock of Bolle having a value of approximately $11.1 million.

Bolle France is a manufacturer, marketer and distributor of premium
sunglasses, sport shields, safety glasses, goggles and safety and tactical
eyewear products. Bolle France and its subsidiaries represent a material
component of Bolle and will remain with Bolle subsequent to the Spinoff.

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PROPOSAL NUMBER ONE FOR BEC STOCKHOLDERS AND THE ONLY
PROPOSAL FOR ILC SHAREHOLDERS--APPROVAL OF THE MERGER.

THE MERGER

JOINT REASONS FOR THE MERGER

The Boards of Directors of BEC and ILC have determined that the Combined
Company would have the potential to realize both improved long-term operating
and financial results and a stronger competitive position than either ILC or
BEC (comprised only of the ORC Business) standing alone. Each of the BEC
Board and the ILC Board has identified additional potential mutual benefits
of the Merger for the Combined Company. These potential benefits include
principally the following:

(i) the strategic fit between ILC and BEC (comprised only of the ORC
Business) and the significant potential revenue enhancement and
cost saving opportunities that will be available to the Combined
Company through broader marketing opportunities, enhanced
technological and product development capabilities, lower
administrative and purchasing costs, and the opportunity for
greater operating efficiencies;

(ii) the benefits to the Combined Company which will result from its
larger revenue, customer and stockholder base;

(iii) the compatibility and strength of the combined management teams
of ILC and BEC;

(iv) the fact that the Combined Company's larger field sales and
service organization and greater financial strength have the
potential for greater opportunities in marketing the products of
the Combined Company;

(v) the combined technological resources which will allow the
Combined Company to compete more effectively against competitors
by providing enhanced ability to develop new products and greater
functionality for existing products;

(vi) the combined experience, financial resources, size and breadth of
product offerings of the Combined Company which will allow the
Combined Company to respond more quickly and effectively to
technological change, increased competition and market demands in
an industry experiencing rapid innovation and evolution; and

(vii) that certain operating and manufacturing systems utilized within
BEC will aid the operations of ILC following completion of the
transaction and that certain operating and manufacturing systems
utilized within ILC will aid the operations of BEC following
completion of the transaction.

THE FOLLOWING INFORMATION REGARDING REASONS FOR THE MERGER CONTAINS
FORWARD LOOKING INFORMATION. THE FORWARD-LOOKING STATEMENTS REFLECT THE BEST
JUDGMENT OF THE MANAGEMENT OF BEC OR ILC, AS APPROPRIATE, BASED ON FACTORS
CURRENTLY KNOWN. THESE STATEMENTS ARE NOT GUARANTEES OF FUTURE PERFORMANCE
AND ARE SUBJECT TO CERTAIN RISKS, UNCERTAINTIES AND ASSUMPTIONS THAT ARE
DIFFICULT TO PREDICT. ACTUAL RESULTS AND OUTCOMES MAY DIFFER MATERIALLY FROM
THE RESULTS AND OUTCOMES DISCUSSED IN THE FORWARD-LOOKING STATEMENTS.

Until the merger is complete it is impossible to definitively quantify the
projected cost savings and synergies. However, based on BEC's past experience
of acquisitions and current information on the businesses the following
estimated cost savings/synergies were considered by the BEC Board in reaching
its decision to approve the Merger: (i) regulatory compliance costs (e.g.
printing, professional, insurance costs)--$500,000 per annum; (ii) operating
costs reductions (e.g. the implementation of BEC's systems to improve yields
and work flow, non-duplication of R&D expenditure, leveraging distribution
networks and taking into effect volume discounts)--$1 million per annum;
(iii) reorganization savings (e.g. moving manufacturing of like items to the
most efficient manufacturing location, reducing duplicate head

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count)--$1 million per annum; and (iv) the synergy implicit in ILC
historically having a stronger R&D department and ORC historically having a
stronger manufacturing margins.

BEC and ILC have each identified additional reasons for the Merger.
Nevertheless, each Board of Directors has recognized that the potential
benefits of the Merger may not be realized. See "Risk Factors--Risk Factors
Relating to the Merger and to Both BEC and ILC--Joint Operations; Adverse
Effect on Financial Results."

BEC'S REASONS FOR THE MERGER

The evolution of BEC to its present composition was accomplished through a
series of acquisitions and divestitures which were consummated during the
period from October 1992 to present. In October 1992, Benson Eyecare
Corporation ("Benson") purchased two chains of optical stores. In order to
offer a broader range of eyecare products, in June 1993, Benson entered the
non-prescription eyewear distribution business with its purchase of what
became the Foster Grant Group ("FGG"), a distributor of value-priced
sunglasses and reading glasses. Broadening its product distribution and
seeking to achieve synergies between prescription eyewear and
non-prescription eyewear distribution channels in the fall of 1994, Benson
purchased Optical Radiation Corporation ("ORC") which included the two
businesses which made up the prescription eyewear business and the lighting
technologies business. At this time, Benson shifted its strategic focus to
its more profitable wholesale distribution and manufacturing of eyewear
rather than retail distribution, which stores competed with its wholesale
customers, resulting in the sale of the two chains of optical stores. In
November 1995, Benson entered the premium sunglass market with its purchase
of Bolle America, Inc. In May 1996 Benson received an offer to be purchased
which it deemed in the best interest of its shareholders to accept.
Subsequently, the shareholders agreed to the resulting Essilor Merger and
Spinoff of BEC which, together with the Asset Sale, constituted the sale of
the entire prescription eyewear business. Benson recorded a substantial gain
on the sale of this business which was distributed to the stockholders via a
dividend. At the same time, the stockholders received the distribution of BEC
common stock. During 1996, BEC was unable to return FGG to an acceptable
level of profitability and therefore decided to divest of FGG (the value
priced portion of its non-prescription eyewear business) and focus on the
premium segment of the sunglass market through its Bolle business. These
decisions resulted in the sale of FGG in December 1996 and in July 1997, the
purchase of Bolle France. BEC then consisted of two businesses, Bolle and the
ORC technologies business. Since that time, it has been management's
objective to split the businesses into two "pure play" publicly traded
companies, each having a primary focus, one being a sunglass business and the
other being a lighting technologies business. As pure play stand alone
companies, it is anticipated that the companies will be able to better focus
on their core competencies thereby achieving market valuations appropriate to
their respective industries. The Spinoff, in conjunction with the Merger
accomplishes that objective.

The BEC Board has determined that the terms of the Merger Agreement and
the transactions contemplated thereby are fair to and in the best interests
of BEC and its stockholders. Accordingly, the BEC Board has unanimously
approved the Merger Agreement and the transactions contemplated thereby and
recommends that the stockholders of BEC vote FOR approval and adoption of the
Merger Proposal. In reaching its determination, the BEC Board consulted with
BEC management as well as its legal counsel and financial advisors, and
considered, in addition to the joint reasons for the Merger described above,
the following material factors:

(i) the presentation and views expressed by the management of BEC
regarding the results of operations, financial condition and
prospects of each of BEC, ILC and the Combined Company;

(ii) the terms and conditions of the Merger Agreement and related
documents;

(iii) the continuing presence of the four directors, initially chosen
by BEC, on the nine person board of directors of the Combined
Company;

(iv) the RJ Opinion, to the effect that, as of the date of such
opinion and subject to certain matters set forth therein, the
terms of the transaction set forth in the Merger Agreement are
fair to the BEC stockholders from a financial point of view;

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(v) the results of the due diligence procedures with respect to ILC
conducted by BEC's management and legal, financial and accounting
advisors;

(vi) the anticipated benefits of greater market acceptance of the BEC
Common Stock after the Merger reflecting the Combined Company as
having a single focus in speciality lighting, electronic and
electroformed products; and

(vii) BEC's decision to approve the Spinoff prior to the Merger.

In addition to the factors set forth under the caption "Risk Factors" the
BEC Board also gave particular consideration to the following potential
negative factors: (i) the risk that the potential benefits sought in the
Merger might not be fully realized; (ii) the possibility that the Merger
might not be consummated; (iii) the effect of public announcement of the
Merger on BEC's sales and operating results; (iv) the potential dilutive
effect of the issuance of BEC Common Stock in the Merger; and (v) the
difficulty of managing separate operations at different geographic locations.

In view of the wide variety of factors considered by the BEC Board, it did
not find it practicable to quantify, or otherwise attempt to assign relative
weights to, the specific factors considered in making its determination.
Consequently, the BEC Board did not quantify the assumptions and results of
its analyses in making its determination that the Merger is fair to, and in
the best interests of, BEC and its stockholders.

THE BEC BOARD UNANIMOUSLY RECOMMENDS THAT
BEC STOCKHOLDERS VOTE "FOR" THE MERGER AND RELATED PROPOSALS.

ILC'S REASONS FOR THE MERGER

The ILC Board has determined that the terms of the Merger Agreement and
the transactions contemplated thereby are fair to and in the best interests
of ILC and its shareholders. Accordingly, the ILC Board has unanimously
approved the Merger Agreement and recommends that the shareholders of ILC
vote FOR approval and adoption of the Merger Agreement. In reaching its
determination, the ILC Board consulted with ILC management as well as its
legal counsel and financial advisors, and considered, in addition to the
joint reasons for the Merger described above, the following material factors:

(i) the presentation and views expressed by the management of ILC
regarding the results of operations, financial condition and
prospects of each of ILC, BEC and the Combined Company;

(ii) the terms and conditions of the Merger Agreement and related
documents;

(iii) the continuing presence of four directors initially designated
by ILC on the nine person board of directors of the Combined
Company;

(iv) the strong financial performance achieved by the ORC business;

(v) the DLJ Opinion, to the effect that, as of the date of such
opinion and subject to certain matters set forth therein, the
Exchange Ratio was fair to the ILC shareholders from a financial
point of view;

(vi) the Merger is expected to be treated as a tax-free
reorganization under the Code;

(vii) the results of the due diligence procedures with respect to BEC
conducted by ILC's management and legal, and financial advisors;

(viii) greater acceptance by the financial markets of the common stock
of the Combined Company due to the greater number of shares
outstanding and resulting increased liquidity; and

(ix) the condition that the Spinoff would be consummated prior to the
Merger and that the ILC shareholders will not participate in the
Spinoff.

In addition to the factors set forth under the caption "Risk Factors", the
ILC Board also gave particular consideration to the following potential
negative factors: (i) the risk that BEC and ILC would

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not be able to successfully integrate their respective businesses and might
not realize the potential benefits sought in the Merger; (ii) the additional
leverage from the Combined Company as compared to ILC prior to the Merger and
(iii) the fact that the Merger Agreement provides for a fixed Exchange Ratio,
thereby subjecting the ILC shareholders to the risk of volatility in the
markets for the both ILC's and BEC's securities.

In view of the wide variety of factors considered in connection with its
evaluation of the proposed merger, the ILC Board did not find it practicable
to quantify, or otherwise attempt to assign relative weights to, the specific
factors considered in reaching its determination. Consequently, the ILC Board
did not quantify the assumptions and results of its analyses in making its
determination that the Merger is fair to, and in the best interests of, ILC
and its shareholders.

THE ILC BOARD UNANIMOUSLY RECOMMENDS THAT
ILC SHAREHOLDERS VOTE "FOR" THE MERGER.

MATERIAL CONTACTS AND BOARD DELIBERATIONS

BEC and ILC regularly review their respective businesses and market
positions in a continued effort to improve their respective technological
capabilities and competitive positions. In April 1996, BEC initiated
discussions with ILC regarding a potential merger. At that time, the
companies executed a mutual confidentiality agreement and conducted limited
due diligence. On May 7, 1996, the ILC Board held a special meeting to
discuss the views held by ILC management in respect to of a potential
combination with BEC. On May 16, 1996, BEC submitted a formal proposal to
merge BEC and ILC in a transaction to be accounted for as a pooling of
interests (the "May Proposal").

On May 22, 1996, the ILC Board met to consider BEC's proposal. The ILC
Board determined that the terms of the transaction proposed by BEC were not
in the best interests of ILC and its shareholders at that time. On June 3,
1996, ILC informed BEC that the ILC Board had decided not to pursue further
discussions regarding the May Proposal.

Subsequent to June 1996, BEC and ILC maintained informal contact through
unplanned meetings at trade shows and BEC continued to monitor the business
developments of ILC through available public sources. BEC continued to
believe that a merger of both businesses would result in strategic benefits
and would enhance stockholder value for both BEC and ILC stockholders.

Also, in December 1996, in order to focus on its core specialty lighting
and premium sunglasses businesses, BEC consummated the sale of its Foster
Grant value-priced sunglasses business to Accessories Associates, Inc. In
March 1997, RJ approached BEC seeking appointment as BEC's financial advisor
with respect to ORC and to suggest that it be authorized to approach ILC on
BEC's behalf in an effort to renew merger discussions. In April 1997, BEC
engaged RJ as its financial advisor.

In January 1997, ILC received inquiries from several parties regarding a
potential business combination with ILC and subsequently engaged DLJ to
assist it in the evaluation of these inquiries and ILC's other strategic
alternatives. ILC management, with the assistance of DLJ, engaged in further
discussions and management meetings with certain of these parties but
determined that such inquiries would not result in a transaction that was in
the best interests of the shareholders of ILC. Although ILC management and
DLJ engaged in such further discussions and management meetings, no such
inquiries led to sufficiently adequate proposals as to be presented to the
ILC Board for formal consideration. The ILC Board was, however, kept
appraised of such inquiries, discussions and meetings.

In February 1997, ILC and BEC held an informal meeting regarding resuming
negotiations for a business combination. In May 1997, ILC announced the
commencement of its previously approved share repurchase program.
Simultaneously, ILC announced that it had engaged DLJ as its financial
advisor to assist in the ongoing evaluation of strategic alternatives to
enhance shareholder value. In June 1997 an informal discussion took place
between senior management of BEC and DLJ and in August 1997 a further
informal discussion took place between senior management of ILC and RJ. No
specific proposals were made at these informal meetings.

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On September 22, 1997, RJ arranged a formal meeting between BEC and ILC at
ILC's offices in order to initiate formal merger discussions. At this
meeting, BEC reiterated its belief that a business combination between the
companies would result in strategic benefits and would enhance shareholder
value for both BEC and ILC stockholders. On September 22, 1997, a proposal
(the "September Proposal") was made that reflected a combination of BEC
(excluding Bolle) with ILC. The May Proposal reflected a combination of BEC
(including Bolle) and ILC. Accordingly, the two proposals are not comparable.
In addition, the May Proposal was to be accounted for as a pooling of
interests, but the current Merger Agreement will treat the Merger as a
purchase. The September Proposal set forth the calculation of the Exchange
Ratio as was subsequently agreed on October 30, 1997, which calculation was
not adjusted during the course of the subsequent discussions.

On October 7, 1997, representatives of DLJ visited BEC's manufacturing
facilities in Asuza, California in order to commence due diligence. On
October 8 and 9, 1997, senior management of ILC and BEC and representatives
of DLJ met in New York to continue due diligence and to discuss the potential
merger and the general terms of the proposed transaction.

On October 14, 1997, representatives of DLJ met with senior management of
BEC at BEC's offices to continue due diligence and to further refine the
terms and conditions of the proposed merger. Senior management of ILC also
participated at such meeting by telephone conference. Following such meeting,
BEC directed its legal counsel to commence preparation of a draft merger
agreement.

On October 17, 1997, the ILC Board met with representatives of DLJ and
ILC's legal counsel via telephone conference in order to discuss the
preliminary terms of a proposed transaction. At such meeting the ILC Board
authorized ILC management to continue to negotiate the terms of the proposed
transaction and to prepare the appropriate documentation.

During the weeks of October 20 and 27, 1997, BEC, ILC and their respective
financial and legal advisors engaged in further due diligence and continued
to meet to negotiate the terms of the proposed transaction.

On October 27, 1997 the ILC Board met in New York with representatives of
DLJ and legal counsel to review the results of management's due diligence,
ILC's business prospects and the status of the negotiations with BEC and to
receive a presentation from DLJ regarding the financial implications of the
proposed transaction. At such meeting the ILC Board authorized ILC management
to continue to negotiate the terms of the proposed transaction.

On October 27, 1997 the BEC Board met with representatives of RJ and BEC's
legal counsel, at which time the BEC Board approved and ratified the
discussions held to date regarding the proposed merger and authorized BEC
senior management to continue to pursue further negotiations and discussions
regarding the proposed merger.

In their meetings on October 27, the BEC Board and the ILC Board discussed
the proposed merger consideration. Each board considered it in the best
interest of their respective shareholders to merge the companies on terms
which gave all shareholders continuing equity participation in the Combined
Company and in the respective amounts reflected in the Merger Agreement. See
"Opinion of BEC's Financial Advisor" and "Opinion of ILC's Financial
Advisor."

On October 30, 1997, two of the outside directors of the ILC Board met in
New York with the Chairman of the Board of Directors of BEC to discuss the
business operations of BEC and the Combined Company and the terms of the
proposed merger.

On October 30, 1997, the ILC Board met via telephone conference with
representatives of DLJ and ILC's legal counsel to consider the approval of
the Merger, the Merger Agreement and the related transactions. At this
meeting, the ILC Board reviewed the proposed terms of the transaction and DLJ
reviewed with the ILC Board certain financial analyses performed by DLJ in
connection with its determination as to the fairness of the Exchange Ratio,
from a financial point of view, to the holders of ILC Common Stock, from a
financial point of view. DLJ delivered to the ILC Board its oral opinion
(subsequently confirmed in writing in the DLJ Opinion) to the effect that as
of such date, the Exchange

49
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Ratio was fair to the holders of ILC Common Stock from a financial point of
view. See "Opinion of ILC's Financial Advisor." In addition, legal counsel to
ILC reviewed with the ILC Board the terms and conditions of the Merger
Agreement and the transactions contemplated thereby. Based on the ILC Board's
experience, its review of the proposed Merger, the recommendation of ILC
management and the DLJ Opinion, the ILC Board determined that the Merger was
in the best interests of ILC shareholders and unanimously approved the Merger
Agreement and all related transactions. In reaching its decision to approve
the Merger, the ILC Board considered that the Bolle Spinoff would be
consummated prior to the Merger and that the ILC shareholders would not
participate in the Spinoff or receive any equity interest of Bolle in
exchange for their shares of ILC Common Stock. In reaching this
determination, the ILC Board was aware of the fact that certain members of
ILC's management and the ILC Board may be deemed to have an interest in the
Merger in addition to their interests as ILC shareholders generally, which
may cause potential conflicts of interest. Because all ILC shareholders were
to receive the same consideration in the Merger, however, and because the
proposed compensation arrangements for Messrs. Baumgartner and Capra were
approved by the ILC directors other than Messrs. Baumgartner and Capra, the
ILC Board did not consider itself subject to conflicts of interest that
impeded its ability to consider the proposed Merger in a proper manner.

On October 30, 1997, the BEC Board met via telephone conference with RJ to
consider the Merger, the Merger Agreement and all related transactions. At
this meeting RJ delivered its preliminary opinion that the transactions set
forth in the Merger Agreement are fair from a financial point of view, to BEC
and its stockholders. For a description of the opinion of RJ and the
accompanying presentation, see "Opinion of BEC Financial Advisors." Based on
the experience of BEC's Board, its analysis of the proposed merger and the
fairness opinion received from RJ, the BEC Board unanimously approved the
Merger, the Merger Agreement and all related transactions as in the best
interest of BEC stockholders, and recommended stockholder approval. In
reaching its decision to approve the Merger, the BEC Board assumed that the
Spinoff of Bolle would be consummated prior to the Merger. In reaching its
decision the BEC Board determined that no directors or management of BEC had
any interest in the Merger in addition to their interests as BEC
stockholders. In addition, at this meeting the BEC Board approved the Spinoff
and reviewed in detail the reasons therefor and the mechanics for effecting
such Spinoff. The BEC Board plan to pursue the creation of two "pure play"
stand alone companies was discussed as early as July 1997, although the
mechanism for achieving this end was not finalized until this meeting when
the Merger Agreement was approved.

On October 30, 1997, the Merger Agreement was executed. In addition, the
Voting Agreements were signed on such date. On October 31, 1997, BEC and ILC
issued press releases announcing the terms of the Merger Agreement.

OPINION OF BEC'S FINANCIAL ADVISOR

On April 15, 1997, BEC engaged RJ to provide investment banking advice and
services to BEC and to render an opinion to the Board of Directors of BEC as
to the fairness from a financial point of view to BEC and its stockholders of
the consideration to be paid by BEC in the Merger.

On October 30, 1997 RJ delivered to the Board of Directors of BEC its
written opinion that as of the date of such opinion and based on and subject
to the assumptions and limitations set forth in the opinion as described
below, the terms of the transaction set forth in the Merger Agreement are
fair from a financial point of view, to BEC and its stockholders. A copy of
the opinion letter dated October 30, 1997 from RJ (the "RJ Opinion") is
attached as Annex D to this Joint Proxy Statement/Prospectus. Stockholders of
BEC are urged to read the RJ Opinion in its entirety.

The RJ Opinion was prepared for the BEC board and addressed only the
fairness to BEC and its stockholders from a financial point of view of the
consideration to be paid by BEC and does not constitute recommendations to
any stockholder or BEC as to how such stockholder should vote at the BEC
Special Meeting. The RJ Opinion does not constitute an opinion as to the
price at which BEC or ILC Common Stock will actually trade at any time. The
type and amount of consideration were determined in arm's length negotiations
between BEC and ILC. No restrictions or limitations were imposed upon RJ with
respect to the investigations made or procedures followed by RJ in rendering
its opinion.

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In performing its financial analysis of the Merger, RJ assumed that the
Spinoff had been consummated, and accordingly, the value of Bolle is not
reflected in any of RJ's financial analysis regarding BEC, including its
Relative Contribution Analysis, Earnings Per Share Impact Analysis, Common
Stock Performance Analysis, Comparable Company Analysis, Comparable
Transaction Analysis and Discounted Cash Flow Analysis.

In arriving at the RJ Opinion, RJ reviewed the Merger Agreement, including
the exhibits thereto, the Contribution Agreement between BEC and Bolle, as
well as financial and other information that was publicly available or
furnished to it by BEC and ILC, including information provided during
discussions with their respective managements. The RJ Opinion assumes Bolle
will be spun-off to BEC stockholders prior to the Merger and that it has an
equity market value as estimated by BEC management. Included in the
information provided during discussions with respective managements were
certain financial projections for BEC (excluding Bolle) prepared by the
management of BEC and certain financial projections for ILC prepared by the
management of BEC. In addition, RJ compared certain financial and securities
data of ILC with that of Advanced Lighting Technologies, Amphenol Corp.,
Chicago Miniature Lamp, Holophane Corp., Hubbell Inc., Littlefuse Inc.,
Methode Electronics, Molex Inc. and Oak Industries Inc. (the "Comparable
Companies"), companies whose securities are traded in public markets,
reviewed the historical stock prices and trading volumes of ILC Common Stock,
reviewed prices and premiums paid in certain other business combinations and
conducted such other financial studies, analyses and investigations as RJ
deemed appropriate for purposes of rendering its opinion (the "RJ Comparable
Companies").

In rendering the RJ Opinion, RJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to it from public sources or that was provided to or discussed with it by BEC
and ILC or their respective representatives. RJ relied upon the estimates of
the management of BEC of the revenue and cost synergies (the "Synergies")
achievable as a result of the Merger. RJ also assumed that the financial
projections regarding BEC and ILC supplied by BEC to RJ were reasonably
prepared on a basis reflecting the best currently available estimates and
judgments of the management of BEC and ILC as to the future operating and
financial performance of BEC.

The RJ Opinion is necessarily based on economic, market, financial and
other conditions as they exist on, and on information made available to RJ as
of the date thereof. RJ does not have any obligation to update, revise or
reaffirm the RJ Opinion. RJ was not asked to, and did not provide any opinion
on the underlying business decision to conduct the Spinoff, including the
availability of alternatives to the Spinoff.

The following is a summary of the analyses presented by RJ to the BEC
Board at its October 30, 1997 meeting. All analysis discussed below, unless
otherwise indicated; (i) assumes that the Spinoff had been consummated and
that the value of BEC does not include Bolle; (ii) assumes that all
Convertible Notes are converted, resulting in an Exchange ratio of 4.36:1
(prior to the reverse stock split proposed by BEC to its stockholders); and
(iii) includes the estimated Synergies at an annualized pre-tax cost savings
of $2.5 million beginning June 30, 1998.

Relative contribution analysis. RJ analyzed the relative contributions of
BEC and ILC to the revenues, earnings before interest, taxes, depreciation
and amortization ("EBITDA"), earnings before interest and taxes ("EBIT") and
net income of the pro forma combined entity for the projected calendar years
1997, 1998 and 1999 excluding Synergies and transaction adjustments and
assuming ordinary tax rates for each company. Based on the projected
financial information for the calendar year 1997, BEC's revenues, EBITDA,
EBIT and net income would represent 50.9%, 58.0%, 60.2% and 50.3%,
respectively, of the pro forma combined entity. Based on the projected
financial information for the calendar year 1998, BEC's revenues, EBITDA,
EBIT and net income would represent 59.0%, 59.1%, 58.9% and 48.4%,
respectively, of the pro forma combined entity. Based on the projected
financial information for the calendar year 1999, BEC's revenues, EBITDA,
EBIT and net income would represent 57.4%, 58.9%, 60.0% and 52.7%,
respectively, of the pro forma combined entity. The shares of BEC Common
Stock to be issued to the holders of ILC Common Stock on a fully diluted
basis would represent approximately 50.0% of the outstanding shares of BEC
Common Stock after giving effect to the Merger at an exchange ratio of 4.36:1
(prior to giving effect to the proposed one for two reverse stock split of
BEC).

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Earnings Per Share ("EPS") Impact Analysis. RJ also analyzed the pro forma
effects on the projected EPS of BEC resulting from the Merger, including the
Synergies projected by the management of BEC for each of the years ending
December 31, 1997, 1998 and 1999 assuming the Exchange Ratio of 4.36:1 (prior
to giving effect to the proposed one for two reverse stock split of BEC). The
analysis for the fiscal year ending December 31, 1997 was pro forma assuming
the Merger occurred on January 1, 1997. This analysis was based on a number
of assumptions, including among other things, the projected financial
performance of BEC and ILC. The analysis indicated that the Merger, accounted
for as a purchase transaction, including the benefit of the Synergies, is
anticipated to be accretive to BEC's stand-alone EPS estimates by 11.8%,
9.0%, 2.3% for the years ending December 31, 1997, 1998 and 1999.

Common Stock Performance Analysis. RJ's analysis of the performance of ILC
Common Stock consisted of an historical analysis of closing prices and
trading volumes for periods from November 29, 1991 through October 24, 1997.
RJ's analysis of the performance of ILC Common Stock was performed in order
to ascertain that the transaction value was within a historical range of ILC
Common Stock. RJ did not compare the historical prices of ILC Common Stock
with the historical prices of BEC Common Stock. During the above period, ILC
Common Stock reached a high of $20.00 per share and a low of $7.56 per share.
On October 30, 1997, the closing price of ILC Common Stock was $11.75 per
share.

Comparable Company Analysis. RJ analyzed the operating performance of ILC
relative to the RJ Comparable Companies. Historical financial information
used in connection with the ratios provided below with respect to ILC and the
Comparable Companies is as of the most recent financial statements publicly
available for each company.

RJ performed a valuation analysis of ILC by applying certain market
trading statistics for the comparable companies to ILC's historical and
estimated financial results. RJ estimated certain publicly available
financial data of the RJ Comparable Companies, including (i) enterprise value
(defined as market value of common equity plus book value of total debt and
preferred stock less cash) as a multiple of latest 12 months ("LTM")
revenues, gross profit, EBITDA and EBIT; (ii) price to earnings ratios based
on (a) LTM EPS; (b) estimated current fiscal year EPS; and estimated next
fiscal year EPS. RJ noted that as of October 23, 1997, the Comparable
Companies were trading at implied multiples of enterprise value and earnings,
as the case may be in (i) a range of 1.3X to 4.7X (with an average of 2.9X
LTM revenues; (ii) a range of 3.4X to 14.2X (with an average of 8.0X) LTM
gross profit; (iii) a range of 7.5X to 13.5X (with an average of 11.2X LTM
EBITDA; (iv) a range of 9.1X to 20.9X (with an average of 15.1X LTM EBIT; (v)
a range of 15.2X to 43.4X (with an average of 28.4X LTM EPS; (vi) a range of
15.2X to 31.1X (with an average of 25.2X) estimated current fiscal year EPS;
and (vii) a range of 13.5X to 24.6X (with an average of 20.0X estimated next
fiscal year EPS. Based on the valuation multiples of the Comparable Companies
discussed above, RJ derived a summary valuation range for ILC Common Stock of
$12.66 to $28.80 per share.

No company utilized in the comparable company analysis is identical to
ILC. Accordingly, an analysis of the results of the foregoing necessarily
involved complex considerations and judgments concerning differences in
financial and operating characteristics of the RJ Comparable Companies and
ILC and other factors that could affect the public trading value of the RJ
Comparable Companies. Mathematical analysis such as determining the average
is not in itself a meaningful method of using comparable company date.

Comparable Transaction Analysis. RJ also performed an analysis of the
following selected merger and acquisition transactions: LPL Technologies,
Inc./LPL Acquisition Corp.; Whitehall Corp./Cambridge Capital Fund LP;
Torotel, Inc./Electric & Gas Technology, Inc.; Alpha Industries,
Inc./M/A-COM, Inc.; Hipotronics, Inc./Hubbell, Inc.; Belden, Inc./Investors;
Sunward Technologies, Inc./Read-Rite Corp.; International Power Machines
Corp./Exide Electronics Group, Inc.; ElectroCom Automation, Inc./AEG AG
(Daimier-Benz AG); Reliance Electric Co./General Signal Corp.; Reliance
Electric Co./Rockwell International Corp.; Data Switch Corp./General Signal
Corp.; Best Power Technology, Inc./General Signal Corp.; Chipcorn Corp./3Com
Corp.; Advance Circuits, Inc./Johnson Matthey, PLC; Kevlin Corp./Kaydon
Corp.; Kevlin Corp./Chelton Communications Systems; ILC Technology, Inc./BEC
Group, Inc.; Orbit Semiconductor, Inc./DII Group, Inc.; Kemet Corp./Vishay
Intertechnology, Inc.; Interpoint Corp./Crane Co.; Panatech Research &
Development/Harbour Group, Ltd.; Opal, Inc./Applied Materi-

<PAGE>

als, Inc.; ElectroStar, Inc./Tyco International, Ltd.; Zycon Corp./Hicks Muse
Tate & Furst, Inc.; Zycon Corp./Hadco Corp.; Tencor Instruments, Inc./KLA
Instruments Corp.; Amphenol Corp./Kohlberg Kravis Roberts & Co.; Measurex
Corp./Honeywell, Inc; Exide Electronics Group, Inc./Danaher Corp.; Zilog,
Inc./Texas Pacific Group, Inc.; Elexsys International, Inc./Sanmina Corp.;
Chips and Technologies, Inc./Intel Corp.; Magnetic Technologies Corp./SPS
Technologies, Inc.; Boston Technology, Inc./Comverse Technology, Inc.; Zytec
Corp./Computer Products, Inc.; (collectively, the "RJ Comparable
Transactions") in the electronics and electrical equipment industries.
Multiples reviewed in the RJ Comparable Transactions consisted of (i)
aggregate transaction value (defined as the equity value of the offer plus
book value of total debt and preferred stock less cash) to (where available),
LTM sales, LTM EBITDA and LTM EBIT as of the time of the announcement of the
acquisition, and (ii) aggregate purchase price (defined as the equity value
of the offer) to (where available) LTM net income and Book Value as of the
time of the announcement of the acquisition. The RJ Comparable Transactions
were comprised of 36 transactions announced during the period 1990 to 1997.
RJ noted that the implied multiples of aggregate transaction value and
aggregate purchase price, as the case may be, for these transactions were in
(i) a range of 0.5X to 4.0X (with an average of 1.4X) LTM sales; (ii) a range
of 3.6X to 22.5X (with an average of 9.4X) LTM EBITDA; (iii) a range of 4.7X
to 37.5X with an average of 15.0X LTM EBIT; (iv) a range of 6.0X to 48.3X
(with an average of 22.3X) LTM net income; and (v) a range of 0.9X to 9.9X
(with an average of 3.5X) book value. Based on the multiples paid in the RJ
Comparable Transactions discussed above, RJ derived a summary valuation range
for ILC Common Stock of $3.73 to $68.58 per share.

RJ also analyzed the premiums paid by acquirors in these transactions and
found that the premiums compared with the target's closing price one day, one
week, and four weeks prior to the announcement averaged 33.5%, 39.9% and
50.7%, respectively. The premiums for the Merger, by comparison, are 7.7%,
6.6% and 5.5%, respectively. No transaction utilized in the comparable
transaction analysis is identical to the Merger. Accordingly, an analysis of
the results of the foregoing necessarily involves complex considerations and
judgments concerning differences in financial and operating characteristics
of ILC and other factors that could affect the acquisition value of the
companies to which it is being compared. Mathematical analysis such as
determining the average is not in itself a meaningful method of using
comparable transactions data.

Discounted Cash Flow analysis. In addition, RJ performed a discounted cash
flow analysis for the three-year period commencing January 1, 1997 (pro forma
to exclude units sold in 1997) and ending December 31, 1999 based on the
stand-alone unlevered free cash flows of ILC, without giving effect to the
Synergies. Unlevered free cash flows were calculated as the after-tax
operating earnings of ILC, plus depreciation and amortization and other
non-cash items, plus (or minus) net changes in working capital minus
projected capital expenditures. RJ calculated terminal values by applying a
range of estimated EBITDA multiples of 7.0X, 8.0X and 9.0X to the projected
EBITDA of ILC in 1999. The unlevered free cash flows and terminal values were
then discounted to the present using a range of discount rates of 12.5%,
15.0% and 17.5% representing an estimated range of the weighted average cost
of capital of ILC. Based on this analysis, RJ calculated per share equity
values of ILC ranging from $12.12 to $16.97.

The preparation of a fairness opinion is a complex process and is not
necessarily susceptible to partial analysis or summary description. Selecting
portions of the analyses or of the summary of the material financial analyses
set forth above, without considering the analyses as a whole, could create an
incomplete view of the process underlying RJ's Opinion. In arriving at its
fairness opinion, RJ did not attribute any particular weight to any analysis
or factor it considered, but rather made qualitative judgments as to the
significance and relevance of any analysis or factor. The analyses were
prepared solely for the purposes of RJ's providing an opinion to the BEC
Board as to the fairness from a financial point of view of the consideration
to be paid by BEC in the Merger and do not purport to be appraisals. Analyses
based upon forecasts of future results are not necessarily indicative of
actual future results, which may be significantly more or less favorable than
suggested by such analyses. Because such analyses are inherently subject to
uncertainty, being based upon numerous factors or events beyond the control
of the parties or their respective advisors, RJ does not assume
responsibility if future results are materially different from those
forecast.

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As described above, the RJ Opinion to the BEC Board was one of many
factors taken into consideration by the BEC Board in making its determination
to approve the Merger Agreement and the Merger. The foregoing summary does
not purport to be a complete description of the analysis performed by RJ and
is qualified by reference to the written opinion of RJ set forth in Annex D
hereto.

RJ, as part of its investment banking business, is continually engaged in
the valuation of businesses and their securities in connection with mergers
and acquisitions, negotiated underwritings, competitive biddings, secondary
distributions of listed and unlisted securities, private placements, and
valuations for estate, corporate and other purposes.

RJ provides a full range of financial, advisory and brokerage services and
in the course of its normal trading activities may from time to time effect
transactions and hold positions in the securities of BEC or ILC for its own
account and for the account of customers.

Pursuant to a letter agreement dated April 15, 1997 the ("Engagement
Letter"), BEC agreed to pay RJ a fee of $50,000 due upon the delivery of the
RJ Opinion and an additional fee of $600,000 at the closing of the Merger. In
addition, BEC agreed to reimburse RJ for its reasonable out-of-pocket
expenses and agreed to indemnify RJ and certain related persons against
certain liabilities, including liabilities under the federal securities laws,
arising out of BEC's engagement of RJ.

OPINION OF ILC'S FINANCIAL ADVISOR

DLJ has acted as financial advisor to ILC in connection with the Merger
and delivered its oral opinion to the ILC Board dated October 30, 1997, which
was subsequently confirmed in writing on November 4, 1997, to the effect
that, as of the date of such opinion and based upon and subject to the
assumptions, limitations and qualifications set forth therein, the Exchange
Ratio is fair to the holders of ILC Common Stock, from a financial point of
view.

THE FULL TEXT OF THE DLJ OPINION IS SET FORTH AS ANNEX E TO THIS JOINT
PROXY STATEMENT/PROSPECTUS AND SHOULD BE READ CAREFULLY IN ITS ENTIRETY FOR
ASSUMPTIONS MADE, PROCEDURES FOLLOWED, OTHER MATTERS CONSIDERED AND LIMITS OF
THE REVIEW BY DLJ.

The DLJ Opinion was prepared for the ILC Board and addresses only the
fairness of the Exchange Ratio to the holders of ILC Common Stock from a
financial point of view and does not constitute a recommendation to any
shareholder of ILC as to how such shareholder should vote at the ILC Special
Meeting. DLJ's opinion does not constitute an opinion as to the price at
which ILC or BEC Common Stock will actually trade at any time. The type and
amount of consideration was determined in arm's length negotiations between
ILC and BEC. No restrictions or limitations were imposed upon DLJ with
respect to the investigations made or procedures followed by DLJ in rendering
its opinion.

In arriving at the DLJ Opinion, DLJ reviewed the Merger Agreement,
including the exhibits thereto, the Contribution Agreement between BEC and
Bolle, as well as financial and other information that was publicly available
or furnished to it by ILC and BEC, including information provided during
discussions with their respective managements. Included in the information
provided during discussions with the respective managements were certain
financial projections for ILC prepared by the management of ILC and certain
financial projections for BEC prepared by the management of BEC. In addition,
DLJ compared certain financial and securities data of ILC and BEC with that
of various other companies whose securities are traded in public markets,
reviewed the historical stock prices and trading volumes of ILC Common Stock
and BEC Common Stock, reviewed prices and premiums paid in certain other
business combinations and conducted such other financial studies, analyses
and investigations as DLJ deemed appropriate for purposes of rendering its
opinion.

In rendering its opinion, DLJ relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to it from public sources or that was provided to it by ILC and BEC or their
respective representatives. In particular, DLJ relied upon the estimates of
the operating synergies available as a result of the Merger (the "Merger
Synergies") provided by the management of ILC and based upon discussions of
such Merger Synergies with the management of BEC.

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DLJ also assumed that the financial projections regarding ILC and BEC
supplied by their respective managements to DLJ were reasonably prepared on a
basis reflecting the best currently available estimates and judgments of the
managements of ILC and BEC as to the future operating and financial
performance of ILC and BEC, respectively. DLJ assumed no responsibility for
making an independent evaluation of any assets or liabilities.

The DLJ Opinion is necessarily based on economic, market, financial and
other conditions as they existed on, and on information made available to DLJ
as of the date of its opinion. DLJ does not have any obligations to update,
revise or reaffirm the DLJ Opinion.

The following is a summary of the analyses presented by DLJ to the ILC
Board at its October 30, 1997 meeting. All analyses discussed below, unless
otherwise indicated, (i) assume that the Spinoff had been consummated and
accordingly excludes the financial results of Bolle, (ii) reflect the Reverse
Split and the conversion of all Convertible Notes and (iii) exclude the
estimated Merger Synergies.

Relative Contribution Analysis. DLJ analyzed the relative contributions of
ILC and BEC to the revenues, EBITDA, EBIT and net income of the pro forma
combined entity for the projected calendar years 1997 and 1998, for fiscal
year 1996 and for the nine months ended September 30, 1997, excluding Merger
Synergies and transaction adjustments and assuming normalized tax rates.
Based on the historical financial information for the fiscal year 1996, ILC's
revenues, EBITDA, EBIT and net income would represent 50.9%, 45.4%, 41.8% and
42.6%, respectively, of the pro form combined entity. Based on the historical
financial information for the nine months ended September 30, 1997, ILC's
revenues, EBITDA, EBIT and net income would represent 53.3%, 42.8%, 39.3% and
45.6%, respectively, of the pro forma combined entity. Based on the projected
financial information for the calendar year 1997, ILC's revenues, EBITDA,
EBIT and net income would represent 52.8%, 43.8%, 40.6% and 47.4%,
respectively, of the pro forma combined entity. Based on the projected
financial information for the calendar year 1998, ILC's revenues, EBITDA,
EBIT and net income would represent 54.2%, 44.4%, 40.5% and 46.0%,
respectively, of the pro forma combined entity. The shares of BEC Common
Stock to be issued to the holders of ILC Common Stock would represent
approximately 50.0% of the outstanding shares of BEC Common Stock (51.4% on a
fully diluted basis) after giving effect to the Merger and the Exchange
Ratio.

EPS Impact Analysis. DLJ also analyzed the pro forma effects on the
projected EPS of ILC resulting from the Merger, excluding the Merger
Synergies, for each of the years ending December 31, 1997 and 1998, assuming
the Exchange Ratio. The pro forma analysis for the fiscal year ending
December 31, 1997 assumed the Merger occurred on January 1, 1997. This
analysis was based on an number of assumptions, including, among other
things, the projected financial performance of ILC and BEC. The analysis
indicated that the Merger, accounted for as a purchase transaction without
the benefit of the Merger Synergies, is anticipated to be slightly dilutive
to ILC's stand-alone EPS for the projected year ending December 1997 and
accretive by approximately 15% to ILC's stand alone EPS for the projected
year ending December 31, 1998.

Common Stock Performance Analysis. DLJ's analysis of the performance of
ILC Common Stock consisted of an historical analysis of closing prices and
trading volumes for periods from October 23, 1992 through October 24, 1997.
During the period October 23, 1992 to October 24, 1997, ILC Common Stock
reached a high of $15.00 per share and a low of $6.75 per share. On October
24, 1997, the closing price of ILC Common Stock was $11.81 per share, as
compared to $11.75 at the beginning of such period. During the period from
October 27, 1995 to October 24, 1997, ILC Common Stock underperformed the S&P
400 and a comparable company index comprised of Advanced Lighting
Technologies, Inc., Chicago Miniature Lamp, Inc., EG&G, Inc. Genlyte Group,
Inc., Holophane Corp. and LSI Industries, Inc. (the "DLJ Comparable
Companies"). The above analyses did not include historical information
regarding BEC's common stock.

BEC Comparable Company Analysis. To provide contextual data on comparative
market information, DLJ analyzed the operating performance of BEC relative to
the DLJ Comparable Companies. Historical financial information used in
connection with the ratios provided below with respect to BEC and the
Comparable Companies is as of the most recent financial statements publicly
available for each company as of October 24, 1997.

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DLJ performed a valuation analysis of BEC, after the Spinoff of Bolle, by
applying certain market trading statistics for the DLJ Comparable Companies
to BEC's historical and estimated financial results, excluding Bolle. DLJ
examined certain publicly available financial data of the DLJ Comparable
Companies, including (i) enterprise value (defined as market value or common
equity plus book value of total debt and preferred stock less cash) as a
multiple of LTM, EBITDA and EBIT; and (ii) price to earnings ratios based on:
(a) LTM EPS; and (b) estimated calendar year 1997 EPS and (c) estimated
calendar year 1998 EPS. DLJ noted that as of October 24, 1997, the DLJ
Comparable Companies were trading at implied multiples of enterprise value
and earnings, as the case may be, in (i) a range of 0.7x to 4.6x (with an
average, excluding the high and low (the "Average") of 1.8x LTM revenues:
(ii) a range of 6.8x to 27.4x (with an Average of 12.9x) LTM EBITDA; (iii) a
range of 9.3x to 33.3 (with an Average of 16.3x) LTM EBIT; (iv) a range of
15.4x to 37.7x (with an Average of 23.0x) LTM EPS; (v) a range of 15.1x to
31.0x (with an Average of 23.8x) estimated calendar year 1997 EPS; and (vi) a
range of 13.4x to 25.4x (with an Average of 18.0x) estimated calendar year
1998 EPS. Based on the valuation multiples of the DLJ Comparable Companies
discussed above, DLJ derived a summary valuation range for BEC Common Stock
of $2.79 to $8.88 per share with an Average of $4.85 per share. The calendar
year 1997 and 1998 EPS estimates for the DLJ Comparable Companies were based
on estimates provided by First Call Research Direct. LTM Revenue, LTM EBITDA,
LTM EBIT, LTM EPS and EPS estimates for BEC, excluding Bolle, were provided
by BEC.

No company utilized in the comparable company analysis is identical to
BEC. Accordingly, an analysis of the results of the foregoing necessarily
involved complex considerations and judgments concerning differences in
financial and operating characteristics of the DLJ Comparable Companies and
BEC and other factors that could affect the public trading value of the DLJ
Comparable Companies. Mathematical analyses such as determining the average
is not in itself a meaningful method of using comparable company data.

BEC Discounted Cash Flow Analysis. In addition, DLJ performed a discounted
cash flow analysis for the five-year period commencing January 1, 1998 and
ending December 31, 2002 based on the stand-alone unlevered free cash flows
of BEC, excluding Bolle. Unlevered free cash flows were calculated as the
after-tax operating earnings of BEC, plus depreciation and amortization and
other non-cash items, plus (or minus) net changes in working capital minus
projected capital expenditures. DLJ calculated terminal values by applying a
range of estimated EBITDA multiple of 10.0x to 14.0x to the projected EBITDA
of BEC in 2002. The unlevered free cash flows and terminal values were then
discounted to the present using a range of discount rates of 11.0% to 15.0%
representing an estimated range of the weighted average cost of capital of
BEC. Based on this analysis, DLJ calculated per share equity values of BEC
ranging from $4.60 to $8.47.

ILC Comparable Company Analysis. To provide contextual data on comparative
market information, DLJ analyzed the operating performance of ILC relative to
the DLJ Comparable Companies. Historical financial information used in
connection with the ratios provided below with respect to ILC and the DLJ
Comparable Companies is as of the most recent financial statements publicly
available for each company as of October 24, 1997.

DLJ performed a valuation analysis of ILC by applying certain market
trading statistics for the DLJ Comparable Companies to ILC's historical and
estimated financial results. DLJ examined certain publicly available
financial data of the DLJ Comparable Companies, including (i) enterprise
value (defined as market value or common equity plus book value of total debt
and preferred stock less cash) as a multiple of LTM EBITDA and EBIT; and (ii)
price to earnings ratios based on: (a) LTM EPS; (b) estimated calendar year
1997 EPS; and (c) estimated calendar year 1998 EPS. DLJ noted that as of
October 24, 1997, the DLJ Comparable Companies were trading at implied
multiples of enterprise value and earnings, as the case may be, in (i) a
range of 0.7x to 4.6x (with an Average of 1.8x) LTM revenues; (ii) a range of
6.8x to 27.4x (with an Average of 12.9x) LTM EBITDA; (iii) a range of 9.3x to
33.3x (with an Average of 16.3x) LTM EBIT; (iv) a range of 15.4x to 37.7x
(with an Average of 23.0x) LTM EPS; (v) a range of 15.1x to 31.0x (with an
Average of 23.8x) estimated calendar year 1997 EPS; and (vi) a range of 13.4x
to 25.4x (with an Average of 18.0x) estimated calendar year 1998 EPS. Based
on the valuation multiples of the DLJ Comparable Companies discussed above,
DLJ derived a summary valuation range for ILC Common Stock of $10.10 to
$27.97 per share with an Average of $16.28 per share.

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No company utilized in the comparable company analysis is identical to
ILC. Accordingly, an analysis of the results of the foregoing necessarily
involved complex considerations and judgments concerning differences in
financial and operating characteristics of the DLJ Comparable Companies and
ILC and other factors that could affect the public trading value of the DLJ
Comparable Companies. Mathematical analysis such as determining the average
is not in itself a meaningful method of using comparable company data.

Comparable Transaction Analysis. DLJ also performed an analysis of
selected merger and acquisition transactions (the "DLJ Comparable
Transactions") in the specialty lighting and broader low technology
manufacturing industry. Multiples reviewed in the DLJ Comparable Transactions
consisted of (i) aggregate transaction value (defined as the equity value of
the offer plus book value of total debt and preferred stock less cash) to
(where available), LTM EBITDA and LTM EBIT as of the time of the announcement
of the acquisition, and (ii) aggregate purchase price (defined as the equity
value of the offer) to (where available) LTM net income and book value as of
the time of the announcement of the acquisition. The DLJ Comparable
Transactions were comprised of 30 transactions announced during the period
1993 to 1997. DLJ noted that the implied multiples of aggregate transaction
value and aggregate purchase price, as the case may be, for these
transactions were in, excluding the high and low; (i) a range of 5.8x to
17.3x (with an Average of 10.4x) LTM EBITDA; (ii) a range of 8.1x to 37.5x
(with an Average of 16.6x) LTM EBIT; (iii) a range of 11.5x to 38.6x (with an
Average of 22.4x) LTM net income; and (iv) a range of 0.8x to 14.8x (with an
Average of 3.6x) book value. Based on the multiples paid in the DLJ
Comparable Transactions discussed above, DLJ derived a summary valuation
range for ILC Common Stock of $7.37 to $28.64 per share with an Average of
$14.82 per share.

No transaction utilized in the comparable transaction analysis is
identical to the Merger. Accordingly, an analysis of the results of the
foregoing necessarily involves complex considerations and judgments
concerning differences in financial and operating characteristics of ILC and
the companies included in the DLJ Comparable Transactions and other factors
that could affect the acquisition value of the companies to which it is being
compared. Mathematical analyses such as determining the average is not in
itself a meaningful method of using comparable transactions data.

ILC Discounted Cash Flow Analysis. In addition, DLJ performed a discounted
cash flow analysis for the five-year period commencing January 1, 1998 and
ending December 31, 2002 based on the stand-alone unlevered free cash flows
of ILC. Unlevered free cash flows were calculated as the after-tax operating
earnings of ILC, plus depreciation and amortization and other non-cash items,
plus (or minus) net changes in working capital minus projected capital
expenditures. DLJ calculated terminal values by applying a range of estimated
EBITDA multiple of 8.0x to 12.0x to the projected EBITDA of ILC in 2002. The
unlevered free cash flows and terminal values were then discounted to the
present using a range of discount rates of 11.0% to 15.0% representing an
estimated range of the weighted average cost of capital of ILC. Based on this
analysis, DLJ calculated per share equity values of ILC ranging from $13.11
to $22.34.

The summary set forth above does not purport to be a complete description
of the analyses performed by DLJ, but describes, in summary form, the
principal elements of the analyses contained in the materials presented by
DLJ to the ILC Board in connection with DLJ rendering its opinion. The
preparation of a fairness opinion involves various determinations as to the
most appropriate and relevant methods of financial analysis and the
application of these methods to the particular circumstances and therefore,
such an opinion is not readily susceptible to summary description. Each of
the analyses conducted by DLJ was carried out in order to provide a different
perspective on the transaction and add to the total mix of information
available. DLJ did not form a conclusion as to whether any individual
analysis, considered in isolation, supported or failed to support an opinion
as to fairness from a financial point of view. Rather, in reaching its
conclusion, DLJ considered the results of the analyses in light of each other
and ultimately reached its opinion based on the results of the analyses taken
as a whole. DLJ did not place particular reliance or weight on any individual
factor, but instead concluded that its analyses, taken as a whole, supported
its determination. Accordingly, notwithstanding the separate facts summarized
above, DLJ believes that its analyses must be considered as a whole and that
selecting portions of

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its analyses and the factors considered by it, without considering all
analyses and factors, could create an incomplete or misleading view of the
evaluation process underlying its opinion. The analyses performed by DLJ are
not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than suggested by such analyses.

DLJ was selected to render an opinion in connection with the Merger based
upon DLJ's qualifications, expertise and reputation, including the fact that
DLJ, as part of its investment banking business, is regularly engaged in the
valuation of businesses and their securities in connection with mergers and
acquisitions, underwritings, sales and distributions of listed and unlisted
securities, private placement and valuations for corporate and other
purposes.

Pursuant to a letter agreement between ILC and DLJ dated January 21, 1997
(the "DLJ Engagement Letter"), DLJ is entitled to (i) a retainer fee of
$100,000, (ii) a fee of $500,000 payable at the time DLJ notified ILC that it
was prepared to deliver an opinion with respect to the Merger, irrespective
of the conclusion reached therein, and (iii) a fee of 0.73% of the aggregate
amount of consideration received by ILC and/or its shareholders upon
consummation of the Merger, less the amounts paid pursuant to (i) and (ii)
above. In addition, ILC has agreed to reimburse DLJ for all out-of-pocket
expenses (including the reasonable fees and expenses of its counsel) incurred
by DLJ in connection with its engagement thereunder, whether or not the
Merger is consummated, and to indemnify DLJ for certain liabilities and
expenses arising out of the Merger or the transactions in connection
therewith, including liabilities under federal securities laws. The terms of
the fee arrangement with DLJ, which DLJ and ILC believe are customary in
transactions of this nature, were negotiated at arm's length between ILC and
DLJ and the ILC Board was aware of such arrangement.

DLJ provides a full range of financial advisory and brokerage services and
in the course of its normal trading activities may from time to time effect
transactions and hold positions in the securities or options on the
securities of BEC and/or ILC for its own account and for the accounts of
customers.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS FOR ILC SHAREHOLDERS

General. No ruling has been (or will be) sought from the Internal Revenue
Service as to the anticipated U.S. federal income tax consequences of the
Merger. As a condition to the consummation of the Merger, ILC must receive an
opinion from its counsel, Davis Polk & Wardwell, in form and substance
reasonably satisfactory to ILC, to the effect that the Merger will qualify as
a reorganization within the meaning of Section 368(a) of the Code and that
ILC and BEC will each be a party to that reorganization within the meaning of
Section 368(b) of the Code. BEC and ILC have no present intention of waiving
this condition, but, if they cannot receive a Tax Opinion, they have agreed
to seek additional shareholder/ stockholder consent to proceed with the
Merger without a Tax Opinion.

In the opinion of Davis Polk & Wardwell, subject to the qualifications
contained herein, the following are the material federal income tax
considerations of the Merger that are generally applicable to holders of ILC
Common Stock.

This discussion is not a complete analysis or description of all potential
tax effects of the Merger, and addresses only those shareholders who hold
their ILC Common Stock as a capital asset. In addition, the discussion does
not address all of the tax consequences that may be relevant to particular
ILC shareholders in light of their personal circumstances or to particular
taxpayers subject to special treatment under the Code (for example, insurance
companies, financial institutions, dealers in securities, tax-exempt
organizations, foreign corporations, foreign partnerships or other foreign
entities and individuals who are not citizens or residents of the United
States, shareholders who acquired their shares in connection with previous
mergers involving ILC or an affiliate, or shareholders who acquired their
shares in connection with stock options or stock purchase plans or in other
compensation transactions).

This discussion is based upon the provisions of the Code, applicable
Treasury regulations thereunder, Internal Revenue Services rulings and
judicial decisions, all as in effect on the date of this Joint Proxy
Statement/Prospectus. There can be no assurance that future legislative,
administrative or judicial changes or interpretations will not affect the
accuracy of the statements or conclusions set forth herein. Any such change
could apply retroactively and could affect the accuracy of this discussion.

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No information is provided herein with respect to the tax consequences, if
any, of the Merger under applicable foreign, state, local or other tax laws.

EACH SHAREHOLDER OF ILC IS URGED TO CONSULT WITH THEIR TAX ADVISOR AS TO THE
SPECIFIC TAX CONSEQUENCES TO SUCH SHAREHOLDER OF THE MERGER UNDER U.S.
FEDERAL, STATE, LOCAL OR ANY OTHER APPLICABLE TAX LAWS.

Certain Consequences of Reorganization Status. In the opinion of Davis
Polk & Wardwell, the Merger will be a reorganization within the meaning of
Section 368(a) of the Code, provided that customary representation letters
from each of ILC and BEC are delivered at closing, the representations
contained therein are correct as of the Effective Time, the Merger is
consummated in the manner contemplated by the Merger Agreement and this Joint
Proxy Statement/Prospectus and there is no change in the Code or applicable
authority. If such representation letters are not so delivered, the
representations are not correct, the Merger is not so consummated or there is
a change in the Code or applicable authority, this opinion cannot be relied
upon.

Provided that the Merger constitutes a reorganization within the meaning
of 368(a) of the Code, an ILC shareholder who receives BEC Common Stock in
the Merger will not generally recognize gain or loss upon such exchange.

The aggregate tax basis of the BEC Common Stock received in the Merger by
an ILC shareholder will be the same as the aggregate tax basis of the ILC
Common Stock surrendered in exchange therefor. The holding period of BEC
Common Stock received in the Merger by an ILC shareholder will include the
period during which the shareholder held the ILC Common Stock surrendered in
exchange therefor.

ILC shareholders receiving a cash payment in lieu of a fractional share
will generally be treated as if the shareholder received a fractional share
of BEC Common Stock and then sold this fractional share in a taxable
transaction. Such shareholder, and an ILC shareholder who exercises
dissenters' rights with respect to all of such holder's shares of Common
Stock of ILC, will generally recognize capital gain or loss for federal
income tax purposes, measured by the difference (if any) between the amount
of cash received and the holder's basis in such fractional share or shares,
as the case may be, provided that the payment is neither essentially
equivalent to a dividend within the meaning of Section 302 of the Code nor,
in the case of a payment by BEC upon the exercise of dissenters' rights, has
the effect of a distribution of a dividend within the meaning of Section
356(a)(2) of the Code. If the requirements of these sections are not
satisfied, the receipt of such cash payments (either in lieu of a fractional
share or as a result of exercising dissenters' rights) could be treated as
dividend income rather than a capital gain transaction. The payment of cash
in lieu of a fractional share must result in a meaningful reduction of a
shareholder's proportionate stock interest in BEC in order to be "not
essentially equivalent to a dividend." Generally, in the case of a
shareholder whose stock interest in BEC (relative to the total number of BEC
shares outstanding) is minimal, and who exercises no control or management
power over the affairs of BEC, any actual reduction in proportionate interest
will be treated as "meaningful." Generally, a disposition of ILC Common Stock
pursuant to an exercise of dissenters' rights will be a capital transaction
if the shareholder exercising such rights will no longer own any shares of
BEC Common Stock or ILC Common Stock (actually or constructively within the
meaning of the attribution rules of Section 318 of the Code). BECAUSE OF THE
COMPLEXITY OF THE RULES GOVERNING THIS DETERMINATION, SHAREHOLDERS ARE URGED
TO CONSULT WITH THEIR TAX ADVISORS REGARDING THE APPLICATION OF THE RULES IN
LIGHT OF THEIR PERSONAL CIRCUMSTANCES.

No gain or loss will be recognized by BEC, Acquisition Corp., or ILC
solely as a result of the Merger.

Backup Withholding. Unless an exemption applies, the Exchange Agent will
be required to withhold, and will withhold, 31% of any cash payments in
respect of dissenters' rights to which a stockholder or other payee is
entitled pursuant to the Merger, unless the stockholder or other payee
provides his or her tax identification number (social security number or
employer identification number) and certifies that such number is correct.
Each stockholder and, if applicable, each other payee is required to complete
and sign the Form W-9 that will be included as part of the transmittal letter
to avoid backup withholding, unless an applicable exemption exists and is
provided in a manner satisfactory to BEC and the Exchange Agent.

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SHAREHOLDERS OF ILC ARE URGED TO CONSULT WITH THEIR TAX ADVISORS REGARDING
THE SPECIFIC TAX CONSEQUENCES TO SUCH STOCKHOLDER OF THE MERGER UNDER U.S.
FEDERAL, STATE, LOCAL OR ANY OTHER APPLICABLE TAX LAWS.

ACCOUNTING TREATMENT

The Merger will be accounted for by BEC as a purchase of a business. Under
the purchase method of accounting, the assets and liabilities of ILC will be
recorded at their fair value, and any excess of BEC's purchase price over
such fair value will be accounted for as goodwill. The results of operations
and cash flows of ILC will be included in the BEC's financial statements from
the date of consummation of the Merger.

AMENDMENT TO BEC BYLAWS

On October 30, 1997, at a special meeting of the BEC Board and pursuant to
powers vested in it by the Bylaws, the Board approved an amendment to the
Bylaws of BEC. Upon approval of the amendment by the BEC Board, the duties of
the Chairman of the Board, the Vice Chairman of the Board and the Chief
Executive Officer of BEC, as described in Article III, Sections 7, 8 and 9,
respectively of the By-Laws, were modified. These modifications include: (i)
creation of a separate position of Chief Executive Officer, a position
formerly held by the Chairman of the Board and (ii) creation of a provision
providing for the succession of the Vice Chairman of the Board to Chairman of
the Board in the event of a vacancy in the position of Chairman of the Board.

STOCK EXCHANGE LISTING

BOARD OF DIRECTORS AND MANAGEMENT OF BEC FOLLOWING THE MERGER

Pursuant to the Merger Agreement, upon consummation of the Merger the BEC
Board will be expanded from seven (7) to nine (9) members. Four (4) members
will be existing BEC directors, four (4) members will be proposed by ILC, and
the ninth director will be elected by the BEC Board subsequent to the Merger
pursuant to the By-laws of BEC. Martin E. Franklin, Ian G.H. Ashken, David L.
Moore and William T. Sullivan, all current directors of BEC, will remain on
the BEC Board as the BEC Nominees. Nora A. Bailey, Richard W. Hanselman and
Charles F. Sydnor, current directors of BEC, have agreed to resign at the
Effective Time in order to facilitate the Merger. Two of the resigning
directors, who are not continuing directors of BEC or Bolle, will each
receive $15,000 (representing the normal annual fee paid to all non-employee
directors of BEC) and all issued options to all resigning directors will vest
upon their resignation. BEC is now seeking stockholder approval for the
election of Harrison H. Augur, Henry C. Baumgartner, Richard D. Capra and
George B. Clairmont, who are all current directors of ILC and are the ILC
Nominees for the BEC Board. After the Merger, the BEC Board, as
reconstituted, will elect a ninth director who will be appointed jointly by
the BEC Nominees and the ILC Nominees to serve as a director.

Following the Merger, the following persons will serve in the following
management capacities of BEC: Martin E. Franklin, Chairman of the Board,
Richard D. Capra, Chief Executive Officer and Ian G.H. Ashken, Chief
Financial Officer. See "Management of BEC following the Merger."

VOTING AGREEMENTS AND PROXIES

Martin E. Franklin, Chairman of the Board of Directors and Chief Executive
Officer of BEC has entered into the BEC Voting Agreement with ILC. Pursuant
to the BEC Voting Agreement, Mr. Franklin

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has agreed to vote all shares of BEC Common Stock of which he is the
beneficial owner and all shares of BEC Common Stock of which he subsequently
acquires beneficial ownership in favor of the Merger. In addition, Mr.
Franklin has granted an irrevocable proxy to Henry C. Baumgartner and Richard
D. Capra, both directors and executive officers of ILC, to vote Mr.
Franklin's BEC Common Stock in accordance with the terms of the BEC Voting
Agreement. Henry C. Baumgartner, Chairman of the ILC Board and Chief
Executive Officer of ILC has entered into the ILC Voting Agreement with BEC.
Pursuant to the ILC Voting Agreement, Mr. Baumgartner has agreed to vote all
shares of ILC Common Stock of which he is the beneficial owner and all shares
of ILC Common Stock of which he subsequently acquires beneficial ownership in
favor of the Merger. In addition, Mr. Baumgartner has granted an irrevocable
proxy to Martin E. Franklin and Ian G.H. Ashken, both directors and executive
officers of BEC, to vote Mr. Baumgartner's ILC Common Stock in accordance
with the terms of the ILC Voting Agreement. See Annexes B and C attached
hereto.

In addition, BEC and ILC have agreed to use their respective best efforts
to cause the respective directors and executive officers to vote shares of
BEC Common Stock or ILC Common Stock, respectively, held by them in favor of
the Merger.

EMPLOYMENT AND CONSULTING AGREEMENTS

BEC will enter into an employment/consulting agreement with Richard D.
Capra, Chief Operating Officer of ILC and a consulting agreement with Henry
C. Baumgartner, Chief Executive Officer of ILC concurrently with the
consummation of the Merger. After the Merger Mr. Baumgartner will serve as
director of BEC but will not be an officer of either BEC or ILC. See
"Management of BEC Following the Merger--Certain Transactions."

RESTRICTIONS ON SALE OF BEC COMMON STOCK BY AFFILIATES

BEC intends to register the shares of BEC Common Stock to be issued in the
Merger under the Securities Act by a Registration Statement on Form S-4 (of
which this Joint Proxy Statement/Prospectus forms a part), thereby allowing
those shares of BEC Common Stock to be traded without restriction by all
former holders of ILC Common Stock except for (i) holders deemed to be
"affiliates" (as defined for purposes of Rule 145 under the Securities Act)
of ILC at the time of the ILC Special Meeting or (ii) holders who become
"affiliates" of BEC after the Merger.

Consequently, each of the "affiliates" of the Combined Company will be
advised that such affiliate may not be permitted under current law to make
any public sale of any BEC Common Stock received upon consummation of the
Merger except under certain circumstances, including where such sale is
permitted pursuant to Rule 145 under the Securities Act. In general, Rule
145, as currently in effect, imposes restrictions on the manner in which such
affiliates may make resales of BEC Common Stock and also on the number of
shares of BEC Common Stock that such affiliates and others (including persons
with whom the affiliates act in concert) may sell within any three month
period.

CONVERSION OF CONVERTIBLE NOTES AND OTHER BEC CAPITALIZATION CHANGES

As of or prior to the Effective Time, BEC shall cause (i) the conversion
of more than 50% of the aggregate principal amount of the Convertible Notes
into BEC Common Stock, and (ii) each of the BEC Warrants (as hereinafter
defined), and certain options for BEC Common Stock held by Bolle employees
(the "Bolle Options"), the Series A Preferred Stock (as hereinafter defined)
and certain Notes assumed from Benson having an aggregate principal amount of
less than $55,000 (the "Benson Notes") to no longer be outstanding in respect
of BEC or any of its subsidiaries following the Spinoff. See "Recent Material
Developments--The Spinoff," "--Description of the Convertible Notes" and "The
Merger Agreement--The Exchange Ratio."

DILUTION OF VOTING POWER; CONVERSION OF CONVERTIBLE NOTES

If all of the holders of the Convertible Notes do not agree to convert,
additional shares of BEC Common Stock will be issuable as a result of the
reduction in the conversion price resulting from the Spinoff, further
diluting the voting power of the existing BEC stockholders. See "The Merger
Agreement--Exchange Ratio."

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THE MERGER AGREEMENT

The following is a brief summary of the material provisions of the Merger
Agreement, a copy of which is attached as Annex A to this Joint Proxy
Statement/Prospectus and is incorporated herein by reference. This summary is
qualified in its entirety by reference to the full and complete text of the
Merger Agreement. STOCKHOLDERS OF BEC AND SHAREHOLDERS OF ILC ARE EACH URGED
TO READ THE MERGER AGREEMENT IN ITS ENTIRETY.

THE MERGER

The Merger Agreement provides that, subject to the approval of the Merger
by the ILC Shareholders and BEC Stockholders and the satisfaction or waiver
of the other conditions to the Merger, ILC will be merged with and into
Acquisition Corp. in accordance with the applicable provisions of California
law and Delaware law, respectively, whereupon the separate existence of ILC
shall cease and Acquisition Corp. will be the surviving corporation of the
Merger after which Acquisition Corp. will change its name to ILC Technology,
Inc. At the Effective Time, the conversion of ILC Common Stock and the
conversion of the common stock of Acquisition Corp. pursuant to the Merger
Agreement will be effected as described below. The certificate of
incorporation and by-laws of Acquisition Corp. as in effect immediately
before the Effective Time, shall be the certificate of incorporation and
by-laws of the surviving corporation. The directors of Acquisition Corp.
immediately before the Effective Time shall be the initial directors of the
surviving corporation, and the officers of Acquisition Corp. immediately
before the Effective Time shall be the initial officers of the surviving
corporation, in each case until their respective successors are elected or
appointed and qualified.

EFFECTIVE TIME

Subject to the provisions of the Merger Agreement, the parties thereto
shall cause the Merger to be consummated by filing an agreement of merger
with the Secretary of State of the State of California in accordance with the
relevant provisions of California law and a Certificate of Merger with the
Secretary of State of the State of Delaware in accordance with the relevant
provisions of Delaware law. The Effective Time shall be as soon as
practicable on or after the Closing Date. The Closing shall take place at the
offices of Kane Kessler, P.C., legal counsel to BEC, at a time and date to be
specified by the parties, which shall be as soon as practicable after the BEC
Special Meeting and the ILC Special Meeting for the purpose of confirming the
satisfaction or waiver of the conditions set forth in the Merger Agreement,
or at such other time, date and location as the parties thereto agree in
writing.

CONDITIONS TO THE MERGER

The prospective obligations of BEC and ILC to consummate the Merger are
subject to the satisfaction or waiver of certain conditions; provided,
however, that no party shall refuse to consummate the Merger if a condition
is not satisfied as a result of a breach by such party of any agreement,
representation, warranty or covenant of such party under the Merger
Agreement. Such conditions include, but are not limited to, (i) the approval
and adoption of the Merger Agreement and the transactions contemplated
thereby by the stockholders of BEC and the shareholders of ILC; (ii) the
authorization for listing a nationally recognized stock exchange or Nasdaq
subject to the official notice of issuance of the BEC Common Stock issuable
to the ILC shareholders pursuant to the Merger Agreement; (iii) the
expiration or termination of the waiting period applicable to the
consummation of the Merger under the HSR Act; (iv) effectiveness, in
accordance with the provisions of the Securities Act, of the Registration
Statement, of which this Joint Proxy Statement/Prospectus is a part; (v) the
absence of any injunction, order, decree or ruling issued by a court of
competent jurisdiction or by a governmental, regulatory administrative agency
or commission or any statutes rule, regulation or executive order which has
the effect of making the Merger or the transactions contemplated thereby
illegal or otherwise materially restricts, prevents or prohibits the
consummation of the Merger; (vi) the execution of the Contribution Agreement,
Indemnification Agreement and the Management Services Agreement and
consummated the Spinoff; (vii) the representations and warranties of each
party being true in all material respects as of the Effective Time of the
Merger; (viii) compliance by the parties in all material respects

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with all other agreements and covenants contained in the Merger Agreement
required to be performed on or before the Effective Time; (ix) the holders of
not more than 4.9% of the shares of ILC Common Stock shall have made a demand
for payment pursuant to appraisal, dissenter's or similar rights under
applicable law by the conclusion of the ILC Special Meeting; and (x) ILC
shall receive the Tax Opinion. Neither party to the Merger has any present
intention to waive a condition. However, in the event that any condition to
the Merger is waived, it is not the intent of the parties to resolicit the
stockholders of BEC and ILC prior to the BEC and ILC Special Meetings with
information concerning the waiver of any conditions to the Merger, except
that each of BEC and ILC shall resolicit for approval by their respective
stockholders in the event of a waiver of the delivery of the Tax Opinion. See
"The Merger--Certain Federal Income Tax Considerations for ILC Shareholders".

BASIS OF CONVERTING SHARES OF ILC

At the Effective Time, by virtue of the Merger and without any action on
the part of BEC, Acquisition Corp., ILC or the holders of BEC and ILC
securities, each share of ILC Common Stock issued and outstanding immediately
prior to the Effective Time, (other than any Dissenting Shares (as defined
below)) shall be canceled and extinguished and automatically converted by
application of the Exchange Ratio into the right to receive shares of BEC
Common Stock upon surrender of the certificate representing such share of ILC
Common Stock. The Exchange Ratio shall be adjusted upward to the extent any
shares of BEC Common Stock are issued upon conversion of any Convertible
Notes prior to the Effective Time and to the extent any Convertible Notes are
outstanding as of the Effective Time, to reflect the potential conversion of
such Convertible Notes into more shares of BEC Common Stock after the
Effective Time. Each share of ILC Common Stock held in the treasury of ILC or
owned by Acquisition Corp., BEC or any direct or indirect wholly-owned
subsidiary of ILC or of BEC immediately prior to the Effective Time shall be
canceled and extinguished without any conversion thereof.

EXCHANGE RATIO

As a result of the Merger, each outstanding share of ILC Common Stock
(other than shares as to which dissenters' rights pursuant to the CGCL have
been perfected) will be converted to 4.36 shares of BEC Common Stock,
assuming the conversion of all of BEC's outstanding Convertible Notes, or
2.18 shares if the one for two Reverse Split is approved. The Merger
Agreement does not contain any provisions for adjustment of the Exchange
Ratio based upon fluctuations in the market price of BEC Common Stock or ILC
Common Stock prior to the Effective Time. In setting this Exchange ratio it
was the intention of the parties to create a 50/50 transaction, with the
relative values of the companies being balanced by assumed indebtedness.

The Exchange Ratio is calculated assuming the conversion of all of the
Convertible Notes into BEC Common Stock prior to the Effective Time. Assuming
the current conversion price of $5.75 per share of BEC Common Stock and the
conversion alternatively of all of, or 50% of, the Convertible Notes, the
Convertible Notes would be converted into an aggregate of approximately
3,665,000 shares or 1,892,000 shares (before giving effect to the Reverse
Stock Split), respectively, of BEC Common Stock. If all of the holders of the
Convertible Notes do not convert prior to the Effective Time, the Exchange
Ratio will be adjusted upward pursuant to the formula described below
(increasing the number of shares of BEC Common Stock exchanged for each share
of ILC Common Stock pursuant to the Merger) to compensate for (i) the
additional shares of BEC Common Stock issuable after the Effective Time upon
the conversion of the Convertible Notes as a result of a reduction in the
conversion price triggered by the Spinoff, or (ii) the additional
indebtedness remaining in the Combined Company to the extent that the
Convertible Notes are not converted. See "Information Concerning
BEC--Description of the Convertible Notes."

In the event that any of the Convertible Notes are outstanding as of the
Effective Time (the "Outstanding Convertible Notes") the Exchange Ratio will
be adjusted and calculated in accordance with the following formula (the
"Exchange Ratio Adjustment Formula")

Exchange Ratio = 17,631,102+X+Y
4,879,811

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where X represents the maximum number of shares of BEC Common Stock
into which the Outstanding Convertible Notes are convertible and Y represents
the number of shares of BEC Common Stock issued upon conversion of the
Convertible Notes prior to the Effective Time. The numerator of the Exchange
Ratio Adjustment Formula represents the number of shares of BEC Common Stock
outstanding as of October 30, 1997. The denominator of the Exchange Ratio
Adjustment Formula represents the number of shares of ILC Common Stock
outstanding as of October 30, 1997. These amounts are fixed amounts in the
calculation of the Exchange Ratio. See the Pro Forma Combined Financial
Statements for a calculation of the adjusted exchange ratio at different
conversion levels. See "Risk Factors--Risk Factors Relating Only to
BEC--Potential Dilutive Effect to Stockholders."

STOCK OPTIONS

Pursuant to the terms of the ILC Option Plans, the ILC Stock Options
granted under the ILC Option Plans vest immediately upon the change in
control resulting from the Merger. All holders of stock options under the ILC
Option Plans shall have the right to have such options converted into such
number of options pursuant to the BEC Options Plans, as provided below, to
purchase shares of BEC Common Stock at such exercise price, as provided
below, and exercise period as applicable to the options outstanding under the
ILC Plans:

(i) the number of shares of BEC Common Stock to be subject to the new
option shall be equal to the product of (x) the number of shares of ILC
Common Stock subject to the original option and (y) the Exchange Ratio;

(ii) the exercise price per share of BEC Common Stock under the new
option shall be equal to (x) the exercise price per share of ILC Common
Stock under the original option divided by (y) the Exchange Ratio; and

(iii) upon each exercise of options by a holder thereof, the aggregate
number of shares of BEC Common Stock deliverable upon such exercise shall
be rounded down, if necessary, to the nearest whole share and the
aggregate exercise price shall be rounded up, if necessary, to the nearest
cent.

Prior to the Effective Time, BEC and ILC and the stock option committees
of their respective boards of directors shall effect such conversion of all
unexercised options outstanding under the ILC Plans at the Effective Time.
Upon such conversion, the options granted under the BEC Option Plan to the
former holders of options pursuant to the ILC Option Plans shall, except to
the extent required to maintain the status of such options as "incentive
stock options," in all respects be subject to the terms, provisions and
conditions of the BEC Option Plan; provided, however, that such holders shall
be deemed to have been granted such options as of the date the original
options were granted under the ILC Option Plans.

SURRENDER AND PAYMENT

ILC SHAREHOLDERS SHOULD NOT SEND CERTIFICATES REPRESENTING THEIR SHARES TO
ILC OR TO THE EXCHANGE AGENT PRIOR TO RECEIPT OF THE LETTER OF TRANSMITTAL.

The Merger Agreement provides that prior to the Effective Time,
Acquisition Corp. shall designate a bank or trust company to act as Exchange
Agent for the holders of shares of ILC Common Stock in connection with the
Merger to receive the Merger Consideration. Promptly after the Effective
Time, the surviving corporation shall cause the Exchange Agent to mail to
each person who was, at the Effective Time, a holder of record of shares of
ILC Common Stock entitled to receive the Merger Consideration, a form of
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the certificates evidencing such shares of ILC
Common Stock (the "Certificates") shall pass, only upon proper delivery of
the Certificates to the Exchange Agent) and instructions for use in effecting
the surrender of the Certificates pursuant to such letter of transmittal.
Upon surrender to the Exchange Agent of a Certificate, together with such
letter of transmittal, duly completed and validly executed in accordance with
the instructions thereto, and such other documents as may be required
pursuant to such instructions, the holder of such Certificates shall be
entitled to receive in exchange therefor the Merger

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Consideration for each share of ILC Common Stock formerly evidenced by such
Certificates, and such Certificates shall then be cancelled. No interest
shall accrue or be paid on the Merger Consideration payable upon the
surrender of any Certificate for the benefit of the holder of such
Certificate. If payment of the Merger Consideration is to be made to a person
other than the person in whose name the surrendered Certificate is registered
on the stock transfer books of ILC, it shall be a condition of payment that
the Certificate so surrendered shall be endorsed properly or otherwise be in
proper form for transfer and that the person requesting such payment shall
have paid all transfer and other taxes required by reason of the payment of
the Merger Consideration to a person other than the registered holder of the
Certificate surrendered or shall have established to the satisfaction of the
Surviving Corporation that such taxes either have been paid or are not
applicable.

NO FRACTIONAL SHARES

Pursuant to the Merger Agreement, no fraction of a share of BEC Common
Stock shall be issuable by virtue of the Merger, but in lieu thereof each
holder of shares of ILC Common Stock who would otherwise be entitled to a
fraction of a share of BEC Common Stock (after aggregating all fractional
shares of BEC Common Stock to be received by such holder) shall receive from
BEC an amount of cash (rounded to the nearest whole cent) equal to the
product of (i) such fraction, multiplied by (ii) the average closing price of
one share of BEC Common Stock for the ten most recent days that BEC Common
Stock has traded ending on the trading day immediately prior to the Effective
Time, as reported on the NYSE. As soon as practicable after the determination
of the amount of cash to be paid to former shareholders of the ILC in lieu of
any fractional interests, the Exchange Agent shall make available in
accordance with this Agreement such amounts to such former shareholders.

REPRESENTATIONS AND WARRANTIES

The Merger Agreement contains various customary mutual representations and
warranties (which representations and warranties are subject, in certain
cases, to specified exceptions) of BEC, Acquisition Corp. and ILC relating
to, among other things, the following matters: (i) the due organization and
corporate power to operate their respective businesses; (ii) the absence of
any violation by BEC, Acquisition Corp. and ILC of their respective articles
or certificate of incorporation and by-laws; (iii) the authorization,
execution, delivery, performance and enforceability of the Merger Agreement
by each such party and of the transactions contemplated thereby not being in
violation of their respective organizational documents, debt instruments or
material contracts, or federal, state or local laws; (iv) the absence of any
governmental or regulatory authorization, consent, approval or waiver
required to consummate the Merger; (v) reports and other documents required
to be filed with the Commission and other regulatory authorities and the
accuracy of the information contained therein and the accuracy of the
information contained in certain additional financial statements delivered in
connection with the transaction and the absence of undisclosed liabilities;
(vi) the absence of any material changes or events with respect to the
parties; (vii) the absence of any material untrue statements or omissions in
this Joint Proxy Statement/ Prospectus; (viii) other than RJ in the case of
BEC and DLJ in the case of ILC, the absence of brokers, finders or investment
banker, entitled to any brokerage, finder's or other fee or commission in
connection with the transactions contemplated by the Merger Agreement; (ix)
the absence of any litigation (including products liability) that would have
a material adverse effect on the financial condition, business or results of
operations of the parties; (x) employee benefit matters; (xi) tax matters;
(xii) environmental matters; (xiii) matters relating to the good title to
properties; and (xiv) the receipt of fairness opinions from the parties'
respective financial advisers.

CONDUCT OF BEC'S AND ILC'S BUSINESSES PRIOR TO THE MERGER

Pursuant to the Merger Agreement, until the earlier of the termination of
the Merger Agreement pursuant to its terms and the Effective Time, each of
ILC and BEC has agreed, except (i) as indicated in its respective disclosure
schedules or (ii) to the extent that the other of them shall otherwise
consent in writing, that their respective businesses shall be conducted only
in the ordinary course of business and in a manner consistent with past
practice and each of ILC and BEC will use its respective best efforts to

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preserve substantially intact the business organization of ILC and its
subsidiaries and BEC and its subsidiaries, as the case may be, to keep
available the services of their respective present officers, employees and
consultants and to preserve their respective present relationships with
customers, suppliers and other persons with which they have significant
business relations. In addition, except as provided in the respective
disclosure schedules, without the prior written consent of the other, neither
ILC nor BEC shall do certain actions described in Section 4.2 of the Merger
Agreement including, but not limited to the following: (a) issue any shares
of capital stock of any class, or any options, warrants, convertible
securities or other rights of any kind to acquire any shares of capital
stock; (b) split, combine or reclassify any outstanding shares of common
stock or declare, set aside or pay any dividend with respect to the shares of
common stock (c) redeem purchase any shares of its capital stock; (d) settle
or compromise any pending or threatened suit, action or claim; (e) encumber
or dispose of any material assets; (f) incur any indebtedness for borrowed
money (other than for working capital on a short term basis); (g) make or
commit any capital expenditure in excess of $200,000; (h) acquire any
corporation, partnership or other business organization; (i) pay or discharge
any claim or liability other than liabilities reflected or reserved against
in ILC's or BEC's 1996 respective year end financial statements (or incurred
subsequently in the ordinary course of business consistent with past
practice) and paid in the ordinary course of business and consistent with
past practice; and (j) take any action which would make any of the
representations or warranties of ILC or BEC, as the case may be, contained in
the Merger Agreement untrue or incorrect as of the date when made if such
action had then been taken, or would result in any of the conditions to the
Merger not being satisfied.

NO SOLICITATION

Under the terms of the Merger Agreement, each of the ILC, BEC and their
respective subsidiaries will not, directly, through any officer, director,
employee, representative, agent, financial adviser or otherwise, solicit,
initiate or encourage inquiries or submission of proposals or offers from any
person relating to any sale of all or a portion of the assets, business,
properties of (other than immaterial or insubstantial assets or inventory in
the ordinary course of business), or any equity interest in, ILC, BEC or any
of their respective subsidiaries, as the case may be, or any business
combination whether by merger, consolidation, sale of assets, tender offer or
otherwise (collectively, an "Acquisition Transaction") or participate in any
negotiation regarding, or furnishing to any other person any information
(except information which has been previously publicly disseminated by ILC or
BEC, as the case may be, in the ordinary course of business) with respect to,
or otherwise cooperate in any way with, or assist in, facilitate or
encourage, any effort or attempt by any other person to do or seek to do any
of the foregoing. Notwithstanding the foregoing, ILC or BEC, as the case may
be, may furnish any information (subject to the execution of a
confidentiality agreement substantially similar to that then in effect
between ILC and BEC) and participate in discussions and negotiate with any
such entity or group concerning any potential Acquisition Transaction
involving ILC, BEC or any of their respective subsidiaries, as the case may
be, if such entity or group has submitted a bona fide proposal to its Board
of Directors, relating to any such transaction which ILC's or BEC's Board of
Directors, as the case may be, reasonably determines would represent a
Superior Proposal (as defined below) to the Merger to the holders of ILC
Common Stock or BEC Common Stock, as the case may be. If the Board of the ILC
or BEC, as the case may be, after duly considering advice, written or
otherwise, of their respective financial advisors, determines in good faith
that it would be inconsistent with its fiduciary responsibilities not to
approve or recommend a Superior Proposal, then (A) ILC or BEC, as the case
may be, shall not enter into any agreement with respect to the Superior
Proposal and (B) any other obligation of ILC or BEC, as the case may be,
under the Merger Agreement shall not be affected unless the Merger Agreement
is terminated in accordance with the terms of the Merger Agreement, and all
fees and expenses payable as a result of such termination are paid to ILC or
BEC, as the case may be, prior to or concurrently with such termination. As
used in the Merger Agreement the term "Superior Proposal" means a bona fide
proposal made by a third party to acquire ILC or BEC, as the case may be,
pursuant to any Acquisition Transaction that the respective Board determines
in its good faith judgment to be more favorable to BEC's or ILC's
stockholders/shareholders, as the case may be, than the Merger (after
considering the advice, written or otherwise, of their outside counsel and
financial advisor).

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COVENANTS

BEC and ILC have agreed to use their best efforts to file, as soon as
practicable, notifications under the HSR Act in connection with the Merger
and the transactions contemplated thereby, and to respond as promptly as
practicable to any inquiries received from the FTC and the Antitrust Division
for additional information and documentation and to respond as promptly as
practicable to all inquiries and requests from any state Attorney General or
other governmental authority in connection with antitrust matters.

Each of ILC, BEC and Acquisition Corp. has agreed to comply in all
material respects with all applicable laws and with all applicable rules and
regulations of any governmental authority in connection with the execution,
delivery and performance of the Merger Agreement, the Merger and the
transactions contemplated thereby.

ILC and BEC have agreed to consult with each other before issuing any
press release or otherwise making any public statements with respect to the
Merger and shall not issue any such press release or make any such statement
before such consultation, except as may be required by law or any listing
agreement or rules and regulations of any securities exchange or the
over-the-counter market, as the case may be, on which any securities of ILC
and BEC are listed.

Each of ILC, BEC and Acquisition Corp. have agreed to use their respective
best efforts to take or cause to be taken all actions and to do or cause to
be done all things reasonably necessary, proper or advisable to consummate
the transactions contemplated by the Merger Agreement and to use its
reasonable best efforts to obtain all necessary waivers, consents, licenses,
permits and approvals, and to effect all necessary filings under the
Securities Act, the Exchange Act and the HSR Act and to cooperate in
responding to inquires from, and making presentations to, regulatory
authorities.

BEC and ILC, as the case may be, shall obtain all material third party
consents required in connection with the consummation of the Merger pursuant
to the Merger Agreement including, but not limited to, in the case of BEC,
any consent required pursuant to the Credit Agreement.

ILC and BEC agreed to use their respective best efforts to cause their
respective directors and executive officers to vote any shares held by them
in favor of the Merger.

BEC agreed to use its commercially reasonable efforts to do such acts as
are necessary to effectuate the Spinoff so that the ORC Business, as a going
concern, and all of the properties and assets comprising the ORC Business
shall be fully vested in BEC and its subsidiaries and that the Non-ORC
Business shall be transferred to and assumed by Bolle at or prior to the
Effective Time. As of or prior to the Effective Time, BEC agreed to cause (i)
the conversion of more than 50% of the aggregate principal amount of the
Convertible Notes into BEC Common Stock, and (ii) each of the BEC Warrants,
the Bolle Options, the Series A Preferred Stock and the Benson Notes to no
longer be outstanding in respect of BEC or any of its subsidiaries following
the Spinoff. See "Information Concerning BEC--Recent Material
Developments--The Spinoff."

Pursuant to the Merger Agreement, ILC agreed that none of the common share
purchase rights issued pursuant to and in connection with the Rights
Agreement dated as of September 29, 1989 between ILC and Security Pacific
National Bank, as amended, shall be exercised or triggered at or prior to the
Effective Time.

The Merger Agreement provides that, to the fullest extent permitted under
applicable law and regardless of whether the Merger is consummated, ILC shall
indemnify and hold harmless, and, after the Effective Time, the surviving
corporation shall, to the fullest extent permitted under applicable law,
indemnify and hold harmless, each director, officer, employee, fiduciary and
agent of ILC and each of its subsidiaries against all costs and expenses
(including attorneys' fees), judgments, fines, losses, claims, damages,
liabilities and settlement amounts paid in connection with any claim, action,
suit, proceeding or investigation (whether arising before or after the
Effective Time), arising out of or pertaining to any of the transactions
contemplated hereby, including without limitation, liabilities arising under
the Securities

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Act or the Exchange Act in connection with the Merger and in the event of any
such claim, action, suit, proceeding or investigation, ILC or the surviving
corporation, as the case may be, shall advance the reasonable fees and
expenses of counsel, with certain exceptions.

Further, BEC shall cause the surviving corporation to use its best efforts
to purchase "tail" coverage under ILC's current directors' and officers'
liability insurance policies for ILC's officers and directors in office prior
to the Effective Time, covering claims made during the two (2) year period
following the Effective Time, for actions taken prior to the Effective Time,
the premium for which shall be paid in full as of the Effective Time.

TERMINATION; FEES AND EXPENSES

The Merger Agreement may be terminated and the Merger contemplated thereby
may be abandoned at any time notwithstanding approval thereof by the BEC
stockholders and/or the ILC shareholders, but prior to the Effective Time by:
(i) mutual consent of each of the Boards of Directors of BEC and ILC; (ii) by
either party if the Merger has not occurred on or before March 31, 1998
(unless extended by mutual consent of BEC and ILC) provided that the
terminating party's failure to fulfill any obligation under the Merger
Agreement has not been the cause of, or resulted in, the failure of the
Merger to occur on or before such date; (iii) by either party if any court of
competent jurisdiction or governmental, regulatory or administrative agency
or commission shall have issued an order, decree or ruling or taken any other
action permanently restraining, enjoining or otherwise prohibiting the Merger
and such order, decree, ruling or other action shall have become final and
non-appealable; (iv) by the non-breaching party if either BEC or ILC breaches
or fails to perform in any material respect any material obligations,
covenants or agreements contained in the Merger Agreement after the
expiration of 10 days notice of such failure; (v) by either party if any
material representation of the other party is not true in a material respect
when made; (vi) by either party if the other party's Board of Directors
withdraws or modifies its recommendation for the Merger; (vii) by either
party if after the receipt of a Superior Proposal its Board of Directors
determines to accept, in accordance with the terms of the Merger Agreement,
such Superior Proposal; or (viii) by either party if the other party's
Chairman of the Board of the Directors and all the other directors of the
other party fail to vote for the Merger at the other party's Special Meeting.

In the event that the Merger Agreement is terminated due to the reasons
set forth in (iv), (v), (vi), (vii) or (viii) in the above paragraph, the
party not responsible for the termination is entitled to receive from the
other party their expenses, capped at a maximum of $1,500,000. In addition,
in the event that the Merger Agreement is terminated due to the reasons set
forth in (iv), (vi), (vii) or (viii) in the above paragraph the party not
responsible for the termination is entitled to a breakup fee from the other
party of $3,000,000.

ILC SHAREHOLDER'S DISSENTERS' RIGHTS

If the Merger Agreement is approved by the required vote of the ILC
shareholders and is not abandoned or terminated, each holder of ILC Common
Stock who voted against the Merger may, by complying with Sections 1300
through 1312 of the CGCL, be entitled to dissenters' rights as described
therein, provided that (i) such holder's shares of ILC Common Stock are
subject to restriction on transfer imposed by ILC or by any law or regulation
or (ii) demands for payment pursuant to such dissenters' rights are filed
with respect to 5% or more of the outstanding shares of ILC Common Stock on
or before the date of the ILC Special Meeting. The obligations of BEC and
Acquisition Corp. to effect the Merger are subject to the condition that
holders of not more than 4.9% of the outstanding shares of ILC Common Stock
have exercised, or have a continued right to exercise, appraisal, dissenters'
or similar rights under applicable law with respect to their shares by virtue
of the Merger. While this condition is waivable, BEC and Acquisition Corp.
have no current intention to waive such condition.

The record holders of the shares of ILC Common Stock that are eligible to,
and do, exercise their dissenters' rights with respect to the Merger are
referred to herein as "Dissenting Shareholders," and the shares of stock with
respect to which they may exercise dissenters' rights are referred to herein
as

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"Dissenting Shares." If an ILC shareholder has a beneficial interest in
shares of ILC Common Stock that are held of record in the name of another
person, such as a broker or nominee, and such shareholder desires to perfect
whatever dissenters' rights such beneficial shareholder may have, such
beneficial shareholder must act promptly to cause the holder of record timely
and properly to follow the steps summarized below.

The following discussion is not a complete statement of the provisions of
the CGCL relating to dissenters' rights, and is qualified in its entirety by
reference to Sections 1300 through 1312 of the CGCL attached to this Joint
Proxy Statement/Prospectus as Annex F and incorporated herein by this
reference. This discussion and Section 1300 through 1312 of the CGCL should
be reviewed carefully by any ILC shareholder who wishes to exercise statutory
dissenters' rights or wishes to preserve the right to do so, since failure to
comply with the required procedures will result in the loss of such rights.

Shares of ILC Common Stock must satisfy each of the following requirements
to qualify as Dissenting Shares under the CGCL: (i) such shares of ILC Common
Stock must have been outstanding on the ILC Record Date; (ii) such shares of
ILC Common Stock must have been voted against the Merger; (iii) the holder of
such shares of ILC Common Stock must make a written demand that ILC
repurchase such shares of ILC Common Stock at fair market value and such
demand must be received by either ILC or ILC's transfer agent no later than
the date of the ILC Special Meting; and (iv) the holder of such shares of ILC
Common stock must submit certificates for endorsement (as described below). A
vote by proxy or in person against the Merger does not in and of itself
constitute a demand for appraisal under the CGCL. In addition, for such
shares of ILC Common Stock to qualify as Dissenting Shares, (i) demands for
payment must have been filed with respect to 5% or more of the outstanding
shares of ILC Common Stock on or before the date of the ILC Special Meeting
or (ii) such shares of ILC Common Stock must be subject to restriction on
transfer imposed by ILC or by any law or regulation.

Pursuant to Sections 1300 through 1312 of the CGCL, Dissenting
Shareholders may require ILC to repurchase their Dissenting Shares at a price
equal to the fair market value of such shares determined as of the day before
the first announcement of the terms of the Merger, excluding any appreciation
or depreciation in consequence of the Merger, but adjusted for any stock
split, reverse split or stock dividend that becomes effective thereafter. On
October 30, 1997, the last full day of trading prior to the public
announcement of the proposed Merger, the closing price per share of ILC
Common Stock was $11.75.

The demand of a Dissenting Shareholder must be made in writing upon ILC no
later than the date of the ILC Special Meeting. Such demand is required by
law to state the number and class of Dissenting Shares held of record by the
Dissenting Shareholder that the Dissenting Shareholder demands that ILC
purchase, and to contain a statement of the amount that the Dissenting
Shareholder claims to be the fair market value of the Dissenting Shares as of
the day before the first announcement of the Merger. The statement of fair
market value in such demand by the Dissenting Shareholder constitutes an
offer by the Dissenting Shareholder to sell the Dissenting Shares at such
price.

If there are any Dissenting Shareholders, then within 10 days after
approval of the Merger by the outstanding shares of ILC Common Stock, ILC is
required to mail to each holder of Dissenting Shares a notice of the approval
of the Merger, a statement of the price determined by ILC to represent the
fair market value of Dissenting Shares (which shall constitute an offer by
ILC to purchase such Dissenting Shares at such stated price) and a
description of the procedures to be followed for such shareholders to
exercise their rights as Dissenting Shareholders.

Within 30 days after the date on which the notice of the approval of the
Merger by the outstanding shares was mailed to a Dissenting Shareholder, that
shareholder who wishes to be paid the full value of his or her Dissenting
Shares must submit to ILC or its transfer agent certificates representing any
Dissenting Shares that the Dissenting Shareholder demands ILC purchase, so
that such Dissenting Shares may either be stamped or endorsed with the
statement that the shares are Dissenting Shares or exchanged for certificates
of appropriate denomination so stamped or endorsed.

If, upon a Dissenting Shareholder's surrender of the certificates
representing that Dissenting Shareholder's Dissenting Shares, ILC and the
Dissenting Shareholder agree that such shares are

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Dissenting Shares and agree upon the price to be paid for such shares, then
the agreed price is required by law to be paid to the Dissenting Shareholder
within the later of 30 days after the date of such agreement or 30 days after
any statutory or contractual conditions to the consummation of the Merger are
satisfied, unless provided otherwise by agreement.

If ILC and a Dissenting Shareholder disagree as to whether such Dissenting
Shareholder's proposed Dissenting Shares are entitled to be classified as
Dissenting Shares or as to the fair market value of such shares, then such
Dissenting Shareholder has the right to bring an action in California
Superior Court, within six months after the date on which the notice of the
approval of the Merger by the outstanding shares of ILC Common Stock was
mailed to the Dissenting Shareholder, to resolve such dispute. In such
action, the court will determine whether the shares of ILC Common stock held
by such Dissenting Shareholder are Dissenting Shares, the fair market value
of such shares, or both. The CGCL provides, among other things, that a
Dissenting Shareholder may not withdraw a demand for payment of the fair
market value of Dissenting Shares unless ILC consents to such request for
withdrawal. The CGCL does not specify the procedures for withdrawing such a
demand.

ILC shall give BEC (i) prompt notice of any written demands for appraisal
of any shares of ILC Common Stock, withdrawals of such demands, and any other
instruments served pursuant to the CGCL and received by ILC that relate to
any demand for appraisal and (ii) the opportunity to participate in all
negotiations and proceedings that take place before the Effective Time with
respect to demands for appraisal under the CGCL. ILC shall not, except with
the prior written consent of BEC or as may be required by applicable law,
voluntarily make any payment with respect to any demands for appraisal of ILC
Common Stock or offer to settle or settle any such demands. Any payments made
in respect of Dissenting Shares will be made by ILC or the Surviving
Corporation, as the case may be.

APPRAISAL RIGHTS OF BEC'S STOCKHOLDERS

Stockholders of BEC are not entitled to appraisal rights under the DGCL in
connection with the Merger.

NOTE: THIS IS PROPOSAL NUMBER ONE TO BE CONSIDERED AND VOTED ON BY BEC
STOCKHOLDERS AND IS THE ONLY PROPOSAL TO BE CONSIDERED AND VOTED ON BY ILC
SHAREHOLDERS.

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INFORMATION CONCERNING BEC

BEC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

ACQUISITIONS AND DIVESTITURES

For the year ended December 31, 1996

BEC was incorporated on December 28, 1995, as a wholly owned subsidiary of
Benson Eyecare Corporation, a Delaware corporation ("Benson"), in connection
with the Essilor Merger (as defined below), pursuant to which Benson
stockholders received all of the outstanding shares of common stock of BEC in
a pro rata distribution (the "BEC Spinoff"). The BEC Spinoff and Merger of
Essilor Acquisition Corporation with and into Benson (the "Essilor Merger")
occurred on May 3, 1996. As a result thereof, Essilor purchased Benson and
the Omega Group, Benson's wholesale optical laboratory business. On May 3,
1996, Benson also consummated the sale of Monsanto Company of the assets of
its Orcolite ophthalmic lens manufacturing operation (the "Asset Sale").
Prior to the BEC Spinoff, Benson contributed to BEC all of the assets of its
then non-prescription eyewear and optics related businesses and BEC assumed
all of the liabilities of Benson's non-prescription eyewear and optics
related businesses.

In December 1996, BEC sold to Foster Grant Holdings, Inc. ("Holdings") all
of the issued and outstanding shares of capital stock of the entities
comprising Foster Grant Group ("FGG"). Holdings, a recently formed Delaware
corporation, is a wholly owned subsidiary of Accessories Associates, Inc.
("AAi"), a Rhode Island corporation.

On October 31, 1997, BEC announced its intent to spin off Bolle to BEC's
stockholders. It is anticipated that BEC's stockholders will receive one
share of Bolle common stock for every three shares of BEC Common Stock held
at the time of the Spinoff. It is anticipated that after the Spinoff Bolle
will be listed on Nasdaq. In connection with the Spinoff, BEC will assign to
Bolle, and Bolle will assume, all of BEC's business, assets and liabilities,
other than those relating to the ORC Business.

The above transactions are presented as discontinued operations in the
consolidated financial statements for the periods presented.

For the Year Ended December 31, 1995

Effective June 30, 1995, BEC sold 100% of the issued and outstanding
capital stock of Superior Eye Care, Inc. for aggregate consideration of $5
million. No gain or loss was recorded on the sale.

For the Year Ended December 31, 1994

In August 1994, BEC sold the assets of certain retail optical stores owned
by its wholly owned subsidiary, Pembridge Optical Partners, Inc., for
consideration of $1.25 million in interest bearing promissory notes
receivable due September 1997. Such notes were later adjusted down to $1.14
million.

On October 12, 1994, BEC acquired ORC for approximately $143 million. The
cash portion of the purchase consideration was funded in part through cash on
hand of BEC and ORC, and borrowings under a revolving credit facility. The
Omega and Orcolite businesses were subsequently divested on May 3, 1996, as
discussed above and in Note 2 to the accompanying consolidated financial
statements. The operating results of the remaining ORC businesses are
reflected in continuing operations from date of acquisition.

On October 13, 1994, BEC sold the businesses and assets of the Ophthalmic
Surgical Products Division of ORC for aggregate consideration of $4.6 million
in cash and 61,000 shares of Mentor Corporation common stock.

On October 20, 1994, BEC completed the divestiture of its retail
operations through the sale of Benson Optical Co., Inc. and Superior Optical
Co., Inc. to OCA Acquisition, Inc. ("OCA"), for an aggregate consideration of
$3.5 million in notes receivable and $1.5 million of convertible preferred
stock, which represented a 19.9% equity interest in OCA, on an if converted
basis. During 1995, BEC disposed of these notes and the OCA convertible
preferred stock.

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RESULTS OF OPERATIONS

Nine months ended September 30, 1997 compared to nine months ended September
30, 1996

Net sales of $35.2 million for the nine months ended September 30, 1997
increased from $32.0 million for the nine months ended September 30, 1996
reflecting strong internal sales growth at ORC, the only business included in
continuing operations.

Gross margin decreased from 40% for the nine months ended September 30,
1996 to 38% for the nine months ended September 30, 1997 due primarily to the
sales mix being more heavily weighed to the relatively lower gross margin
product lines at ORC Electronic Products and market pressure on average
selling prices in certain other product lines manufactured by ORC reflecting
the same factors described in the quarter's analysis above.

For the nine months ended September 30, 1997, selling, general and
administrative expenses of $7.7 million were decreased from $7.9 million
despite the strong sales growth.

Interest expense of $2.6 million for the nine months ended September 30,
1997 increased from $2.1 million for the same period last year due to the
higher amounts outstanding under the revolving credit facility.

The provision for income taxes of approximately $1.3 million or 32% of
income before income taxes for the nine months ended September 30, 1997
represents the anticipated effective tax rate of the Company in its present
structure and reflects the utilization of all tax benefits available to BEC.
The tax provision of $1.3 million for the nine months ended September 30,
1996 represented BEC's 30% effective tax rate for 1996.

Year Ended December 31, 1996 Compared to Year Ended December 31, 1995

Net sales for the year ended December 31, 1996 were $42.6 million compared
to $41.2 million for the year ended December 31, 1995. Sales of $2.6 million
from Superior Eye Care, Inc., which was sold on June 28, 1995, were included
in 1995. The growth primarily resulted from growth at ORC, particularly ORC
Electronic Products, which reflected the continued growth of ORC's served
markets.

Adjusted for the fee income from Superior Eye Care, Inc., the gross profit
margin remained relatively flat, increasing from 39% in 1995 to 40% in 1996.

Selling, general and administrative expenses decreased from $13.8 million
or 33% of net sales in 1995 to $10.0 million or 24% of sales, reflecting both
a total dollar and percentage of sales decrease despite increased sales.
BEC's costs have decreased with the smaller size of BEC as compared to Benson
and the divestiture of Superior Eyecare, Inc. in June 1995. ORC continues to
combine sales growth with cost efficiencies while maintaining strong
operating margins.

Interest expense of 1996 was $2.9 million, down from $4.1 million in 1995,
reflecting both lower credit facility balances and lower average interest
rates.

Other income consists primarily of equity income from BEC's investment in
Eyecare Products and interest income from notes receivable. Equity income
decreased from $0.5 million in 1995 to $0.3 million in 1996. In 1995 other
income was also higher due to nonrecurring income earned from the sale of
assets.

BEC's 1996 provision for income taxes of $1.9 million or 35% of income
from continuing operations before taxes represents the effective tax rate of
BEC in its then structure. In 1995, the effective tax benefit used for
continuing operations was 58% reflecting the impact of discontinued
operations and the loss recorded for the year arising from the special
charges.

Year ended December 31, 1995 compared to year ended December 31, 1994.

Net sales increased from 39.0 million in 1994 to $41.2 million in 1995. In
1994, net sales included $29.9 of sales from divested businesses but only
included one quarter of ORC sales ($9.1 million) from the date of
acquisition, with the balance being sales of Superior Eye Care, Inc. The
results are therefore not comparable.

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Gross margin decreased from $24.6 million or 63% of the net sales in 1994
to $17.5 or 42% of net sales in 1995. This is primarily due to the shift in
business from retail to manufacturing in nature.

Selling, general and administrative expenses were $13.8 million for the
year ended December 31, 1995 compared to $25.2 million for the year ended
December 31, 1994. This decrease also reflects the shift in business toward
manufacturing and the elimination of ORC's costs of being a stand-alone
public company through October 12, 1994.

Special charges of $5.2 million primarily include (i) $4.3 million charge
to reflect the impairment of certain notes receivable and trade accounts
receivable from OCA prior to the exchange of such assets for a non-interest
bearing convertible note receivable from Sterling Vision, Inc., valued at
$2.1 million, and (ii) the write of $0.5 million of deferred financing costs
in connection with a change in BEC's banking syndicate in September 1995.

Interest expense for the year ended December 31, 1995 increased to $4.1
million from $3.1 million in 1994 primarily due to higher credit facility
balances outstanding and the issuance of Benson's convertible notes in April
1994.

Other income in 1995 was $3.3 million versus $1.2 million in 1994. The
increase was primarily due to equity income recorded on BEC's investment in
Eyecare Products plc in 1995 versus an equity loss in 1994 and nonrecurring
gains recorded on the sales of certain assets in 1995.

BEC recorded a net tax benefit of $1.3 million or 58% of income from
continuing operations in 1995. The 1995 effective tax benefit for continuing
operations of 58% was higher than the 1994 effective tax benefit of 40%,
primarily due to the differing impact of discontinued operations on BEC's
overall effective tax rate. Acquisitions made during 1995 and 1994 had a
significant impact on the tax rate.

LIQUIDITY AND CAPITAL RESOURCES

Nine Months Ended September 30, 1997 Comapred to Nine Months Ended September
30, 1996

Net cash provided by operating activities of continuing operations during
the nine months ended September 30, 1997 of $2.9 million represents the net
income and the positive effect of increased accounts payable and decreased
other current assets. These cash sources were offset by decreased accrued
expenses and increased accounts receivable and inventory. Depreciation and
amortization for the nine months ended September 30, 1997 was $1.1 million
compared to $0.7 million for the same period last year. Cash paid for
acquisitions in 1997 represents the purchases of the assets of Byers
Equipment and QSP Coating Technologies by ORC. Capital expenditures of $0.8
million were slightly higher than prior year's of $0.5 million. These
operating and investing activities were primarily financed through proceeds
from the issuance of common stock and revolving credit facility borrowings.

BEC continues to expect cash flow from operations combined with available
borrowing capacity under BEC's revolving credit facility to be sufficient to
fund BEC's operating needs at least through 1998.

For the Year Ended December 31, 1996

Net cash provided by continuing operations in 1996 was $3.9 million with
net income plus non-cash expenses being offset by increases in inventories
and other assets. Movements in accounts receivable and accounts payable were
not significant to overall cash flows.

During 1996, the disposition of the prescription eyewear business and FGG
provided total cash proceeds from operating, investing and financing
activities of approximately $285 million. Most of the cash received for the
sale of the prescription eyewear business was used to pay a dividend of $230
million to stockholders in conjunction with the Merger and Spinoff. The
remaining cash proceeds were used to pay down short and long term debt
leaving BEC with lower debt levels at the end of 1996.

On April 3, 1996, BEC and certain of its subsidiaries entered into the
Credit Agreement with the Lenders, led by NationsBank, N.A. The Credit
Agreement, as amended effective December 12, 1996, provides for a $25 million
revolving credit facility, which includes a letter of credit subfacility.

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Future acquisitions may be financed by debt or equity offerings. In the
short term, liquidity needs were met from cash flow from operations, working
capital management and BEC's Credit Agreement. On a long term basis, BEC's
management has had a successful track record of being able to access the
public equity and debt markets for capital and liquidity.

For the Year Ended December 31, 1995

In 1995, BEC's loss from continuing operations of $0.9 million included
substantially all non-cash special charges and depreciation and amortization
expense of $6.4 million. Changes in assets and liabilities resulted in uses
of cash except for the $2.4 million increase in accounts payable resulting in
cash used by continuing operating activities of $12.5 million

In 1995, the prescription eyewear business completed acquisitions which,
in addition to capital expenditures, resulted in the use of cash by
discontinued operations investing activities.

Capital expenditures in 1995 included $763 for the installation and
implementation of a new management information system at ORC in additional to
normal course of business expenditures.

In June 1995, Benson completed a primary public stock offering of
approximately 2.35 million shares of common stock at an offering price of
$10.125 per shares. Net proceeds to BEC aggregating approximately $22.1
million were used to pay down debt, to fund acquisitions and for general
corporate purposes, including working capital needs.

On March 6, 1995, all borrowings under the Second Amended and Restated
Loan and Security Agreement were refinanced under a Third Amended and
Restated Loan and Security Agreement (the "Amended Agreement"), with BEC
becoming the Borrower. Borrowings under the Amended Agreement bear interest
at variable rates based upon the Eurodollar Rate, with an initial base rate
equivalent to LIBOR plus 112 basis points. The facility is secured by
inventory, trade receivables and intangible assets until various requirements
are met, after which time the collateral will be released.

For the Year Ended December 31, 1994

BEC and certain of its wholly owned subsidiaries entered into an Amended
and Restated Loan and Security Agreement (the "March Agreement"), dated as of
March 21, 1994. Under the March Agreement, the lenders agreed to make
available to The Bonneau Company ("Bonneau"), Pennsylvania Optical Company
and Opti-Ray, Inc. ("Opti-Ray") (referred to as the "Borrowers") an aggregate
loan amount of up to $33 million. On March 30, 1994, the Borrowers borrowed
an aggregate $13.4 million under the March Agreement in connection with the
purchase of Opti-Ray, to provide working capital financing for Opti-Ray's
first quarter operations and to pay certain fees and expenses incurred in
connection with the acquisition. The March Agreement was amended by an
agreement dated as of October 12, 1994 (the "October Agreement"). Under the
October Agreement, the lenders agreed to make available to certain
discontinued operations, an aggregate loan amount of up to $75 million.

On May 9, 1994, Benson completed a public offering of $41 million
convertible subordinated notes due 2001, with a coupon rate of 8% per annum,
and a conversion price of $9.056 per share. The net proceeds of this offering
were used primarily to repay a portion of the outstanding balances under a
revolving credit facility, fund capital expenditures, and or general
corporate purposes.

SEASONALITY AND CYCLICAL RESULTS

BEC is subject to cyclical capital spending trends by certain of its
customers. As a result, operating results may be subject to considerable
fluctuation from quarter to quarter.

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BUSINESS OF BEC

GENERAL

BEC was incorporated on December 28, 1995 as a wholly owned subsidiary of
Benson in connection with the Essilor Merger (as defined below), pursuant to
which Benson stockholders received all of the outstanding shares of common
stock of BEC in a pro rata distribution (the "BEC Spinoff"). The BEC Spinoff
and Merger of Essilor Acquisition Corporation with and into Benson (the
"Essilor Merger") occurred on May 3, 1996. On May 3, 1996, Benson also
consummated the sale to Monsanto Company of the assets of ORC's Orcolite
ophthalmic lens manufacturing operation (the "Asset Sale"). Prior to the BEC
Spinoff, Benson contributed to BEC all of the assets of its then
non-prescription eyewear and optics related businesses and BEC assumed all of
the liabilities of Benson's non prescription eyewear and optics related
businesses.

In December 1996, BEC sold to Foster Grant Holdings, Inc. ("Holdings") all
of the issued and outstanding shares of capital stock of the entities
comprising the Foster Grant Group, a distributor of value-priced sunglasses
and non-prescription reading glasses. Holdings, a Delaware corporation, is a
wholly owned subsidiary of Accessories Associates, Inc., a Rhode Island
corporation.

Following the divestiture of its prescription eyewear business in May 1996
through the Essilor Merger between Benson Eyecare Corporation and Essilor
Acquisition Corporation, a subsidiary of Essilor S.A. and the Asset Sale to
Monsanto Corporation and the sale of FGG in December 1996, BEC had two core
businesses, ORC, which manufactures and distributes specialty lighting,
electronic and electroformed products to a diverse customer base, and Bolle
America, the exclusive marketer and distributor of Bolle(Registered
Trademark) premium sunglasses, sport shields and goggles and safety and
tactical eyewear.

ORC

Subsequent to the Spinoff (and not taking into effect the Merger) BEC will
be positioned to focus on its specialty lighting, electronic and
electroformed products.

ORC consists of three business units: Lighting Products, Electronic
Products and Electroformed Products. ORC Lighting Products designs and
manufactures specialty lighting used in high intensity illumination systems
and mini-systems that incorporate lamps, optics and electronic components.
Three primary markets are served by ORC Lighting Products: industrial,
medical and cinema. Lamps for the industrial market are used in photo
exposure systems, specialty lighting applications and in various other high
technology equipment. The medical market is serviced with fiber optic
illumination components and systems used with medical endoscopes as
illumination for diagnostic and minimally invasive surgical procedures.
Products include a specially designed ceramic lamp with integral parabolic
reflector, optical components, power supply and fiber optic illumination
systems. ORC Lighting Products supports the worldwide cinema market with a
wide range of short-arc xenon lamps used in projectors and buildings, stadium
and theater lighting.

ORC Electronic Products manufactures photoexposure systems, including the
Opti-Beam(Registered Trademark) and ProForm(Trademark) lines. These highly
sophisticated systems are used in the production of high density, fine-line
circuit boards, microcircuits, flexible circuits and flat panel displays. The
business has focused on the upper end of the market where its proprietary
optics technology, vision alignment systems and superior automated material
handling capabilities allow for imaging fine line circuitry with exceptional
throughput.

ORC Electroformed Products supplies a wide range of electroformed products
to a variety of industrial customers. Its products include (i) electroformed
nickel and copper components such as cold shields, flashlight and search
light reflectors, abrasion resistant shields for use on airplane and
helicopter rotor blades and highly polished spheres, parabolas and ellipses
for industrial uses and, (ii) tooling used in the manufacture of hard resin
and polycarbonate ophthalmic lenses.

VOLTARC

On October 1, 1997, BEC expanded its interests in the specialty lamp
business. Pursuant to the terms of a Stock Purchase and Option Agreement (the
"Voltarc Purchase Agreement") dated as of October 1,

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1997 among BEC, ORC, Voltarc and certain stockholders of Voltarc (the
"Voltarc Stockholders"), BEC and ORC acquired (a) 30% of the common stock of
Voltarc, for, among other things, $1,800,000, (b) 12,000 shares of preferred
stock of Voltarc, convertible at ORC's option into approximately 10% of the
total number of shares of Voltarc issued and outstanding for, among other
things, $1,200,000 and (c) an option to acquire the remaining shares of
capital stock of Voltarc from the remaining Voltarc Stockholders subsequent
to the closing of the Voltarc transaction. Pursuant to the Voltarc Purchase
Agreement, the Voltarc stockholders also received the right to put the
remaining shares of Voltarc common stock to BEC or ORC upon the occurrence of
certain events. In addition, ORC made available to Voltarc a subordinated
revolving credit facility in the amount of $800,000. Voltarc is a
manufacturer, marketer and distributor of specialty lighting products.

Voltarc is a niche light source manufacturer that produces a number of
specialty lamps including: ultra-violet (UV) lamps for water purification and
curing applications; internally illuminated outdoor signs and neon
components; reprographic, atinic (aquarium) and transportation lighting,
including commercial and private aircraft. In addition, through an Italian
subsidiary, Voltarc manufactures UV lamps and curing equipment and
distributes Voltarc products in Europe. BEC's investment in Voltarc will
remain with the Combined Company after the Merger.

SUPPLY AGREEMENTS

ORC does not have any significant supply agreements and most materials
used are available from more than one vendor. ORC Lighting Products is
subject to a sole source for three of its lamp components but through strong
supplier relationships has not encountered significant difficulties with
delivery or price. ORC continues to identify and qualify alternate sources of
supply.

COMPETITION

The businesses in which BEC competes are different but parallel markets in
that all of the businesses are affected by changes and growth in
technological, specifically optics related, industries. For example, both ORC
Lighting Products and ORC Electronic Products supply products used in
manufacturing printed circuit boards and flat panel displays, both high
growth technological markets. Competition in these markets is intense and no
one competitor dominates.

ORC Lighting Products competes in the highly competitive international
specialty discharge lighting market. The business distinguishes itself by
providing high quality, competitively price products accompanied by superior
service. Within the ORC Lighting Products' served portion of the market, it
competes primarily with three competitors, one of which is United
States-based.

ORC Electronic Products competes in the worldwide photo exposure system
market and is considered one of the market leaders for producing "next
generation" equipment for its customers. Because of the growth potential of
the market, an increasing number of competitors are entering the markets
served by ORC Electronic Products. Although U.S. and international patents
are obtained wherever appropriate, products can be and are being replicated
by competitors, sometimes at a lower cost to the customer. ORC Electronics
Products' competitive advantages include advanced, effective research and
development and quality products.

ORC Electroformed Products' core markets include metal optics and erosion
shields for helicopter rotor blades and propellers. The business also
continues to find new uses for its electroformed technology. Because it
produces specialty products for specific customers, repeat business is common
and electroforming competitors are few in the markets served.

CUSTOMERS

ORC is not dependent upon a single customer or a few customers, and no one
customer of ORC accounts for more than 10% of the BEC's consolidated
revenues. ORC Lighting Products serves a wide range of customers in the
medical, industrial and entertainment industries; therefore, its top 25
customers represent less than 40% of its business. ORC Electronic Products
sells capital equipment to international

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technologically-based customers. Its products sell for price points ranging
from $30,000 to in excess of $1.0 million and its customer base changes each
year. ORC Electroformed Products provides custom products to its customers.
Its customer base has grown each year and includes a wide range of industrial
manufacturing businesses.

THE CREDIT FACILITY

BEC, as Borrower, entered into the Credit Agreement with the Lenders
pursuant to the terms of which the Lenders made available to the Borrower the
Credit Facility in the maximum aggregate principal amount at any time
outstanding of $70 million, which includes a Tranche A Term Loan Facility in
the principal amount of $15 million, (ii) a Tranche B Term Loan Facility in
the French Franc equivalent amount equal to $15 million and (iii) a Revolving
Credit Facility in the maximum aggregate principal amount any time
outstanding of $40 million, including a letter of credit subfacility of up to
$5 million and a $25 million sublimit for French Franc borrowings. The Credit
Facility has been and will be used by BEC (i) for working capital, (ii) to
finance capital expenditures permitted thereunder, (iii) to finance the
acquisition of Bolle France and other permitted acquisitions and; (v) for
other lawful general corporate purposes, with certain exceptions.

Each of ORC, ORC Management, Inc., Bolle, and Bolle America, Inc.
(collectively, the "Guarantors") have executed an Amended and Restated
Guaranty Agreement in favor of the Agent for the benefit of each of the
Lenders, guaranteeing the payment of the obligations (the "Obligations") of
BEC to the Lenders under the Credit Agreement. BEC and the Guarantors have
granted to the Lenders a security interest in, among other things, their
accounts, inventory, receivables, equipment, contracts, leases and all
general intangibles as security for the Obligations. Pursuant to the terms of
the Credit Agreement, BEC may borrow and repay under the Revolving Credit
Facility until April 30, 2002, subject to terms and conditions of the Credit
Agreement. The Credit Facility terminates and all amounts outstanding
thereafter are due and payable on April 30, 2002. The Tranche A Term Loan
Facility and the Tranche B Term Loan Facility (collectively the "Term Loan
Facility") are subject to repayment in accordance with the amortization
schedules set forth in the Credit Agreement, with the final payment of all
amounts outstanding, together with accrued interest thereon, being due and
payable on March 31, 2002. The Credit Agreement also requires the Company to
make certain mandatory prepayments and allows the Company the ability to make
optional prepayments. See "Risk Factors--Restrictive Loan Covenants."

BEC intends to amend the Credit Agreement in connection with the Spinoff
and is currently negotiating the terms of such amended credit facility.

CYCLICAL RESULTS

ORC is subject to cyclical capital spending trends by certain of its
customers. As a result, operating results may be subject to considerable
fluctuation from quarter to quarter.

PROPERTIES

BEC owns an office and manufacturing facilities comprising approximately
188,705 square feet for its ORC operations in Azusa, California. BEC also
rents approximately 3,000 square feet of office space for its executive
offices in Rye, NY. Prior to the Spinoff, BEC owns an approximately 150,000
square foot building located in Farmer's Branch, Texas, which it leases to
the Foster Grant Group. The property is subject to a mortgage (the
"Mortgage") of approximately $3.6 million, and will be transferred to Bolle
prior to the Spinoff.

BEC's facilities are substantially fully utilized. BEC believes that its
facilities are reasonably suitable for the purpose to which they are put and
that, subject to possible changes to accommodate centralization and
consolidation of its business activities, they are adequate for the BEC's
immediate foreseeable needs.

INTELLECTUAL PROPERTY

ORC has several patents protecting certain of its products. These patents
have expiration dates ranging from 2010 to 2011. Management believes that the
loss of any single patent would not have a

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material adverse effect on the business of BEC as a whole. ORC vigorously
defends its patent rights and additionally relies on trade secrets and
unpatented proprietary know-how to protect its competitive position. BEC
believes that product improvement, product quality and customer service are
as important as patent protection in maintaining the competitive position of
ORC.

EMPLOYEES

BEC employs approximately 380 employees, excluding any employees of Bolle
and its subsidiaries. None of BEC's employees are covered by any collective
bargaining agreements. BEC considers its relations with its employees to be
satisfactory.

ENVIRONMENTAL MATTERS

Compliance with environmental laws and regulations has not had a material
effect on BEC's earnings to date and is not expected to have a material
effect in the future, nor has BEC been required to undertake significant
capital expenditures to meet environmental regulations. It is management's
view at this time that compliance with federal, state and local provisions
regulating the discharge of material into the environment or otherwise
relating to the protection of the environment will not have a material
adverse effect upon the capital expenditures, earnings, or competitive
position of the Combined Company.

BEC was named as a "Potentially Responsible Party" with regard to
pollution contained in the aquifer below BEC's Azusa facility. After further
technical and legal review, the Environmental Protection Agency informed BEC
that it will take no action against BEC with respect to the site and will not
require BEC to participate with the parties preparing a remediation plan for
the site. Based on current information, BEC anticipates that it also will be
given the opportunity to participate in a lump sum cash settlement and
consent decree to be negotiated with a nominal contributors, providing BEC
protection against any potential third party claims for contribution with
respect to the site. The cost of any such cash settlement is not anticipated
to have a material effect on the Combined Company, its operations or its
financial results. In addition, if BEC were required to bear any portion of
the remediation costs, BEC believes it would have a claim against the prior
owner of the property for contribution or cost recovery. There can be no
assurance, however, that such a claim would be successful.

LEGAL PROCEEDINGS

BEC believes that there are no material pending legal proceedings to which
it is a party or to which any of its property is the subject.

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DESCRIPTION OF THE CONVERTIBLE NOTES

GENERAL

The Convertible Notes are unsecured, subordinated obligations of BEC. The
aggregate principal amount of the Convertible Notes is $21,018,000. The
Convertible Notes bear interest from May 3, 1996 at the rate of 8% per annum
and will mature on May 3, 2002.

The Convertible Notes bear interest, which is compounded semi annually, on
May 3 and November 3 of each year commencing May 3, 1996, on the principal
sum thereof until the earliest to occur of the following (the "Interest
Payment Date"): (1) May 3, 2002, (2) conversion of the Convertible Notes or
(3) redemption of the Convertible Notes. Interest on the Convertible Notes
shall be payable on the Interest Payment Date. Interest may be paid, at BEC's
option, in cash or in shares of BEC Common Stock valued at the average
closing bid price for a share of the BEC Common Stock for the thirty (30)
trading days immediately prior to the Interest Payment Date (the "Average
Common Stock Price"), if there is in effect on the Interest Payment Date an
effective registration statement with respect to the resale of shares of BEC
Common Stock. The indenture (the "Indenture") relating to the Convertible
Notes does not generally limit the amount of other indebtedness or securities
that may be issued by BEC or any of its subsidiaries. The Convertible Notes
are subordinated in right of payment to all existing and future senior
indebtedness of BEC and are effectively subordinated to all existing and
future liabilities and obligations of BEC's subsidiaries.

Under the terms of the Indenture, BEC is required to pay to holders
converting Convertible Notes all accrued interest through the date of
conversion. BEC has recently advised the holders of the Convertible Notes
that while it is not required to do so under the terms of the Indenture, BEC
will further pay to holders of the Convertible Notes who convert their Notes
prior to January 31, 1998 an additional amount equal to all interest that
otherwise would have accrued through and including May 3, 1998, the date on
which the Convertible Notes are otherwise callable (if not converted) at 104%
of their principal amount.

Pursuant to the terms of the Indenture, the Spinoff will result in an
adjustment of the conversion price of the Convertible Notes. Under the terms
of the Indenture, the BEC Board will determine the fair market value, as of
the record date for the Spinoff, of the shares of Bolle distributed to the
BEC Stockholders. The presently effective conversion price will then be
adjusted to reflect the value so distributed, by multiplying the current
conversion price by a fraction (a) the numerator of which is the then current
per share market price of BEC Common Stock less the fair market value, per
share of BEC Common Stock, of shares of Bolle distributed, and (b) the
denominator of which is the current per share market price of BEC common
stock on the date the determination is made. The Convertible Noteholders who
do not convert prior to the record date of the Spinoff will retain their
conversion rights, at the adjusted Conversion Price. See "Risk Factors--Risk
Factors Relating only to BEC--Potential Dilutive Effect to BEC Stockholders".

REDEMPTION

Subsequent to May 3, 1998, the Notes may be called, at the option of BEC,
as a whole or from time to time in part, prior to maturity, upon not less
than 30 nor more than 60 days' prior notice, at the applicable redemption
prices (expressed in percentages of principal amount) set forth as follows:
If redeemed during the twelve-month period beginning 1998, 1999, 2000, or
2001 the redemption price shall be 104%, 103%, 102% or 101%, respectively,
together with accrued and unpaid interest, if any, to the date fixed for
redemption.

CONVERSION RIGHTS

The Convertible Notes will be convertible, in whole or from time to time
in part into shares of BEC Common Stock at any time on or prior to maturity
on May 3, 2002, at the conversion price of $5.75 per share (the "Conversion
Price"), adjusted upon certain events including those described in this
section.

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The right to convert a Convertible Note called for redemption will terminate
at the close of business on the redemption date unless BEC shall default in
payment of the redemption price. No fractional shares will be issued upon
conversion, but an appropriate cash payment will be made in respect of any
fractional shares.

The Conversion Price is subject to adjustment upon certain events that
occur after the date of the Indenture, including, but not limited to (i) a
dividend or distribution on BEC Common Stock or a subdivision, combination or
reclassification of BEC Common Stock; (ii) the issuance to all holders of BEC
Common Stock of rights, warrants or options entitling them to subscribe for
or purchase BEC Common Stock (or securities convertible into BEC Common
Stock) at less than the current market price per share; (iii) the
distribution to all holders of BEC Common Stock of capital stock (other than
BEC Common Stock), evidences of indebtedness or assets (including securities
and cash, but excluding any cash dividend paid out of current or retained
earnings and dividends and distributions of stock mentioned in (i) above) or
rights, warrants or options to subscribe for or purchase securities of BEC
(excluding the rights, warrants and options mentioned in (ii) above); (iv)
the issuance of BEC Common Stock to an affiliate for a net price per share
less than the current market price per share on the date BEC fixes the
offering price of such additional shares (other than issuances of BEC Common
Stock under certain employee or director benefit plans of BEC); (v) the
distribution, by dividend or otherwise, of cash (including any cash that is
distributed as part of a distribution described in (iii) above) to all
holders of BEC Common Stock in an aggregate amount that, together with (x)
the aggregate of any other distributions of cash that did not trigger a
conversion price adjustment to all holders of its BEC Common Stock within the
12 months preceding the date fixed for determining the stockholders entitled
to such distribution and (y) the aggregate of any cash plus the fair market
value of consideration that did not trigger a conversion price adjustment
payable within the 12 months preceding the date fixed for determining the
stockholders entitled to such distribution, exceeds 10% of the product of the
current market price per share on the date fixed for the determination of
stockholders entitled to receive such distribution times the number of shares
of BEC Common Stock outstanding on such date. The Indenture also provides
that if rights, warrants or options expire unexercised the Conversion Price
shall be readjusted to take into account the actual number of such warrants,
rights or options which were exercised. No adjustment of the Conversion Price
will be required to be made in any case until cumulative adjustments not yet
made amount to 1% of the Conversion Price.

For further information concerning the Convertible Notes and the effect of
the conversion or non-conversion of the Convertible Notes prior to the
Effective Time on the Exchange Ratio, see "The Merger Agreement--Exchange
Ratio" and "Risk Factors--Risk Factors Relating only to BEC--Potential
Dilutive Effect to Stockholders."

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CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

BEC has entered into indemnification agreements with each of its
directors, officers and certain executives, pursuant to which BEC has agreed
to indemnify each indemnitee to the fullest extent authorized by law against
any and all damages, judgments, settlements and fines ("Losses") in
connection with any action, suit, arbitration or proceeding or any inquiry or
investigation, whether brought by or in the right of BEC or otherwise,
whether civil, criminal, administrative, investigative or other, or any
appeal therefrom, by reason of an indemnitee's service as a director of BEC.
An indemnitee is not entitled to indemnification for any Losses that are (i)
based or attributable to the indemnitee gaining in fact any personal profit
or advantage to which the indemnitee is not entitled, (ii) for the return by
the indemnitee of any remuneration paid to the indemnitee without the
previous approval of the stockholders of BEC which is illegal, (iii) for
violations of Section 16 of the Exchange Act or similar provisions of state
law, (iv) base upon knowingly fraudulent, dishonest or willful misconduct and
(v) not permitted to be covered by applicable law. The agreements provide
that the indemnification under the agreement is not exclusive of any other
rights the indemnitee may have under the BEC Certificate, Restated By-laws,
applicable Delaware corporate statutes or any agreement or vote of
stockholders.

BEC's non-employee Directors receive automatically stock option grants
under the terms of the BEC Option Plan. Mr. Franklin, Mr. Ashken and Mr.
Sullivan also have received stock option grants under the terms of the BEC
Option Plan. Messrs. Franklin and Ashken have entered into employment
agreements with BEC. Mr. Sullivan received certain benefits from BEC in
connection with his resignation as an officer.

On December 12, 1996, in connection with the sale of the Foster Grant
Group by BEC to Foster Grant Holdings, Inc. a wholly owned subsidiary of
Accessories Associates, Inc. ("AAi"), Marlin Capital, LP ("Marlin"), a
Delaware limited partnership, invested $2.5 million in convertible preferred
stock of AAi; upon conversion, AAi common stock received by Marlin would bear
demand and piggyback registration rights. Marlin Holdings, Inc. ("MH"), a
Delaware corporation, is the general partner of Marlin. Mr. Martin E.
Franklin, BEC's Chairman and Chief Executive Officer, is the Chief Executive
Officer and principal stockholder of MH. Mr. Ashken, BEC's Chief Financial
Officer and a Director, also is a stockholder and executive officer of MH.
Mr. Franklin also has been named a member of AAi's Board of Directors.

Ms. Nora Bailey, a member of BEC's Board of Directors since May 1996, is
an attorney specializing in federal tax law. In her professional capacity she
has rendered legal advice and related services to both BEC and its
predecessor, Benson. Ms. Bailey has rendered such services both prior to and
subsequent to her appointment to BEC's Board of Directors, and it is
anticipated that from time to time in the future she will be engaged to
provide similar legal services to BEC. All fees paid to Ms. Bailey in
connection with such services have been agreed in arms' length negotiations
and are in accordance with Ms. Bailey's usual and customary billing
practices. Fees paid to Ms. Bailey by BEC in connection with such services
are not paid in consideration of her services as a director. Aggregate fees
billed to Benson and BEC by Ms. Bailey during 1996 were approximately
$73,500.

BEC intends to enter into a Management Services Agreement with Bolle,
pursuant to which BEC will provide services to Bolle relating to overall
management and strategic planning and direction, banking negotiations,
treasury functions, investor relations, securities regulatory compliance,
employee and general business insurance programs and asset acquisitions and
sales. Pursuant to the Management Services Agreement, BEC will also make
available to Bolle the services of Messrs. Franklin and Ashken. As
compensation for BEC's services to Bolle, BEC, pursuant to the Management
Services Agreement, will be entitled to receive from Bolle a monthly fee of
$60,000 and reimbursement for BEC's identifiable reasonable out-of-pocket
expenses incurred in connection with the performance of services under the
Management Services Agreement. The Management Services Agreement, which will
be entered into on or prior to the time of the Spinoff, will have an initial
term of three years, automatically renewable for successive one-year periods
until terminated by either party upon 90 days written notice.

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BEC also entered into each of the Indemnification Agreement and the
Contribution Agreement with Bolle. See "Information Concerning BEC--Recent
Material Developments--Contribution to Bolle" and "--Indemnification
Agreement."

No other significant transactions, business relationships, or indebtedness
are known to exist between BEC and related parties (defined as directors,
executive officers, nominees for director, security holders of more than 5%
of the voting stock or any members of the immediate family of any of the
foregoing persons).

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INFORMATION CONCERNING ILC

ILC MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

GENERAL

ILC designs, develops, manufactures and markets high intensity lamps and
lighting products for the medical, industrial, aerospace, scientific,
entertainment and military industries. During fiscal 1997, 1996 and 1995, ILC
derived approximately 31%, 39% and 40%, respectively, of its net sales from
the medical market. During fiscal 1997, 1996 and 1995, ILC's sales in the
industrial market accounted for 43%, 46% and 47%, respectively, of net sales.
In fiscal years 1997, 1996 and 1995, ILC's sales in the aerospace market
accounted for 14%, 8% and 8%, respectively, of net sales. Products sold in
the medical market are incorporated into products sold into the health-care
and health-care related industries. These industries have recently been
subject to significant fluctuations in demand which in turn have affected the
demand for components used in these products. ILC expects sales to the
medical market to continue to decrease as a percentage of net sales for the
foreseeable future. Aerospace sales have increased in fiscal 1997 over fiscal
1996 and 1995 due to shipments of multi-faceted Cermax high-intensity
discharge lamps used in the infrared guidance system of the TOW (Tube
Launched Optically Guided Wire Controlled) missile and due to additional
contracts for space lighting requirements. Because of the on-going
uncertainty in military and defense spending, ILC does not expect aerospace
sales to grow from fiscal 1997 levels.

In September 1996, the ILC Board voted to proceed with the divestiture of
ILC's Precision Lamp, Inc. subsidiary ("PLI") based in Cotati, California.
The accompanying consolidated financial statements for fiscal 1996 and 1995
have been restated to reflect the discontinued operations of the PLI
business. In May 1997, ILC completed the sale of Converter Power, Inc.
("CPI") and the results of operations for this subsidiary through the date of
sale have been included in continuing operations. Refer to Notes 12 and 13 of
Notes to ILC Consolidated Financial Statements for a further discussion of
discontinued operations and the sale of CPI. Accordingly, the following
discussion and analysis of financial condition and results of operations
reflects the activities of ILC, CPI and Q-Arc, Ltd. ("Q-Arc").

FISCAL 1997 COMPARED TO FISCAL 1996

Net sales for fiscal 1997 were $55,518,000 compared to $54,206,000 in
fiscal 1996. Although net sales at ILC's California operations ("ILC
Sunnyvale") and Q-Arc increased by 16.1% between the two fiscal years, net
sales at CPI decreased 55.1% between the two fiscal years. In the fourth
quarter of fiscal 1996, CPI experienced a significant reduction in orders
from a major customer that provides equipment to the semiconductor equipment
industry. This order reduction continued into the first and second quarters
of fiscal 1997. In May 1997, CPI was sold and therefore net sales for fiscal
1997 reflect only seven months of CPI sales activity as opposed to a full
year in fiscal 1996. The net sales increases at both ILC Sunnyvale and at
Q-Arc were the result of a higher volume of products sold in all areas except
equipment products, which were lower than the previous year due to the timing
of the shipment of orders.

Cost of sales as a percentage of net sales was 70.6% for fiscal 1997
compared to 66.7% for fiscal 1996. The percentage increase was due in part to
the sales decline from CPI's major customer discussed above. In addition,
unfavorable yields in Cermax and infrared lamp products, coupled with
increases in the provision for inventory reserves and revenue recognition on
aerospace contracts with low or minimal gross margins, contributed to the
cost of sales percentage increase between the two fiscal years. The $176,000
increase in the provision for inventory reserves, from $520,000 in fiscal
1996 to $696,000 in fiscal 1997, relates to the increase in inventory levels
of ILC during fiscal 1997 and at September 27, 1997. The ratio of inventory
reserve to year end inventory in fiscal 1997, 1996 and 1995 was 16.0%, 18.6%
and 20.0%, respectively.

Research and development expenses, 7.7% of net sales in fiscal 1997
compared to 8.0% of net sales in fiscal 1996, remained constant at
approximately $4.3 million. Spending declines occurred in flashlamp and
quartz lamp products while spending increases took place in Cermax and
equipment products for the display and projection markets. Additionally,
research and development spending declined at CPI due to the sale of the
subsidiary in May 1997.

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Sales and marketing expenses for fiscal 1997 were $3,059,000, or 5.5% of
net sales compared to $2,646,000, or 4.9% of net sales in fiscal 1996. The
$413,000 increase between the two fiscal years was the result of personnel
additions, increased travel and trade show participation and additional
commission expense.

General and administrative expenses, 7.8% of net sales in fiscal 1997
compared to 8.1% of net sales in fiscal 1996, decreased $88,000 between the
two fiscal years. The primary reason for the decrease was due to the
inclusion of only seven months of expense for CPI in fiscal 1997 versus a
full year of expense in fiscal 1996. If the general and administrative
expenses related to CPI were excluded from both fiscal years, the increase
between the two periods was approximately $555,000. Profit sharing accruals
at ILC Sunnyvale in fiscal 1997 and personnel additions at Q-Arc during
fiscal 1997 caused general and administrative expenses to increase in fiscal
1997 over fiscal 1996.

Amortization of intangibles of $120,000 in fiscal 1997 and 1996 represents
the amortization of the covenant-not-to-compete arising from the acquisition
of Q-Arc in 1991.

Interest income was $147,000 in fiscal 1997 compared to $80,000 in fiscal
1996. Interest expense associated with continuing operations, $641,000 in
fiscal 1997 compared to $542,000 in fiscal 1996, increased $99,000 between
the two fiscal years. The increase in interest expense is due to higher
borrowings under a line of credit for working capital needs and an equipment
line of credit for capital equipment acquisitions.

ILC reported income from continuing operations before provision for income
taxes and before gain on sale of CPI of $4,069,000 in fiscal 1997 compared to
income from continuing operations before provision for income taxes of
$6,061,000 in fiscal 1996. As discussed in Note 13 of Notes to ILC
Consolidated Financial Statements, the CPI subsidiary was sold in May 1997.
The transaction resulted in a pre-tax gain, net of expenses, of $2,379,000.
The results of operations for CPI through April 1997 are included in ILC's
Consolidated Statement of Operations. Including the gain on the sale of CPI
in the results of operations for fiscal 1997 increases the income from
continuing operations before provision for income taxes to $6,447,000. The
effective tax rate for fiscal 1997 and 1996 was 25%.

As previously discussed, the ILC Board voted to proceed with the
divestiture of PLI located in Cotati, California. The operating losses of PLI
for the six months ended March 29, 1997 were offset against accruals made in
the fourth quarter of fiscal 1996 for anticipated losses during the final
disposition of the subsidiary. In January 1997, ILC signed an agreement to
sell PLI to PLI Acquisition Corp. for approximately $3.3 million subject to
due diligence and the purchaser's ability to obtain adequate financing. The
closing was set to occur no later than March 31, 1997. The purchaser was not
able to obtain the required financing, but ILC agreed to sell the stock of
PLI to PLI Acquisition Corp., as discussed in Note 12 of Notes to ILC
Consolidated Financial Statements. ILC received a $4 million promissory note
that bears interest at the rate of 8% per year on any unpaid principal
amount. Payments began in May 1997 and will be completed in April 2000. The
activities of PLI for fiscal 1996 have been restated to reflect a loss from
discontinued operations.

FISCAL 1996 COMPARED TO FISCAL 1995

Net sales for fiscal 1996 were $54,206,000, an increase of 9.5% over
fiscal 1995 net sales of $49,496,000. The $4,710,000 increase was primarily
attributable to a $3.4 million sales increase in Cermax and related equipment
sales, a $1.7 million sales increase in quartz lamps and a $1 million sales
increase in flashlamps. These sales gains were offset by a $1.4 million sales
decrease in aerospace and at CPI. In the fourth quarter of fiscal 1996, CPI
experienced a significant reduction in orders from a major customer that
provides equipment to the semiconductor equipment industry.

Cost of sales as a percentage of net sales was 66.7% for fiscal 1996
compared to 64.2% for fiscal 1995. The percentage increase was due primarily
to the sales decline from CPI's major customer discussed above coupled with
cost revisions for a fixed price contract in aerospace. In addition, although
there was some improvement in the gross margin associated with quartz lamp
products in fiscal 1996 over fiscal 1995,

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the gross margin in both fiscal years remained negative. In fiscal 1996,
quartz lamp products had a negative gross margin of 29.5% or $1,118,000,
compared to a negative gross margin of 56.6% or $1,192,000 in fiscal 1995.
The ratio of inventory reserve to year end inventory in fiscal 1996, 1995 and
1994 was 18.6%, 20.0% and 26.3%, respectively.

Research and development expense, 8.0% of net sales in fiscal 1996
compared to 8.6% of net sales in fiscal 1995, remained unchanged at
approximately $4.3 million. In both fiscal years, the majority of the
spending was for the development of quartz stepper lamps used in the
processing of semiconductor materials, in Cermax for lamps for video
projection and at CPI for the design of new power supplies to compliment the
lamps for video projection.

Sales and marketing expenses, 4.9% of net sales in both fiscal 1996 and
1995, increased $241,000 between the two fiscal years. The increase was the
result of personnel additions and more travel and trade show attendance.

As a percentage of net sales, general and administrative expenses were
8.1% in fiscal 1996 and 9.0% in fiscal 1995. In absolute dollars, the general
and administrative spending level remained constant at approximately $4.4
million.

Amortization of intangibles of $120,000 in fiscal 1996 and 1995 represents
the amortization of the covenant-not-to-compete arising from the acquisition
of Q-Arc in 1991.

Interest income was $80,000 in fiscal 1996, compared to interest income of
$265,000 in fiscal 1995, which amount included approximately $235,000 of
interest income from an income tax refund in the third quarter of fiscal
1995. Interest expense associated with continuing operations, $542,000 in
fiscal 1996 as compared to $589,000 in fiscal 1995, decreased approximately
$47,000 between the two fiscal years due to a slightly lower interest rate.
Interest expense is associated with a term loan obtained to purchase ILC's
two operating facilities in Sunnyvale, California, a line of credit for
working capital needs and an equipment line of credit for capital equipment
acquisitions.

ILC reported income from continuing operations before provision for income
taxes of $6,061,000 in fiscal 1996 compared to income from continuing
operations before provision for income taxes of $6,109,000 in fiscal 1995.
The fiscal 1996 effective tax rate was 25% compared with a fiscal 1995
effective tax rate of 28%, exclusive of a $238,000 income tax refund received
in the third quarter of fiscal 1995.

As previously discussed, the ILC Board voted to proceed with the
divestiture of PLI. The net operating results of PLI were reported as a
$4,239,000 loss from discontinued operations in fiscal 1996. This amount
included the $840,000 operating loss of PLI for fiscal 1996 and an estimated
loss for the disposal of discontinued operations of $3,399,000. The estimated
loss for the disposal included asset write downs of $3.3 million, a $500,000
charge for anticipated losses during the final disposition of PLI and the
write off of the unamortized balance of the PLI covenant-not-to-compete of
approximately $470,000. The combined loss from discontinued operations is net
of a $1,413,000 income tax benefit. See Note 12 of Notes to ILC Consolidated
Financial Statements.

ILC believes that inflation and changing prices had no significant impact
on sales or costs during fiscal 1997, 1996 and 1995.

LIQUIDITY AND FINANCIAL CONDITION

Cash and cash equivalents decreased to $1,114,000 at the end of fiscal
1997 from $1,829,000 at the end of fiscal 1996. Cash provided by operating
activities from continuing operations amounted to $1,070,000 in fiscal 1997,
a decrease of $695,000 from $1,765,000 in fiscal 1996. Cash used in
discontinued operations amounted to $1,518,000 in fiscal 1997, an increase of
$1,350,000 from $168,000 in fiscal 1996. During fiscal 1997, ILC made capital
equipment purchases of $3,102,000. In fiscal 1997, ILC decreased its net
borrowings under its line of credit by $2,500,000, decreased its net
borrowings under an equipment line by $276,000 and paid down a term loan by
$1,451,000. In addition, in fiscal 1997, ILC also repurchased, on the open
market, 37,000 shares of its common stock for $425,000. In fiscal 1996, ILC
made capital equipment acquisitions of $3,187,000. During fiscal 1996, ILC
increased its net borrowings under its line of credit by $3,000,000,
increased its net borrowings under an equipment line by $180,000 and paid
down

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a term loan by $1,584,000. In fiscal 1995, ILC used cash of $1,745,000 to
purchase land and a new manufacturing facility in Santa Clara, California and
made capital equipment acquisitions of $2,518,000. During fiscal 1995, ILC
increased its net borrowing under its line of credit by $2,000,000, increased
its net borrowings under an equipment line by $670,000 and paid down a term
loan by $1,578,000.

ILC had working capital of $13,337,000 and a current ratio of 2.17 to 1.0
at September 27, 1997. This compares with working capital of $15,155,000 and
a current ratio of 2.45 to 1.0 at September 28, 1996. As of September 27,
1997, ILC had $3,500,000 unused on a $6,000,000 bank line of credit with
interest at 2% above the LIBOR rate (London Interbank Offer Rate) (7.66% at
September 27, 1997). ILC also has available an unused $2,000,000 equipment
credit facility at the above interest rate. This credit facility can be
increased to accommodate the capital equipment needs of ILC. In fiscal 1998,
ILC anticipates making capital expenditures of approximately $2.5 million. As
of September 27, 1997, ILC did not have any outstanding material commitments
for capital expenditures. ILC's current financial resources, together with
anticipated additional resources to be provided from continuing operations,
are expected to be adequate to meet ILC's working capital needs, capital
equipment requirements and debt service obligations at least through fiscal
1998.

BUSINESS OF ILC

GENERAL

ILC designs, develops, manufactures and markets high intensity lamps and
lighting products for the medical, industrial, aerospace, scientific,
entertainment and military industries. ILC was incorporated in California in
1967. Its principal manufacturing and executive facilities are located at 399
Java Drive, Sunnyvale, California 94089, and its telephone number is (408)
745-7900. ILC's wholly-owned subsidiary, Q-Arc, Ltd., an arc lamp
manufacturing company based in Cambridge, England, was acquired by ILC in
1991.

In September 1996, the ILC Board voted to proceed with the divestiture of
ILC's PLI subsidiary and therefore PLI is reported as discontinued operations
in the accompanying ILC Consolidated Financial Statements. PLI is a
manufacturer of miniature incandescent surface mount lamps as well as liquid
crystal display backlight panels that incorporate the technology of the
surface mount lamps.

In May 1997, ILC completed the sale of CPI to Applied Science and
Technology, Inc. ("ASTeX"). The gain on the sale was reported in the results
of operations for the third quarter of fiscal 1997. CPI is a producer of high
efficiency, small form lamp power sources built to fit compactly into a
variety of systems.

BUSINESS STRATEGY

ILC uses a market focused business strategy. The key element of this
strategy is to select growth markets that most closely match ILC's
technological expertise and manufacturing strengths. With a strong emphasis
on research and development, ILC achieves and maintains a leadership position
in these market segments through advanced technology, engineering design
capability and attentive customer support.

PRODUCTS

Flashlamps. ILC manufactures pulsed and direct current arc lamps that are
designed to satisfy a wide variety of laser and industrial applications
requiring rigorous, high-performance standards. The primary source of sales,
of which approximately 80% are for the replacement market, derives from
industrial uses such as materials aging (solar simulation) and laser cutting,
drilling, scribing and marking. In addition, ILC derives sales of flashlamps
in the medical market, where lasers are utilized in cataract surgery and
other exacting procedures. Production of flashlamps is highly labor-intensive
and requires a lengthy training period to achieve a quality product. ILC
anticipates that the market for flashlamps in low-energy laser pumping
applications will erode as alternative technologies such as laser diode pumps
become increasingly cost-effective. In high-powered laser applications,
however, ILC believes that flashlamps will continue to be utilized.

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ILC believes that growth in its flashlamp business is highly dependent
upon its ability to develop new, non-laser applications for flashlamp
technology. ILC continues to develop high growth arc lamp markets outside of
the laser applications. Some of these include materials aging (solar
simulation), ultraviolet ("UV") sterilization and curing, machine vision and
spectrofluoroscopy. During fiscal 1997, sales of flashlamps to non-laser
markets were approximately 12% of ILC's total flashlamp sales.

Cermax and Equipment. ILC manufactures Cermax lamps, which are short arc
xenon lamps that are optically pre-aligned, encased in a safe ceramic body
bonded to a metallized sapphire window, and are capable of transmitting the
full spectrum from infrared to UV wavelengths. In addition, ILC manufactures
fully-encased and open frame power supplies, lamp holders and other equipment
to support its Cermax product line. Products also include complete fiber
optic lightsources that are private labeled for manufacturers of medical
equipment. ILC sells Cermax lamps primarily to original equipment
manufacturers ("OEMs").

The primary market for ILC's Cermax product line is fiber optic
illumination for medical procedures such as endoscopy. The market for Cermax
lightsources and related equipment used in endoscopy is composed of two
segments: a high-intensity or critical segment and a low-intensity or
non-critical segment. Critical endoscopy applications require high-intensity
Cermax lightsources with specialized power supplies. High intensity
lightsources are required because physicians seek good color rendition on
video displays and, in some cases, also because of the small size of the
fiber optic lightguide. The low-intensity market is dominated by
manufacturers of halogen lightsources. Ancillary industrial uses for Cermax
lightsources include illuminating areas that are difficult to inspect, such
as nuclear reactors or jet engines. ILC has also targeted new non-medical
Cermax lightsource markets that include analytical instruments and spot UV
curing lightsources.

During fiscal 1995, ILC announced the release of new high-intensity lamps
for video projection utilizing ILC's proprietary Daymax and Cermax
technologies. During fiscal 1996 and 1997, several of ILC's products were
incorporated into high-end/professional and mid-range/business video
projection systems of several OEMs, including Hughes-JVC Technology
Corporation, Ampro Corporation, Electrohome Limited and Digital Projection
Ltd. Sony Electronics Inc. and Mitsubishi Electric Corporation have also
demonstrated preliminary versions of ILC's video projection lamps. ILC's
video projection lamps are compatible with the key imaging devices, including
light valves, liquid crystal displays ("LCDs") or Texas Instruments Inc.'s
DMD (Digital Micromirror Devices). In conjunction with several OEMs, ILC is
developing lamps for the low-end/commercial business segment. ILC's future
growth will depend to a large extent on the successful introduction,
marketing and commercial viability of video projection systems that use ILC's
products.

The factors that may adversely affect ILC's Cermax business include the
entry of competitors into the market. ILC's primary patent on the Cermax lamp
expired in 1991. ORC, Ushio and EG&G, Inc. are manufacturing and marketing
sealed beam xenon illuminators that compete with ILC's Cermax lamps, and
other established and emerging companies may compete in the future. Increased
competition could result in price reductions, which in turn could generate
lower net sales on stable unit volume. Increased competition could also
result in fewer customer orders, reduced gross margins and loss of market
share.

Stepper Lamps. In fiscal 1995, ILC began commercial shipment of mercury
xenon short arc lamps, which are used to expose patterns during the
fabrication of semiconductor products. ILC is shipping a complete line of
1,000 and 2,000 watt stepper lamps. Each lamp, fully utilized, lasts for
approximately 1-2 months. Accordingly, ILC expects that the product will
generate a high repeat business.

The market for stepper lamps is currently dominated by Ushio, a Japanese
competitor of ILC. ILC has worked extensively for more than four years with
semiconductor manufacturers in the United States to qualify its stepper lamps
at major semiconductor fabrication facilities. In 1996 and 1997, ILC's
stepper lamps were qualified by a number of semiconductor manufacturers
including IBM Corporation, Intel Corporation and Integrated Solutions, Inc.
The failure of ILC's stepper lamp to sustain market acceptance would have a
material adverse effect on ILC's results of operations.

In October 1994, ILC purchased a 20,000 square foot office and
manufacturing facility in Santa Clara, California for ILC's stepper lamp
operations. The move to the new facility was completed in the second

87
<PAGE>
quarter of fiscal 1997. The success of ILC's stepper lamp business depends in
large part on the ability of ILC to manufacture stepper lamps efficiently and
reliably over time. There can be no assurance that ILC will not experience
manufacturing problems in the future that would result in product delivery
delays or quality problems.

Other Products. ILC's other products include mercury capillary lamps,
Daymax metal halide lamps and products for the aerospace and military
markets.

ILC manufactures mercury capillary lamps using technology and processes
that are similar to those developed for stepper lamps. The primary
applications for mercury capillary lamps include the photolithography of grid
patterns on color television screens and printed circuit boards for
computers.

Daymax lamps simulate stable daylight conditions. Originally developed for
use in the space program, these products are now used primarily in the
entertainment business. Applications include: indoor and outdoor lighting for
motion picture and television productions, high speed and special effects
lighting, concert and stadium lighting and theatrical lighting. Daymax lamps
are also used for solar simulation in certain scientific applications. ILC
has developed DTI, a series of integral low-power metal halide lamps (less
than 500 watts) for commercial projection, stage and medical applications.
DTI lamps, using a rugged ceramic reflector, have been qualified for use in
video projection systems and architectural lighting.

In the aerospace market, ILC offers standard, modified and customer
systems covering the visible, infrared and UV spectrum to meet each space
lighting requirement. ILC's lighting systems are installed in the space
shuttle interior and exterior, on the Manned Maneuvering Unit, on Spacelab
and in several experiments carried aboard the shuttle orbiters. Other ILC
systems are being designed for use on International Space Station Alpha, in
future shuttle experiments and payload packages and space robotic vehicles.
ILC is the only domestic manufacturer of space lighting qualified to serve
NASA and other government agencies in Japan and Europe. ILC aerospace
lighting systems feature efficiency, reliability, ruggedness, light weight
and full space qualification. New systems designed to meet unique
requirements can often be developed from ILC's large selection of
space-qualified designs and components, substantially reducing development
costs and lead times.

ILC's products for the military market include infrared lamps used by the
military on tanks and aircraft to deflect offensive heat seeking missiles. In
addition, ILC developed for Hughes Aircraft Company a multi-faceted Cermax
high-intensity discharge lamp that is used in the infrared guidance system of
the TOW (Tube Launched Optically Guided Wire Controlled) missile, and shipped
approximately $1.6 million of this product in fiscal 1997.

MARKETING AND SALES

ILC markets and sells its products to OEMs through a direct sales force
and to end users through sales representatives and distributors. The sales
organization includes regional sales managers and a team of market
development managers with global responsibilities aligned along specific
markets such as the semiconductor, video projection and medical markets. In
addition, ILC maintains customer service groups at its facilities in
California and Cambridge, England to provide sales and customer service
support to its customer base and network of domestic and foreign sales
representatives and distributors.

ILC's European sales office, which is located at the facilities of Q-Arc
in Cambridge, England, markets and sells the complete line of lamp and
equipment products and provides local customer support for European
customers. In the fiscal year ended September 27, 1997, international sales
represented approximately 34.0% of ILC's net sales. Information regarding
ILC's export sales and major customers is incorporated herein by reference to
Note 3 of Notes to ILC Consolidated Financial Statements.

BACKLOG

As of September 27, 1997, ILC's backlog of unfilled orders was
approximately $23.4 million, compared to approximately $28.0 million at
September 28, 1996. Subsequent to fiscal 1997, ILC received an order of
approximately $6.5 million. A comparable order from the same customer was
received prior

88
<PAGE>
to the end of fiscal 1996 and is included in the backlog as of September 28,
1996. Had this order been received before the end of fiscal 1997, ILC's
backlog at September 27, 1997 would have been approximately $29.9 million.
ILC includes in its backlog orders that have been released by the customer
for shipment within the next 12 months. Due to the possibility of customer
changes in delivery schedules or cancellations of orders, backlog as of any
particular date is not necessarily representative of actual sales for any
succeeding period.

MANUFACTURING

ILC's lamp groups have built substantial expertise in the fields of
sealing technology (ceramic-to-metal, quartz-to-metal, vacuum sealing),
materials research, plasma physics, electrical engineering, optoelectronics
and electrode technology. The manufacturing of most of ILC's lamp and power
supply products is labor and capital intensive, and accordingly, the labor
force is highly skilled and experienced. The combination of ILC's technical
and manufacturing expertise enables ILC to dominate its selected market
niches for specialty lighting.

ILC designs, develops and manufactures a majority of its products in two
facilities totaling 97,000 square feet in Sunnyvale, California. These
adjoining buildings include lamp development laboratories, separate
manufacturing facilities for xenon and krypton arc lamps, Cermax lamps,
Daymax metal halide lamps, mercury capillary lamps, Cermax equipment and
aerospace products. In October 1994, ILC purchased a facility in Santa Clara,
California totaling approximately 20,000 square feet to accommodate stepper
lamp manufacturing. Q-Arc purchased a new facility of approximately 36,000
square feet in June 1994 and occupied the new facility in early fiscal 1995.
Q-Arc currently occupies approximately 25,000 square feet of this facility
and has available 11,000 square feet for future expansion.

Q-Arc received ISO 9002 certification in fiscal 1995 and ILC Sunnyvale
became certified in fiscal 1996. ISO certification ensures customers that ILC
has a quality system that will result in continuous product quality
improvement. It is a recognition of a commitment to quality through all
sections of the organization.

PATENTS AND TRADEMARKS

ILC holds approximately 25 United States and foreign patents related to
the key features of several of its products and has several patent
applications pending in the United States. While these patents tend to
enhance ILC's competitive position, ILC believes that ILC's success depends
primarily upon its proprietary technological, engineering, production and
marketing skills and the high quality of its products. The names of two of
ILC's products, Cermax and Daymax, are registered as trademarks in the United
States Patent and Trademark Office and in many other countries in which ILC's
products are sold.

ILC's patents expire at various dates between 1998 and 2013. There can be
no assurance that any patents held by ILC will not be challenged and
invalidated, that patents will issue from any of ILC's pending patent
applications or that any claim allowed from existing or pending patents will
be of sufficient scope or strength to provide meaningful protection or any
commercial advantage to ILC. Competitors of ILC also may be able to design
around ILC's patents.

COMPETITION

ILC competes on the basis of product performance, applications
engineering, customer service, reputation and price. ILC competes in many
markets in which technology develops and improves rapidly, stimulating ILC to
enhance the capability of its products and technologies. Competitors consist
of both large and small companies located in the United States, Japan and
Europe. They include EG&G, Inc., Osram GmbH, Philips Electronics N.V., Ushio,
ORC, Koto and Wolfram Electric Inc. In many market segments, the competition
has established the benchmark for product acceptance at a very high level,
which requires ILC to improve continuously all phases of its processes for
customer satisfaction. ILC believes that by exploiting segmented market areas
in which ILC has technological, manufacturing and marketing strengths, ILC
can compete effectively. At the same time, by focusing its product
development and acquisition activities in these areas, ILC believes that it
can defend its strengths and maintain its leadership in selected markets.

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<PAGE>
ENGINEERING AND RESEARCH

ILC's engineering and research and development efforts consist of three
main activities. The first area of activity is extensive application
engineering in response to customer requirements. These activities result in
customer specific products and modifications to existing products to satisfy
the needs of ILC's customers. The second area is joint engineering and
development work made in connection with customer production contracts. The
third area includes those projects funded by ILC to develop new products and
technologies. ILC spent $4,253,000, $4,320,000 and $4,297,000 in fiscal 1997,
1996 and 1995, respectively, for ILC funded research and development.

EMPLOYEES

As of September 27, 1997, ILC had 439 full-time employees, comprised of 31
in research and engineering, 24 in marketing and sales, 361 in manufacturing
and 23 in general and administrative positions. ILC believes that its future
success depends upon its continued ability to recruit and retain highly
skilled employees in all disciplines. Although competition for qualified
personnel is intense, ILC has been successful in attracting and retaining
skilled employees. None of ILC's employees is represented by a labor union.
ILC believes that its relations with its employees are good.

FACILITIES

ILC owns facilities with an aggregate of approximately 153,000 square feet
of office and manufacturing space in four separate buildings in Sunnyvale and
Santa Clara, California and Cambridge, England. In Sunnyvale, ILC owns two
adjacent buildings with an aggregate of 97,000 square feet of office and
manufacturing space. These buildings were constructed by ILC in 1977 and
1979, sold and leased back from the new owners in 1982, and re-purchased from
the landlord in August 1993. ILC leases to one tenant approximately 9,000
square feet of its space in Sunnyvale under a lease that expires in March
1998. In October 1994, ILC purchased 20,000 square feet of office and
manufacturing space in Santa Clara, California. In June 1994, ILC purchased
36,000 square feet of office and manufacturing space in Cambridge, England.
Q-Arc currently occupies approximately 25,000 square feet with approximately
11,000 square feet available for future expansion.

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<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT OF ILC

The following table sets forth information with respect to the beneficial
ownership of ILC Common Stock as of the ILC Record Date by (i) each
shareholder known by ILC to be the beneficial owner of more than 5% of ILC
Common Stock; (ii) each director of ILC; (iii) each executive officer of ILC;
and (iv) all directors and executive officers of ILC as a group.

<TABLE>
<CAPTION>
BENEFICIAL OWNERSHIP
AS OF ILC RECORD
DATE (1)
--------------------
NAME NUMBER PERCENT
- ---------------------------------------------------------------- --------- ---------
<S> <C> <C>
Westport Asset Management, Inc. (2).............................. 700,550 14.3%
Royce & Associates, Inc. (3)..................................... 519,920 10.6
Investment Counselors of Maryland, Inc. (4)...................... 326,000 6.6
Marvin C. Schwartz (5)........................................... 302,700 6.2
Henry C. Baumgartner (6)......................................... 191,238 3.8
Felix J. Schuda (7).............................................. 96,184 1.9
Ronald E. Fredianelli (8)........................................ 79,751 1.6
Richard D. Capra (9)............................................. 27,338 *
John A. Lucero (10).............................................. 16,906 *
Dennis M. Toohey (11)............................................ 6,250 *
Arthur O. Whipple (12)........................................... 3,950 *
Arthur L. Schawlow (13).......................................... 27,000 *
Harrison H. Augur (14)........................................... 47,000 1.0
George B. Clairmont (15)......................................... 177,900 3.6
All Executive Officers and Directors as a Group
(10 persons)(16)................................................ 673,517 13.0
</TABLE>

- ------------
* Less than 1%.
(1) Based upon a total of 4,903,591 shares of ILC Common Stock outstanding
as of the ILC Record Date. Unless otherwise indicated below, the persons
and entities named in the table have sole voting and sole investment
power with respect to all shares beneficially owned, subject to
community property laws where applicable. Shares of ILC Common Stock
subject to options that are currently exercisable or exercisable within
60 days of the ILC Record Date are deemed to be outstanding and to be
beneficially owned by the person holding such options for the purpose of
computing the percentage ownership of such person but are not treated as
outstanding for the purpose of computing the percentage ownership of any
other person.
(2) The share ownership is as reported on Schedule 13G dated February 13,
1997. Of these shares, 691,650 shares are held in discretionary managed
accounts and 8,900 shares are beneficially owned by officers and
stockholders of Westport Asset Management Inc. The address of Westport
Asset Management Inc. is 253 Riverside Avenue, Westport, Connecticut
06880.
(3) The share ownership is as reported on Amendment Number 3 to Schedule 13G
dated June 6, 1997, on behalf of a group consisting of Charles M. Royce,
Royce & Associates, Inc. ("Royce") and Royce Management Company ("RMC").
Of these shares, 461,620 shares are beneficially owned by Royce and
58,300 shares are beneficially owned by RMC. Mr. Royce disclaims
beneficial ownership of all of such shares. The address of Mr. Royce,
Royce and RMC is 1414 Avenue of the Americas, New York, New York 10019.
(4) The share ownership is as reported on Schedule 13G dated February 14,
1997. All of such shares are owned by various investment advisory
clients of Investment Counselors of Maryland, Inc., which reported sole
voting power as to 286,000 shares and sole dispositive power as to
326,000 shares. The address of Investment Counselors of Maryland, Inc.
is 803 Cathedral Street, Baltimore, Maryland 21201-5297.
(5) The share ownership is as reported on Schedule 13D dated August 13,
1996. Mr. Schwartz reported ownership of 55,500 shares, sole dispositive
power and voting power with respect to 20,000 shares and discretionary
and shared dispositive power with respect to 227,200 shares. The address
of Mr. Schwartz is 605 Third Avenue, New York, New York 10158-3698.
(6) Includes 92,500 shares subject to outstanding options that are
exercisable within 60 days after the ILC Record Date. An additional
77,500 shares subject to outstanding options will become exercisable
upon the closing of the Merger. Mr. Baumgartner is the Chairman of the
Board, Chief Executive Officer and a director of ILC.
(7) Includes 42,500 shares subject to outstanding options that are
exercisable within 60 days after the ILC Record Date. An additional
12,500 shares subject to outstanding options will become exercisable
upon the closing of the Merger. Mr. Schuda is the Vice President and
Chief Technical Officer of ILC.
(8) Includes 52,500 shares subject to outstanding options that are
exercisable within 60 days after the ILC Record Date. An additional
37,500 shares subject to outstanding options will become exercisable
upon the closing of the Merger. Mr. Fredianelli is the Chief Financial
Officer and Secretary of ILC.
(9) Includes 26,250 shares subject to outstanding options that are
exercisable within 60 days after the ILC Record Date. An additional
113,750 shares subject to outstanding options will become exercisable
upon the closing of the Merger. Mr. Capra is the President, Chief
Operating Officer and a director of ILC.
<PAGE>

(10) Includes 15,000 shares subject to outstanding options that are
exercisable within 60 days after the ILC Record Date. An additional
40,000 shares subject to outstanding options will become exercisable
upon the closing of the Merger. Mr. Lucero is the Senior Vice President,
Sales and Marketing of ILC.

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<PAGE>
(11) Represents shares subject to outstanding options that are exercisable
within 60 days after the ILC Record Date. An additional 18,750 shares
subject to outstanding options will become exercisable upon the closing
of the Merger. Mr. Toohey is the Vice President, Logistics and Quality
of ILC.
(12) Includes 3,750 shares subject to outstanding options that are
exercisable within 60 days after the ILC Record Date. An additional
28,750 shares subject to outstanding options will become exercisable
upon the closing of the Merger. Mr. Whipple is the Vice President,
Engineering of ILC.
(13) Includes 15,000 shares subject to outstanding options that are
exercisable within 60 days after the ILC Record Date. An additional
15,000 shares subject to outstanding options will become exercisable
upon the closing of the Merger. Dr. Schawlow is a director of ILC.
(14) Includes 35,000 shares subject to outstanding options that are
exercisable within 60 days after the ILC Record Date. An additional
15,000 shares subject to outstanding options will become exercisable
upon the closing of the Merger. Mr. Augur is a director of ILC.
(15) Includes 68,900 shares owned by persons whose accounts are managed by
Mr. Clairmont, as to which Mr. Clairmont disclaims beneficial ownership.
Mr. Clairmont is a director of ILC.
(16) Includes the shares subject to outstanding options exercisable within 60
days after the ILC Record Date, as described in notes (6) through (14).

MANAGEMENT OF BEC FOLLOWING THE MERGER

The executive officers and directors of BEC following the Merger will be
as follows (assuming the Director Election proposal is approved by BEC
stockholders):

<TABLE>
<CAPTION>
NAME AGE OFFICE
- -------------------------- ----- --------------------------------------------------
<S> <C> <C>
Martin E. Franklin ........ 33 Chairman of the Board of Directors and Director
Richard D. Capra .......... 65 Chief Executive Officer and Director
Ian G.H. Ashken ........... 37 Executive Vice President of Finance and
Administration, Chief Financial Officer, Assistant
Secretary and Director
David L. Moore ............ 40 Director
William T. Sullivan ....... 53 Director
Harrison H. Augur ......... 55 Director
Henry C. Baumgartner ...... 65 Director
George B. Clairmont ....... 48 Director
</TABLE>

Martin E. Franklin was elected Chairman of the Board and Chief Executive
Officer of BEC in December 1995. Mr. Franklin was Chairman of the Board and
Chief Executive officer of Benson from October 1992 to May 1996 and President
from November 1993 to May 1996. Mr. Franklin has been the Chairman and Chief
Executive Officer of Pembridge Holdings, Inc. since 1990. From 1988 to 1990,
Mr. Franklin was Managing Director of Pembridge Associates, Inc. Both
Pembridge Associates, Inc. and Pembridge Holdings, Inc., specialized in
merchant banking and related services. Mr. Franklin has been Chairman and
Chief Executive Officer of Marlin Holdings, Inc., the general partner of
Marlin Capital, L.P., since October 1996. Mr. Franklin is non-executive
Chairman and a director of Eyecare Products plc and also serves on the boards
of directors of Specialty Catalog Corp. and certain private companies. Mr.
Franklin received his B.A. in Political Science from the University of
Pennsylvania.

Richard D. Capra has served as a member of the ILC Board since 1995. Since
July 1996, he has also served as President and Chief Operating Officer of
ILC. From January 1991 to July 1996, Mr. Capra served as a management
consultant and a director of several companies in the electrical and lighting
business. He was President and Chief Executive Officer of Philips Lighting
Inc., U.S., from 1983 to 1991.

Ian G.H. Ashken, A.C.A. was appointed Executive Vice President, Chief
Financial Officer, Assistant Secretary and a Director of BEC in December
1995. Mr. Ashken was Chief Financial Officer of Benson and a director of
Benson from October 1992 to May 1996. Mr. Ashken also served as Benson's
Executive Vice President from October 1994 to May 1996; Secretary from
October 1992 to December 1993; and, Assistant Secretary from December 1993 to
May 1996. Mr. Ashken has been the Executive Vice President and a director of
Pembridge Holdings, Inc. since 1990. Since October 1996, Mr. Ashken has been
Vice Chairman of Marlin Holdings, Inc., the general partner of Marlin
Capital, L.P. Mr. Ashken is a director of Eyecare Products plc. Mr. Ashken
received his B.A. (Hons) in Economics and Accounting from the University of
Newcastle in England.

92
<PAGE>
David L. Moore became a member of the BEC Board in May 1996. For more than
the last five years Mr. Moore has been President and Chief Executive Officer
of Century 21 Home Improvements, and for more than fifteen years has been
President and Chief Executive Officer of Garden State Brickface, Inc., a
leading New York metropolitan area residential and commercial remodeling
firm. Mr. Moore received his B.A. in Economics from Amherst College and his
M.B.A. from Harvard University.

William T. Sullivan was President and Chief Operating Officer of BEC from
April 1996 to April 1997. Mr. Sullivan became a member of the BEC Board in
May 1996. Upon Benson's acquisition of ORC in October 1994, Mr. Sullivan was
appointed Benson's Executive Vice President of Operations. From July 1993 to
October 1994, Mr. Sullivan served as the President of the Consumer Optical
Group of ORC. From August 1987 through July 1993, Mr. Sullivan served as
Group Vice President of the Consumer Optical Group of ORC. Prior to joining
ORC, Mr. Sullivan was President of Pearle Vision Centers.

Harrison H. Augur has served as a member of the Board of Directors of ILC
since 1989. He has been General Partner of Capital Asset Management since
June 1987. From April 1981 to August 1991, he served as Executive Vice
President and Director of Worms & Co., Inc.

Henry C. Baumgartner is a co-founder of ILC. He has served ILC in various
management positions since 1967 and has been a member of the ILC Board since
1967. Mr. Baumgartner was appointed Chairman of the ILC Board in July 1996
and Chief Executive Officer of ILC in April 1990. From April 1990 to July
1996, he served as the President of ILC. Prior to 1990, he served as Chief
Executive Officer and Chairman of the Board of ILC from November 1986.

George B. Clairmont has served as a member of the Board of Directors of
ILC since July 1997. He has been President of Clairvest Corporation, a New
York-based registered investment adviser, since 1983. Mr. Clairmont also
serves as a director of Thomson-Leeds Corporation, a designer and
manufacturer of point of sales displays.

DIRECTORS

Pursuant to the Merger Agreement, upon consummation of the Merger, the BEC
Board will be expanded from seven (7) to nine (9) members. Four (4) members
will be existing BEC directors, four (4) members will be proposed by ILC, and
the ninth director will be elected by the BEC Nominees and ILC Nominees
subsequent to the Merger pursuant to the Bylaws of BEC. Martin E. Franklin,
Ian G.H. Ashken, David L. Moore and William T. Sullivan, all current
directors of BEC, will remain on the BEC Board as the BEC Nominees. Nora A.
Bailey, Richard W. Hanselman and Charles F. Sydnor, current directors of BEC,
have agreed to resign at the Effective Time in order to facilitate the
Merger. BEC is seeking stockholder approval for the election of Harrison H.
Augur, Henry C. Baumgartner, Richard D. Capra and George B. Clairmont, who
are all current directors of ILC and are the ILC Nominees for the BEC Board.
After the Merger, the BEC Board will elect a ninth director who will be
appointed jointly by the BEC Nominees and the ILC Nominees to serve as a
director. See "The Merger--Board of Directors and Management of BEC Following
the Merger."

COMMITTEES OF THE BOARD OF DIRECTORS

Committee structure and membership will be determined by the BEC Board
shortly after the completion of the Merger. At that time, the BEC Board will
appoint new members to its audit, compensation and nominating committees. The
compensation committee of BEC meets annually in December to review and
determine, among other things, compensation arrangements for the senior
management of BEC. Therefore, any bonuses for BEC's management have not yet
been determined in respect of their performance in 1997, including their
efforts regarding the Spinoff and Merger, or their compensation arrangements
in respect of 1998.

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<PAGE>
SUMMARY COMPENSATION TABLE

The following table sets forth all compensation earned by or paid to each
executive officer of ILC who will be an executive officer or director of BEC
following the Merger, for services rendered to ILC and its subsidiaries
during each of fiscal 1997, 1996 and 1995. Summary compensation information
for the BEC Nominees may be found in the BEC Annual Report for the fiscal
year ended December 31, 1996, and is incorporated by reference herein.

<TABLE>
<CAPTION>
ANNUAL COMPENSATION(1)
------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY BONUS(2) COMPENSATION(3) COMPENSATION(4)
- --------------------------- ------ --------- -------- --------------- ---------------
<S> <C> <C> <C> <C> <C>
Henry C. Baumgartner, ..... 1997 $183,654 $45,000 $6,000 $3,000
Chief Executive Officer(5) 1996 175,000 15,000 -- 2,558
1995 175,610 26,392 -- 3,021
Richard D. Capra,.......... 1997 $197,115 $45,000 $6,000 $ 615
President and Chief 1996 25,385 -- -- --
Operating Officer(6) 1995 10,000 -- -- --

</TABLE>

- ------------
(1) No compensation is paid to officers of ILC for services rendered as
directors.
(2) Includes cash bonuses paid during the year and cash bonuses accrued for
services rendered during the year.
(3) Represents car allowance.
(4) Represents ILC matching contribution under ILC's Thrift Incentive
Savings Plan.
(5) Mr. Baumgartner will serve only as a director of BEC following the
Merger.
(6) Mr. Capra will serve as Chief Executive Officer and a director of BEC
following the Merger.

OPTION GRANTS IN FISCAL 1997

The following table sets forth information regarding option grants during
fiscal 1997 to each executive officer of ILC who will be an executive officer
or director of BEC after the Merger. In accordance with the rules of the
Commission, the table sets forth the hypothetical gains or "option spreads"
that would exist for the options at the end of their ten-year terms. These
gains are based on assumed rates of annual compound stock price appreciation
of 5% and 10% from the date the options were granted to the end of the option
terms.

OPTION GRANTS IN FISCAL 1997
INDIVIDUAL GRANTS

POTENTIAL REALIZABLE
VALUE AT
ASSUMED ANNUAL RATES
NUMBER OF PERCENT OF OF STOCK
SECURITIES TOTAL OPTIONS PRICE APPRECIATION FOR
UNDERLYING GRANTED TO OPTION
OPTIONS EMPLOYEES IN EXERCISE PRICE EXPIRATION TERM (2)
NAME GRANTED (1) FISCAL 1997 PER SHARE DATE 5% 10%
- -------------------- ------------ --------------- -------------- ------------ ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Henry C.
Baumgartner......... 20,000 5% $11.00 11/21/06 $138,357 $350,623
Henry C.
Baumgartner......... 50,000 12% 9.50 5/13/07 298,725 757,028
Richard D. Capra .... 40,000 10% 11.00 11/21/06 276,714 701,247
Richard D. Capra .... 40,000 10% 9.50 5/13/07 238,980 605,622
</TABLE>

- ------------
(1) The options shown in the table were granted at fair market value and
become exercisable in cummulative increments of 25% of the shares per
year, commencing on the first anniversary of the date of grant. The
options shown in the table will expire ten years from the date of grant,
subject to earlier termination upon termination of employment.
(2) The assumed annual compound rates of stock price appreciation are
mandated by the rules of the Commission and do not represent ILC's
estimate or projection of future stock prices.

94
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION
VALUES

The following table shows certain information regarding options exercised
during fiscal 1997 and held as of September 27, 1997, by each executive
officer of ILC who will be an executive officer or director of BEC after the
Merger.

<TABLE>
<CAPTION>
NUMBER OF VALUE OF UNEXERCISED
UNEXERCISED OPTIONS IN-THE-MONEY OPTIONS
AT FY-END(1) AT FY-END ($)(2)
------------------- --------------------
SHARES VALUE
ACQUIRED REALIZED EXERCISABLE/ EXERCISABLE/
NAME OF EXERCISE (#) ($)(3) UNEXERCISABLE UNEXERCISABLE
- --------------------- --------------- ---------- ------------------- --------------------
<S> <C> <C> <C> <C>
Henry C. Baumgartner 40,000 $375,000 81,250/88,750 $558,688/$179,063
Richard D. Capra .... -- -- 16,250/123,750 $ 12,813/$147,188
</TABLE>

- ------------
(1) Represents the total number of shares subject to stock options held by
each executive officer. These options were granted on various dates
during fiscal years 1988 through 1997 and are exercisable on various
dates beginning in 1989 and expiring in 2007.
(2) Represents the difference between the exercise price and $11.75, which
is the September 27, 1997 closing price of the ILC Common Stock as
reported by Nasdaq. Stock option exercise prices range from $2.25 to
$11.25.
(3) Represents the aggregate market value of the shares covered by the
option at the date of exercise, less the aggregate exercise price.

ILC DIRECTOR COMPENSATION

Harrison H. Augur and George B. Clairmont, as outside directors of ILC,
are paid an annual fee of $10,000 for services as a director. Such fee is
paid quarterly and pro rated when a director does not serve for a full year.
Directors receive no additional compensation for committee participation or
attendance at committee meetings. During fiscal 1997, Mr. Augur was granted
an automatic option to purchase 5,000 shares of ILC Common Stock at an
exercise price of $9.50 per share. In addition, in February 1997, Mr. Augur
was granted an option to purchase 5,000 shares of ILC Common Stock at an
exercise price of $11.19 per share.

CERTAIN TRANSACTIONS

In November 1996, ILC entered into Compensation Agreements with eleven of
its key employees, eight of whom are currently employed by ILC, that provide
for severance benefits upon termination following a change in control of ILC.
Six of the executive officers of ILC, plus two additional key employees of
ILC, are currently covered by the Compensation Agreements. Each agreement
provides that if, during the two-year period following a change in control of
ILC (as defined in the agreements), ILC terminates the employee's employment
without cause (other than for death, retirement or disability) or the
employee terminates the employee's employment for good reason (as defined in
the agreements), the employee will receive from ILC a lump sum payment as a
severance benefit. The amount of such payment will be equal to three times
the employee's annual full base salary (excluding bonus) for Messrs.
Baumgartner and Capra. However, in the case of each of Messrs. Baumgartner
and Capra, it is intended that the terms of the employment/consulting
agreements to be entered into with BEC will supercede such arrangements.

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COMPARISON OF CAPITAL STOCK

DESCRIPTION OF BEC CAPITAL STOCK

The authorized capital stock of BEC consists of 50,000,000 shares of
Common Stock, $0.01 par value per share, and 500,000 shares of Preferred
Stock, $1.00 par value per share.

BEC COMMON STOCK

As of the BEC Record Date, there were 17,631,102 shares of BEC Common
Stock. BEC Common Stock is listed on NYSE under the symbol "EYE". As of the
BEC Record Date, the outstanding BEC Common Stock was held by approximately
580 stockholders. In addition, stock options to purchase an aggregate of
3,301,253 shares of BEC Common Stock were outstanding as of the BEC Record
Date. Holders of BEC Common Stock are entitled to one vote per share on all
matters to be voted upon by the Holders. The stockholders may not cumulate
votes in connection with the election of directors. Subject to the
preferences that may be applicable to outstanding Preferred Stock, if any,
the holders of BEC Common Stock are entitled to receive ratably such
dividends, if any, as may be declared from time to time by the Board of
Directors out of funds legally available therefor. In the event of a
liquidation, dissolution or winding up of BEC, the holders of BEC Common
Stock are entitled to share ratably in all assets remaining after payment of
liabilities, subject to the preferences that may be applicable to outstanding
Preferred Stock, if any. The BEC Common Stock has no preemptive or conversion
rights or other subscription rights. There are no redemption or sinking fund
provisions applicable to the BEC Common Stock. All outstanding shares of BEC
Common Stock are fully paid and non-assessable, and the shares of BEC Common
Stock to be outstanding upon completion of the Merger will be fully paid and
non-assessable.

PREFERRED STOCK

BEC has 500,000 shares of Preferred Stock authorized, of which, as of the
Record Date, 10,000 shares are outstanding. Pursuant to the Spinoff, it is
anticipated that the 10,000 shares of outstanding preferred stock will be
cancelled. The BEC Board has the authority to issue these shares of Preferred
Stock in one or more series and to fix the rights, preferences, privileges
and restrictions granted to or imposed upon any unissued and undesignated
shares of Preferred Stock and to fix the number of shares constituting any
series and the designations of such series, without any further vote or
action by the stockholders. Although it presently has no intention to do so,
the BEC Board, without stockholder approval, can issue Preferred Stock with
voting and conversion rights which could adversely affect the voting power or
other rights of the holders of BEC Common Stock. The issuance of Preferred
Stock may also have the effect of delaying, deferring or preventing a change
in control of BEC and negating BEC's ability to apply the pooling of interest
method of accounting to the Merger.

TRANSFER AGENT AND REGISTRAR

The Transfer Agent and Registrar of the BEC Common Stock is National City
Bank. Its telephone number is (800) 622-6757.

DESCRIPTION OF ILC CAPITAL STOCK

The authorized capital stock of ILC consists of 10,000,000 shares of
Common Stock, no par value per share, of which there were 4,903,591 shares
outstanding as of the ILC Record Date, held by approximately 400 shareholders
of record. In addition, stock options to purchase an aggregate of 830,000
shares of ILC Common Stock were outstanding as of the ILC Record Date.

ILC COMMON STOCK

The following description of the ILC Common Stock does not purport to be
complete and is subject to and qualified in its entirety by the ILC Amended
and Restated Articles of Incorporation and Bylaws and by the provisions of
applicable California law.

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Holders of ILC Common Stock are entitled to one vote per share on all
matters to be voted upon by the shareholders. Holders of ILC Common Stock
have cumulative voting rights in the election of directors. Accordingly,
provided notice of the intention to use cumulative voting has been given at
the meeting prior to voting, a shareholder may give one candidate a number of
votes equal to the number of directors to be elected multiplied by the number
of votes to which the shareholder's shares are entitled, or distribute the
shareholder's votes on the same principle among as many candidates as the
shareholder may select.

Holders of ILC Common Stock are entitled to receive such dividends as may
be declared from time to time by the Board of Directors out of funds legally
available therefor. In the event of the liquidation, dissolution or winding
up of ILC, the holders of ILC Common Stock are entitled to share ratably in
all assets legally available for distribution. The ILC Common Stock has no
preemptive or conversion rights or other subscription rights. There are no
redemption or sinking fund provisions applicable to the ILC Common Stock. All
outstanding shares of ILC Common Stock are fully paid and non-assessable, and
the shares of BEC Common Stock that are received in exchange for the ILC
Common Stock to be outstanding upon completion of the Merger will be fully
paid and non-assessable.

ILC Common Stock is included for quotation on Nasdaq under the trading
symbol "ILCT."

The transfer agent and registrar for the ILC Common Stock is ChaseMellon
Shareholder Services, L.L.C. Its telephone number is (415)954-9509.

ILC COMMON STOCK PURCHASE RIGHTS

In 1989, the ILC Board declared and paid a dividend of one common share
purchase right (a "Right") for each outstanding share of ILC Common Stock.
Each Right entitles the registered holder of ILC Common Stock to purchase
from ILC one share of ILC Common Stock at a price of $55 per share, subject
to adjustment. The terms of the Rights are set forth in a Rights Agreement
dated as of September 29, 1989 between ILC and Security Pacific National
Bank, as amended by First Amendment to Rights Agreement dated as of February
25, 1997 between ILC and ChaseMellon Shareholder Services, L.L.C., as
successor to Security Pacific National Bank ("Rights Agreement"). The Rights
are not exercisable until the earlier to occur of the following: (i) 10 days
(or such later date as may be determined by action of the ILC Board)
following a public announcement that a person or group of affiliated or
associated persons (an "Acquiring Person") has acquired beneficial ownership
of 15% or more of the outstanding shares of ILC Common Stock or (ii) 10
business days (or such later date as may be determined by action of the ILC
Board) 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 the
outstanding shares of ILC Common Stock. In the event that ILC 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, each holder of a Right will have the right to receive, upon
the exercise of the Right at its then current exercise price, 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 certain other events, each holder of a Right (other than certain
Acquiring Persons) will have the right to receive, upon the exercise of the
Right at its then current exercise price, that number of shares of ILC Common
Stock with a market value of two times the exercise price of the Right. The
ILC Board proposes to amend the Rights Agreement prior to the Effective Time
to enable the Merger to be consummated without any Rights becoming
exercisable.

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COMPARISON OF STOCKHOLDER RIGHTS

After consummation of the Merger, the holders of ILC Common Stock who
receive BEC Common Stock under the terms of the Merger Agreement will become
stockholders of BEC. As shareholders of ILC, their rights are governed by
California law, including the CGCL, and by the ILC Amended and Restated
Articles of Incorporation (the "ILC Articles") and the ILC Bylaws, as amended
(the "ILC Bylaws"). As stockholders of BEC, their rights will be governed by
Delaware law, including the DGCL, the BEC Certificate and the BEC Bylaws (the
"BEC Bylaws"). The following discussion summarizes certain differences
between the rights of ILC shareholders under the CGCL, the ILC Articles and
the ILC Bylaws and the rights of BEC stockholders under the DGCL, the BEC
Certificate and the BEC Bylaws. This summary does not purport to be complete
and is qualified in its entirety be reference to the ILC Articles and ILC
Bylaws, the BEC Certificate and BEC Bylaws and the relevant provisions of
California and Delaware law, including the CGCL and the DGCL.

SIZE OF THE BOARD OF DIRECTORS

Under the CGCL, although changes in the number of directors must in
general be approved by a majority of the outstanding shares, the board of
directors may fix the exact number of directors within a stated range set
forth in the articles of incorporation or bylaws, if that stated range has
been approved by the shareholders. The ILC Bylaws provide that the ILC Board
has the authority to set the exact number of directors within the range of
six to eleven. The exact number of directors is currently set at six members.
The DGCL permits the board of directors alone to change the authorized
number, or the range, of directors by amendment to the bylaws, unless the
directors are not authorized to amend the bylaws or the number of directors
is fixed in the certificate of incorporation (in which case a change in the
number of directors may be made only by amendment to the certificate of
incorporation following approval of such change by the stockholders). The BEC
Bylaws state that the number of directors shall be at least two and no more
than twelve. As part of the Merger, the Board of Directors of BEC will elect
four new directors as the ILC Nominees and one additional director will be
elected by the BEC Board after the Merger. The BEC Bylaws provide, consistent
with the DGCL, that the size of the Board of Directors may be changed by the
approval of the BEC Board acting alone.

CUMULATIVE VOTING

In an election of directors under cumulative voting, each share of stock
normally having one vote is entitled to a number of votes equal to the number
of directors to be elected. A shareholder may then cast all such votes for a
single candidate or may allocate them among as many candidates as the
shareholder may choose. Without cumulative voting, the holders of a majority
of the shares present at any meeting at which directors will be elected would
have the power to elect all the directors to be elected at the meeting, and
no person could be elected without the support of holders of a majority of
the shares voting at such meeting.

Under the CGCL, cumulative voting in the election of directors is a right
available to all shareholders of California corporations unless certain
conditions apply. The ILC Articles provide for cumulative voting. Under the
DGCL, cumulative voting in the election of directors is not mandatory. The
BEC Certificate does not provide for cumulative voting.

NOTICE OF STOCKHOLDER PROPOSALS AND NOMINATIONS OF DIRECTORS; POWER TO CALL
SPECIAL STOCKHOLDER MEETINGS

The ILC Bylaws provide that for nominations or other business to be
properly brought before an annual meeting by a shareholder, the shareholder
must have given timely notice of such business or nomination in writing to
the Secretary of ILC and such business must be a proper matter for
shareholder action under the CGCL. To be timely, a shareholder's notice must
be delivered to the Secretary of ILC at the principal executive offices of
ILC not less than 60 nor more than 90 days before the first anniversary of
the preceding year's annual meeting of shareholders; provided, however, that
if the date of the annual meeting is advanced more than 30 days before or
delayed by more than 60 days after such anniversary

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date, notice by the shareholder to be timely must be so delivered not earlier
than the 90th day before such annual meeting and not later than the close of
business on the later of the 60th day before such annual meeting or the 10th
day following the day on which public announcement of the date of such
meeting is first made. The ILC Bylaws provide that such shareholder's notice
shall set forth: (i) as to each person whom the shareholder proposes to
nominate for election or reelection as a director all information relating to
such person that is required to be disclosed in solicitations of proxies for
election of directors, or is otherwise required, in each case pursuant to the
regulations of the Commission (including such person's written consent to
being named in the proxy statement as a nominee and to serving as a director
if elected); (ii) as to any other business that the shareholder proposes to
bring before the meeting, a brief description of such business, the reasons
for conducting such business at the meeting and any material interest in such
business of such shareholder and the beneficial owner, if any, on whose
behalf the proposal is made; and (iii) as to the shareholder giving the
notice and the beneficial owner, if any, on whose behalf the nomination or
proposal is made (a) the name and address of such shareholder, as they appear
on ILC's books, and of such beneficial owner and (b) the class and number of
shares of ILC Common Stock that are owned beneficially and of record by such
shareholder and such beneficial owner. The chair of the meeting shall
determine whether a nomination or any business proposed to be brought before
the meeting was not brought in accordance with the foregoing procedures and,
if it is so determined, shall disregard such nomination or proposal.

Under the CGCL, a special meeting of shareholders may be called by the
board of directors, the chairman of the board, the president, the holders of
shares entitled to cast not less than 10% of the votes at such meeting or
such additional persons as are authorized by the articles of incorporation or
the bylaws. The ILC Bylaws provide that a special meeting may be called by
the ILC Board, the Chairman of the Board, the President or by shareholders
holding not less than 10% of the voting stock. The ILC Bylaws also provide
that the ILC Board may postpone, reschedule or cancel any previously
scheduled special shareholder meeting. Nominations of persons for election to
the ILC Board may be made at a special meeting of shareholders at which
directors are to be selected pursuant to ILC's notice of meeting by or at the
direction of the ILC Board or by any shareholder of record of ILC at the time
of giving of notice of the meeting who is entitled to vote at the meeting,
and who complies with the notice procedures for nominations for directors to
be elected at annual meetings, as discussed above. To be timely, a
shareholder's notice must be delivered to the Secretary of ILC at the
principal executive offices of ILC not earlier than the 90th day before such
special meeting and not later than the close of business on the later of the
60th day before such special meeting or the 10th day following the day on
which public announcement is first made of the date of the special meeting
and of the nominees proposed by the ILC Board to be selected at such special
meeting.

Under the DGCL, a special meeting of stockholders may be called by the
board of directors or by any other person authorized to do so in the
certificate of incorporation or the bylaws. Pursuant to the BEC Bylaws,
special meetings may be called by a majority of the Board of Directors, the
Chairman, or a majority of the stockholders of record entitled to vote.
Therefore, a substantially greater number of BEC stockholders must consent to
the call of a special meeting of stockholders. In addition, the ability of
the BEC Board under the DGCL to limit or eliminate the right of stockholders
to initiate action at special stockholder meetings may make it more difficult
to change the existing BEC Board and management.

STOCKHOLDER APPROVAL OF CERTAIN BUSINESS COMBINATIONS

In the last several years, a number of states (but not California) have
adopted laws designed to make certain kinds of "unfriendly" corporate
takeovers or other transactions involving a corporation and one or more of
its significant stockholders, more difficult. Under Section 203 of the DGCL
("Section 203"), certain "business combinations" by a Delaware corporation
with "interested stockholders" are subject to a three-year moratorium unless
specified conditions are met. BEC has elected in the BEC Certificate not to
be governed by Section 203. However, subject to stockholder approval, the BEC
Certificate could be amended to make BEC subject to Section 203.

The CGCL does not contain a business combinations provision comparable to
Section 203. However, the CGCL does provide that, with respect to a merger,
except (i) where the terms and conditions and the

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fairness of the terms and conditions of the transaction have been approved by
the California Commissioner of Corporations, (ii) in a "short-form" merger
(the merger of a parent corporation with a subsidiary in which the parent
owns at least 90% of the outstanding shares of each class of the subsidiary's
stock), or (iii) where all of the shareholders of the applicable class of the
target corporation consent, if the surviving corporation or its parent
corporation owns, directly or indirectly, shares of the target corporation
representing more than 50% of the voting power of the target corporation
prior to the merger, then the nonredeemable common stock of the target
corporation may be converted only into nonredeemable common stock of the
surviving corporation or its parent corporation. The effect of this provision
is to prohibit a cash-out merger of minority shareholders, except where the
majority shareholder already owns 90% or more of the voting power of the
target corporation and could, therefore, effect a short-form merger to
accomplish such a cash-out of minority shareholders. In addition, the CGCL
requires that, in connection with certain transactions between a corporation
whose shares are held of record by 100 or more persons and an "interested
party," such interested party must deliver a written opinion as to the
fairness of the consideration to the shareholders of the corporation. An
"interested party" for purposes of this CGCL provision means a person who is
a party to the transaction and (i) directly or indirectly controls the
corporation, (ii) is an officer or director of the corporation or (iii) is an
entity in which a material financial interest is held by any director or
executive officer of the corporation.

CLASSIFIED BOARD OF DIRECTORS

A classified board of directors is one in which a certain number, but not
all, of the directors is elected on a rotating basis each year. The CGCL
provides that California corporations that meet certain qualifications may
amend their articles of incorporation to provide for a classified board, but
corporations that are not so qualified must elect directors annually and are
not permitted to have a classified board. The DGCL permits, but does not
require, a classified board of directors, with staggered terms under which
one-half or one-third of the directors is elected for terms of two or three
years, respectively. This method of electing directors makes changes in the
composition of the board of directors, and thus a potential change in control
of a corporation, a lengthier and more difficult process. Neither the ILC
Articles and Bylaws nor the BEC Certificate and Bylaws currently provides for
a classified board of directors.

REMOVAL OF DIRECTORS

Under the CGCL, any director or the entire board of directors may be
removed, with or without cause, with the approval of a majority of the
outstanding shares entitled to vote; however, no individual director may be
removed (unless the entire board is removed) if the number of votes cast
against such removal would be sufficient to elect the director under
cumulative voting (without regard to whether shares may be voted
cumulatively). Under the DGCL, a director of a corporation such as BEC that
does not have a classified board of directors or cumulative voting, may be
removed with or without cause with the approval of a majority of the
outstanding shares entitled to vote.

FILLING VACANCIES ON THE BOARD OF DIRECTORS

Under the CGCL, any vacancy on a board of directors other than one created
by removal of a director may be filled by the board. If the number of
directors is less than a quorum, a vacancy may be filled by the unanimous
written consent of the directors then in office, by the affirmative vote of a
majority of the directors at a meeting held pursuant to notice or waivers of
notice or by a sole remaining director. A vacancy created by the removal of a
director may be filled by the board only if so authorized by a corporation's
articles of incorporation or a bylaw approved by the corporation's
shareholders. The ILC Articles and ILC Bylaws do not provide such authority
to the ILC Board. Under the DGCL, vacancies and newly created directorships
may be filled by a majority of the directors then in office (even though less
than a quorum) unless otherwise provided in the certificate of incorporation
or bylaws (and unless the certificate of incorporation directs that a
particular class is to elect such director, in which case any other directors
elected by such class, or a sole remaining director, shall fill such
vacancy). The BEC Bylaws allow any vacancy on the Board of Directors to be
filled by a majority of the directors then in office.

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INDEMNIFICATION AND ELIMINATION OF LIABILITY

There are certain differences between the laws of California and Delaware
respecting indemnification and limitation of liability. The laws of both
states permit corporations to adopt a provision in their charter documents
eliminating the liability of a director to the corporation or its
stockholders for monetary damages for breach of the director's fiduciary duty
of care. The ILC Articles eliminate the liability of directors for monetary
damages to the corporation to the fullest extent permissible under California
law. The CGCL does not permit the elimination of monetary liability where
such liability is based on (i) intentional misconduct or knowing and culpable
violation of law; (ii) acts or omissions that a director believes to be
contrary to the best interests of the corporation or its shareholders, or
that involve the absence of good faith on the part of the director; (iii)
receipt of an improper personal benefit; (iv) acts or omissions that show
reckless disregard for the director's duty to the corporation or its
shareholders, where the director in the ordinary course of performing a
director's duties should have been aware of a risk of serious injury to the
corporation or its shareholders; (v) acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of the
director's duty to the corporation or its shareholders; (vi) interested
transactions between the corporation and a director in which a director has a
material financial interest; and (vii) liability for improper distributions,
loans or guarantees.

The BEC Certificate also eliminates the liability of directors to the
fullest extent permissible under Delaware law, as such law exists currently
or as it may be amended in the future. Under the DGCL, such provision may not
eliminate or limit director monetary liability for: (i) breaches of the
director's duty of loyalty to the corporation or its stockholders; (ii) acts
or omissions not in good faith or involving intentional misconduct or knowing
violations of law; (iii) the payment of unlawful dividends or unlawful stock
repurchases or redemptions; or (iv) transactions in which the director
received an improper personal benefit. Such limitation of liability provision
also may not limit a director's liability for violation of, or otherwise
relieve BEC or its directors from the necessity of complying with, federal or
state securities laws, or affect the availability of non-monetary remedies
such as injunctive relief or rescission.

The CGCL permits indemnification of expenses incurred in derivative or
third-party actions, except that with respect to derivative actions (i) no
indemnification may be made without court approval when a person is adjudged
liable to the corporation in the performance of that person's duty to the
corporation and its shareholders, unless a court determines that such person
is entitled to indemnity for expenses, and then such indemnification may be
made only to the extent that such court shall determine, and (ii) no
indemnification may be made without court approval in respect of amounts paid
in settling or otherwise disposing of a pending action or expenses incurred
in defending a pending action which is settled or otherwise disposed of
without court approval.

Indemnification is permitted by the CGCL only for acts taken in good faith
and believed to be in the best interest of the corporation and its
shareholders, as determined by a majority vote of a disinterested quorum of
the directors, independent legal counsel (if a quorum of independent
directors is not obtainable), a majority vote of a quorum of the shareholders
(excluding shares owned by the indemnified party) or the court handling the
action. The CGCL requires indemnification when the individual has
successfully defended the action on the merits (as opposed to the DGCL which
requires indemnification relating to a successful defense on the merits or
otherwise).

The DGCL generally permits indemnification of expenses incurred in the
defense or settlement of a derivative or third-party action, provided there
is a determination by court order, by a majority vote of the disinterested
directors even though less than a quorum, by independent legal counsel or by
a majority vote of a quorum of the stockholders that the person seeking
indemnification acted in good faith and in a manner reasonably believed to be
in or (in contrast to California law) not opposed to the best interests of
the corporation. Without such court approval, however, no indemnification may
be made in respect of any derivative action in which such person is adjudged
liable for negligence or misconduct in the performance of his or her duty to
the corporation. The DGCL requires indemnification of expenses when the
individual being indemnified has successfully defended the action on the
merits or otherwise.

California corporations may include in their articles of incorporation a
provision that extends the scope of indemnification through agreements,
bylaws or other corporate action in excess of that

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specifically authorized by statute. The ILC Articles authorize ILC to provide
indemnification of agents, which include directors and officers, through
bylaw provisions, agreements with agents, vote of shareholders or
disinterested directors or otherwise, in excess of the indemnification
otherwise permitted by the CGCL, subject only to the applicable limits set
forth in the CGCL described above with respect to actions for breach of duty
to ILC and its shareholders. ILC provides indemnification to the fullest
extent permitted by the CGCL pursuant to its Bylaws to all officers and
directors of ILC and pursuant to indemnification agreements with all
executive officers and directors of ILC.

The DGCL provides that the indemnification provided by statute shall not
be deemed exclusive of any other rights under any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise. The BEC Certificate
includes a provision providing that BEC shall indemnify the directors of BEC
to the fullest extent permissible under Delaware law.

LOANS TO OFFICERS AND EMPLOYEES

Under the CGCL, any loan or guaranty by a corporation to or for the
benefit of a director or officer of the corporation or its parent requires
approval of the shareholders owning a majority of the outstanding shares of
the corporation (excluding shares owned by the interested person). In
addition, under the CGCL, shareholders of any corporation with 100 or more
shareholders of record may approve a bylaw authorizing the board of directors
alone (excluding any interested director) to approve loans or guaranties to
or on behalf of officers (whether or not such officers are directors) under
certain circumstances. The ILC Bylaws do not contain such a provision. Under
the DGCL, a corporation may make loans to, guarantee the obligations of or
otherwise assist its officers or other employees and those of its
subsidiaries (including directors who are also officers or employees) when
such action, in the judgment of the directors, may reasonably be expected to
benefit the corporation.

INSPECTION OF STOCKHOLDER LIST

Both the CGCL and the DGCL allow any stockholder to inspect the
stockholder list for a purpose reasonably related to such person's interest
as a stockholder. The CGCL provides, in addition, for an absolute right to
inspect and copy the corporation's stockholder list by persons holding an
aggregate of 5% or more of a corporation's voting shares, or, under certain
other circumstances, shareholders holding an aggregate of 1% or more of such
shares. Delaware law does not provide for any such absolute right of
inspection, and no such right is granted under the BEC Certificate or BEC
Bylaws. Restricted access to stockholder records, even though unrelated to
the stockholder's interests as a stockholder, could result in impairment of
the stockholder's ability to coordinate opposition to management proposals,
including proposals with respect to a change in control of BEC.

STOCKHOLDER VOTING

Both the CGCL and the DGCL generally require that a majority of the
stockholders of both acquiring and target corporations approve statutory
mergers. Delaware law does not require a stockholder vote of the surviving
corporation in a merger (unless the corporation provides otherwise in its
certificate of incorporation) if (i) the merger agreement does not amend the
existing certificate of incorporation, (ii) each share of the corporation
outstanding before the merger is an identical outstanding or treasury share
of the surviving corporation after the merger and (iii) the number of shares
to be issued by the surviving corporation in the merger does not exceed 20%
of the shares of the corporation outstanding immediately prior to the merger.
The CGCL contains a similar exception to its voting requirements for
reorganizations where shareholders or the corporation itself, or both,
immediately prior to the reorganization will own immediately after the
reorganization equity securities constituting more than five-sixths of the
voting power of the surviving or acquiring corporation or its parent entity.

Both the CGCL and the DGCL also require that a sale of all or
substantially all of the assets of a corporation be approved by a majority of
the voting shares of the corporation transferring such assets.

With certain exceptions, the CGCL requires that mergers, reorganizations,
certain sales of assets and similar transactions be approved by a majority
vote of each class of shares outstanding. In contrast, the

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DGCL generally does not require class voting, except in certain transactions
involving an amendment to the certificate of incorporation which adversely
affects a specific class of shares.

DIVIDENDS AND REPURCHASES OF SHARES

Under California law, a corporation may make a distribution to its
shareholders (including dividends, whether in cash or other property, and
repurchases of its shares) if: (i) the retained earnings of the corporation
immediately prior to the distribution equals or exceeds the amount of the
proposed distribution; (ii) immediately after giving effect to the
distribution, (a) the sum of the assets of the corporation (exclusive of
goodwill, capitalized research and development expenses and deferred charges)
would be at least equal to 1-1/4 times its liabilities (not including
deferred taxes, deferred income and other deferred credits), and (b) the
current assets of the corporation would be at least equal to its current
liabilities or, if the average of the earnings of the corporation before
income taxes and before interest expense for the two preceding fiscal years
were less than the average of the interest expense of the corporation for
such fiscal years, at least equal to 1-1/4 times its current liabilities; and
(iii) the corporation making the distribution is not, or as a result of the
distribution would not be, likely to be unable to meet its liabilities
(except those whose payment is otherwise adequately provided for) as they
mature. Such tests are applied to California corporations on a consolidated
basis.

The DGCL generally provides that a corporation may declare and pay
dividends out of surplus (defined as net assets minus stated capital) or, if
there is no surplus, out of net profits for the fiscal year in which the
dividend is declared and/or for the preceding fiscal year. Dividends may not
be paid out of net profits if the capital of the corporation is less than the
amount of capital represented by the issued and outstanding stock of all
classes having a preference upon the distribution of assets. In addition,
Delaware law generally provides that a corporation may redeem or repurchase
its shares only if such redemption or repurchase would not impair the capital
of the corporation.

STOCKHOLDER ACTION BY WRITTEN CONSENT

Unless otherwise provided in the certificate of incorporation,
stockholders of a Delaware corporation may take action without a meeting,
without prior notice, and without a vote, upon the written consent of
stockholders having not less than the minimum number of votes that would be
necessary to authorize the proposed action at a meeting at which all shares
entitled to vote were present and voted. The BEC Certificate does not
prohibit the stockholders from taking action by written consent. The ILC
Bylaws permit shareholder action by written consent. However, the CGCL
provides that certain actions by written consent may only be taken upon
notice of the action to all shareholders prior to the consummation of the
action authorized by such approval, and directors may be elected by written
consent only if the consent is unanimous.

DISSENTERS' RIGHTS

Under both California and Delaware law, a stockholder of a corporation
participating in certain major corporate transactions may, under varying
circumstances, be entitled to appraisal rights pursuant to which such
stockholder may receive cash in the amount of the fair market value of his or
her shares in lieu of the consideration he or she would otherwise receive in
the transaction. Under the DGCL, such dissenter's rights are not available
(i) with respect to the sale, lease or exchange of all or substantially all
of the assets of a corporation, (ii) with respect to a merger or
consolidation by a corporation the shares of which are either listed on a
national securities exchange or are held of record by more than 2,000 holders
if such stockholders receive only shares of the surviving corporation or
shares of any other corporation that are either listed on a national
securities exchange or held of record by more than 2,000 holders, plus cash
in lieu of fractional shares or (iii) to stockholders of a corporation
surviving a merger if no vote of the stockholders of the surviving
corporation is required to approve the merger.

The CGCL in general affords appraisal rights in sale of assets
reorganizations. Shareholders of a California corporation whose shares are
listed on a national securities exchange or on a list of over-the-counter
margin stocks issued by the Board of Governors of the Federal Reserve System
generally do not have appraisal rights unless the holders of at least 5% of
the class of outstanding shares claim the right or unless the corporation or
any law restricts the transfer of such shares.

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STOCKHOLDER DERIVATIVE SUITS

The CGCL provides that a shareholder bringing a derivative action on
behalf of the corporation need not have been a shareholder at the time of the
transaction in question, provided that certain tests are met. Under the DGCL,
a stockholder may only bring a derivative action on behalf of the corporation
if the stockholder was a stockholder of the corporation at the time of the
transaction in question or his or her stock thereafter devolved upon him or
her by operation of law. The CGCL also provides that the corporation or the
defendant in a derivative suit may make a motion to the court for an order
requiring the plaintiff shareholder to furnish a security bond. Delaware does
not have a similar bonding requirement.

DISSOLUTION

Under the CGCL, shareholders holding 50% or more of the total voting power
may authorize a corporation's dissolution, with or without the approval of
the corporation's board of directors, and this right may not be modified by
the articles of incorporation. Under the DGCL, unless the board of directors
approves the proposal to dissolve, the dissolution must be approved by
stockholders holding 100% of the total voting power of the corporation. Only
if the dissolution is initially approved by the board of directors may it be
approved by a simple majority of the corporation's stockholders. In the event
of such a board-initiated dissolution, Delaware law allows a Delaware
corporation to include in its certificate of incorporation a supermajority
voting requirement in connection with dissolutions. The BEC Certificate
contains no such supermajority voting requirement, however, a majority of
shares voting at a meeting at which a quorum is present would be sufficient
to approve a dissolution of BEC which had previously been approved by its
Board of Directors.

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ADDITIONAL MATTERS BEING SUBMITTED TO A VOTE
OF ONLY BEC'S STOCKHOLDERS

PROPOSAL NUMBER TWO--AMEND THE BEC CERTIFICATE
TO EFFECT THE REVERSE SPLIT

GENERAL

The BEC Board has approved an amendment to the BEC Certificate which would
effect the Reverse Split, subject to stockholder approval of the Merger
Agreement, the Reverse Split Proposal and the impending effectiveness of the
Merger. The Reverse Split will cause all issued and outstanding shares of BEC
Common Stock to be split, on a reverse basis, one-for-two. The Reverse Split
would not affect the number of authorized shares of BEC Common Stock.
Accordingly, the Reverse Split will effectively increase the number of
available authorized shares of BEC Common Stock. The effective date of the
Reverse Split would be the date on which the BEC Reverse Split Charter
Amendment is filed with the Secretary of State of the State of Delaware.
Implementation of the Reverse Split is contingent upon approval and adoption
by the BEC stockholders, and the impending effectiveness of the Merger. The
effective date of the Reverse Split is anticipated to be immediately prior to
the Effective Time of the Merger. As described below, the primary objectives
of the BEC Board in effecting the Reverse Split are to increase the per share
market value of the BEC Common Stock and to increase the number of authorized
but unissued shares of BEC Common Stock.

The BEC Board has been advised that certain securities firms limit the
extension of margin credit for, and otherwise discourage their registered
representatives from recommending, the purchase of corporate securities that
have a per share market value of less than $5.00 per share. Under the margin
regulations of the Federal Reserve Board, brokers, financial institutions and
certain other lenders may extend credit for the purchase of margin stock
(such as BEC Common Stock) in an amount not to exceed 50% of the market value
of such shares. See "Market Prices of BEC and ILC Common Stock."

The Reverse Split is being proposed in tandem with the Merger so that,
upon the issuance of the shares of BEC Common Stock in conjunction with the
Merger, there will be a sufficient number of shares of BEC Common Stock
authorized for issuance in connection with (i) the continuation of BEC's
employee benefit plans and (ii) the options formerly relating to ILC Common
Shares which will be assumed by BEC in connection with the Merger. At the BEC
Record Date, there were issued and outstanding 17,631,139 shares of BEC
Common Stock and options to acquire an additional 3,335,478 shares of BEC
Common Stock (of which approximately 2.5 million shares relate to the Bolle
participants. See "Information Concerning BEC--Recent Material
Developments--The Spinoff"). Approximately shares of BEC Common Stock
are expected to be issued to shareholders of ILC.

The BEC Board believes that the Reverse Split will provide flexibility for
BEC in meeting its possible needs by enabling the BEC Board to raise
additional capital through the issuance of BEC Common Stock or securities
convertible into or exercisable for BEC Common Stock, to make additional
stock awards under BEC's employee benefit plans and/or to employ BEC Common
Stock as a form of consideration for acquisitions. Other than in connection
with the Merger, or pursuant to agreements previously entered into such as
the Voltarc Purchase Agreement, BEC does not presently intend to issue any
additional shares for any specific purpose (except in connection with BEC's
employee benefit plans).

In order to increase the market value and the marginability of BEC Common
Stock, as well as to provide for a sufficient number of authorized shares of
BEC Common Stock upon the effectiveness of the Merger, the BEC Board has
determined that a recapitalization through the Reverse Split, contingent upon
the actual or impending effectiveness of the Merger, would be in the best
interests of BEC and it stockholders.

EFFECTS OF THE REVERSE SPLIT

General Effects. The principal effect of the Reverse Split would be to
decrease the number of outstanding shares of BEC Common Stock. Specifically,
the 17,631,139 shares of BEC Common Stock issued and outstanding on the BEC
Record would, as a result of the Reverse Split, together with shares of
BEC Stock upon and assuming the conversion of all of the Convertible Notes,
be

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converted into approximately shares of BEC Common Stock (with the
precise number depending upon the extent of fractional shares which will be
converted to cash based upon the closing price on the NYSE for a share of BEC
Common Stock on the trading day prior to implementation of the Reverse
Split). After giving effect to the Merger, the 4,903,591 shares of ILC Common
Stock issued and outstanding would, as a result of the Merger, be converted
into approximately 10,689,828 shares of BEC Common Stock (with the precise
number depending upon the extent of fractional shares), after giving effect
to the Reverse Split. Because the number of shares of BEC Common Stock
authorized for issuance by the BEC Certificate following the Reverse Split
will remain at 50,000,000 shares, the Reverse Split will result in
approximately "new" (or post-split) shares of BEC Common Stock ("New
Shares") available for issuance by BEC.

Effect on Market for BEC Common Stock. On , 1998, prior to the
Spinoff, and the most recent practical date before the printing of this Joint
Proxy Statement/Prospectus, the last reported closing price of BEC Common
Stock on the NYSE was per share. By decreasing the number of shares of
BEC Common Stock otherwise outstanding without altering the aggregate
economic interest in BEC represented by such shares, the BEC Board believes
that the trading price for BEC Common Stock will be increased to a price more
appropriate for a NYSE quoted security.

Effect on Derivative and Convertible Securities of BEC. The total number
of shares of BEC Common Stock issuable upon the exercise of options, warrants
and Convertible Notes to acquire such shares, and the exercise price thereof
shall be proportionally adjusted to reflect the Reverse Split.

Changes in Stockholders' Equity. As an additional result of the Reverse
Split, BEC's stated capital, which consists of the par value per share of BEC
Common Stock and BEC Preferred Stock multiplied, respectively, by the number
of such shares outstanding, will be reduced. Although the par value of BEC
Common Stock will remain at $.01 per share following the Reverse Split,
stated capital will be decreased because the number of shares outstanding
will be reduced. Correspondingly, BEC's additional paid-in capital, which
consists of the difference between BEC's stated capital and the aggregate
amount paid to BEC upon the issuance by BEC of all then outstanding shares of
BEC Common Stock and BEC Preferred Stock, will be increased. However, the
Series A Preferred Stock, the only currently outstanding series or class of
Preferred Stock of BEC, is not expected to be outstanding at the Effective
Time. See "The Merger--Conversion of the Convertible Notes and Other BEC
Capitalization Changes."

Dissenters' Rights. Pursuant to the DGCL, BEC's stockholders are not
entitled to appraisal rights with respect to the Reverse Split.

FEDERAL INCOME TAX CONSEQUENCES

The following summary of the federal income tax consequences of the
Reverse Split is based on current law, including the Code, and is for general
information only. The tax treatment of a stockholder may vary depending upon
the particular facts and the circumstances of such stockholder. Certain
stockholders, including insurance companies, tax-exempt organizations,
financial institutions, broker-dealers, non-resident aliens, foreign
corporations and persons who do not hold BEC Common Stock as a capital asset,
may be subject to special rules not discussed below. ACCORDINGLY, EACH
STOCKHOLDER SHOULD CONSULT HIS OR HER TAX ADVISOR TO DETERMINE THE PARTICULAR
TAX CONSEQUENCES TO HIM OR HER OF THE REVERSE SPLIT, INCLUDING THE
APPLICATION AND EFFECT OF FEDERAL, STATE, LOCAL OR FOREIGN INCOME TAXES AND
OTHER LAWS.

The receipt of New Shares in the Reverse Split will be a non-taxable
transaction under the Code for federal income tax purposes. Consequently, a
stockholder receiving New Shares will not recognize either gain or loss, or
any other type of income, with respect to whole New Shares received as a
result of the Reverse Split. In addition, the tax basis of such stockholder's
shares of BEC Common Stock prior to the Reverse Split will carry over as the
tax basis of the stockholder's New Shares. The holding period of the New
Shares will also include the stockholder's holding period of the BEC Common
Stock prior to the Reverse Split, provided that such BEC Common Stock was
held by the stockholder as a capital asset on the effective date of the
Reverse Split.

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The receipt of a stockholder of cash in lieu of a fractional New Share
pursuant to the Reverse Split will be a taxable transaction for federal
income tax purposes. Accordingly, such a stockholder will recognize gain or
loss equal to the difference between the amount of cash received and the
portion of the aggregate tax basis in his or her shares of BEC Common Stock
allocable to the fractional New Share interest at issue. If the shares of BEC
Common Stock were held as a capital asset on the effective date of the
Reverse Split, then the stockholder's gain or loss will be a capital gain or
loss.

Based on certain exceptions contained in regulations issued by the
Internal Revenue Service, BEC does not believe that it or its stockholders
will be subject to backup withholding or informational reporting with respect
to cash distributed in lieu of fractional New Shares.

EXCHANGE OF SHARES

On or after the effective date of the Reverse Split, BEC will mail to each
BEC stockholder of record a letter of transmittal. A BEC stockholder will be
able to receive a certificate representing New Shares and, if applicable,
cash in lieu of a fractional New Share only by transmitting to the Exchange
Agent such stockholder's stock certificate(s) for shares of BEC Common Stock
outstanding prior to the Reverse Split, together with the properly executed
and completed letter of transmittal, and such evidence of ownership of such
shares as BEC may require. BEC stockholders will not receive certificates for
New Shares unless and until the certificates representing their shares of BEC
Common Stock outstanding prior to the Reverse Split are surrendered. BEC
stockholders should not forward their certificates to the Exchange Agent
until the letter of transmittal is received and should surrender their
certificates only with such letter of transmittal. Holders of ILC Common
Stock prior to the Merger will receive a letter of transmittal which combines
the procedure for exchanging their certificates representing ILC Common Stock
for certificates representing New Shares (see "The Merger").

Payment in lieu of a fractional New Share will be made to any BEC
stockholder entitled thereto promptly after receipt of a properly completed
letter of transmittal and stock certificate(s) for all of his or her shares
of BEC Common Stock outstanding prior to the Reverse Split. There will be no
service charge payable by BEC stockholders in connection with the exchange of
certificates or in connection with the payment of cash in lieu of the
issuance of a fractional New Share. These costs will be borne by BEC.

THE BEC BOARD HAS UNANIMOUSLY APPROVED THE REVERSE SPLIT. THE BEC BOARD
RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF APPROVAL AND ADOPTION OF THE
REVERSE SPLIT.

PROPOSAL NUMBER THREE--TO ELECT FOUR ADDITIONAL
DIRECTORS TO THE BEC BOARD

The Election of the additional Directors is contingent upon approval and
adoption by the BEC Stockholders, and is also contingent upon the approval of
the Merger Proposal and effectiveness of the Merger.

BEC's Bylaws provide that BEC shall have at least two (2) and no more than
twelve (12) directors, as determined by the BEC Board from time to time.
Pursuant to the Merger Agreement, upon consummation of the Merger the BEC
Board will be expanded from seven (7) to nine (9) members. Four (4) members
will be existing BEC directors, four (4) members will be proposed by ILC, and
the ninth director will be elected by the BEC Board subsequent to the Merger
in accordance with the Bylaws of BEC. Martin E. Franklin, Ian G.H. Ashken,
David L. Moore and William T. Sullivan, all current directors of BEC, will
remain on the BEC Board as BEC Nominees. Nora A. Bailey, Richard W. Hanselman
and Charles F. Sydnor, current directors of BEC, have agreed to resign at the
Effective Time in order to facilitate the Merger. BEC is now seeking
stockholder approval for the election of Harrison H. Augur, Henry C.
Baumgartner, Richard D. Capra and George B. Clairmont, who are all current
directors of ILC and are the ILC Nominees for BEC's Board. After the Merger,
the BEC Board as reconstituted will elect a ninth director who will be
appointed jointly by the BEC Nominees and the ILC Nominees to serve as a
director.

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In the event that the Merger is not consummated, the ILC Nominees will not
serve as directors of BEC and accordingly, Nora A. Bailey, Richard W.
Hanselman and Charles F. Sydnor will not resign as directors of BEC.

The persons named in the enclosed form of proxy have advised that, unless
contrary instructions are received, they intend to vote FOR the election of
the nominees. The BEC Board does not expect that any of the nominees will be
unavailable for election as a director. If by reason of an unexpected
occurrence, one or more of the nominees is not available for election,
however, the persons named in the form of proxy have advised that they will
vote for such substitute nominees as the BEC Board may propose in accordance
with terms of the Merger Agreement.

Information with respect to Messrs. Augur, Baumgartner, Capra and
Clairmont is set forth above. See "The Merger--Management of BEC Following
the Merger." Information with respect to Messrs. Franklin, Ashken, Moore and
Sullivan, who will continue to be directors of BEC, is incorporated herein by
reference to BEC's Annual Report on Form 10-K for the year ended December 31,
1996 (See "Incorporation By Reference"). The names of the ILC Nominees are as
follows:

Harrison H. Augur
Henry C. Baumgartner
Richard D. Capra
George B. Clairmont

Pursuant to the Merger Agreement, the BEC Board will take all actions
necessary to cause the BEC Nominees, or successor designees of such BEC
Nominees, on the one hand, and the ILC Nominees, or successor designees of
such ILC Nominees, on the other hand, to remain as directors of the BEC Board
for a period of two years from the Effective Time. The respective terms of
office of the nominees for Director shall continue until the next annual
meeting of stockholders and until their successors have been elected and
qualified in accordance with the BEC Bylaws. There are no family
relationships among any of the directors, nominees for director or executive
officers of BEC.

THE BEC BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE SELECTION OF THE
NOMINEE DIRECTORS. THE BEC BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR
OF EACH OF THE BEC NOMINEE DIRECTORS.

PROPOSAL NUMBER FOUR--TO AMEND THE BEC CERTIFICATE
TO CHANGE THE NAME OF BEC GROUP, INC.

As part of their consideration of the Merger and the Merger Agreement, the
BEC Board has unanimously approved an amendment to the BEC Certificate to
change the corporate name of BEC Group, Inc. to Lumen Technologies, Inc.
Implementation of the name change is contingent upon approval and adoption by
the BEC stockholders, approval by the stockholders of the Merger Proposal and
the impending effectiveness of the Merger. Following the Effective Time and
implementation of the name change, BEC has been advised by the NYSE that BEC
Common Stock will trade under the new quotation symbol of [ ].

THE BEC BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE NAME CHANGE. THE
BEC BOARD RECOMMENDS THAT STOCKHOLDERS VOTE IN FAVOR OF APPROVAL AND ADOPTION
OF THE NAME CHANGE.

PROPOSAL NUMBER FIVE--TO AMEND THE BEC OPTION PLAN

PROPOSED AMENDMENT TO THE BEC OPTION PLAN

At the BEC Special Meeting, the BEC Stockholders will be asked to approve
the BEC Option Plan, which is described below under "Description of Plan."
The principal amendment is to increase the total number of shares of BEC
Common Stock that may be awarded pursuant to the BEC Option Plan by 2,075,000
shares to 4,250,000 shares (all numbers giving effect to the Reverse Split).
BEC is seeking

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stockholder approval of the BEC Option Plan in order to comply with the
requirements of Section 422 of the Code and the requirements of Section
162(m) of the Code in order for compensation paid under the BEC Option Plan
to be deductible by BEC irrespective of the $1 million limit in such Section.
Stockholder approval is also required by the rules of the NYSE in order for
shares of Common Stock issued to officers and directors of BEC pursuant to
the BEC Option Plan to be listed for trading thereunder. The approval of the
Amendment to the BEC Option Plan is subject to stockholder approval of this
1996 Stock Incentive Plan Proposal and the Merger Proposal and the
effectiveness of the Merger.

BEC management believes that the proposed increase in the number of shares
available for grant under the BEC Option Plan is necessary in order to
provide a sufficient number of shares to BEC to incentivize current employees
as well as new employees who will be joining BEC as a result of the Merger
and for potential future acquisitions. BEC believes that key employees of the
new operations should have a stock interest in BEC and that the stock option
program is an excellent vehicle for rewarding performance that is tied to the
value of the BEC Common Stock. The proposed increase is also necessary in
order to provide the opportunity for holders of ILC Stock Options to receive
BEC Stock Options, as part of the transactions contemplated by the Merger.
See "The Merger Agreement--Stock Options."

Prior to the amendment and restatement, the BEC Option Plan currently
authorized up to 4,350,000 shares of BEC Common Stock (before giving effect
to the Reverse Split) for grant pursuant to awards. Of this amount, as of the
BEC Record Date, approximately 1,049,372 shares of BEC Common Stock remained
available for grant under the BEC Option Plan.

DESCRIPTION OF THE PLAN

As noted above, 4,250,000 shares of BEC Common Stock were reserved for
issuance pursuant to the grant of stock based awards under the BEC Option
Plan, In addition, the BEC Option Plan limits the number of options and stock
appreciation rights that may be granted to any single individual to 1,000,000
shares of BEC Common Stock. Pursuant to the BEC Option Plan, employees,
directors and consultants of BEC and its subsidiaries and affiliates (other
than employees subject to a collective bargaining agreement) are eligible to
be selected as participants to receive discretionary awards of various forms
of equity-based incentive compensation, including stock options, stock
appreciation rights, restricted stock awards, performance share unit awards
and phantom stock unit awards, and awards consisting of combinations of such
incentives.

The BEC Option Plan is administered by the full Board of Directors of BEC
or a committee thereof, including the compensation committee (the entity
administering the BEC Option Plan, hereinafter referred to as the
"Committee"). The Committee, in its sole discretion, will determine which
eligible employees, directors and consultants of BEC and its subsidiaries may
participate in the BEC Option Plan and the type, extent and terms of the
equity-based awards to be granted to them. Members of the Committee who are
non-employee directors, will receive automatic non-discretionary annual
grants of stock options pursuant to the BEC Option Plan.

Under the BEC Option Plan, at the time of the consummation of the Merger
each non-employee director automatically was granted an option to purchase
10,000 shares of BEC Common Stock. Thereafter, on the date that a person
first becomes a non-employee director, he or she will automatically be
granted an option to purchase 10,000 shares of BEC Common Stock. Thereafter,
beginning in 1999, on the date of each annual meeting of stockholders of BEC,
each non-employee director will automatically be granted an option to
purchase 2,500 shares of BEC Common Stock. All such automatic grants to
non-employee directors are hereafter called "Director Options." Each Director
Option has an exercise price per share equal to the fair market value of one
share of BEC Common Stock on the date of grant and vests and becomes
exercisable over a four year period beginning on the first anniversary of the
date of grant at the rate of 25% of each Director Option on each of the four
years immediately following the date of grant. All Director Options will be
NSQOs (as defined below).

Stock options granted by the Committee under the BEC Option Plan may be
"incentive stock options" ("ISOs") within the meaning of Section 422 of the
Code, or "non-qualified stock options" ("NQSOs"). The exercise price of the
options will be determined by the Committee when the options are

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granted, subject to a minimum price of the fair market value of BEC Common
Stock on the date of grant in the case of ISOs, and the par value of the BEC
Common Stock in the case of NQSOs. The option exercise price for all options
granted under the BEC Option Plan may be paid in cash or in shares of BEC
Common Stock having a fair market value on the date of exercise equal to the
exercise price or, in the discretion of the Committee, by delivery to BEC of
(i) other property having a fair market value on the date of exercise equal
to the option exercise price, or (ii) a copy of irrevocable instructions to a
stockbroker to deliver promptly to BEC an amount of sale or loan proceeds
sufficient to pay the exercise price.

A "stock appreciation right" ("SAR") may be granted by the Committee as a
supplement to a related stock option or may be granted independent of any
option. SARs granted in connection with an option will become exercisable and
lapse according to the same vesting schedule and lapse rules that are
established for the corresponding option. SARs granted independent of any
option will vest and lapse according to the terms and conditions set by the
Committee. An SAR will entitle its holder to be paid an amount equal to the
excess of the fair market value of BEC Common Stock subject to the SAR on the
date of exercise over the exercise price of the related stock options, in the
case of an SAR granted in connection with an options, or the fair market
value of BEC Common Stock on the date of grant in the case of an SAR granted
independent of an option.

Shares of BEC Common Stock covered by a restricted stock award may, in the
discretion of the Committee be issued to the recipient at the time the award
is granted or may be deposited with an escrow agent until the end of the
restricted period set by the Committee. During the restricted period,
restricted stock will be subject to transfer restrictions and forfeiture in
the event of termination of employment with BEC or a subsidiary and other
restrictions and conditions established by the Committee at the time the
award is granted.

A phantom stock unit award will provide for the future payment of cash or
the issuance of shares of BEC Common Stock to the recipient if continued
employment or other conditions established by the Committee at the time of
grant are attained.

A performance share unit award will provide for the future payment of cash
or the issuance of shares of BEC Common Stock to the recipient upon the
attainment of certain corporate performance goals established by the
Committee over three to five year performance award periods. At the end of
each performance award period, the Committee decides the extent to which the
corporate performance goals have been attained and the amount of cash or BEC
Common Stock to be distributed to the participant.

The BEC Board may amend or terminate the BEC Option Plan at any time;
provided, however, that without further stockholder approval no amendment may
(i) materially increase the maximum number of awards which may be issued
under thereunder, (ii) change the minimum option exercise price, (iii) extend
the maximum term of options, or (iv) extend the termination date of the BEC
Option Plan.

FEDERAL TAX CONSEQUENCES

Set forth below is a brief description of the federal income tax
consequences applicable to ISOs and NQSOs granted under the BEC Option Plan.

ISOs. No taxable income is realized by an optionee upon the grant or
exercise of an ISO. If BEC Common Stock is issued to an optionee pursuant to
the exercise of an ISO, and if no disqualifying disposition of such shares is
made by such optionee within two years after the date of grant or within one
year after the transfer of such shares to such optionee, then (1) upon sale
of such shares, any amount realized in excess of the option price will be
taxed to such optionee as a long-term capital gain and any loss sustained
will be a long-term capital loss, and (2) no deduction will be allowed to the
optionee's employer for Federal income tax purposes. The long-term capital
gains tax rate may vary depending on the length of time the shares are
actually held.

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If the BEC Common Stock acquired upon the exercise of an ISO is disposed
of prior to the expiration of either holding period described above,
generally (1) the optionee will realize ordinary income in the year of
disposition in an amount equal to the excess (if any) of the fair market
value of such shares at exercise (or, if less, the amount realized on the
disposition of such shares) over the option price paid for such shares, and
(2) the optionee's employer will be entitled to deduct such amount for
federal income tax purposes if the amount represents an ordinary and
necessary business expense. Any further gain (or loss) realized by the
optionee upon the sale of the BEC Common Stock will be taxed as short-term or
long-term capital gain (or loss), depending on how long the shares have been
held, and will not result in any deduction by the employer.

Subject to certain exceptions for disability or death, if an ISO is
exercised more than three months following termination of employment, the
exercise of the option will generally be taxed as the exercise of a NQSO.

For purposes of determining whether an optionee is subject to any
alternative minimum tax liability, an optionee who exercises an ISO generally
would be required to increase his or her alternative minimum taxable income,
and compute the tax basis in the stock so acquired, in the same manner as if
the optionee had exercised an NQSO. Each optionee is potentially subject to
the alternative minimum tax. In substance, a taxpayer is required to pay the
higher of his/her alternative minimum tax liability or his/her "regular"
income tax liability. As a result, a taxpayer has to determine his/her
potential under the alternative minimum tax.

NQSOs. With respect to NQSOs: (i) no income is realized by the optionee at
the time the option is granted; (ii) generally, at exercise, ordinary income
is realized by the optionee in an amount equal to the difference between the
option price paid for the shares and the fair market value of the shares, if
unrestricted, on the date of exercise, and the optionee's employer is
generally entitled to a tax deduction in the same amount subject to
applicable tax withholding requirements; and (iii) at sale, appreciation (or
depreciation) after the date of exercise is treated as either short-term or
long-term capital gain (or loss) depending on how long the shares have been
held.

As a result of the rules under Section 16(b) of the Exchange Act,
"insiders" (as defined in the Exchange Act), depending upon the particular
exemption from the provisions of Section 16(b) utilized, may not receive the
same tax treatment as set forth above with respect to the grant and/or
exercise of options. Generally, insiders will not be subject to taxation
until the expiration of any period during which they are subject to the
liability provisions of Section 16(b) with respect to any particular option.

Optionees are strongly advised to consult with their individual tax
advisers to determine their personal tax consequences resulting from the
grant and/or exercise of options under the BEC Option Plan.

NEW PLAN BENEFITS

The grant of options under the BEC Option Plan is entirely within the
discretion of the Committee. BEC cannot forecast the extent of option grants
that will be made in the future. As noted above, upon the consummation of the
Merger non-employee Directors will receive an automatic grant of NQSOs with
respect to 10,000 shares of BEC Common Stock each, thereafter, beginning in
1999, each non-employee Director will receive an automatic grants of NQSOs
with respect to 2,500 shares of BEC Common Stock on an annual basis.
Information with respect to compensation paid and other benefits, including
options, granted in respect of the 1996 fiscal year to the Chief Executive
Officer and the Executive Officer Group is set forth below. During 1996,
550,000 stock options were awarded to the BEC's Chief Executive Officer and
the other named executive officers. In 1996, 825,000 stock options under the
BEC Option Plan were granted to all current executive officers as a group and
approximately 795,160 stock options were granted to 107 employees and
consultants, including all current officers who are not executive officers.
In 1996, 402,250 stock options were granted to Directors who were not
executive officers, including the stock options granted to William Sullivan,
who was, but is no longer an executive officer. To date, stock options have
been granted at exercise prices which range from $0.83 per share to $5.25 per
share. Most of the stock options granted in 1996, excluding options granted
to executive officers, were to replace options previously held by employees
in Benson, prior to the BEC Spinoff.

111
<PAGE>
THE BEC BOARD UNANIMOUSLY RECOMMENDS THAT THE BEC STOCKHOLDERS VOTE FOR THE
PROPOSED AMENDMENT TO THE BEC OPTION PLAN.

INDEPENDENT ACCOUNTANTS

BEC has been advised that representatives of Price Waterhouse LLP, BEC's
independent accountants of 1996, will be available by telephone at the BEC
Special Meeting, will have an opportunity to make a statement if they desire
to do so and will be available to respond to appropriate questions.

LEGAL MATTERS

Certain legal matters with respect to the validity of the securities
offered hereby will be passed upon for BEC by Kane Kessler, P.C., 1350 Avenue
of the Americas, New York, New York 10019. It is a condition to the
consummation of the Merger that ILC receive an opinion from Davis Polk &
Wardwell with respect to certain tax matters. See "Summary--Federal Income
Tax Consequences" and "The Merger--Certain Federal Income Tax Considerations
for ILC Shareholders" on pages and , respectively.

EXPERTS

The financial statements as of December 31, 1996 and 1995, and the three
years then ended of BEC, except as they relate to Bolle America for the year
ended December 31, 1994, have been audited by Price Waterhouse LLP,
independent accountants, and, insofar as they relate to Bolle America for the
year ended December 31, 1994, by KPMG Peat Marwick LLP, independent
accountants, whose reports thereon appear herein. Such financial statements
have been so included in reliance on the reports of such independent
accountants given on the authority of such firms as experts in auditing and
accounting.

The audited consolidated financial statements of ILC included in this
Joint Proxy Statement/ Prospectus to the extent and for the periods indicated
in their report have been audited by Arthur Andersen LLP, independent public
accountants, as indicated in their report with respect thereto, and are
included herein in reliance upon the authority of said firm as experts in
accounting and auditing in giving said reports.

STOCKHOLDER PROPOSALS

Any proposal of a BEC stockholder intended to be presented at the Annual
Meeting of Stockholders of BEC to be held in 1998, must be received by BEC no
later than February 20, 1998 to be considered for inclusion in the proxy
statement for the 1998 Annual Meeting of Stockholders of BEC. Proposals must
comply with Rule 14a-8 promulgated by the Securities and Exchange Commission
pursuant to the Securities Exchange Act of 1934.

112
<PAGE>
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
<S> <C>
BEC GROUP, INC.

Unaudited Pro Forma Combined Financial Statements

Unaudited Pro Forma Combined Balance Sheet as of September 30, 1997......................... F-3

Unaudited Pro Forma Combined Statement of Operations for the nine months ended
September 30, 1997......................................................................... F-4

Unaudited Pro Forma Combined Statement of Operations for the year ended December 31, 1996 .. F-5

Notes to Unaudited Pro Forma Combined Financial Statements.................................. F-6

Unaudited Interim Consolidated Financial Statements

Unaudited Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996 ....... F-9

Unaudited Consolidated Statements of Operations for the nine months ended
September 30, 1997 and 1996................................................................ F-10

Unaudited Consolidated Statements of Cash Flows for the nine months ended
September 30, 1997 and 1996................................................................ F-11

Notes to Unaudited Consolidated Financial Statements........................................ F-12

Annual Financial Statements

Report of Independent Accountants........................................................... F-14

Independent Auditors' Report................................................................ F-15

Consolidated Balance Sheets as of December 31, 1996 and 1995................................ F-16

Consolidated Statements of Operations for the years ended
December 31, 1996, 1995 and 1994........................................................... F-17

Consolidated Statements of Stockholders' Equity for the years ended
December 31, 1996, 1995 and 1994........................................................... F-18

Consolidated Statements of Cash Flows for the years ended
December 31, 1996, 1995 and 1994........................................................... F-19

Notes to Consolidated Financial Statements.................................................. F-21

ILC TECHNOLOGY, INC.

Report of Independent Public Accountants..................................................... F-36

Consolidated Balance Sheets--September 27, 1997 and September 28, 1996....................... F-37

Consolidated Statements of Operations for the Three Fiscal Years Ended September 27, 1997 ... F-38

Consolidated Statements of Stockholders' Equity for the Three Fiscal Years Ended
September 27, 1997.......................................................................... F-39

Consolidated Statements of Cash Flows for the Three Fiscal Years Ended September 27, 1997 ... F-40

Notes to Consolidated Financial Statements................................................... F-42
</TABLE>

F-1
<PAGE>
BEC GROUP, INC.
PRO FORMA COMBINED FINANCIAL STATEMENTS

The following unaudited pro forma combined financial statements give
effect to the merger under the purchase method of accounting assuming 100% of
the Convertible Notes are converted and the effect of the Contribution
Agreement between BEC and its subsidiary Bolle described below.

In connection with the Spinoff of Bolle to the stockholders of BEC, which
will occur prior to the closing of the proposed Merger of ILC and Acquisition
Corp., BEC's historical financial statements shown in the "BEC" column of the
pro forma combined financial statements included herein have been restated to
reflect Bolle as a discontinued operation. In addition, BEC will transfer
certain assets and liabilities to Bolle pursuant to the Contribution
Agreement. The pro forma adjustments relating to the Contribution Agreement
are shown in a separate column in the pro forma combined financial statements
included herein. The Spinoff does not require stockholder approval and is not
conditioned upon the closing of the proposed Merger.

In accordance with the Contribution Agreement (i) BEC will assign to Bolle
all of BEC's assets other than the assets related to the ORC Business (as
defined in the Contribution Agreement) and certain other specific assets
retained by BEC; and (ii) Bolle will assume all of BEC's liabilities prior to
the Spinoff other than those related to the ORC Business and certain specific
liabilities.

The accompanying pro forma combined statements of operations give effect
to the Contribution Agreement and the Merger as though they occurred at the
beginning of the periods presented. The pro forma combined balance sheet at
September 30, 1997 is based on the unaudited balance sheet of BEC at
September 30, 1997 and the audited balance sheet of ILC at September 27,
1997. The pro forma combined statements of operations for the nine months
ended at September 30, 1997 and the year ended December 31, 1996 are based on
the BEC unaudited interim historical financial statements for the nine months
ended September 30, 1997 and audited historical financial statements of BEC
for the year ended December 31, 1996, the unaudited interim financial
statements of ILC at September 27, 1997 and the ILC audited historical
financial statements at September 28, 1996.

Pro forma adjustments are based upon preliminary estimates, available
information and certain assumptions that management deems appropriate.
Management does not expect material changes to the purchase accounting
adjustments upon the final allocation of purchase price. The unaudited pro
forma combined financial information presented herein is not necessarily
indicative of the results of operations or financial position that BEC would
have obtained had such events occurred at the beginning of the period, as
assumed, or of the future results of BEC.

F-2
<PAGE>
BEC GROUP, INC.
PRO FORMA BALANCE SHEET
AS OF SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
CONTRIBUTION MERGER
AGREEMENT BEC RELATED
PRO FORMA POST PRO FORMA PRO FORMA
BEC ADJUSTMENTS SPINOFF ILC ADJUSTMENTS COMBINED
---------- -------------- ---------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Current assets:
Cash & cash equivalents ... $ 1,873 $ 1,873 $ 1,114 $ (622)(j) $ 443
(1,922)(m)
Trade receivables, net .... 7,758 7,758 10,534 18,292
Inventories ................ 9,788 9,788 10,717 20,505
Receivables from
discontinued operations .. 34,379 $(34,379)(a)
Investment in discontinued
operations ................ 21,059 (21,059)(b)
Other current assets ....... 2,968 2,968 2,330 5,298
---------- -------------- ---------- --------- ------------- -----------
Total current assets ..... 77,825 (55,438) 22,387 24,695 (2,544) 44,538
Property and equipment, net 13,048 (5,672)(c) 7,376 21,653 29,029
Goodwill, net ............... 11,826 11,826 27,507 (k) 39,333
Intangible assets, net ..... 1,242 1,242 238 1,480
Equity investments and notes
receivable from affiliates 10,185 (9,534)(d) 2,197 2,197
(651)(d)
Other assets ................ 4,421 (1,000)(e) 3,421 765 4,186
---------- -------------- ---------- --------- ------------- -----------
Total assets................ $118,547 $(72,295) $ 46,252 $49,548 $ 24,963 $120,763
========== ============== ========== ========= ============= ===========
LIABILITIES AND
STOCKHOLDERS' EQUITY
Current liabilities:
Short term debt and current
portion of long term debt $ 20,179 $ (145)(c) $ 3,109 $ 2,535 $ 5,644
(16,925)(f)
Accounts payable ........... 2,946 2,946 4,362 7,308
Accrued expenses ........... 9,765 (254)(g) 9,417 4,462 $ (622)(j) 15,757
(94)(g) 2,500 (l)
---------- -------------- ---------- --------- ------------- -----------
Total current liabilities 32,890 (17,418) 15,472 11,359 1,878 28,709
Long term debt ............. 32,938 (3,428)(c) 29,510 3,118 32,628
Convertible subordinated
debt ...................... 22,941 22,941 (21,019)(m)
(1,922)(m)
Long term liabilities ..... 9,376 (400)(g) 8,076 78 8,154
(900)(g)
---------- -------------- ---------- --------- ------------- -----------
Total liabilities ......... 98,145 (22,146) 75,999 14,555 (21,063) 69,491
Stockholders' equity ........ 20,402 (9,294)(h) (29,747) 34,993 21,019 (m) 51,272
(40,855)(i) 25,007 (n)
---------- -------------- ---------- --------- ------------- -----------
Total liabilities and
stockholders' equity ....... $118,547 $(72,295) $ 46,252 $49,548 $ 24,963 $120,763
========== ============== ========== ========= ============= ===========
</TABLE>

F-3
<PAGE>
BEC GROUP, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR BEC
CONTRIBUTION POST (1) PRO FORMA PRO FORMA
BEC AGREEMENT SPINOFF ILC ADJUSTMENTS COMBINED
--------- -------------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Net sales ......................... $35,221 $35,221 $43,397 $78,618
COSTS AND EXPENSES:
Cost of sales ..................... 21,785 21,785 30,453 52,238
Selling general and administrative
expenses ......................... 7,746 7,746 8,925 $ 516 (r) 17,187
Interest expense .................. 2,567 $(233)(o) 2,334 355 (1,361)(s) 1,328
Other (income) expense ............ (878) 595 (p) (283) (2,379) (2,662)
--------- -------------- --------- --------- ------------- -----------
Total costs and expenses .......... 31,220 362 31,582 37,354 (845) 68,091
--------- -------------- --------- --------- ------------- -----------
Income from continuing operations
before income taxes .............. 4,001 (362) 3,639 6,043 845 10,527
Provision for income taxes ........ 1,271 (138)(q) 1,133 1,511 321 (q) 2,965
--------- -------------- --------- --------- ------------- -----------
Income from continuing operations
before minority interests ........ $ 2,730 $(224) $ 2,506 $ 4,532 $ 524 $ 7,562
========= ============== ========= ========= ============= ===========
Weighted average shares
outstanding ...................... 17,659 17,659 5,035 22,125 (t)
Earnings per share ................ $ 0.16 $ 0.14 $ 0.90 $ 0.34
</TABLE>

- ------------
(1) In May 1997, ILC sold Converter Power, Inc. ("CPI"), a wholly-owned
subsidiary which manufactured and distributed power supplies. If CPI
had been sold as of the beginning of the period presented, ILC's
sales for the nine months ended September 30, 1997 would have been
$40.4 million with income from continuing operations of $2.8 million.
Accordingly pro forma combined income from continuing operations
would have been $5.8 million or $0.26 per share.

F-4
<PAGE>
BEC GROUP, INC.
PRO FORMA COMBINED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1996
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
FOR BEC
CONTRIBUTION POST (1) PRO FORMA PRO FORMA
BEC AGREEMENT SPINOFF ILC ADJUSTMENTS COMBINED
--------- -------------- --------- --------- ------------- -----------
<S> <C> <C> <C> <C> <C> <C>
REVENUES:
Net sales .......................... $42,574 $42,574 $54,116 $96,690
COSTS AND EXPENSES:
Cost of sales ...................... 25,676 25,676 36,909 62,585
Selling general and administrative 10,020 10,020 11,385 $ 688 (r) 22,093
Interest expense ................... 2,942 2,942 487 (1,692)(s) 1,737
Other (income) expense ............. (1,378) $ 375 (p) (1,003) (1,003)
--------- -------------- --------- --------- ------------- -----------
Total costs and expenses ........... 37,260 375 37,635 48,781 (1,004) 85,412
--------- -------------- --------- --------- ------------- -----------
Income from continuing operations
before income taxes ............... 5,314 (375) 4,939 5,335 1,004 11,278
Provision for income taxes ......... 1,870 (131)(q) 1,739 1,334 351 (q) 3,424
--------- -------------- --------- --------- ------------- -----------
Income from continuing operations
before minority interest .......... $ 3,444 $(244) $ 3,200 $ 4,001 $ 653 $ 7,854
========= ============== ========= ========= ============= ===========
Weighted average shares ............ 17,669 17,669 5,000 22,221 (t)
Earnings per share ................. $ 0.19 $ 0.18 $ 0.80 $ 0.35
</TABLE>

- ------------
(1) Represents ILC's twelve months ended December 28, 1996

F-5
<PAGE>
NOTES TO THE PRO FORMA COMBINED FINANCIAL STATEMENTS
(UNAUDITED)
(IN THOUSANDS, EXCEPT PER SHARE DATA)

PRO FORMA COMBINED BALANCE SHEET ADJUSTMENTS

(a) Adjustment to reflect the reduction of the receivable from Bolle Inc.
in conjunction with the Spinoff.

(b) Adjustment to reflect the Spinoff of BEC's investment in Bolle Inc.
(discontinued operations).

(d) Adjustment to reflect the allocation of Equity in and notes receivable
from affiliated companies consisting of BEC Group's 23% interest in
Eyecare Products plc which is accounted for by the equity method
($9,534) and its investment in Superior Vision Services, Inc. and
related note receivable which are accounted for by the cost method
($651) to Bolle Inc.

(e) Adjustment to reflect the allocation of the Preferred Stock in
Accessories Associates, Inc. to Bolle Inc.

(f) Adjustment to reflect the portion of BEC's debt expected to be repaid
in conjunction with the Spinoff as required by the Merger Agreement.

(g) Adjustment to reflect the allocation of retained liabilities relating
to BEC's sale of the Foster Grant Group ($654) and the Prescription
Eyewear Business ($994) in 1996. Such liabilities represent estimates
of amounts to be paid in conjunction with the indemnification
provisions of these sales agreements.

(h) Adjustment to reflect the cancellation of BEC's Series A Preferred
Stock.

(i) Adjustment to reflect the net loss to be recorded in conjunction with
the Spinoff and contribution agreement adjustments (a) through (h)
described above.

(j) Adjustment to reflect the payment of short term interest payable on
the Convertible Notes due 2001. See Note (m).

(k) Adjustment to reflect the excess of purchase price over net book value
of ILC allocated to goodwill and amortized over an estimated life of
forty years on a straight line basis.

The purchase price for the Merger is calculated as follows:

<TABLE>
<CAPTION>
<S> <C>
Number of ILC shares outstanding on the date the
Merger agreement was signed........................ 4,880
Multiplied by the closing market price per share of
ILC common stock on the same date.................. $ 11.75
---------
Value of Merger Consideration....................... $57,340
Add estimated merger related expenses............... 2,660
---------
Total purchase price................................ $60,000
</TABLE>

The purchase price was allocated as follows:

<TABLE>
<CAPTION>
<S> <C>
Cash..................................... $ 1,114
Accounts receivable...................... 10,534
Inventories.............................. 10,717
Other current assets..................... 2,330
Property, plant and equipment............ 21,653
Intangibles, net......................... 238
Goodwill................................. 27,507
Other assets............................. 2,962
Curr portion of long term debt........... (2,535)
Accounts payable and accrued
liabilities............................. (11,324)
Long term debt........................... (3,118)
Long term liabilities.................... (78)
----------
Net assets acquired...................... $ 60,000
----------
</TABLE>

F-6
<PAGE>

(l) Adjustment to reflect severance payments to be made under existing ILC
Compensation Agreements, triggered by the Merger.

(m) Adjustment to reflect conversion of 100% of the BEC Group Convertible
Notes Due 2001 and payment of long term accrued interest ($1,922). See
Note (t) below for a table of the possible effects of a 50% conversion
and a 0% conversion.

(n) Adjustment to reflect the net effect of the purchase (adjustments (j)
through (l), on the equity of the combined company.

(o) Adjustment to reflect the reduction in interest expense included in
BEC's historical results applicable to the debt being repaid in
conjunction with the Spinoff and the maximum indebtedness allowed by
the Merger Agreement. See note (f). This debt is denominated in French
Francs and BEC's average interest rate on French Franc debt during
1997 has been approximately 5%. Accordingly, this adjustment is
calculated as $16,925 multiplied by a pro forma interest rate of 5.5%.
Such debt has been outstanding since July 10, 1997.

PRO FORMA COMBINED STATEMENTS OF OPERATIONS ADJUSTMENTS

(p) Adjustment to reflect equity income on the investment in Eyecare
Products plc. See Note (d).

(q) Adjustment to reflect a statutory tax rate of 38% in 1997 and 35% in
1996 on the pro forma adjustments.

(r) Adjustment to reflect amortization of goodwill on a straight line
basis over 40 years. See Note (k).

(s) Adjustment to reflect reduction of interest expense associated with
the conversion of convertible notes described in Note (m). The
adjustment is based on the actual interest rate of the convertible
notes of 8% which is compounded semi-annually. BEC will use its
reasonable commercial efforts to effect conversion of the convertible
notes. In this regard, the holders have been offered interest payment
through May 3, 1998 if they convert prior to the Spinoff. Assuming
100% conversion as of January 31, 1998, this offer would result in a
non-recurring interest charge of approximately $475.

(t) The pro forma weighted average number of shares outstanding is
calculated below. The pro forma combined financial statements assume
that 100% of the BEC convertible note holders will convert before the
Spinoff. The table below shows three scenarios. Scenario 1 calculates
EPS based on 100% conversion of the Convertible Notes as shown in the
pro forma combined statements of operations. Scenario 2 calculates
earnings per share based on 50% conversion of the Convertible Notes.
Scenario 3 calculates earnings per share based on no conversion of the
Convertible Notes. The table assumes an Exchange Ratio of 4.38, 4.43
and 4.50, respectively.

F-7
<PAGE>

<TABLE>
<CAPTION>
SCENARIO 1 SCENARIO 2
100% CONVERSION 50% CONVERSION
----------------------------- -----------------------------
NINE MONTHS NINE MONTHS
ENDED YEAR ENDED ENDED YEAR ENDED
SEPTEMBER 30 DECEMBER 31 SEPTEMBER 30 DECEMBER 31
1997 1996 1997 1996
-------------- ------------- -------------- -------------
<S> <C> <C> <C> <C>
Weighted average shares
outstanding of the Company....... 17,659 17,669 17,659 17,669
Conversion of principal amount of
convertible notes ............... 3,655 3,655 1,828 1,828
-------------- ------------- -------------- -------------
Subtotal ......................... 21,314 21,324 19,487 19,497
-------------- ------------- -------------- -------------
Effect of 1 for 2 reverse split .. 10,657 10,662 9,743 9,748
Shares issued as merger
consideration ................... 10,638 10,638 10,834 10,834
Additional common stock
equivalents from vested ILC
options replaced with BEC
options ......................... 830 921 859 951
-------------- ------------- -------------- -------------
Pro forma weighted average
shares........................... 22,125 22,221 21,436 21,533
============== ============= ============== =============
Additional interest expense ...... $ 0 $ 0 $ (681) $ (846)
Tax benefit....................... 0 0 (259) (296)
-------------- ------------- -------------- -------------
Net effect on net income from
continuing operations............ $ 0 $ 0 $ (422) $ (550)
============== ============= ============== =============
Adjusted net income from
continuing operations ........... 7,562 7,854 7,140 7,304
Adjusted Earnings per share ..... $ 0.34 $ 0.35 $ 0.33 $ 0.34
</TABLE>

(RESTUBBED TABLE CONTINUED FROM ABOVE)

<TABLE>
<CAPTION>
SCENARIO 3
NO CONVERSION
-----------------------------
NINE MONTHS
ENDED YEAR ENDED
SEPTEMBER 30 DECEMBER 31
1997 1996
-------------- -------------
<S> <C> <C>
Weighted average shares
outstanding of the Company....... 17,659 17,669
Conversion of principal amount of
convertible notes ............... 0 0
-------------- -------------
Subtotal ......................... 17,659 17,669
-------------- -------------
Effect of 1 for 2 reverse split .. 8,830 8,835
Shares issued as merger
consideration ................... 10,980 10,980
Additional common stock
equivalents from vested ILC
options replaced with BEC
options ......................... 889 980
-------------- -------------
Pro forma weighted average
shares........................... 20,699 20,795
============== =============
Additional interest expense ...... $(1,361) $(1,692)
Tax benefit....................... (517) (592)
-------------- -------------
Net effect on net income from
continuing operations............ $ (844) $(1,100)
============== =============
Adjusted net income from
continuing operations ........... 6,718 6,754
Adjusted Earnings per share ..... $ 0.32 $ 0.32
</TABLE>

F-8
<PAGE>
BEC GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS, EXCEPT PER SHARE DATA)

<TABLE>
<CAPTION>
(UNAUDITED)
SEPTEMBER 30, DECEMBER 31,
1997 1996
--------------- --------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................... $ 1,873 $ 2,164
Trade receivables, net ..................................... 7,758 7,280
Inventories ................................................ 9,788 9,317
Receivable from discontinued operations .................... 34,379 937
Investment in discontinued operations ...................... 21,059 10,227
Other current assets ....................................... 2,968 3,654
--------------- --------------
Total current assets ...................................... 77,825 33,579
Property and equipment, net ................................. 13,048 13,114
Goodwill, net ............................................... 11,826 11,372
Intangible assets, net ...................................... 1,242 1,296
Equity in and notes receivable from affiliated companies .... 10,185 11,435
Other assets................................................. 4,421 4,275
--------------- --------------
Total assets................................................. $118,547 $ 75,071
=============== ==============

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short term debt and current portion of long term debt ...... $ 20,179 $ 17,645
Accounts payable............................................ 2,946 2,858
Accrued compensation........................................ 1,505 2,134
Other accrued expenses...................................... 8,260 8,557
--------------- --------------
Total current liabilities.................................. 32,890 31,194
Long-term debt............................................... 32,938 3,597
Convertible subordinated notes............................... 22,941 21,922
Other........................................................ 9,376 10,754
--------------- --------------
Total liabilities.......................................... 98,145 67,467
--------------- --------------
Stockholders' equity:
Preferred stock--par value $1; 500 shares authorized; 10
and 0 shares issued and outstanding........................ 9,294 --
Common stock--par value $.01; 50,000 shares authorized;
17,631 and 17,631 shares issued............................ 176 176
Additional paid-in capital.................................. 28,654 28,703
Treasury stock--22 and 116 shares, at cost.................. (106) (557)
Retained deficit............................................ (17,616) (20,718)
--------------- --------------
Total stockholders' equity................................. 20,402 7,604
--------------- --------------
Total liabilities and stockholders' equity................. $118,547 $ 75,071
=============== ==============
</TABLE>

See accompanying notes to consolidated financial statements.

F-9
<PAGE>
BEC GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
REVENUES:
Net sales ...................................... $35,221 $31,984
COSTS AND EXPENSES
Cost of sales ................................. 21,785 19,348
Selling, general and administrative ........... 7,746 7,929
Interest expense .............................. 2,567 2,117
Other income .................................. (878) (1,740)
--------- ---------
Total costs and expenses ..................... 31,220 27,654
--------- ---------

Income from continuing operations before taxes 4,001 4,330
Provision for income taxes ..................... 1,271 1,295
--------- ---------
Income from continuing operations .............. 2,730 3,035
Income (loss) from discontinued operations .... 371 79,102
--------- ---------
Net income (loss)............................... $ 3,101 $82,137
========= =========

Weighted average shares outstanding ............ 17,659 17,671

PRIMARY EARNINGS PER SHARE:
Income from continuing operations .............. $ 0.16 $ 0.17
Income (loss) from discontinued operations .... 0.02 4.48
--------- ---------
Net income (loss)............................... $ 0.18 $ 4.65
========= =========
</TABLE>

See accompanying notes to consolidated financial statements.

F-10
<PAGE>
BEC GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

<TABLE>
<CAPTION>
FOR THE NINE MONTHS
ENDED
SEPTEMBER 30,
-----------------------
1997 1996
---------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net cash provided by operating activities of continuing
operations..................................................... $ 2,946 $ 3,579
Net cash provided (used) by operating activities of
discontinued operations ....................................... (1,883) 7,797
---------- -----------
Net cash provided by operating activities ..................... 1,063 11,376
---------- -----------
Cash flows from investing activities:
Cash expended on acquisitions, net ............................. (1,686) --
Capital expenditures ........................................... (792) (540)
Proceeds from sale of assets ................................... -- 157
Net cash provided (used) by investing activities of
discontinued operations ....................................... (34,810) 246,784
---------- -----------
Net cash provided (used) by investing activities .............. (37,288) 246,401
---------- -----------
Cash flows from financing activities:
Proceeds from revolving credit line ............................ 35,471 2,946
Proceeds from (payments for) long term obligations ............ 100 (394)
Proceeds from issuances of common stock ........................ 584 2,503
Purchases of treasury stock .................................... (204) --
Cash dividends to shareholders ................................. -- (230,071)
Net cash used by financing activities of discontinued
operations .................................................... (17) (32,221)
---------- -----------
Net cash provided (used) by financing activities .............. 35,934 (257,237)
Net increase (decrease) in cash ................................. (291) 540
Cash and cash equivalents at beginning of period ................ 2,164 4,055
---------- -----------
Cash and cash equivalents at end of period....................... $ 1,873 $ 4,595
========== ===========
</TABLE>

See accompanying notes to consolidated financial statements.

F-11
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1 -- BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles,
Regulation S-X and the instructions for Form 10-Q. These statements contain
all adjustments, consisting of only normal recurring adjustments, which in
the opinion of management are necessary to fairly present the consolidated
financial position of the Company as of September 30, 1997 and its results of
operations for the three and nine months ended September 30, 1997 and 1996
and its cash flows for the nine months ended September 30, 1997 and 1996. The
results of operations of the interim periods presented are not necessarily
indicative of the results to be expected for the full fiscal year. The
consolidated balance sheet at September 30,1997 and December 31, 1996
reflects the investment in discontinued operations. These condensed financial
statements should be read in conjunction with the financial statements and
notes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.

NOTE 2 -- DISCONTINUED OPERATIONS

As of October 30, 1997, the Company entered into a definitive agreement to
acquire (through its wholly-owned subsidiary, BILC Acquisition Corp.) ILC
Technology, Inc. ("ILC"). Under the terms of the agreement and assuming the
conversion of the principal amount of the Company's convertible notes, ILC
shareholders will receive 4.36 shares of the Company's common stock (or 2.18
shares, after giving effect to a proposed one-for-two reverse split of the
Company's common stock) for each share of ILC common stock outstanding. At
September 30, 1997, ILC had 4,879,811 shares of common stock outstanding and
the Company had 17,631,082 shares of common stock issued (or, if the full
face value of the Company's 8% convertible notes were to be converted,
21,286,484 shares). The completion of the transaction is subject to approval
by both the Company's and ILC's shareholders, obtaining required regulatory
approvals, and other customary closing conditions. Mr. Martin E. Franklin and
Mr. Henry C. Baumgartner, the chairmen, respectively, of the Company and ILC
have executed voting agreements in favor of the transaction.

On October 31, 1997, the Company also announced its intent to spin off its
Bolle Inc. ("Bolle") subsidiary to the Company's shareholders. It is
anticipated that the Company's shareholders will receive one share of Bolle
common stock for every three shares of the Company's common stock held at the
time of the spin off. It is also anticipated that Bolle will be listed on the
NASDAQ National Market System.

The Company's 1996 discontinued operations included Foster Grant Group and
the Prescription Eyewear Business. The Company's 1996 and 1997 discontinued
operations include the planned spin off of Bolle Inc.

F-12
<PAGE>
Summarized information on the combined discontinued operations follows:

<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------
1997 1996
--------- ---------
<S> <C> <C>
Net Sales.................................................... $20,670 $19,816
Income before taxes.......................................... $ 584 $ 2,325
Income tax expense .......................................... 196 967
Minority interests .......................................... 17 --
--------- ---------
Earnings from 1997 discontinued operations net of tax ....... $ 371 $ 1,358
========= =========
Earnings (loss) from 1996 discontinued operations net of tax -- 77,744
--------- ---------
Earnings (loss) from discontinued operations................. $ 371 $79,102
========= =========
</TABLE>

F-13
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Dirctors and
Stockholders of BEC Group, Inc. (formerly Benson Eyecare Corporation)

In our opinion, based upon our audits and the report of other auditors, the
accompanying consolidated balance sheets and the related consolidated
statements of operations, of stockholders' equity and of cash flows present
fairly, in all material respects, the financial position of BEC Group, Inc.
(formerly Benson Eyecare Corporation) and its subsidiaries at December 31,
1996 and 1995, and the results of their operations and their cash flows for
each of the three years in the period ended December 31, 1996, in conformity
with generally accepted accounting principles. These financial statements are
the responsibility of the Company's management; our responsibility is to
express in opinion on these financial statements based on our audits. We did
not audit the financial statements of Bolle America, Inc., a wholly-owned
subsidiary, which statements reflect income from discontinued operations of
$1,937,000 for the year ended December 31, 1994. Those statements were
audited by other auditors whose report thereon has been furnished to us, and
our opinion expressed herein, insofar as it relates to the amounts included
for Bolle America, Inc., is based solely on the report of the other auditors.
We conducted our audits of these statements in accordance with generally
accepted auditing standards which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits and the report of other auditors provide a reasonable
basis for the opinion expressed above.

PRICE WATERHOUSE LLP
Dallas, Texas
March 10, 1997, except as to the first three
paragraphs of Note 2 and Note 17,
as to which the date is November 14, 1997.

F-14
<PAGE>
INDEPENDENT AUDITORS' REPORT

To the Board of Directors and Stockholders
Bolle America, Inc.

We have audited the statements of operations, stockholders' equity, and cash
flows of Bolle America, Inc. for the year ended December 31, 1994, which
financial statements are not separately presented herein. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of its operations and cash flows of Bolle
America, Inc. for the year ended December 31, 1994, in conformity with
generally accepted accounting principles.

KPMG PEAT MARWICK LLP
Denver, Colorado
January 20, 1995

F-15
<PAGE>
BEC GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(Amounts in thousands)

<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1995
---------- ----------
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents......................................... $ 2,164 $ 4,055
Trade receivables, less allowance for doubtful accounts of $503
and $485 ........................................................ 7,280 7,166
Inventories ...................................................... 9,317 8,018
Investment in and net receivables from discontinued operations .. 11,167 203,579
Other current assets ............................................. 3,651 1,984
---------- ----------
Total current assets ............................................ 33,579 224,802
Property and equipment, net ....................................... 13,114 13,490
Goodwill, net ..................................................... 11,372 11,599
Intangible assets, net ............................................ 1,296 1,510
Equity in and notes receivable from affiliated companies ......... 11,435 10,564
Other assets ...................................................... 4,275 7,774
---------- ----------
Total assets..................................................... $ 75,071 $269,739
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Short-term debt................................................... $ 17,645 $ 62,849
Accounts payable ................................................. 2,858 2,284
Accrued compensation ............................................. 2,134 2,087
Other accrued expenses ........................................... 8,557 6,312
---------- ----------
Total current liabilities ....................................... 31,194 73,532
Long-term debt .................................................... 3,597 18,606
Convertible subordinated notes .................................... 21,922 40,950
Other long-term liabilities ....................................... 10,754 5,517
---------- ----------
Total liabilities ............................................... 67,467 138,605
---------- ----------
Commitments and contingencies
Stockholders' equity:
Preferred stock--par value $1; 500 shares authorized; none
outstanding .....................................................
Common stock--par value $.01; 50,000 shares authorized; 17,631
and 32,101 issued ............................................... 176 321
Additional paid-in capital ....................................... 28,703 131,553
Treasury stock -116 and 195 shares at cost ....................... (557) (1,365)
Retained earnings (deficit)....................................... (20,718) 625
---------- ----------
Total stockholders' equity ...................................... 7,604 131,134
---------- ----------
Total liabilities and stockholders' equity....................... $ 75,071 $269,739
========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-16
<PAGE>
BEC GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Amounts in thousands, except per share data)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
---------------------------------
1996 1995 1994
--------- ---------- ----------
<S> <C> <C> <C>
Continuing operations:
Net sales................................................... $42,574 $41,244 $39,047
Costs and expenses:
Costs of sales ............................................. 25,676 23,725 14,405
Selling, general and administrative expense ................ 10,020 13,820 25,159
Special charges ............................................ -- 5,237 --
Interest expense ........................................... 2,942 4,087 3,142
Other income, net .......................................... (1,378) (3,337) (1,169)
--------- ---------- ----------
Total costs and expenses .................................. 37,260 43,532 41,537
Income (loss) from continuing operations before income taxes 5,314 (2,288) (2,490)
Provision (benefit) for incomes taxes ....................... 1,870 (1,339) (1,006)
--------- ---------- ----------
Income (loss) from continuing operations .................... $ 3,444 $ (949) $(1,484)
--------- ---------- ----------
Discontinued operations (Note 2):
Income (loss) from operations of the Prescription Eyewear
Business, Foster Grant Group and Bolle (less applicable
taxes of $2,177, $1,137 and $2,266, respectively) .......... $ 4,302 $(5,811) $11,650
Net gain on the sales of the Prescription Eyewear Business,
and Foster Grant Group net of phase out losses of $2,902
and applicable taxes of $1,978.............................. 75,010 -- --
--------- ---------- ----------
Income (loss) from discontinued operations .................. $79,312 $(5,811) $11,650
--------- ---------- ----------
Net income (loss)............................................ $82,756 $(6,760) $10,166
========= ========== ==========
Pro forma weighted average common shares outstanding ....... 17,669 17,600 17,600
========= ========== ==========
Income (loss) per share:
Income (loss) from continuing operations..................... $ 0.19 $ (0.05) $ (0.08)
Income (loss) from discontinued operations .................. 4.49 (0.33) 0.66
--------- ---------- ----------
Net income (loss) per share.................................. $ 4.68 $ (0.38) $ 0.58
========= ========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-17
<PAGE>
BEC GROUP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1996, 1995 AND 1994
(Amounts in thousands)

<TABLE>
<CAPTION>
ADDITIONAL RETAINED
PAID-IN EARNINGS TREASURY
SHARES PAR VALUE CAPITAL (DEFICIT) STOCK
---------- ----------- ------------ ----------- ----------
<S> <C> <C> <C> <C> <C>
1994:
Balance--beginning of year ............ 20,556 $ 206 $ 43,579 $ (2,731)
Shares issued for acquisitions ...... 7,118 71 49,041
Shares issued through public
offering, net of expenses ........... 969 10 9,952
Exercise of stock options ............ 310 3 1,420
Conversion of convertible debt ...... 78 1 349
Compensation accrued for stock
options.............................. 161
Other issuances of common stock ..... 20 150
Stock contributed to pension plan ... 19 130
Cash dividend to stockholders ....... (50)
Treasury stock ....................... (195) $(1,365)
Net income ........................... 10,166
---------- ----------- ------------ ----------- ----------
Balance--December 31, 1994 ............ 28,875 291 104,782 7,385 (1,365)

1995:
Shares issued for acquisitions ...... 316 3 2,843
Shares issued through public
offering, net of expenses ........... 2,356 24 22,012
Exercise of stock options ............ 317 3 1,410
Compensation accrued for stock
options.............................. 146
Other issuances of common stock ..... 17 115
Stock contributed to pension plan ... 25 245
Net loss ............................. (6,760)
---------- ----------- ------------ ----------- ----------
Balance--December 31, 1995 ............ 31,906 321 131,553 625 (1,365)

1996:
Exercise of stock options ............ 415 4 2,323
Dividend to stockholders ............. (125,972) (104,099)
Shares issued for acquisitions ...... 2 12
Other issuances of common stock ..... 22 174
Treasury stock ....................... (116) (2) (1,363) 808
Effect of Spinoff (reverse split) ... (16,008) (160) 1,541
Conversion of 8% Convertible Notes
due 2001 ............................ 1,294 13 20,435
Net income ........................... 82,756
---------- ----------- ------------ ----------- ----------
Balance--December 31, 1996 ............ 17,515 $ 176 $ 28,703 $ (20,718) $ (557)
========== =========== ============ =========== ==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-18
<PAGE>
BEC GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Amounts in thousands)

<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31,
------------------------------------
1996 1995 1994
----------- ----------- ----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income (loss)...................................... $ 3,444 $ (949) $ (1,484)
Adjustments to reconcile income (loss) to net cash
provided (used) by operating activities:
Special charges and merger related expenses, net of
payments ............................................. -- 4,120 --
Depreciation and amortization ......................... 998 2,303 1,851
Bad debt expense ...................................... 26 280 307
Loss (gain) on sale of property and equipment ........ 414 (316) (3)
Stock compensation expense ............................ -- 15 161
Changes in current assets and liabilities (net of
effect of companies acquired):
Accounts receivable ................................... (89) (2,201) 3,185
Inventories ........................................... (1,371) 256 7,987
Other assets .......................................... (2,054) (3,529) 3,609
Accounts payable ...................................... 356 2,383 4,546
Accrued expenses and other ............................ 110 (5,732) (20,840)
Cash provided (used) by discontinued operations ...... 6,853 (9,122) 19,334
----------- ----------- ----------
Net cash provided (used) by operating activities ..... 8,687 (12,492) 18,653
----------- ----------- ----------
Cash flows from investing activities:
Cash expended in acquisitions, net of cash received ... -- (3,865) (62,142)
Capital expenditures .................................. (620) (1,619) (2,025)
Proceeds from sale of fixed assets .................... 155 3,648 66
Non-compete agreement and intangible assets .......... 2
Investments in affiliated companies ................... (7,481)
Cash provided (used) by discontinued operations ...... 276,112 (36,887) (18,962)
----------- ----------- ----------
Net cash provided (used) by investing activities ..... 275,649 (38,723) (90,544)
----------- ----------- ----------

Cash flows from financing activities:
Net proceeds from issuance of long-term debt ......... -- 4,078 44,635
Payments on notes payable and mortgages ............... (15,364) (1,068) (3,018)
Proceeds (payments) from revolving credit line ....... (45,000) (8,938) 10,587
Proceeds from issuance of common stock ................ 1,944 23,569 1,573
Cash dividends to stockholders ........................ (230,071) -- --
Cash provided (used) by discontinued operations ...... 2,226 20,745 30,322
----------- ----------- ----------
Net cash provided (used) by financing activities ..... (286,265) 38,386 84,099
----------- ----------- ----------
Net increase (decrease) in cash ........................ (1,929) (12,829) 12,208
Cash and cash equivalents at beginning of year ........ 4,055 11,431 4,974
----------- ----------- ----------
Cash and cash equivalents at end of year................ $ 2,126 $ (1,398) $ 17,182
----------- ----------- ----------
Supplemental disclosures of cash flow information:
Interest paid ......................................... $ 6,710 $ 9,100 $ 3,956
Income taxes paid ..................................... 2,581 910 991
</TABLE>

F-19
<PAGE>
Noncash transactions:

1996

o $20,448 of convertible notes were converted into equity during 1996 in
conjunction with the Essilor Merger. See Note 2.

o $500 of notes receivable from Superior Vision Services, Inc. ("SVS")
was forgiven during 1996.

o Recorded $1 million of non-interest bearing convertible preferred stock
as partial consideration on the sale of FGG. See Note 2.

1995

o Recorded a $1.9 million non-interest bearing convertible note
receivable in exchange for notes and trade receivables.

o Certain business combinations and divestitures were consummated during
the year. The acquisitions were funded through a combination of cash,
equity and debt. The fair values of the assets and liabilities at the
dates of acquisition are presented as follows:

<TABLE>
<CAPTION>
<S> <C>
Accounts receivable ...................... $ 2,888
Inventories .............................. (275)
Property and equipment ................... 622
Goodwill ................................. 13,841
Intangible assets ........................ 1,350
Other assets ............................. 633
Short-term debt .......................... (92)
Accounts payable and accrued liabilities (1,840)
Other long-term liabilities .............. 2,508
---------
Net assets acquired .................... $19,635
=========
</TABLE>

1994

o Received 195 shares of common stock as partial payment of management
fee from Superior Eye Care.

o Received notes receivable and stock in connection with dispositions of
retail assets.

o Certain business combinations were consummated during the year. The
acquisitions were funded through a combination of cash, equity and
debt. The fair values of the assets and liabilities at the dates of
acquisition are presented as follows:

<TABLE>
<CAPTION>
<S> <C>
Accounts receivable ...................... $ 21,507
Inventories .............................. 37,822
Property and equipment ................... 34,250
Goodwill ................................. 67,086
Intangible assets ........................ 7,886
Other assets ............................. 58,615
Short-term debt .......................... (966)
Accounts payable and accrued liabilities (46,430)
Other long-term liabilities .............. (22,712)
----------
Net assets acquired .................... $157,058
==========
</TABLE>

See accompanying notes to consolidated financial statements.

F-20
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Amounts in thousands, except per share data, unless otherwise noted)

NOTE 1 -- BUSINESS

Business

BEC Group, Inc. ("BEC") has one core business: ORC Technologies, Inc.
("ORC"), f/k/a Optical Radiation Corporation which manufactures and markets
specialty lighting, electronic and electroformed products to a diverse
customer base. The evolution of BEC to its present composition was
accomplished through a series of acquisitions and divestitures which were
consummated during the period from October 1992 through December 1996 (Notes
2 and 5).

NOTE 2 -- DISCONTINUED OPERATIONS

Bolle Inc.

On October 31, 1997, BEC announced its intent to spinoff Bolle Inc.
("Bolle"), a wholly owned subsidiary of BEC, to BEC's stockholders (the
"Spinoff"). It is anticipated that BEC's stockholders will receive one share
of Bolle common stock for every three shares of BEC's common stock held at
the time of the Spinoff. In connection with the Spinoff, BEC will assign to
Bolle, and Bolle will assume, all of BEC's business, assets and liabilities,
other than those relating to ORC. The assigned businesses and assets include
Eyecare Products plc (Note 9) and Superior Vision Services, Inc. (Note 9).
Accordingly, the accompanying financial statements of BEC have been restated
to reflect the results of operations of Bolle as discontinued operations for
all periods presented.

Foster Grant Group and Dallas Corporate Headquarters

On December 12, 1996, BEC sold to Foster Grant Holdings, Inc. ("Holdings")
all of the issued and outstanding shares of capital stock of the entities
comprising the Foster Grant Group ("FGG"). At closing, BEC received $29
million in cash and 100 shares of non-voting preferred stock with a maximum
redemption value of $6 million (the "Preferred Stock"). By agreement with
Accessories Associates, Inc. ("AAi"), BEC may, at its option, exchange the
Preferred Stock for shares of AAi common stock if AAi completes an initial
public offering ("IPO") at any time within three (3) years of closing. Upon
any such exchange, BEC will receive the number of shares of AAi common stock
equal to $6 million divided by 85% of the IPO offering price, as set forth in
the AAi final IPO prospectus. Any such shares of AAi common stock will not be
registered for resale under federal securities laws, but will bear
"piggyback" registration rights. If the Preferred Stock is not converted, it
will be redeemed by Foster Grant Holdings, Inc. ("Holdings") on or before
February 28, 2000 for up to $6 million, based on the FGG's net sales for the
year ending December 31, 1999. The cash consideration was used to pay down
BEC's credit facility and pay transaction expenses. The results of operations
for FGG and the Dallas Corporate Headquarters, which is being closed in
connection with the sale of FGG, are presented as discontinued operations of
the Company. The assets of FGG, net of liabilities, are presented as
investment in discontinued operations at December 31, 1995. A loss of $26.1
million including transaction expenses and phase-out losses, net of taxes was
recorded on the sale. All rights, liabilities and obligations of BEC with
respect to the Preferred Stock and/or agreement by and between BEC, AAi
Holdings and/or FGG will be assigned to, and assumed by, Bolle in connection
with the Spinoff.

Prescription Eyewear Business

On May 3, 1996, Benson, BEC, Essilor International, S.A. ("Essilor"),
Essilor of America, Inc. ("Essilor of America"), a wholly owned subsidiary of
Essilor and Essilor Acquisition Corporation, Inc. ("Essilor Sub"), a wholly
owned subsidiary of Essilor of America, entered into an Agreement and Plan of
Merger, as amended pursuant to which Essilor purchased Benson and the Omega
Group, Benson's wholesale optical laboratory business (the "Essilor Merger").
Benson also entered into an Asset Purchase

F-21
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

Agreement, pursuant to which Benson's lens manufacturing business, Orcolite,
was purchased by the Monsanto Company (the "Asset Sale"). The Omega Group and
Orcolite comprised the Prescription Eyewear Business of Benson. In connection
with the Spinoff, Bolle will agree to indemnify the Company against any and
all liabilities, damages, costs or other expenses arising in connection with
the Essilor transaction, except to the extent arising as a result of the ORC
business.

Pursuant to the Essilor Merger, each outstanding share of Benson common
stock was exchanged for $6.60 in cash and one share of BEC's Common Stock was
received for every two shares of Benson Common Stock. Upon consummation of
the Essilor Merger, the equity interest in Benson of its stockholders ceased
and Benson became a wholly owned subsidiary of Essilor of America. Also upon
consummation of the Essilor Merger, BEC became a registrant whose common
shares are traded on the NYSE.

For accounting purposes, BEC is considered the continuing entity.
Accordingly, in substance, the Merger and Asset Sale were considered to be a
sale of Omega and Orcolite by BEC to Essilor and Monsanto Company,
respectively. Upon approval of the Essilor Merger, Benson's historical
consolidated financial statements, adjusted for the sale of the Prescription
Eyewear business, became the historical financial statements of BEC. The gain
on the sale of these businesses of $100.7 million and the results of
operations for these businesses are presented as discontinued operations of
BEC. The cash merger consideration is treated as a dividend by BEC. The
assets of the discontinued operations, net of liabilities, are presented as
investment in discontinued operations at December 31, 1995. The accounting
treatment of the Essilor Merger and Asset Sale differs from the legal and
federal income tax treatment.

During the third quarter of 1996, the final Closing Balance Sheet for the
sale of Omega was agreed upon by BEC and Essilor. According to the terms of
the Essilor Merger, a purchase price adjustment of $2.1 million was paid to
Essilor on October 3, 1996, decreasing the gain on the sale. Additionally,
Essilor and BEC agreed to settle the Contingent Valuation Right (the "CVR")
early for cash of $2.2 million payable by BEC to Essilor in January 1997.
Accordingly, the gain on the sale increased by approximately $2.4 million.
The net result of the described adjustments, in addition to the adjustment of
certain accruals relating to the Merger, was a $791 incremental gain on the
sale of the Prescription Eyewear Business recorded in discontinued operations
in the third quarter.

Summarized information on the combined discontinued operations, excluding
the net gain on the transactions follows. The 1996 amounts represent the
operating results of FGG, the Prescription Eyewear Business and Bolle Inc.
business through their respective measurement dates.

<TABLE>
<CAPTION>
FOR THE YEAR ENDED
----------------------------------
1996 1995 1994
---------- ---------- ----------
<S> <C> <C> <C>
Net sales.......................... $125,987 $260,591 $153,184
Income (loss) before income taxes 6,479 (4,674) 13,916
---------- ---------- ----------
Income tax expense ................ 2,177 1,137 2,266
---------- ---------- ----------
Net income (loss).................. $ 4,302 $ (5,811) $ 11,650
========== ========== ==========
</TABLE>

BEC also entered into an indemnification agreement, whereby BEC has agreed
to indemnify Essilor against all federal income and other taxes for any
taxable period before the Merger was consummated. BEC has also agreed to
indemnify the above named parties against all losses or liabilities arising
from misrepresentation or breaches of warranty.

Pursuant to the Essilor Merger, all Benson stock options were canceled.
Continuing BEC option holders received cash and new options in exchange for
their Benson options. Option holders from discontinued operations received
cash and BEC stock in exchange for their Benson options.

F-22
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

NOTE 3 -- SPECIAL CHARGES AND MERGER RELATED EXPENSES

BEC's special charges of $5.2 million for the year 1995 included
primarily: (i) a $4.3 million charge to reflect the impairment of certain
notes receivable and trade accounts receivable from OCA Acquisition, Inc.,
d/b/a Optical Corporation of America ("OCA") prior to the exchange of such
assets for non-interest bearing convertible note receivable from Sterling
Vision, Inc. (Note 5) valued at $2.1 million; (ii) the write-off of $500 of
deferred financing costs in connection with a change in BEC's banking
syndicate in September 1995. Neither of these items relate to the ORC
business.

NOTE 4 -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation

The consolidated financial statements include the accounts of BEC and its
wholly owned subsidiaries. Investments in certain less than 50% owned
affiliates are accounted for by the equity method, investments in less than
20% owned affiliates are accounted for by the cost method (Note 9). All
significant intercompany transactions, profits and accounts have been
eliminated in consolidation.

Cash Equivalents

Cash equivalents include all temporary cash investments with original
maturities of three months or less. The carrying value is equal to market
value.

Revenue Recognition

ORC recognizes revenue upon shipment or delivery of products.

Concentration of Credit Risk and Major Customers

BEC is not subject to significant concentrations of credit risk. However,
trade receivables arising from sales to customers are not collateralized and
as a result management continually monitors the financial condition of these
customers to reduce the risk of loss. Notes receivable relate to the
divestiture of certain businesses and related assets in 1995 and 1994. The
carrying values of notes receivable approximate fair value.

Inventories

Inventories, which consist primarily of raw materials and finished goods
held for resale, are stated at the lower of cost or market value and
determined on a first-in-first-out basis.

Warranties

Certain sales are subject to warranty against defects in material and
workmanship for varying periods. BEC provides for such potential future costs
at the time the sales are recorded.

Property and Equipment

Property and equipment are stated at cost. Additions and improvements are
capitalized. Maintenance and repairs are expensed as incurred. Depreciation
is computed on a straight line basis for financial reporting purposes, and on
an accelerated basis for tax purposes, over the estimated useful lives of the
assets. Useful lives range from 3 to 5 years for office equipment to 30 years
for buildings. Asset cost and accumulated depreciation amounts are removed
for dispositions and retirements, with resulting gains and losses reflected
in earnings.

F-23
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

Goodwill and Intangible Assets

Goodwill represents the excess cost over the fair value of net assets
acquired in business combinations accounted for under the purchase method.
Intangible assets consist principally of trademarks and other identifiable
intangible assets.

Goodwill and intangible assets are amortized on a straight line basis over
estimated useful lives which approximate 40 years for goodwill, 20 years for
trademarks, and from 3-10 years for other identifiable intangibles. At each
balance sheet date, BEC evaluates the realizability of goodwill and
intangible assets based upon expectations of undiscounted cash flows of each
subsidiary having a significant goodwill or intangible asset balance. Should
this review indicate that goodwill or intangible assets will not be
recoverable, BEC's carrying value of the goodwill or intangible assets will
be reduced by the estimated shortfall of discounted cash flows. Based upon
its most recent analysis, BEC believes that no material impairment of
goodwill or intangible assets exists.

Income Taxes

Deferred income taxes are provided on the difference in basis of assets
and liabilities between financial reporting and tax returns using enacted tax
rates. A valuation allowance is recorded when realization of deferred tax
assets is not assured.

Investments in Affiliates

Investments in affiliates owned less than 20% are carried on the balance
sheet according to the cost method. Investments in more than 20% owned
affiliates are carried on the balance sheet according to the equity method.

Earnings Per Share

Earnings per share is computed by dividing net earnings or loss by the
weighted average number of shares of common stock and common stock
equivalents outstanding during each year. Common stock equivalents consist of
the dilutive effect of common shares which may be issued upon exercise of
stock options and warrants.

The number of common shares issued and outstanding as of December 31, 1995
has not been adjusted to reflect the Essilor Merger and Asset Sale and
represents the historical stockholders' equity in Benson.

The pro forma weighted average shares outstanding in 1995 and 1994 reflect
the effect of the Essilor Merger and Asset Sale and represent the approximate
number of common shares outstanding including common stock equivalents of BEC
following the Essilor Merger and Asset Sale.

Reclassifications

Certain amounts in the 1995 and 1994 financial statements have been
reclassified to conform with the 1996 presentation.

Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that effect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from these estimates.

F-24
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

New Accounting Pronouncements

Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings
per Share" establishes specific guidelines for publicly held companies for
the computation, presentation, and disclosure requirements of earnings per
share. The statement is effective for all periods ending after December 15,
1997 and restatement will be required for all prior-period EPS data
presented. The application of SFAS 128 to the Company's computation of
earnings per share does not affect the pro forma earnings per share amounts
reported for the year ended December 31, 1996 or the nine months ended
September 30, 1997.

SFAS No. 130, "Reporting Comprehensive Income", establishes guidelines for
all items that are to be recognized under accounting standards as components
of comprehensive income to be reported in the financial statements. The
statement is effective for all periods ending after December 15, 1997 and
reclassification of financial statements for earlier periods presented will
be required for comparative purposes.

SFAS No. 131, "Disclosures about Segments of an Enterprise and Related
Information", establishes standards for reporting of operating segment
information in annual financial statements and requires that those
enterprises report selected information about operating segments in interim
financial statements issued to shareholders. The statement is effective for
all periods ending after December 15, 1997. The Company presently reports as
one operating segment and expects to continue to do so.

NOTE 5 -- BUSINESS COMBINATIONS AND DIVESTITURES

1997 AND 1996 DIVESTITURES (NOTE 2)
1995 BUSINESS COMBINATION

Bolle America, Inc.

Effective November 2, 1995, BEC acquired all of the outstanding common
stock of Bolle America, Inc. ("Bolle America") in exchange for 3,265 shares
of BEC's Common Stock, valued at $31 million. The business combination was
accounted for as a pooling of interests and accordingly, the financial
statements of Bolle America were combined with those of BEC. BEC entered into
employment, consulting and noncompete agreements with the former president of
Bolle America providing for annual payments of $255 from 1996 through 2000.
Bolle America's results are included in discontinued operations.

1995 DIVESTITURES

Effective September 15, 1995, BEC exchanged its interests in notes
receivable and trade accounts receivable from OCA for a non interest-bearing
convertible note receivable from Sterling Vision, Inc. ($2.1 million carrying
value at December 31, 1996) (Note 3).

Effective June 30, 1995, BEC sold 100% of the issued and outstanding
capital stock of Superior Eye Care for aggregate consideration of $5 million.
There was no gain or loss recorded on the transaction.

1994 BUSINESS COMBINATIONS

Optical Radiation Corporation

On October 12, 1994, BEC acquired all of the issued and outstanding
capital stock of ORC. The consideration was $143 million which consisted of
$95 million of cash, and the issuance of 7.1 million shares of BEC's Common
Stock, valued at $48 million. The acquisition was accounted for as a purchase
with the operating results of ORC included in the consolidated financial
statements from October 12, 1994. The allocation of purchase price included
assignment of $7 million to trademarks and other identifiable intangible
assets and $68 million to goodwill.

F-25
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

Pro forma information for the acquisition of ORC is not presented herein
as the majority of the ORC business purchased was sold in connection with the
Essilor Merger and Asset Sale on May 3, 1996 (Note 2).

1994 DIVESTITURES

On October 13, 1994, BEC sold the businesses and assets of the Ophthalmic
Surgical Products Division of ORC for aggregate consideration of $4.6 million
in cash and 61 shares of Mentor Corporation common stock. The consolidated
financial statements do not include any operating results for this business.
Other income, net for the year ended December 31, 1995 includes a realized
gain of $515 from the sale of the Mentor stock.

On October 20, 1994, BEC sold 100% of the issued and outstanding capital
stock of Benson Optical Co., Inc. ("Benson Optical") and Superior Optical
Company, ("Superior Optical") for aggregate consideration of $3.5 million in
notes receivable and $1.5 million of convertible preferred stock of OCA,
which, if converted, represented a 19.9% equity interest. There was no gain
or loss recorded on the sale. The note receivable was due October 2000, with
interest payments due quarterly until October 1996, and interest and
principal payments due quarterly thereafter. The fair value of the preferred
stock approximated its carrying value at December 31, 1994, subject to
adjustment based upon certain purchase price adjustments provided for in the
purchase agreement. BEC's interests in OCA were sold in 1995.

In August 1994, BEC sold the assets of certain retail optical stores owned
by its subsidiary, Pembridge Optical Partners, Inc. ("Pembridge Optical"), to
Sterling Vision, Inc. for consideration of $1.14 million in notes receivable
due September 1997 which bear interest at prime plus 1.5%, payable monthly.

NOTE 6 -- INVENTORIES

Inventories consist of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
-------- --------
<S> <C> <C>
Raw materials..... $4,534 $4,165
Work in progress 2,655 2,549
Finished goods .. 2,504 1,741
Reserves ......... (376) (437)
-------- --------
$9,317 $8,018
======== ========
</TABLE>

NOTE 7 -- PROPERTY AND EQUIPMENT

Property and equipment consists of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Land........................... $ 1,631 $ 1,849
Buildings ..................... 10,401 9,700
Machinery and equipment ...... 3,224 3,005
Furniture and fixtures ........ 203 97
Leasehold improvements ........ 42 42
--------- ---------
15,501 14,693
Less accumulated depreciation (2,387) (1,203)
--------- ---------
Net property and equipment .... $13,114 $13,490
========= =========
</TABLE>

F-26
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

Depreciation expense for the years ended December 31, 1996, 1995 and 1994
was $748, $742 and $1,512, respectively.

Land and buildings totaling $6.3 million net of accumulated depreciation
are subject to operating leases. The minimum future rental income is as
follows:

<TABLE>
<CAPTION>
<S> <C>
1997................. $1,233
1998 ................ 686
1999 ................ 318
2000 and thereafter --
--------
$2,237
========
</TABLE>

NOTE 8 -- GOODWILL AND INTANGIBLE ASSETS

Intangible assets and accumulated amortization at December 31, consist of
the following:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Goodwill.............................. $11,939 $11,881
Trademarks ........................... 1,498 1,496
Other identifiable intangible assets (16) 384
Less accumulated amortization ....... (753) (652)
--------- ---------
$12,668 $13,109
========= =========
</TABLE>

Amortization expense for goodwill and intangible assets for the years
ended December 31, 1996, 1995 and 1994, was $357, $492 and $346,
respectively.

NOTE 9 -- EQUITY IN AND NOTES RECEIVABLE FROM AFFILIATED COMPANIES

Eyecare Products plc

On August 8, 1994, BEC, through its wholly owned subsidiary, Ashfield
Development, Inc. ("Ashfield"), a British Virgin Islands corporation,
subscribed for shares of Eyecare Products plc ("Eyecare Products"), in order
to maintain BEC's holdings in Eyecare Products at 26.44%. Ashfield accounted
for its interest in Eyecare Products under the equity method. On September 1,
1994, BEC sold 51% of its holdings in Ashfield to an Asian joint venture
partner. During September 1994, BEC sold its holdings in Eyecare Products to
Ashfield. No profit or losses were recorded on these transactions because the
transactions were between companies under common control. From September 1,
1994 to April 30, 1996, BEC accounted for its investment in Ashfield on the
equity method of accounting.

As part of the series of transactions leading up to the Merger on May 3,
1996, the assets and liabilities of Ashfield were distributed to its
shareholders and Ashfield was subsequently liquidated. No gain or loss was
recorded on the distribution. BEC now holds its investment in Eyecare
Products directly. For the years ended December 31, 1996 and 1995, BEC
recognized equity earnings of $275 and $525, respectively, on its investment
in Eyecare Products.

BEC has entered into an agreement, dated November 14, 1996, as amended,
with Lantis Eyewear Corporation ("Lantis"), whereby BEC sold 3,500 shares of
Eyecare Products to Lantis and has granted Lantis an option to acquire BEC's
remaining interest in Eyecare Products. A $250 deposit received from Lantis
in December 1996 was recorded as deferred income. BEC currently maintains a
23% interest in Eyecare Products. Eyecare Products is the largest frame
manufacturer and distributor in France having sales of approximately $90
million in 1996.

F-27
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

Eyecare Products shares two common directors with BEC, and BEC has a
management agreement with Eyecare Products under which a management fee is
paid to BEC, not to exceed .5% of Eyecare Products net sales. BEC recognized
management fee income of $100 and $300 during each of the years December 31,
1996 and 1995, respectively.

Superior Vision Services, Inc.

BEC's investment in Superior Vision Services, Inc. ("SVS") is currently
accounted for on the cost basis. Additionally, BEC has a fully funded $500
line of credit outstanding to SVS. Both of these balances net of a reserve
are included in "Equity in and notes receivable from affiliated companies."
During 1996, SVS underwent a recapitalization which resulted in the issuance
of Series B preferred shares to BEC in exchange for the forgiveness of $500
of indebtedness in lieu of cash. The carrying value of BEC's investment in
SVS was reduced to $245 at December 31, 1996 to reflect the investment on a
lower of cost or market basis. In connection with the Spinoff, BEC will
assign to Bolle all of its right, title and interest in and to its investment
in SVS.

Benson Partners I, L.P.

In December 1993, a partnership was formed in which a wholly owned
subsidiary of BEC maintained a 1% general partnership interest. The primary
business of the partnership was to invest in ORC. In October 1994, following
the acquisition of ORC by BEC, Benson Partners distributed its assets.
Immediately prior to the completion of the acquisition, BEC received 40
shares as its distribution. Through BEC's investment in Benson Partners,
prior to June 30, 1994, BEC recognized income of $744 representing gain on
the stock.

NOTE 10 -- CREDIT FACILITIES

Short-Term Debt

Short-term debt consists of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Revolving credit facility............. $17,500 $62,500
Current maturities of long-term debt.. 145 349
--------- ---------
$17,645 $62,849
========= =========
</TABLE>

Credit Agreement

On April 3, 1996, BEC and certain of its subsidiaries entered into a $75
million credit facility (the "Original Credit Agreement") with a syndicate of
lenders (the "Lenders"), led by NationsBank, N.A., ("NationsBank"). The
Original Credit Agreement, as amended effective December 12, 1996, provides
for a $25 million revolving credit facility maturing on December 11, 1997,
which includes a letter of credit subfacility of $5 million. The interest
rate applicable to the credit facilities will equal the Base Rate or the
Eurodollar Rate (each, as defined in the Credit Agreement), as BEC may from
time to time elect. The Base Rate will generally be equal to the sum of (a)
the greater of (i) the prime rate as announced from time to time by
NationsBank or (ii) the Federal Funds Rate plus one-half percent (0.5%), and
(b) a margin ranging from 0% to .375%, depending upon BEC's satisfaction of
certain financial criteria. The Eurodollar Rate will generally be equal to
the interbank offered rate for Eurodollar deposits, as adjusted to give
effect to Eurodollar reserve requirements, plus a margin ranging from .625%
to 1.625%, depending upon BEC's satisfaction of certain financial criteria. A
commitment fee of $175 was paid upon closing the Credit Agreement in April
1996.

F-28
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

At December 31, 1996, BEC had aggregate borrowing capacity under the
Credit Agreement of $25 million. During 1996, the weighted average interest
rate on borrowings under the facility was 7.1%, the average outstanding
balance was $42.3 million, and the maximum balance outstanding was $68
million.

At December 31, 1996, BEC was in compliance with all applicable debt
covenants.

Revolving Credit Facility

At December 31, 1995, BEC, through its subsidiaries, had aggregate
borrowing capacity under a revolving credit agreement of $90 million. During
1995, the weighted average interest rate on borrowings under the facility was
7.7%, the average outstanding balance was $61 million, and the maximum
balance outstanding was $86.5 million.

The revolving credit facility had a five-year term and interest accrued at
variable rates based upon the Eurodollar Rate, 6.97% at December 31, 1995,
with an initial rate equivalent to LIBOR plus 112 base points. The facility
was secured by inventory, trade accounts receivable and intangible assets.
This facility was replaced by the Credit Agreement on April 3, 1996.

BEC was not in compliance with all debt covenants during 1995, primarily
due to the special charges and merger related expenses; however, a waiver for
non-compliance was received from the lenders.

Long-Term Debt

Long-term debt consists of the following at December 31:

<TABLE>
<CAPTION>
1996 1995
--------- ---------
<S> <C> <C>
Mortgages...................... $3,742 $18,823
Capitalized lease obligations -- 132
--------- ---------
3,742 18,955
========= =========
Less current maturities ...... (145) (349)
--------- ---------
$3,597 $18,606
========= =========
</TABLE>

Aggregate maturities of long-term debt are as follows:

<TABLE>
<CAPTION>
<S> <C>
1997.......... $ 145
1998 ......... 159
1999 ......... 175
2000 ......... 191
2001 ......... 210
Thereafter .. 2,862
-------
$3,742
=======
</TABLE>

The fair value of long term debt is estimated using incremental borrowing
rates currently available to BEC. The carrying value of long-term debt
approximates fair value.

Convertible Subordinated Notes

On May 9, 1994, Benson completed a public offering of $40,950 Convertible
Subordinated Notes, due 2001 with a coupon rate of 8% and a conversion price
of $9.056 per share. In connection with the Essilor

F-29
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

Merger, holders of $40,896 Convertible Subordinated Notes due 2001 accepted
a Conversion and Exchange Agreement whereby they exchanged one-half of their
principal amount and a portion of accrued interest for new BEC Group 8%
Convertible Notes due 2002 (the "BEC Group Notes"). The other half of their
notes was converted into Merger Consideration using a $7.90 conversion price.
The BEC Group Notes accrue interest semi-annually but do not pay interest
until conversion or maturity. Accordingly, $849 of accrued interest is
included in the Convertible Subordinated Notes balance. Interest may be paid
in cash or in kind at the option of BEC. The conversion price for the BEC
Group Notes is $5.75. As of December 31, 1996, there were $21,019 BEC Group
Notes and $54 Benson Notes outstanding. BEC registered the BEC Group Notes
with the Commission effective January 28, 1997.

Mortgages

BEC has a $3,742 mortgage bearing interest at LIBOR plus 1.85 basis
points, secured by land and buildings in Dallas, Texas, with monthly
principal and interest payments of $41 due through April 2001. Such payments
are paid using rental income from FGG which occupies the building.

NOTE 11 -- INCOME TAXES

The provision (benefit) from income taxes consists of the following:

<TABLE>
<CAPTION>
1996 1995 1994
-------- ---------- ----------
<S> <C> <C> <C>
Continuing operations:
Current:
Federal................................... $2,365 $ (138) $
State and local .......................... 141 (27)
Deferred .................................. (636) (1,174) (1,006)
-------- ---------- ----------
$1,870 $(1,339) $(1,006)
-------- ---------- ----------
Discontinued operations:
Current.................................... $ 623 $ 719 $ 1,277
Deferred .................................. (239) 420 989
-------- ---------- ----------
$ 384 $ 1,139 $ 2,266
-------- ---------- ----------
Total provision (benefit) from income
taxes...................................... $2,254 $ (200) $ 1,260
======== ========== ==========
</TABLE>

BEC's effective tax rates for continuing and discontinued operations
differ from the Federal statutory rate as follows:

<TABLE>
<CAPTION>
1996 1995 1994
--------- --------- ---------
<S> <C> <C> <C>
Expected tax (benefit) at statutory rate 35.0% (35.0%) 35.0%
State income taxes ....................... 2.0% (2.0%) 2.0%
Effects of acquisitions and divestitures (32.9%) 4.2% (11.4%)
Valuation allowance ...................... (1.6%) 16.9% (9.2%)
Goodwill amortization .................... 1.3% 10.9% (1.7%)
Other, net ............................... (1.1%) 2.1% (3.7%)
--------- --------- ---------
2.7% (2.9%) 11.0%
========= ========= =========
</TABLE>

F-30
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

Significant components of deferred income taxes for continuing and
discontinued operations are as follows at December 31:

<TABLE>
<CAPTION>
1996 1995
--------- ----------
<S> <C> <C>
Loss carryforward....................... $ 2,263 $ 778
Accounts receivable .................... 173 144
Notes receivable ....................... 959 1,350
Office closing ......................... 848 --
Inventories ............................ 190 118
Assets of discontinued operations ..... 452 18,605
Other, net ............................. 398 1,097
--------- ----------
Gross deferred tax asset ............... 5,283 22,092
Valuation allowance .................... (2,263) (3,665)
--------- ----------
Deferred tax asset ..................... 3,020 18,427
--------- ----------
Liabilities of discontinued operations -- (7,826)
Fixed assets ........................... (650) (559)
Intangible assets ...................... (128) (1,774)
--------- ----------
Deferred tax liability ................. (778) (10,159)
--------- ----------
Net deferred tax asset.................. $ 2,242 $ 8,268
========= ==========
</TABLE>

Discontinued Operations

BEC recorded gross deferred tax assets of $18,605 for discontinued
operations for the year ended December 31, 1995. The related valuation
allowance of $3,665 reflects an increase of $1,181 from the 1994 balance of
$2,484. The increase in the valuation allowance for discontinued operations
was recorded as a result of the performance of the businesses in 1995. In the
event these deferred tax assets become fully realizable, the valuation
allowance will be released. The effect on the income tax provision related to
the valuation allowance was a charge of $1,181 for the year ended December
31, 1995.

BEC recorded gross deferred tax assets of $452 for discontinued operations
for the year ended December 31, 1996. In connection with the divestitures in
1996, substantially all net operating loss carryforwards were utilized to
reduce income taxes currently payable. The balance of the valuation allowance
at December 31, 1995 was released in 1996 as the utilization of the net
operating loss carryforwards was assured due to the gains recognized on the
divestitures. Net operating loss carryforwards related to discontinued
operations amount to approximately $0 and $37 million at December 31, 1996
and 1995, respectively.

Continuing Operations

The Company recorded gross deferred tax assets of $5,283 and related
valuation allowance of $2,263 for continuing operations for the year ended
December 31, 1996. A capital loss carryforward was generated through the sale
of FGG. A valuation allowance of $2,263 was established for the entire net
tax benefit of the capital loss carryforward as the realization was not
assured. The effect on the income tax provision for continuing operations
related to the valuation allowance was a charge of $2,263. The capital loss
carryforward expires in the year 2001. Net operating loss carryforwards
related to continuing operations amount to approximately $0 an $2 million at
December 31, 1996 and 1995, respectively.

F-31
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

NOTE 12 -- SHARE REPURCHASE PROGRAM

On September 9, 1996, BEC adopted a share repurchase program whereby BEC
may repurchase, pursuant to Rule 10(b)-18 under the Exchange Act, shares of
its common stock in the open market. The repurchase program became active in
December 1996 following the FGG disposal. Repurchased shares may be issued
from time to time upon (i) exercise of options granted under BEC's 1996 Stock
Incentive Plan and/or (ii) under BEC's 1996 Employee Stock Purchase Plan. As
of December 31, 1996, BEC had purchased 116 shares of its common stock at an
average price of $4.80 per share.

NOTE 13 -- STOCK OPTION PLANS

BEC applies APB Opinion No. 25 and related Interpretations in accounting
for its stock option plans, which are described below. Accordingly, no
compensation cost has been recognized for its stock option plans. Had
compensation cost been determined based on the fair market value at the grant
dates for awards under those plans consistent with the method provided by
SFAS No. 123, BEC's net income (loss) and net income (loss) per share would
have been as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
--------------------------------
1996 1995 1994
--------- ---------- ---------
<S> <C> <C> <C> <C>
Net income (loss) As reported .. $82,756 $ (6,760) $10,166
Pro Forma .... 78,592 (10,236) 6,618
Net income (loss) per share As reported .. $ 4.68 $ (0.38) $ 0.58
Pro Forma .... 4.45 (0.58) 0.38
</TABLE>

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model with the following weighted
average assumptions used for all grants:

<TABLE>
<CAPTION>
<S> <C>
Dividend yield ............... 0%
Expected volatility .......... 64%
Risk free rate of return .... 5%
Expected turnover ............ 7%
Expected term ................ 5 years
</TABLE>

The weighted average fair values of the Benson options granted during the
years ended December 31, 1994, 1995 and 1996 were $3.72, $4.80 and $5.12,
respectively. The weighted average fair value of the BEC options granted
during 1996 was $2.55.

BEC may grant nonqualified stock options, incentive stock options or stock
appreciation rights to officers, directors, consultants and key employees of
BEC.

Options under nonqualified stock option plans are granted to officers,
directors and key employees at prices determined by the BEC Board based upon
market value on the date of grant. There were 3,046,633 shares available
under these plans for future grants at December 31, 1996.

As a result of the Essilor Merger and Asset Sale, all Benson options were
canceled. Option holders received consideration (including new BEC options)
for their Benson options. Accordingly, all options were issued under the BEC
Stock Compensation Plan on or after May 3, 1996.

F-32
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

A summary of Benson option transactions is as follows:

<TABLE>
<CAPTION>
OPTION PRICE NUMBER
RANGE PER OF EXPIRATION
SHARE SHARES DATE
--------------- --------- -------------
<S> <C> <C> <C>
Outstanding at 12/31/93 ............................ $1.50 -10.00 1,182 2000 -2003
Granted............................................. $2.65 -7.92 1,834
Exercised........................................... $1.50 -6.99 (310)
Cancelled .......................................... $2.00 -10.00 (419)
---------
Outstanding at 12/31/94............................. $1.50 -8.45 2,287 1995 -2001
Granted............................................. $6.13 -9.87 568
Exercised........................................... $1.50 -7.25 (317)
Cancelled........................................... $7.00 -7.25 (125)
---------
Outstanding at 12/31/95............................. $1.50 -9.87 2,413 1996 -2002
Granted............................................. $7.87 -9.50 268
Exercised........................................... $2.50 -7.25 (326)
Cancelled........................................... $1.50 -9.75 (15)
Cancelled in connection with Merger and Asset Sale (2,340)
---------
Outstanding at 12/31/96............................. -0-
</TABLE>

A summary of BEC option transactions is follows:

<TABLE>
<CAPTION>
WEIGHTED NUMBER
AVERAGE EXERCISE OF
PRICE SHARES
---------------- --------
<S> <C> <C>
Outstanding at 12/31/95 -0-
Granted.................. $4.63 2,050
Exercised................ $2.71 (89)
Cancelled................ $4.94 (146)
--------
Outstanding at 12/31/96 . $4.70 1,815
========
Exercisable at 12/31/96 . $3.90 390
========
</TABLE>

Options generally vest evenly over a three-or four-year period beginning
one year from the date of grant and expire seven years from the date of
grant. The 390 exercisable options at 12/31/96 had an option price range of
$0.83 -- $5.26. The weighted average remaining contractual life of the 1,815
options outstanding at December 31, 1996 was 6.46 years.

NOTE 14 -- RELATED PARTY TRANSACTIONS

On December 12, 1996, in connection with the sale of FGG by BEC, Marlin
Capital, LP ("Marlin"), a Delaware limited partnership, invested $2.5 million
in convertible preferred stock of the buyer AAi; upon conversion, AAi common
stock received by Marlin would bear demand and piggyback registration rights.
Marlin Holdings, Inc. ("MH"), a Delaware corporation, is the general partner
of Marlin. Mr. Martin E. Franklin, BEC's Chairman and Chief Executive
Officer, is the Chief Executive Officer and principal stockholder of MH. Mr.
Ashken, BEC's Chief Financial Officer and a Director, also is a stockholder
and executive officer of MH. Mr. Franklin also has been named a member of
AAi's Board of Directors.

F-33
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

BEC and its predecessor, Benson. Ms. Bailey has rendered such services both
prior to and subsequent to her appointment to the BEC Board, and it is
anticipated that from time to time in the future she will be engaged to
provide similar legal services to BEC. All fees paid to Ms. Bailey in
connection with such services have been agreed in arms' length negotiations
and are in accordance with Ms. Bailey's usual and customary billing
practices. Fees paid to Ms. Bailey by BEC in connection with such services
are not paid in consideration of her services as a director. Aggregate fees
billed to Benson and BEC by Ms. Bailey during 1996 were approximately $73.

Mr. Franklin serves as non-executive chairman of Eyecare Products and a
director of SVS. Mr. Ashken serves as a director of Eyecare Products.

NOTE 15 -- COMMITMENTS AND CONTINGENCIES

ORC has been named a potentially responsible party ("PRP"), along with
several other entities with significant operations, by the U.S. Environmental
Protection Agency ("EPA"), under the Comprehensive Environmental Response,
Compensation, and Liability Act ("CERCLA") of 1980, with respect to the
cleanup of hazardous substances and ground water contamination in the San
Gabriel Valley Aquifer (the "site"), which has been designated a "Superfund
Site" by the EPA. Other entities have been named by the EPA as responsible
parties. Although CERCLA technically imposes joint and several liability upon
each PRP at each site, the extent of ORC's required financial contribution to
the cleanup is expected to be limited based on the documented contribution of
contaminants by each of the PRP's as well as the number and relative
financial strength of the primary contributors of pollutants. Furthermore,
ORC has conducted additional testing at its facility, the result of which
support ORC's position that its activities have not contributed to the
groundwater contamination. Both EPA and the Regional Water Quality Board have
reviewed reports based on such testing and have advised ORC that (i) no
further testing will be required and (ii) no remediation will be required by
ORC. The EPA has advised ORC and the steering committee that it will not
require ORC's participation in the steering committee and will not require
ORC to take any further action with respect to the site.

BEC is subject to various litigation incidental to business. Irrespective
of any indemnification that may be received, BEC does not believe that
exposure on any matter will result in a significant impact on BEC's financial
condition results of operations or cash flows.

F-34
<PAGE>
BEC GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (Continued)
(Amounts in thousands, except per share data, unless otherwise noted)

NOTE 16 -- QUARTERLY FINANCIAL DATA (Unaudited)

FOR THE YEAR ENDED DECEMBER 31, 1996

<TABLE>
<CAPTION>
Q1 Q2 Q3 Q4
- ------------------------------------------- --------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales .................................. $10,771 $11,206 $10,007 $10,590
Gross profit ............................... 4,281 4,328 4,025 4,264
Net income from continuing operations ..... 779 1,210 1,045 410
Income per share from continuing
operations................................. $ 0.04 $ 0.07 $ 0.06 $ 0.02
</TABLE>

FOR THE YEAR ENDED DECEMBER 31, 1995

<TABLE>
<CAPTION>
Q1 Q2 Q3 Q4
- --------------------------------------------- -------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net sales .................................... $9,547 $10,511 $ 9,875 $11,311
Gross profit ................................. 4,324 4,745 3,728 4,722
Net income (loss) from continuing operations 145 629 (1,083) (640)
Income (loss) per share from continuing
operations................................... $ 0.01 $ 0.04 $ (0.06) $ (0.04)
</TABLE>

FOR THE YEAR ENDED DECEMBER 31, 1994

<TABLE>
<CAPTION>
Q1 Q2 Q3 Q4
- --------------------------------------------- --------- --------- -------- ---------
<S> <C> <C> <C> <C>
Net sales .................................... $9,455 $9,937 $7,554 $12,101
Gross profit ................................. 6,521 6,057 5,616 6,449
Net income (loss) from continuing operations (171) (642) 185 (856)
Income (loss) per share from continuing
operations................................... $(0.01) $(0.04) $ 0.01 $ (0.05)
</TABLE>

NOTE 17 -- SUBSEQUENT EVENTS

On July 9, 1997, the Company acquired, in a transaction accounted for as a
purchase, all of the shares of Bolle France which included Bolle France and
several consolidated and unconsolidated subsidiaries, for a total purchase
price of approximately $56,755, comprised of cash of $31,000, BEC Series A
preferred stock of $9,294, Bolle preferred stock of $11,055, Bolle common
stock of $1,822 and warrants to purchase up to 2,130 shares of BEC common
stock as well as direct acquisition costs of $3,585.

As of October 30, 1997, BEC entered into a definitive agreement to acquire
(through its wholly-owned subsidiary, BILC Acquisition Corp.) ILC Technology,
Inc. ("ILC"). Under the terms of the agreement, ILC shareholders will receive
4.36 shares of BEC's Common Stock (or 2.18 shares, after giving effect to a
proposed one-for-two reverse split of BEC's Common Stock) for each share of
ILC Common Stock outstanding. At September 30, 1997, ILC had 4,880 shares of
common stock outstanding and BEC had 17,631 shares of common stock issued
(or, if the full face value of BEC's 8% convertible notes were to be
converted, 21,286 shares). The completion of the transaction is subject to
approval by BEC's stockholders and ILC's shareholders, obtaining required
regulatory approvals, and other customary closing conditions.

On October 31, 1997, BEC also announced its intent to effect the Spinoff.
It is anticipated that BEC stockholders will receive one share of Bolle
Common Stock for every three shares of BEC's Common Stock held at the time of
the spin off. See Note 2.

F-35
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To ILC Technology, Inc.

We have audited the accompanying consolidated balance sheets of ILC
Technology, Inc. (a California Corporation) and subsidiaries as of September
27, 1997 and September 28, 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the three years
in the period ended September 27, 1997. These financial statements are the
responsibility of ILC's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements.
An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of ILC
Technology, Inc. and subsidiaries as of September 27, 1997 and September 28,
1996 and the results of their operations and their cash flows for each of the
three years in the period ended September 27, 1997 in conformity with
generally accepted accounting principles.

ARTHUR ANDERSEN LLP
San Jose, California
December 1, 1997

F-36
<PAGE>
ILC TECHNOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 27, 1997 AND SEPTEMBER 28, 1996

<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents............................................ $ 1,113,992 $ 1,828,807
Accounts receivable, less allowance for doubtful accounts of
$337,958 and $312,358, respectively................................. 9,485,397 9,494,246
Receivable from long-term contracts.................................. 1,049,122 861,427
Inventories, net..................................................... 10,716,680 8,901,528
Deferred tax aset.................................................... 835,803 2,158,000
Prepaid expenses..................................................... 344,393 208,320
Current portion of note receivable from sale of PLI.................. 1,150,000 --
Net assets from discontinued operations.............................. -- 2,178,383
------------- -------------
Total current assets................................................ 24,695,387 25,630,711
------------- -------------
Property and equipment, net........................................... 21,652,695 21,176,431
Note receivable from sale of PLI, net of current portion ............. 2,196,871 --
Covenants-not-to-compete, net of accumulated amortization and
writedown of $3,314,404 and $3,195,524, respectively................. 237,761 356,641
Other assets.......................................................... 765,309 680,013
------------- -------------
$49,548,023 $47,843,796
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable..................................................... $ 4,361,816 $ 3,643,496
Accrued payroll and related items.................................... 1,701,209 1,263,741
Other accrued liabilities............................................ 1,517,606 1,146,822
Current portion of non-compete obligation............................ -- 390,000
Current portion of long-term debt.................................... 2,534,500 2,545,600
Accrued income taxes payable......................................... 1,243,451 1,486,518
------------- -------------
Total current liabilities........................................... 11,358,582 10,476,177
------------- -------------
Long-term liabilities, net of current portion:
Long-term debt....................................................... 3,117,396 7,370,164
Other accruals....................................................... 78,328 206,235
------------- -------------
Total long-term liabilities......................................... 3,195,724 7,576,399
------------- -------------
Commitments and contingencies (Note 8)
Stockholders' equity:
Common stock, no par value; 10,000,000 shares authorized; 4,874,040
shares and 4,782,508 shares outstanding, respectively............... 7,178,231 6,815,109
Retained earnings.................................................... 27,815,486 22,976,111
------------- -------------
Total stockholders' equity.......................................... 34,993,717 29,791,220
------------- -------------
$49,548,023 $47,843,796
============= =============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-37
<PAGE>
ILC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE FISCAL YEARS ENDED SEPTEMBER 27, 1997

<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Net sales...................................... $55,517,905 $54,206,424 $49,496,029
Costs and expenses:
Cost of sales................................. 39,194,377 36,180,448 31,799,916
Research and development...................... 4,252,694 4,319,650 4,278,697
Sales and marketing........................... 3,059,158 2,645,952 2,404,856
General and administrative.................... 4,329,067 4,417,446 4,459,726
Amortization of intangibles................... 120,000 120,000 120,000
------------- ------------- -------------
50,955,296 47,683,496 43,063,195
Income from continuing operations before
provision for income taxes, interest expenses
and gain on sale of CPI....................... 4,562,609 6,522,928 6,432,834
Interest expense, net.......................... 493,917 461,898 323,757
------------- ------------- -------------
Income from continuing operations before
provision for income taxes and before gain on
sale of CPI................................... 4,068,692 6,061,030 6,109,077
Gain on sale of CPI............................ 2,378,683 -- --
------------- ------------- -------------
Income from continuing operations before
provision for income taxes.................... 6,447,375 6,061,030 6,109,077
Provision for income taxes on continuing
operations.................................... 1,608,000 1,515,000 1,472,000
------------- ------------- -------------
Income from continuing operations.............. 4,839,375 4,546,030 4,637,077
Discontinued operations:
Operating loss, net of tax benefit of
$280,000 and $32,000 in 1996 and 1995,
respectively................................. -- (840,217) (99,143)
Estimated loss on disposal, including
$500,000 for operating losses during the
phase out, net of tax benefit of $1,132,996 . -- (3,398,987) --
------------- ------------- -------------
Loss from discontinued operations............. -- (4,239,204) (99,143)
------------- ------------- -------------
Net income..................................... $ 4,839,375 $ 306,826 $ 4,537,934
============= ============= =============
Earnings (loss) per share:
Earnings from continuing operations........... $ 0.96 $ 0.92 $ 0.97
Loss from discontinued operations............. -- (0.86) (0.02)
------------- ------------- -------------
Net income per share........................... $ 0.96 $ 0.06 $ 0.95
============= ============= =============
Weighted average shares outstanding used to
compute net income (loss) per share........... 5,047,658 4,923,132 4,764,989
============= ============= =============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-38
<PAGE>
ILC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE FISCAL YEARS ENDED SEPTEMBER 27, 1997

<TABLE>
<CAPTION>
COMMON
COMMON STOCK RETAINED
SHARES AMOUNT EARNINGS TOTAL
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Balance at October 1, 1994........... 4,522,951 $5,492,338 $18,131,351 $23,623,689
Net income.......................... -- -- 4,537,934 4,537,934
Issuance of common stock under
stock purchase plan................ 37,973 266,575 -- 266,575
Exercise of stock options........... 132,250 450,751 -- 450,751
Repurchase of common stock.......... (10,000) (76,750) -- (76,750)
----------- ------------ ------------- -------------
Balance at September 30, 1995 ....... 4,683,174 6,132,914 22,669,285 28,802,199
Net income.......................... -- -- 306,826 306,826
Issuance of common stock under
stock purchase plan................ 34,209 279,068 -- 279,068
Exercise of stock options........... 65,125 403,127 -- 403,127
----------- ------------ ------------- -------------
Balance at September 28, 1996 ....... 4,782,508 6,815,109 22,976,111 29,791,220
Net income.......................... -- -- 4,839,375 4,839,375
Issuance of common stock under
stock purchase plan................ 28,555 266,588 -- 266,588
Exercise of stock options........... 99,977 521,992 -- 521,992
Repurchase of common stock.......... (37,000) (425,458) -- (425,458)
----------- ------------ ------------- -------------
Balance at September 27, 1997 ....... 4,874,040 $7,178,231 $27,815,486 $34,993,717
=========== ============ ============= =============
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-39
<PAGE>
ILC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE FISCAL YEARS ENDED SEPTEMBER 27, 1997

<TABLE>
<CAPTION>
1997 1996 1995
------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income....................................... $ 4,839,375 $ 306,826 $ 4,537,934
Adjustment to reconcile net income to net cash
provided by continuing operations:
Discontinued operations......................... -- 4,239,204 99,143
Depreciation and amortization................... 2,002,845 1,689,689 1,569,478
Provision for doubtful accounts................. 68,694 38,804 102,861
Provision for inventory obsolescence............ 696,089 520,006 169,034
Net loss on property and equipment sold or
retired........................................ 14,144 -- 26,367
Equity in income of joint venture............... (106,000) (20,000) (89,000)
Gain on sale of CPI............................. (2,378,683) -- --
Changes in assets and liabilities, net of
effects of businesses sold:
Decrease in marketable securities............... -- -- 998,129
Increase in accounts receivable................. (1,494,632) (1,333,378) (2,467,329)
Increase in inventories......................... (4,267,013) (1,888,444) (1,685,743)
(Increase) decrease in deferred tax asset ...... 1,322,197 (704,000) 951,000
(Increase) decrease in prepaid expenses ........ (136,073) (86,076) 406,556
(Increase) decrease in other assets............. 20,704 79,823 (9,397)
Increase (decrease) in accounts payable ........ 718,320 (120,502) 300,709
Decrease in accrued liabilities................. (230,124) (956,660) (637,731)
------------- ------------- -------------
Net cash provided by operating activities from
continuing operations......................... 1,069,843 1,765,292 4,272,011
Net cash used in discontinued operations ...... (1,518,488) (168,186) (1,722,659)
------------- ------------- -------------
Cash flows from investing activities:
Proceeds from sale of CPI....................... 6,350,000 -- --
Payments received on note for sale of PLI ...... 350,000 -- --
Purchase of land and real estate................ -- -- (3,045,412)
Decrease in deposit on land and building
purchase....................................... -- -- 1,300,000
Investment in joint venture..................... -- -- (450,000)
Capital expenditures............................ (3,102,092) (3,186,557) (2,517,541)
------------- ------------- -------------
Net cash provided by (used in) investing
activities.................................... 3,597,908 (3,186,557) (4,712,953)
------------- ------------- -------------
</TABLE>

The accompanying notes are an integral part of these financial statements.

F-40
<PAGE>
ILC TECHNOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE FISCAL YEARS ENDED SEPTEMBER 27, 1997
(CONTINUED)

<TABLE>
<CAPTION>
1997 1996 1995
-------------- ------------- -------------
<S> <C> <C> <C>
Cash flows from financing activities:
Principal borrowings under line of credit ..... $ 10,963,000 $ 9,500,000 $ 8,450,000
Principal repayments under line of credit ..... (13,463,000) (6,500,000) (6,450,000)
New borrowings under equipment line............ 1,045,000 1,555,000 1,720,089
Principal repayments under equipment line ..... (1,321,200) (1,374,800) (1,049,958)
Principal repayments under term loan........... (1,451,000) (1,584,000) (1,578,000)
Payments under non-compete agreement........... -- (390,000) (520,000)
Proceeds from issuance of common stock ........ 788,580 682,195 717,326
Repurchase of common stock..................... (425,458) -- (76,750)
-------------- ------------- -------------
Net cash provided by (used in) financing
activities................................... (3,864,078) 1,888,395 1,212,707
-------------- ------------- -------------
Net increase (decrease) in cash and cash
equivalents.................................. (714,815) 298,944 (950,894)
Cash and cash equivalents at beginning of year . 1,828,807 1,529,863 2,480,757
-------------- ------------- -------------
Cash and cash equivalents at end of year ....... $ 1,113,992 $ 1,828,807 $ 1,529,863
============== ============= =============
1997 1996 1995
-------------- ------------- -------------
Supplemental disclosures of cash flow
information:
Cash paid during the year for:
Interest--continuing operations................ $ 641,127 $ 542,061 $ 589,200
Interest--discontinued operations.............. -- 77,714 106,341
Income taxes................................... 282,898 1,055,000 909,000

Supplemental disclosure of non-cash activities:

</TABLE>

ILC sold the stock of PLI for a note. The purchase price, net of expenses,
approximated the net assets of PLI (Note 12).

The accompanying notes are an integral part of these financial statements.

F-41
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 27, 1997

1. THE COMPANY

ILC Technology, Inc. ("ILC") was incorporated on September 15, 1967. ILC
designs, develops, manufactures and markets high intensity lamps and lighting
products for the medical, industrial, aerospace, scientific, entertainment
and military industries. ILC develops and manufactures the majority of its
products at its headquarter facilities in California and the remainder at its
subsidiary facility in the United Kingdom. (See Notes 12, 13 and 16).

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The consolidated financial statements include the accounts of ILC and its
wholly owned subsidiaries. All significant intercompany balances and
transactions have been eliminated.

Fiscal year 1995 was restated to reflect ILC's decision to discontinue the
operations of Precision Lamp, Inc. ("PLI") (see Note 12). This restatement
had no impact on net income.

ILC's fiscal year end is the Saturday closest to September 30.

Use of Estimates in Preparation of Financial Statements

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. Items
which require management to make estimates include the realization of
accounts receivable and inventory balances, warranty, and other reserves.
Additionally, ILC is currently in negotiation with PLI Acquistion Corp. to
restructure the terms of that note receivable, as discussed in Note 12.

Cash and Cash Equivalents

For the purpose of the statement of cash flows, ILC considers all highly
liquid investments with an original maturity of three months or less at the
time of issue to be cash equivalents.

Inventories

Inventories are stated at the lower of cost (first-in, first-out) or
market, and include material, labor and manufacturing overhead. Inventories
at September 27, 1997 and September 28, 1996, net of inventory reserves of
$2,043,420 and $2,034,258, respectively, consisted of:

<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
Raw materials ..... $ 5,459,159 $4,802,839
Work-in-process .. 3,974,496 2,549,805
Finished goods ... 1,283,025 1,548,884
------------- ------------
Total inventories $10,716,680 $8,901,528
============= ============
</TABLE>

Developmental and Manufacturing Contracts

ILC contracts with the U.S. Government and other customers for the
development and manufacturing of various products under both
cost-plus-fixed-fee and fixed-price contracts. Revenues are recognized under
these contracts using the percentage of completion method, whereby revenues
are

F-42
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

reported in the proportion that costs incurred bear to the total estimated
costs for each contract. Periodic reviews of estimated total costs during the
performance of such contracts may result in revisions of contract estimates
in subsequent periods. Any loss contracts are reserved at the time such
losses are determined. Revenues from these contracts were less than 10% of
net revenues during 1997, 1996 and 1995.

Depreciation and Amortization

Depreciation and amortization on property and equipment are provided on a
straight-line basis over estimated useful lives of 3 to 31.5 years, except
for leasehold improvements which are amortized over the terms of the leases.

Net Income (Loss) Per Share

Net income (loss) per share is computed using the weighted average number
of common shares and common equivalent shares (when such equivalents have a
dilutive effect) outstanding during the period using the treasury stock
method. Fully diluted net income (loss) per share is not significantly
different from net income (loss) per share as reported.

In February 1997, the Financial Accounting Standards Board issued SFAS No.
128, which requires disclosure of basic earnings per share and diluted
earnings per share and is effective for periods ending subsequent to December
15, 1997 and restatement will be required for all prior period EPS data
presented.

Covenants-Not-To-Compete

The covenant-not-to-compete relates to the Q-Arc acquisition that took
place in 1991. This is being amortized over the period of the covenant.

In March 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 121, "Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of." ILC adopted
the provisions of this statement in fiscal 1996. The effect on its financial
position and results of operations was not significant. ILC quarterly
evaluates whether later events and circumstances have occurred that indicate
the remaining estimated useful lives of these intangibles may warrant
revision or that the remaining balances of intangibles may not be
recoverable. When factors indicate that intangibles should be evaluated for
possible impairment, ILC uses an estimate of the related subsidiary's
undiscounted cash flow over the remaining life of the intangibles in
measuring whether the intangibles are recoverable. As part of ILC's decision
to discontinue the operations of PLI, the unamortized balance of the
covenant-not-to-compete ($470,000) was written off in the fourth quarter of
fiscal 1996.

Investment in Joint Venture

In February 1995, ILC invested $450,000 in a lamp manufacturer located in
Japan. ILC's investment represents a 49% ownership interest in the equity of
the investee, consequently ILC accounts for its investment using the equity
method of accounting. ILC's investment is included in Other Assets in the
accompanying consolidated balance sheets and its proportionate interest in
the income of the investee of $106,000, $20,000 and $89,000 in fiscal 1997,
1996 and 1995, respectively, is included in the accompanying consolidated
statements of operations.

New Accounting Pronouncements

SFAS No. 130, "Reporting Comprehensive Income", establishes guidelines for
all items that are to be recognized under accounting standards as components
of comprehensive income to be reported in the

F-43
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

financial statements. The statement is effective for all periods ending
after December 15, 1997 and reclassification of financial statements for
earlier periods presented will be required for comparative purposes.

3. REVENUES

ILC recognizes revenue on all product sales upon shipment of the product.
ILC accrues for estimated warranty obligations at the time of the sale of the
related product based upon its past history of claims experience and costs to
discharge its obligations.

ILC operates in a single industry segment, the designing, developing,
manufacturing and marketing of high performance light source products.
Revenues from continuing operations are geographically summarized as follows
(in thousands):

<TABLE>
<CAPTION>
1997 1996 1995
--------- --------- ---------
<S> <C> <C> <C>
United States ....... $36,639 $34,088 $32,533
Europe .............. 6,671 6,920 5,964
Asia ................ 11,986 12,700 10,951
Other international 222 498 48
--------- --------- ---------
$55,518 $54,206 $49,496
========= ========= =========
</TABLE>

Customers and countries comprising more than 10% of net sales from
continuing operations are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------- ------- -------
<S> <C> <C> <C>
Customer A .. 13.5% 15.0% 12.2%
Customer B .. * 11.5% 12.0%
Japan......... 20.7% 22.1% 21.1%
</TABLE>

- ------------
* less than 10% of net sales

ILC provides credit in the form of trade accounts receivable to its
customers. ILC does not generally require collateral to support customer
receivables. ILC performs ongoing credit evaluations of its customers and
maintains allowances which management believes are adequate for potential
credit losses.

Approximately 31%, 39% and 40% of ILC's sales in fiscal 1997, 1996 and
1995, respectively, were to customers in the medical industry. This industry
has experienced significant fluctuations in demand and ILC expects sales to
the medical market to decrease as a percentage of net sales in the
foreseeable future. Customer B, referred to above, is in the semiconductor
equipment industry and was a major customer of ILC's subsidiary, CPI. In the
fourth quarter of fiscal 1996, CPI experienced a significant reduction in
orders from this customer. In May 1997, CPI was sold (see Note 13).

F-44
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

4. PROPERTY AND EQUIPMENT

Property and equipment at September 27, 1997 and September 28, 1996
consisted of:

<TABLE>
<CAPTION>
1997 1996
-------------- --------------
<S> <C> <C>
Property and equipment, at cost:
Machinery and equipment ...................... $ 17,130,338 $ 15,047,138
Land and buildings ........................... 15,498,058 14,955,738
Furniture and fixtures ....................... 518,283 601,822
Equipment under capital lease ................ 174,268 174,268
Leasehold improvements ....................... -- 598,814
Construction-in-progress ..................... 577,449 1,011,601
-------------- --------------
33,898,396 32,389,381
Less accumulated depreciation and amortization (12,245,701) (11,212,950)
-------------- --------------
Property and equipment, net ................... $ 21,652,695 $ 21,176,431
============== ==============
</TABLE>

5. BANK BORROWINGS

As of September 27, 1997 and September 28, 1996, borrowings outstanding
under ILC's credit facilities consisted of:

<TABLE>
<CAPTION>
1997 1996
------------- -------------
<S> <C> <C>
Line of credit ........... $ 2,500,000 $ 5,000,000
Term loan ................ 1,187,000 2,638,000
Equipment line of credit 1,915,000 2,191,200
Other capital lease ..... 49,896 86,564
------------- -------------
5,651,896 9,915,764
Less: current portion ... (2,534,500) (2,545,600)
------------- -------------
Long-term debt ........... $ 3,117,396 $ 7,370,164
============= =============
</TABLE>

Aggregate maturities for long-term debt during the next five years are
approximately: 1998 -- $2,534,500, 1999 -- $3,117,396, and none in 2000, 2001
and 2002.

All of the above credit facilities are secured by all of the property of
ILC.

ILC has a $6 million line of credit available with a bank which expires in
March 1999. Borrowings under this line are at 2% above the LIBOR rate (London
Interbank Offer Rate) (7.66% at September 27, 1997). Under the covenants of
the loan agreement, unless written approval from the bank is obtained, ILC is
restricted from entering into certain transactions and is required to
maintain certain specified financial covenants and profitability. As of
September 27, 1997, ILC was in compliance with all financial covenants. The
average balance outstanding (based on month-end balances) under the line of
credit in 1997 was $4,021,000. The maximum borrowings were $6,000,000 and the
average interest rate during 1997 was 7.6%. As of September 27, 1997, $3.5
million was available for future borrowings under this line of credit.

In addition, in connection with the purchase of its Sunnyvale
manufacturing facilities, ILC entered into a term loan with a bank for
$5,000,000 in 1993, which was subsequently increased to $6,333,333 in 1994.
The note matures in August 1998. The term loan requires monthly principal
payments equal to one-forty-eighth of the principal amount plus interest at
2% above the LIBOR rate (London Interbank Offer Rate) (7.66% at September 27,
1997). The term loan is a reducing revolving credit facility which allows for
principal pre-payments and the flexibility for re-borrowing up to the maximum
amount that would be outstanding under the term loan given normal
amortization to the date of re-borrowing. The average balance outstanding
(based on month-end balances) under the term loan in 1997 was $1,913,000, and
the average interest rate during 1997 was 7.6%.

F-45
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

5. BANK BORROWINGS (Continued)

ILC has available equipment lines of credit for 100% of the purchase cost
of new equipment. At the end of fiscal 1997, ILC had borrowings under these
lines of $1,915,000, of which $1,348,000 is due in fiscal 1998 and $567,000
is due in fiscal 1999. These borrowings bear interest at 2% above the LIBOR
rate (7.66% at September 27, 1997). ILC also has available an unused $2
million equipment line of credit which expires in August 1998. Borrowings
under this line bear interest at the same rate as discussed above, with
principal balances amortized over a 2 year period.

6. INCOME TAXES

ILC accounts for income taxes under SFAS No. 109, "Accounting for Income
Taxes." SFAS No. 109 requires an asset and liability approach to accounting
for income taxes.

Income from continuing operations before provision for income taxes
consists of the following for fiscal 1997, 1996 and 1995, respectively:

<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
U.S. ...... $4,738,375 $4,897,389 $5,588,040
Foreign .. 1,709,000 1,163,641 521,037
------------ ------------ ------------
$6,447,375 $6,061,030 $6,109,077
============ ============ ============
</TABLE>

The components of the provision for income taxes on continuing operations
are as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ -----------
<S> <C> <C> <C>
Federal--
Current ................................................. $ 671,000 $1,559,000 $ 833,000
Deferred ................................................ 80,000 (600,000) 581,500
------------ ------------ -----------
751,000 959,000 1,414,500
------------ ------------ -----------
Foreign--
Current ................................................. 540,000 384,000 --
State--
Current ................................................. 241,000 276,000 199,000
Deferred ................................................ 76,000 (104,000) 96,500
------------ ------------ -----------
317,000 172,000 295,500
------------ ------------ -----------
Federal refund received .................................. -- -- (238,000)
------------ ------------ -----------
Total provision for income taxes on continuing operations $1,608,000 $1,515,000 $1,472,000
============ ============ ===========
</TABLE>

F-46
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

6. INCOME TAXES (Continued)

The major components of the deferred tax asset account, as computed under
SFAS No. 109, are as follows:

<TABLE>
<CAPTION>
1997 1996
------------- ------------
<S> <C> <C>
Reserve for loss on disposal of discontinued operations,
not currently deductible for tax purposes ................. $ -- $1,133,000
Inventory reserve .......................................... 795,000 877,000
Bad debt reserve ........................................... 132,000 92,000
Warranty reserve ........................................... 103,000 128,000
Accruals not currently deductible for tax purposes ........ 545,000 381,000
Amortization of covenant-not-to-compete .................... -- 202,000
Excess of tax over book depreciation ....................... (1,112,000) (988,000)
Other items, individually insignificant .................... 372,803 333,000
------------- ------------
$ 835,803 $2,158,000
============= ============
</TABLE>

The provision for income taxes on continuing operations differs from the
amounts which would result by applying the applicable statutory Federal
income tax rate to income from continuing operations before taxes as follows:

<TABLE>
<CAPTION>
1997 1996 1995
------------ ------------ ------------
<S> <C> <C> <C>
Computed expected provision ............. $2,192,000 $2,121,000 $2,138,000
State tax ............................... 317,000 364,000 367,000
FSC commission .......................... (43,000) (181,000) (216,000)
General business credits ................ (277,000) (218,000) (203,000)
Refund received ......................... -- -- (238,000)
Other items, individually insignificant.. (581,000) (571,000) (376,000)
------------ ------------ ------------
$1,608,000 $1,515,000 $1,472,000
============ ============ ============
</TABLE>

During the second quarter of fiscal 1995, ILC received a refund of
$238,000 from the Internal Revenue Service (IRS) related to tax returns filed
in previous years, which were examined by the IRS. This amount was recorded
as a reduction of the fiscal 1995 tax provision upon receipt of the refund.
An additional $235,000 of interest related to the refund amount was received
and was included in interest income in fiscal 1995.

7. EMPLOYEE RETIREMENT PLAN

On January 1, 1984, ILC adopted a thrift incentive savings plan (the
"Retirement Plan"). The Retirement Plan is qualified under section 401(k) of
the Internal Revenue Code and is available to all full-time employees with
one or more years of employment with ILC. Under the terms of the Retirement
Plan, participating employees must contribute at least 2% of their salary to
the Retirement Plan, and ILC contributes (as a matching contribution) 100% of
this amount. Employees may also contribute an additional amount up to 13% of
their salary to the Retirement Plan, with no further contributions by ILC.
ILC's contributions vest at a rate of 20% per year, commencing on the first
anniversary of employment. Total employer matching contributions under the
Retirement Plan were $187,000, $226,000, and $212,000 for fiscal years 1997,
1996 and 1995, respectively. The components of such expense relating to
continuing operations was $187,000, $188,000 and $171,000 for fiscal years
1997, 1996 and 1995, respectively.

F-47
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

8. COMMITMENTS AND CONTINGENCIES

At September 27, 1997, all of ILC's facilities in Sunnyvale and Santa
Clara, California and Cambridge, England are owned. All lease obligations
associated with the facilities of PLI and CPI were assumed by the buyers at
the time of sale.

For fiscal years 1997, 1996 and 1995, rental expense was approximately
$178,000, $442,000 and $277,000, respectively. Rental expense for continuing
operations was $121,000, $226,000 and $61,000 for fiscal years 1997, 1996 and
1995, respectively.

As discussed in Note 13, the number of shares held in escrow relating to
the sale of CPI are subject to adjustment related to warranties and the
valuation of the acquiror's common stock.

9. STOCK OPTION AND PURCHASE PLANS

Under the 1992 Stock Option Plan ("Plan"), ILC may grant options to
employees and directors. ILC has reserved 575,000 shares for issuance under
the Plan. The exercise price per share for stock options cannot be less than
the fair market value on the date of grant. Options granted are for a
ten-year term and generally vest ratably over a period of four years
commencing one year after the date of grant. The Plan provides for the
automatic grant of a nonstatutory stock option to purchase shares of Common
Stock to each outside Director annually during ILC's third fiscal quarter.
During fiscal 1997, each outside Director was granted an automatic option to
purchase a total of 5,000 shares of ILC's Common Stock. ILC's 1983 Stock
Option Plan expired in 1993 and no further options have been granted under
such plan since then.

In accordance with the disclosure requirements of Statement of Financial
Accounting Standards No. 123 " Accounting for Stock-Based Compensation," if
ILC had elected to recognize compensation cost based on fair value of the
options granted at grant dates prescribed, income from continuing operations
and earnings per share would have been reduced to the pro forma amounts
indicated in the table below. The pro forma effect on net income for fiscal
1997 and 1996 is not representative of the pro forma effect on net income in
future years because it does not take into consideration pro forma
compensation expense related to grants made prior to fiscal 1996.

<TABLE>
<CAPTION>
1997 1996
------------ ------------
<S> <C> <C>
Income from continuing operations--as reported .......... $4,839,375 $4,546,030
Income from continuing operations--pro forma ............. $4,328,487 $4,344,547
Earnings per share from continuing operations as reported. $ 0.96 $ 0.92
Earnings per share from continuing operations--pro forma.. $ 0.89 $ 0.89
</TABLE>

The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option pricing model utilizing expected volatility
calculations based on historical data (62.10%) and risk-free interest rates
based on U.S. government bonds on the date of grant with maturities equal to
the expected option term (5.82%-6.69%). No dividends are assumed, and the
expected option term is 5.93 years. The weighted-average fair values of
options granted in fiscal 1997 and 1996 are $6.49 and $6.27, respectively.

F-48
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

9. STOCK OPTION AND PURCHASE PLANS (Continued)

A summary of ILC's stock option activity for the past three fiscal years
is as follows:

<TABLE>
<CAPTION>
WEIGHTED
OPTIONS EXERCISE AVERAGE
AVAILABLE NUMBER PRICE EXERCISE
FOR GRANT OF SHARES PER SHARE PRICE
----------- ----------- ------------- ----------
OPTIONS OUTSTANDING
--------------------------------------
<S> <C> <C> <C> <C>
Balance at October 1, 1994 ... 103,624 720,027 $1.09-11.50 $ 6.27
Granted ...................... (28,000) 28,000 $9.50 $ 9.50
Canceled ..................... 34,000 (34,000) $8.75-11.50 $ 9.85
Exercised .................... -- (132,250) $ 2.13-8.75 $ 3.48
----------- ----------- ------------- ----------
Balance at September 30, 1995 109,624 581,777 $1.09-11.50 $ 6.87
Additional shares approved .. 200,000 -- -- --
Granted ...................... (205,000) 205,000 $9.00-11.25 $ 9.94
Canceled ..................... 92,125 (92,125) $8.75-11.50 $10.27
Exercised .................... -- (65,125) $1.09-11.50 $ 6.10
----------- ----------- ------------- ----------
Balance at September 28, 1996 196,749 629,527 $1.09-11.50 $ 7.44
Additional shares approved .. 175,000 -- -- --
Granted ...................... (406,000) 406,000 $9.00-11.19 $10.29
Canceled ..................... 89,550 (89,550) $9.00-11.50 $10.57
Exercised .................... -- (99,977) $1.09-11.50 $ 5.22
----------- ----------- ------------- ----------
Balance at September 27, 1997 55,299 846,000 $2.25-11.25 $ 8.74
=========== =========== ============= ==========
</TABLE>

At the end of fiscal 1997, 1996 and 1995, options to purchase 351,063
shares, 416,965 shares and 439,715 shares, respectively, were exercisable at
weighted average prices of $6.70, $6.11 and $5.94.

The following table summarizes information about stock options outstanding
at September 27, 1997:

<TABLE>
<CAPTION>
WEIGHTED AVG. WEIGHTED AVG.
NUMBER OF WEIGHTED AVG. REMAINING NUMBER OF EXERCISE PRICE
SHARES EXERCISE PRICE EXERCISE CONTRACTUAL SHARES OF OPTIONS
OUTSTANDING RANGE PRICE LIFE EXERCISABLE EXERCISABLE
- ------------- -------------- --------------- --------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
162,000 ...... $ 2.25-3.75 $ 3.54 2.19 years 162,000 $ 3.54
390,000 ...... 7.38-9.50 9.13 7.93 years 136,563 8.70
294,000 ...... 10.63-11.50 11.08 8.64 years 52,500 11.30
</TABLE>

Under ILC's Employee Stock Purchase Plan, ILC has 83,033 shares of common
stock available at September 27, 1997 for issuance to participating employees
who have met certain eligibility requirements. The number of shares available
for purchase by each participant is based upon annual base earnings and at a
purchase price equal to 85% of the fair market value at the beginning or the
end of the quarter of purchase, whichever is lower.

F-49
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

10. INTEREST EXPENSE, NET

Interest expense, net consists of the following:

<TABLE>
<CAPTION>
1997 1996 1995
------------ ----------- ------------
<S> <C> <C> <C>
Interest income ....................................... $(147,210) $(80,163) $(265,443)
Interest expense ...................................... 641,127 542,061 589,200
------------ ----------- ------------
Net interest expense related to continuing operations $ 493,917 $461,898 $ 323,757
============ =========== ============
</TABLE>

11. ACQUISITIONS

In August 1991, ILC acquired all the outstanding stock of Q-Arc Ltd. of
Cambridge, England for $1,400,000 in cash and the assumption of certain
liabilities. Q-Arc is a manufacturer of specialty lamps for laser and
non-laser applications. This transaction was accounted for as a purchase and
accordingly, all assets were revalued to their respective fair values. The
acquisition price was equal to the fair value of net assets acquired. Net
assets included a covenant-not-to-compete of approximately $951,000. The
covenant is being amortized over an eight year period. At September 27, 1997,
the unamortized balance of the Q-Arc covenant-not-to-compete is approximately
$238,000.

12. DISCONTINUED OPERATIONS

In September 1996, ILC's Board of Directors voted to proceed with the
divestiture of PLI which is a subsidiary based in Cotati, California. As a
result of ILC's plan, an estimated loss on disposal of $3,399,000, net of a
tax benefit of $1,133,000, was recorded in the fourth quarter of fiscal 1996.
This loss on disposal included estimated operating losses through the final
disposition of the subsidiary and the write off of the unamortized balance of
the PLI covenant-not-to-compete of approximately $470,000.

In January 1997, ILC signed an agreement to sell PLI. The original selling
price was approximately $3.3 million but was subject to due diligence and the
ability of PLI Acquisition Corp., the purchaser, to obtain adequate financing
no later than March 31, 1997. The purchaser was not able to obtain adequate
financing, but through further discussions with the purchaser, ILC agreed to
sell the stock of PLI to PLI Acquisition Corp. for a promissory note with a
face value of $4 million bearing 8% interest per year on any unpaid principal
amount. Payments on the promissory note began in May 1997 and will be
completed in April 2000. This transaction was recorded in the third quarter
of fiscal 1997. The purchase price, net of expenses and reserves,
approximated the book value and therefore, no gain or loss was recorded.

After conferring with ILC management, PLI Acquisition Corp. did not make
the scheduled October and November 1997 payments on the note payable to ILC.
ILC and PLI Acquisition Corp. are currently evaluating a restructuring of the
payment terms of the note payable to ILC. ILC's management believes that
there has been no impairment of the value of the note as recorded by ILC.

Continuing operations, as reclassified for fiscal years 1996 and 1995,
consist of the activities of ILC Technology, Inc. based in Sunnyvale,
California, CPI based in Beverly, Massachusetts and Q-Arc based in Cambridge,
England. The Consolidated Statements of Operations have been reclassified to
report separately the activities of PLI as discontinued operations. Revenues
from PLI were $7,772,000 and $8,933,000 for fiscal 1996 and 1995,
respectively. The net loss after tax from the discontinued operations of PLI
was $840,000 and $99,000 for fiscal 1996 and 1995, respectively. A portion of
net interest expense of approximately $66,000 and $58,000 for fiscal 1996 and
1995, respectively, was allocated to the discontinued operations. Net
interest expense was allocated to discontinued operations based on the ratio
of the net assets to be discontinued to the consolidated net assets plus
consolidated debt other than debt which is directly attributable to
continuing operations. For the six months ended March 29, 1997, revenues from
PLI were $1,489,000. Net interest expense allocated to the discontinued
operations of PLI was

F-50
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

12. DISCONTINUED OPERATIONS (Continued)

approximately $18,000. As discussed above, the resultant loss from
discontinued operations was offset against accruals made in the fourth
quarter of fiscal 1996.

The net assets of PLI of $2,178,383 as of September 28, 1996 are shown in
the accompanying balance sheet as net assets from discontinued operations.
These assets were written down to a value that represented management's best
estimate of the amount that could be realized upon disposition.

13. CONVERTER POWER, INC.

In May 1997, ILC completed the sale of CPI to Applied Science and
Technology, Inc. (ASTeX) for $6.35 million in cash and 45,000 shares of ASTeX
common stock. The total sale price was $7.35 million, subject to adjustments
related to warranties. ILC has estimated that $500,000 of potential
warranties could be paid and has reduced the gain on sale accordingly. In
August 1997, ASTeX removed approximately 4,900 shares from escrow based on
post-closing audit adjustments. The remaining shares will be held in escrow
subject to any further post-closing adjustments, with a final settlement in
May 1998. The sale, net of expenses, resulted in a gain of $2,378,683 and was
reported in the results of operations for the third quarter ended June 28,
1997. The net amount due from ASTeX of $500,000 (to be satisfied by the
release to ILC of the ASTeX shares held in escrow) is reflected in accounts
receivable in the accompanying balance sheet as of September 27, 1997.

14. RIGHTS AGREEMENT AND OTHER MATTERS

On September 19, 1989, ILC's Board of Directors declared a dividend of one
common share purchase right for each outstanding share of common stock, no
par value, of ILC. The dividend was payable on October 2, 1989 to the
shareholders of record on that date. Each right entitles the registered
holder to purchase from ILC one share of common stock of ILC at a price of
$15.00 per common share. The rights will not be exercisable until a party
either acquires beneficial ownership of 20% of ILC's common stock or makes a
tender offer for at least 30% of its common stock. In the event the rights
become exercisable and thereafter a person or group acquires 30% or more of
ILC's stock, a 20% shareholder ("Acquiring Person") engages in any specified
self-dealing transacton, or, as a result of a recapitalization or
reorganization, an Acquiring Person's shareholdings are increased by more
than 3%, each right will entitle the holder to purchase from ILC, for the
exercise price, common stock having a market value of twice the exercise
price of the right. In the event the rights become exercisable and thereafter
ILC is acquired in a merger or other business combination, each right will
enable the holder to purchase from the surviving corporation, for the
exercise price, common stock having a market value of twice the exercise
price of the right. At ILC's option, the rights are redeemable in their
entirety, prior to becoming exercisable, at $.01 per right. The rights are
subject to adjustment to prevent dilution and expire September 29, 1999. On
February 25, 1997, the Rights Agreement was amended. The amended terms
generally provide that the exercise of the various rights may occur whenever
a party acquires a beneficial ownership of 15% or more of ILC outstanding
common shares and that registered holders of ILC are entitled to purchase
from ILC one share of common stock at a price of $55.00 per common share.
Additionally, the expiration date of the Rights Agreement was extended to
December 31, 2006.

In November 1996, the Board of Directors authorized eight severance
agreements for six executive officers and two managers, providing for
severance benefits upon termination during the two-year period following a
change in control in ILC, as defined therein.

15. REPURCHASE OF COMMON STOCK

In November 1996, the Board of Directors authorized ILC to repurchase up
to 1,000,000 shares of ILC's issued and outstanding common stock. During the
third quarter of fiscal 1997, and since inception

F-51
<PAGE>
ILC TECHNOLOGY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEPTEMER 27, 1997

15. REPURCHASE OF COMMON STOCK (Continued)

of the repurchase program, ILC repurchased 37,000 shares of common stock for
an aggregate amount of $425,458. Purchases were made on the open market and
can be made for up to two years from the date of authorization.

16. SUBSEQUENT EVENT

On October 30, 1997, ILC entered into a definitive Agreement and Plan of
Merger by and among ILC, BEC Group, Inc. ("BEC") and BILC Acquisition Corp.
("Acquisition Corp."), a wholly owned subsidiary of BEC, pursuant to which
ILC will merge (the "Merger") with and into Acquisition Corp. Upon
consummation of the Merger, each outstanding share of ILC will be converted
into the right to receive 2.18 shares (reflecting the completion of BEC's
contemplated one-for two reverse stock split) of BEC's common stock. The
Merger is subject to the approval of both ILC's shareholders and BEC's
stockholders, and to certain regulatory approvals and other customary closing
conditions. The respective chairmen of ILC and BEC have executed voting
agreements in favor of the Merger.

F-52
<PAGE>
ANNEX LIST

Annex A Agreement and Plan of Merger, as amended

Annex B BEC Voting Agreement -- Martin Franklin

Annex C ILC Voting Agreement -- Henry C. Baumgartner

Annex D Fairness Opinion -- Raymond James & Associates, Inc.

Annex E Fairness Opinion -- Donaldson, Lufkin & Jenrette Securities
Corporation

Annex F Chapter 13 of the California General Corporation Law

<PAGE>
ANNEX A

AGREEMENT AND PLAN OF MERGER

AMONG

BEC GROUP, INC.,

BILC ACQUISITION CORP.

AND

ILC TECHNOLOGY, INC.

DATED AS OF OCTOBER 30, 1997

<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE NO.
------------
<S> <C> <C>
ARTICLE I
THE MERGER ....................................................................... 2
1.1. The Merger........................................................................ 2
1.2. Effective Time; Closing........................................................... 2
1.3. Effect of the Merger ............................................................. 2
1.4. Certificate of Incorporation; By-laws ............................................ 2
1.5. Directors and Officers............................................................ 2
1.6. Conversion of Securities.......................................................... 2
1.7. Stock Options..................................................................... 3
1.8. Dissenting Shares................................................................. 4
1.9. Surrender of Shares; Stock Transfer Books......................................... 4
1.10. No Fractional Shares.............................................................. 5
1.11. Subsequent Actions................................................................ 5

ARTICLE II
REPRESENTATIONS AND WARRANTIES OF BEC ............................................ 6
2.1. Corporate Organization............................................................ 6
2.2. Certificate of Incorporation and By-laws.......................................... 6
2.3. Capitalization ................................................................... 6
2.4. Authority Relative to this Agreement ............................................. 7
2.5. No Conflict; Required Filings and Consents........................................ 7
2.6. SEC Filings; Financial Statements................................................. 8
2.7. Absence of Certain Changes or Events.............................................. 9
2.8. Litigation........................................................................ 10
2.9. Employee Benefit Plans............................................................ 10
2.10. Labor Matters..................................................................... 10
2.11. Brokers........................................................................... 11
2.12. Products Liability................................................................ 11
2.13. Conduct of Business............................................................... 11
2.14. Joint Proxy Statement-Prospectus.................................................. 11
2.15. Taxes............................................................................. 11
2.16. BEC Properties and Leases ........................................................ 12
2.17. Environmental Matters............................................................. 13
2.18. Material Agreements .............................................................. 13
2.19. Insider Interests ................................................................ 13
2.20. BEC Board ........................................................................ 13
2.21. Fairness Opinion ................................................................. 14
2.22. Trademarks, Patents and Copyrights ............................................... 14

ARTICLE III
REPRESENTATIONS ANDWARRANTIES OF THE COMPANY ..................................... 15
3.1. Corporate Organization ........................................................... 15
3.2. Certificate of Incorporation and By-Laws ......................................... 15

i
<PAGE>
PAGE NO.
------------
3.3. Capitalization ................................................................... 15
3.4. Authority Relative to this Agreement ............................................. 16
3.5. No Conflict; Required Filings and Consents ....................................... 16
3.6. SEC Filings; Financial Statements ................................................ 17
3.7. Absence of Certain Changes or Events ............................................. 17
3.8. Litigation ....................................................................... 18
3.9. Employee Benefit Plans ........................................................... 19
3.10. Labor Matters .................................................................... 19
3.11. Brokers .......................................................................... 19
3.12. Products Liability ............................................................... 19
3.13. Conduct of Business .............................................................. 20
3.14. Joint Proxy Statement-Prospectus ................................................. 20
3.15. Taxes ............................................................................ 20
3.16. Property and Leases .............................................................. 21
3.17. Environmental Matters ............................................................ 21
3.18. Material Agreements .............................................................. 22
3.19. Insider Interests ................................................................ 22
3.20. Board Approval ................................................................... 22
3.21. Fairness Opinion ................................................................. 22
3.22. Trademarks, Patents and Copyrights ............................................... 22
3.23. No Dividends, etc ................................................................ 23

ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER
4.1. Acquisition Proposals ............................................................ 23
4.2. Conduct of Business by the Company and BEC Pending the Merger .................... 23
4.3. No Shopping ...................................................................... 25
4.4. Tax Reorganization................................................................ 25

ARTICLE V
ADDITIONAL AGREEMENTS ............................................................ 26
5.1. Joint Proxy Statement/Prospectus; Registration Statement; Other Filings; Board
Recommendations .................................................................. 26
5.2. Meetings of Shareholders and Stockholders ........................................ 26
5.3. Third Party Consents.............................................................. 27
5.4. HSR Cost.......................................................................... 27
5.5. Additional Agreements ............................................................ 27
5.6. Notification of Certain Matters .................................................. 27
5.7. Access to Information ............................................................ 27
5.8. Public Announcements ............................................................. 28
5.9. Best Efforts; Cooperation ........................................................ 28
5.10. Agreement to Defend and Indemnify ................................................ 28
5.11. Action by the Officers, Directors, etc. .......................................... 29
5.12. Spinoff Agreement................................................................. 29

ii
<PAGE>
PAGE NO.
------------
5.13. Post Merger Directors and Officers BEC ........................................... 29
5.14. Increase in Authorized Shares and Reverse Stock Split ............................ 29
5.15. BEC Name Change .................................................................. 29
5.16. Capital Structure ................................................................ 30
5.17. Audited Company Financial Statements ............................................. 30
5.18. Rights Agreement.................................................................. 30

ARTICLE VI
CONDITIONS OF MERGER ............................................................. 30
6.2. Additional Conditions to Obligations of BEC ...................................... 31
6.3. Additional Conditions to Obligations of the Company .............................. 31

ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER ................................................ 32
7.1. Termination ...................................................................... 32
7.2. Effect of Termination ............................................................ 33
7.3. Termination Fees and Expenses .................................................... 33

ARTICLE VIII
GENERAL PROVISIONS ............................................................... 34
8.1. Non-Survival of Representations, Warranties and Agreements ....................... 34
8.2. Notices .......................................................................... 34
8.3. Expenses ......................................................................... 35
8.4. Certain Definitions .............................................................. 35
8.5. Heading .......................................................................... 36
8.6. Severability ..................................................................... 36
8.7. Entire Agreement; No Third Party Beneficiaries ................................... 37
8.8. Waiver ........................................................................... 37
8.9. Amendment ........................................................................ 37
8.10. Assignment ....................................................................... 37
8.11. Governing Law .................................................................... 37
8.12. Counterparts; Telecopier ......................................................... 37
</TABLE>

iii
<PAGE>
AGREEMENT AND PLAN OF MERGER

AGREEMENT AND PLAN OF MERGER, dated as of October 30, 1997 (the
"Agreement"), among BEC GROUP, INC., a Delaware corporation ("BEC"), BILC
Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of
BEC ("Purchaser"), and ILC TECHNOLOGY, INC. a California corporation (the
"Company").

W I T N E S S E T H:

WHEREAS, the Boards of Directors of BEC, Purchaser and the Company have
each determined that it is in the best interests of their respective
shareholders for Purchaser and the Company to merge upon the terms and
subject to the conditions set forth herein to enter into a business
combination under which the Company will merge with and into Purchaser
pursuant to the terms and conditions hereof (the "Merger"); and

WHEREAS, in furtherance of such merger, the Boards of Directors of BEC,
Purchaser and the Company have each approved the Merger of the Company with
and into Purchaser in accordance with the Corporations Code of the State of
California ("California Law") and the General Corporation Law of the State of
Delaware ("Delaware Law"), respectively, upon the terms and subject to the
conditions set forth in this Agreement; and

WHEREAS, the Board of Directors of the Company (the "Company Board") has
(i) determined that the consideration to be paid for each share of common
stock, no par value per share, of the Company (the "Company Common Stock") in
the Merger is fair to the shareholders of the Company and (ii) resolved and
agreed to recommend the Merger to holders of shares of Company Common Stock;
and

WHEREAS, the Board of Directors of BEC (the "BEC Board") has (i)
determined that the Merger is fair to and in the best interests of the
stockholders of BEC and (ii) resolved and agreed to recommend the Merger to
holders of shares of common stock of BEC, par value $.01 per share, (the "BEC
Common Stock"); and

WHEREAS, concurrently with the execution of this Agreement, and as a
condition and inducement to the Company's willingness to enter into this
Agreement, the Chief Executive Officer of BEC in his capacity as a
shareholder of BEC shall enter into a Voting Agreement in substantially the
form attached hereto as Annex E (the "BEC Voting Agreement"); and
concurrently with the execution of this Agreement and as a condition and
inducement to BEC's willingness to enter into this Agreement, the Chief
Executive Officer of the Company in his capacity as a shareholder of the
Company shall enter into a Voting Agreement in substantially the form
attached hereto as Annex F (the "Company Voting Agreement"); and

WHEREAS, the Company understands that at or prior to the Effective Time
(as defined below), BEC intends (i) to transfer (the "Asset Transfer") to
Bolle, Inc., or to the wholly-owned subsidiaries of Bolle, Inc.
(collectively, the "Bolle Group") all of its business, assets and liabilities
(other than those relating to the ORC Business (as defined below))
(collectively, the "Non-ORC Business") all as more fully set forth in and
pursuant to a Contribution Agreement, a Management Services Agreement and an
Indemnity Agreement and related documents (collectively, the "Transfer
Agreements"), and (ii) to distribute all of the issued and outstanding shares
of common stock of Bolle, Inc. (the "Spinoff") to BEC's stockholders; and

WHEREAS, following such Asset Transfer and Spinoff, BEC shall retain all
of the ORC Business (as hereinafter defined).

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby,
BEC, Purchaser and the Company hereby agree as follows:

Annex A-1
<PAGE>
ARTICLE I

THE MERGER

SECTION 1.1. The Merger. Upon the terms and subject to the conditions set
forth in Article VI, and in accordance with Delaware Law and California Law,
at the Effective Time (as defined below) the Company shall be merged with and
into the Purchaser. As a result of the Merger, the separate corporate
existence of the Company shall cease and the Purchaser shall continue as the
surviving corporation of the Merger (the "Surviving Corporation").

SECTION 1.2. Effective Time; Closing. As promptly as practicable after
the satisfaction or, if permissible, waiver of the conditions set forth in
Article VI, the parties hereto shall cause the Merger to be consummated by
filing this Agreement or a certificate of merger (in any case, the
"Certificate of Merger") with the Secretary of State of the State of Delaware
and the Secretary of State of the State of California, in such form as is
required by, and executed in accordance with the relevant provisions of,
Delaware Law and California Law (the date and time of such filing (or such
later time as may be agreed in writing by the parties and specified in the
Certificate of Merger) being the "Effective Time"). Prior to such filing, a
closing ("Closing") shall be held at the offices of Kane Kessler, P.C., 1350
Avenue of the Americas -- 26th Floor, New York, New York 10019, or such other
place as the parties shall agree, for the purpose of confirming the
satisfaction or waiver, as the case may be, of the conditions set forth in
Article VI. The parties agree that it is anticipated that the Closing shall
be held immediately (or as soon as practicable thereafter) following the
shareholders meeting at which the Company's shareholders are to vote on the
Merger (the "Company Shareholders Meeting") and the stockholders meeting at
which BEC's shareholders are to vote on the Merger (the "BEC Stockholders
Meeting").

SECTION 1.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in the applicable provisions of Delaware Law
and California Law. Without limiting the generality of the foregoing, and
subject thereto, at the Effective Time all the property, rights, privileges,
powers and franchises of the Company and Purchaser shall vest in the
Surviving Corporation, and all debts, liabilities, obligations, restrictions,
and duties of the Company and Purchaser shall become the debts, liabilities,
obligations, restrictions, and duties of the Surviving Corporation.

SECTION 1.4. Certificate of Incorporation; By-laws.

(a) Unless otherwise mutually agreed by each of BEC and the Company, prior
to the Effective Time, at the Effective Time, the Certificate of
Incorporation of Purchaser as the Surviving Corporation, shall be the
Certificate of Incorporation of Purchaser, as in effect immediately prior to
the Effective Time, a copy of which is attached hereto as Annex A, until
thereafter amended as provided by law and such Certificate of Incorporation;
provided, however, that, at the Effective Time, Article I of the Certificate
of Incorporation of the Surviving Corporation shall be amended to read as
follows: "The name of the corporation is ILC Technology, Inc."

(b) Unless otherwise mutually agreed by each of the Company and Purchaser
prior to the Effective Time, the By-laws of Purchaser, as in effect
immediately prior to the Effective Time, shall become the By-laws of the
Surviving Corporation until thereafter amended as provided by law; provided,
however, that, at the Effective Time, the title thereof shall be amended to
read as follows: "By-laws of ILC Technology, Inc."

SECTION 1.5. Directors and Officers. At the Effective Time, the directors
of the Surviving Corporation shall be comprised of the directors of Purchaser
immediately prior to the Effective Time each to hold office in accordance
with the Certificate of Incorporation and By-laws of the Surviving
Corporation. Messrs. Martin Franklin, Richard Capra and Ian Ashken, shall be
the initial officers of the Surviving Corporation, serving as Chairman of the
Board, Chief Executive Officer and Chief Financial Officer, respectively, in
each case until their resignation or their respective successors are duly
elected or appointed and qualified.

SECTION 1.6. Conversion of Securities. At the Effective Time, by virtue
of the Merger and except as may be provided in this Section 1.6, without any
action on the part of the Purchaser, the Company or the holders of any of the
following securities:

Annex A-2
<PAGE>
(a) Each share of Company Common Stock (sometimes hereinafter
referred to as "Shares") issued and outstanding immediately prior
to the Effective Time (other than any shares of Company Common
Stock to be cancelled pursuant to Section 1.6(b) and any
Dissenting Shares (as defined in and to the extent provided in
Section 1.8(a)) shall be cancelled and extinguished and shall be
converted automatically (subject to Section 1.6(d) and (e) into
the right to receive upon surrender of the certificate or
certificates representing such shares, 4.36 shares (the "Exchange
Ratio") of BEC Common Stock (the "Merger Consideration") issued
to the holder of such shares of Company Common Stock in the
manner provided in Section 1.9;

(b) Each share of Company Common Stock held in the treasury of the
Company and each share owned by the Company or any direct or
indirect subsidiary of the Company immediately prior to the
Effective Time shall be cancelled and extinguished without any
conversion thereof and no payment or distribution shall be made
with respect thereto; and

(c) Each share of Common Stock, par value $.01 per share, of
Purchaser issued and outstanding immediately prior to the
Effective Time shall remain outstanding as one (1) validly
issued, fully paid and nonassessable share of Common Stock, par
value $.01 per share, of the Surviving Corporation. Each
certificate evidencing ownership of shares of common stock of the
Purchaser shall continue to evidence ownership of such shares of
common stock of the Surviving Corporation.

(d) In the event of the Reverse Stock Split (as hereinafter defined)
at or prior to the Effective Time, the Exchange Ratio shall be
adjusted to 2.18 shares of BEC Common Stock.

(e) In the event that any of the Convertible Note are outstanding as
of the Effective Time (the "Outstanding Convertible Notes") the
Merger Consideration shall be adjusted and calculated in
accordance with the following formula:
Merger Consideration = 17,631,102+X+Y
--------------
4,879,811

SECTION 1.7. Stock Options.

(a) Prior to the Effective Time, BEC, the Company and the Stock Option
Committees of their respective Boards of Directors shall effect the
conversion of all unexercised options outstanding under the Company's
Employee Stock Purchase Plan, the 1983 Employee Incentive Stock Option Plan
and the 1992 Stock Option Plan (collectively, the "Company Plans") at the
Effective Time for such number of options pursuant to BEC's 1996 Stock
Incentive Plan (the "BEC 1996 Plan"), as provided below, to purchase shares
of BEC Common Stock at such exercise price, as provided below, and exercise
period as applicable to the options outstanding under the Company Plans.

(i) the number of shares of BEC Common Stock to be subject to the new
option shall be equal to the product of (x) the number of shares of the
Company Common Stock subject to the original option and (y) the Exchange
Ratio;

(ii) the exercise price per share of BEC Common Stock under the new
option shall be equal to (x) the exercise price per share of the Company
Common stock under the original option divided by (y) the Exchange Ratio;
and

The adjustments provided herein with respect to any options which are
"incentive stock options" (as defined in Section 422 of the Internal Revenue
Code of 1986, as amended, the "Code") shall be effected

Annex A-3
<PAGE>
in a manner consistent with Section 424(a) of the Code. Upon such
conversion, the options granted under the BEC 1996 Plan to the former holders
of options pursuant to the Company Plan shall, except to the extent provided
above or as may be required to maintain the status of such options as
"incentive stock options", in all respects be subject to the terms,
provisions and conditions of the 1996 BEC Plan and the standard form of stock
option agreement relating to such 1996 BEC Plan; provided, however, such
holders shall be deemed to have been granted such options as of the date the
original options were granted under the Company Plans.

(b) The options outstanding under the Company Plans, shall be vested
pursuant to the terms of such Company Plans, except to the extent that, prior
to the Effective Time, the Company, with the consent of the holder of any
such options, may determine otherwise.

SECTION 1.8. Dissenting Shares.

(a) Notwithstanding any provision of this Agreement to the contrary, the
shares of any holder of Company Common Stock who has demanded and perfected
appraisal rights for such shares in accordance with California Law and who,
as of the Effective Time, has not effectively withdrawn or lost such
appraisal rights ("Dissenting Shares"), shall not be converted into or
represent a right to receive BEC Common Stock pursuant to Section 1.6, but
the holder thereof shall only be entitled to such appraisal rights as are
granted by California Law. Notwithstanding the foregoing, if any holder of
shares of Company Common Stock who demands appraisal of such shares under
California Law shall effectively withdraw or lose (through failure to perfect
or otherwise) the right to appraisal, then, as of the later of the Effective
Time or the occurrence of such event, such holder's shares shall
automatically be converted into and represent only the right to receive the
Merger Consideration in accordance with Section 1.6 hereof, without interest
thereon, upon surrender of the certificate representing such shares of
Company Common Stock in the manner provided in Section 1.9.

(b) The Company shall give BEC (i) prompt notice of any demands for
appraisal of any shares of Company Common stock received by the Company,
withdrawals of such demands, and any other instruments served pursuant to
California Law and received by the Company, and (ii) the opportunity to
participate in all negotiations and proceedings with respect to demands for
appraisal under California Law. The Company shall not, except with the prior
written consent of BEC, make any payment with respect to any demands for
appraisal or offer to settle or settle any such demands. Any payments made in
respect of Dissenting Shares shall be made by the Company or the Surviving
Corporation, as the case may be.

SECTION 1.9. Surrender of Shares; Stock Transfer Books.

(a) Prior to the Effective Time, Purchaser shall designate a bank or trust
company to act as agent (the "Exchange Agent") for the holders of shares of
Company Common Stock in connection with the Merger to receive the shares of
BEC Common Stock to which holders of shares of Company Common Stock shall
become entitled pursuant to Section 1.6(a) (without assuming that any holder
of Shares will perfect its right to an appraisal of such holder's Shares) or
otherwise pursuant to this Agreement and shall deposit such shares of BEC
Common Stock at or prior to the Effective Time with the Exchange Agent and
cash in an amount sufficient for payment in lieu of fractional shares
pursuant to Section 1.10.

(b) Promptly after the Effective Time, the Surviving Corporation shall
cause the Exchange Agent to be mailed to each person who was, at the
Effective Time, a holder of record of shares of Company Common Stock entitled
to receive the Merger Consideration pursuant to Section 1.6(a) a form of
letter of transmittal (which shall specify that delivery shall be effected,
and risk of loss and title to the certificates evidencing such shares of
Company Common Stock (the "Certificates") shall pass, only upon proper
delivery of the Certificates to the Exchange Agent) and instructions for use
in effecting the surrender of the Certificates pursuant to such letter of
transmittal. Upon surrender to the Exchange Agent of a Certificate, together
with such letter of transmittal, duly completed and validly executed in
accordance with the instructions thereto, and such other documents as may be
required pursuant to such instructions, the holder of such Certificates shall
be entitled to receive in exchange therefor the Merger Consideration for each
share of Company Common Stock formerly evidenced by such Certificates, and
such Certificates

Annex A-4
<PAGE>
shall then be cancelled. No interest shall accrue or be paid on the Merger
Consideration payable upon the surrender of any Certificate for the benefit
of the holder of such Certificate. If payment of the Merger Consideration is
to be made to a person other than the person in whose name the surrendered
Certificate is registered on the stock transfer books of the Company, it
shall be a condition of payment that the Certificate so surrendered shall be
endorsed properly or otherwise be in proper form for transfer and that the
person requesting such payment shall have paid all transfer and other taxes
required by reason of the payment of the Merger Consideration to a person
other than the registered holder of the Certificate surrendered or shall have
established to the satisfaction of the Surviving Corporation that such taxes
either have been paid or are not applicable.

(c) At the close of business on the day of the Effective Time, the stock
transfer books of the Company shall be closed and thereafter there shall be
no further registration of transfers of shares of Company Common Stock on the
records of the Company. From and after the Effective Time, the holders of
shares of Company Common Stock outstanding immediately prior to the Effective
Time shall cease to have any rights with respect to such shares of Company
Common Stock except as otherwise provided herein or by applicable law.

(d) In the event any Certificates shall have been lost, stolen or
destroyed, the Exchange Agent shall issue in exchange for such lost, stolen
or destroyed Certificates, upon the making of an affidavit of that fact by
the holder thereof, such shares of BEC Common Stock, cash for fractional
shares, if any, as may be required pursuant to section 1.6; provided,
however, that BEC may, in its discretion and as a condition precedent to the
issuance thereof, require the owner of such lost, stolen or destroyed
Certificates to deliver a bond in such sum as it may reasonably direct as
indemnity against any claim that may be made against BEC, the Company or the
Exchange Agent with respect to the Certificates alleged to have been lost,
stolen or destroyed.

(e) Any shares of BEC Common Stock made available to the Exchange Agent
pursuant to subsection (a) hereof to exchange for Shares for which appraisal
rights have been perfected shall be returned to BEC, upon BEC's demand.

SECTION 1.10. No Fractional Shares. No fraction of a share of BEC Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder
of shares of Company Common Stock who would otherwise be entitled to a
fraction of a share of BEC Common Stock (after aggregating all fractional
shares of BEC Common Stock to be received by such holder) shall receive from
BEC an amount of cash (rounded to the nearest whole cent) equal to the
product of (i) such fraction, multiplied by (ii) the average closing price of
one share of BEC Common Stock for the ten most recent days that BEC Common
Stock has traded ending on the trading day immediately prior to the Effective
Time, as reported on the New York Stock Exchange, Inc. (the "NYSE").
Immediately prior to the Effective Time BEC shall deposit with this Exchange
Agent sufficient funds in cash to pay for all fractional shares. As soon as
practicable after the determination of the amount of cash to be paid to
former shareholders of the Company in lieu of any fractional interests, the
Exchange Agent shall make available in accordance with this Agreement such
amounts to such former shareholders. All remaining cash held by the Exchange
Agent shall then be immediately repaid to BEC.

SECTION 1.11. Subsequent Actions. If, at any time after the Effective
Time, the Surviving Corporation shall consider or be advised that any deeds,
bills of sale, assignments, assurances or any other actions or things are
necessary or desirable to vest, perfect or confirm of record or otherwise in
the Surviving Corporation its right, title or interest in, to or under any of
the rights, properties or assets of either the Company or Purchaser acquired
or to be acquired by the Surviving Corporation as a result of, or in
connection with, the Merger or otherwise to carry out this Agreement, the
officers and directors of the Surviving Corporation shall be authorized to
execute and deliver, in the name and on behalf of either the Company or
Purchaser, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of each of such corporations or
otherwise, all such other actions and things as may be necessary or desirable
to vest, perfect or confirm any and all right, title and interest in, to and
under such rights, properties or assets in the Surviving Corporation or
otherwise to carry out this Agreement.

Annex A-5
<PAGE>
ARTICLE II

REPRESENTATIONS AND WARRANTIES OF BEC AND PURCHASER

BEC and Purchaser each represent and warrant to the Company as follows (it
being understood that the representations and warranties made by BEC and
Purchaser in this Agreement are being made only in respect of the ORC
Business unless otherwise specifically provided):

SECTION 2.1. Corporate Organization. Each of BEC, ORC and Purchaser is a
corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation and has the requisite corporate
power and authority and any necessary governmental authority and approvals to
own, operate or lease the properties that it purports to own, operate or
lease and to carry on its business as it is now being conducted, and is duly
qualified as a foreign corporation to do business, and is in good standing,
in each jurisdiction where the character of its properties owned, operated or
leased or the nature of its activities makes such qualification necessary,
except for such failure which, when taken together with all other such
failures, would not have a Material Adverse Effect (as defined below). For
purposes of this Agreement, "Subsidiary" or "Subsidiaries" of BEC means any
corporation or other legal entity of which BEC (either alone or through or
together with any other Subsidiary of BEC) owns more than fifty per cent
(50%) of the stock or other equity interests the holders of which are
generally entitled to vote for the election of the board of directors or
other governing body of, or otherwise control or direct, such corporation or
other legal entity, with the exception of any subsidiary being transferred to
the Bolle Group at or prior to the Effective Time and Voltarc Technologies,
Inc. When used in connection with BEC or any of its Subsidiaries, the term
"Material Adverse Effect" means any change in or effect that, when taken
together with all other adverse changes and effects, on the ORC Business that
is, or is reasonably likely to be, materially adverse to the business,
results of operations or condition (financial or otherwise), liabilities or
regulatory status of BEC and its Subsidiaries taken as a whole. Except as
disclosed in Schedule 2.1 hereto, BEC does not directly or indirectly own any
equity or similar interest in, or any interest convertible into or
exchangeable or exercisable for, any equity or similar interest in, any
corporation, partnership, joint venture or other business association or
entity. Set forth on Schedule 2.1 is a list of the subsidiaries of ORC
Technologies, Inc.

SECTION 2.2. Certificate of Incorporation and By-laws. BEC has heretofore
furnished to the Company complete and correct copies of the Certificate of
Incorporation and By-laws of each of BEC and the Purchaser, each as amended
to the date hereof. Such Certificate of Incorporation and By-laws are in full
force and effect. Neither BEC nor any of its Subsidiaries is in violation of
any of the provisions of its Certificate of Incorporation or By-laws or
equivalent organizational documents.

SECTION 2.3. Capitalization. As of the date hereof, the authorized
capital stock of BEC consists of 50,000,000 shares of common stock, having a
par value of $.01 per share and 500,000 shares of preferred stock having a
par value of $1.00 per share. As of the date hereof, (i) 17,631,102 shares of
BEC Common Stock are issued (including 21,500 treasury shares of BEC Common
Stock), (ii) 10,000 shares of BEC Preferred Stock are issued and outstanding,
all of which are validly issued, fully paid and nonassessable, and (iii)
there are 4,950,000 shares of BEC Common Stock reserved for issuance under
the BEC 1996 Plan pursuant to which 3,335,978 options have been granted and
are outstanding, 238,812 shares of BEC Common Stock have been purchased and
2,000 shares of restricted stock have been issued. All outstanding shares of
the BEC Common Stock have been duly authorized and validly issued and are
fully paid and nonassessable and free of preemptive rights. Except as set
forth in this Section 2.3 or on Schedule 2.3, there are not, as of the date
hereof, any outstanding or authorized subscriptions, options, warrants,
convertible securities, calls, rights, commitments or any other agreements of
any character relating to the issued or unissued capital stock or other
securities of BEC to which BEC is a party or by which BEC is bound obligating
BEC to issue, deliver, or sell, or cause to be issued, delivered or sold,
additional shares of capital stock of BEC or obligating BEC to grant, extend
or enter into any subscription, option, warrant, call, right, commitment or
other such agreement.

The authorized capital stock of Purchaser consists solely of 1,000 shares
of common stock, par value $.01 per share. All shares of capital stock of
Purchaser that are issued and outstanding are directly owned by BEC.

Annex A-6
<PAGE>
Except as set forth on Schedule 2.3, all the outstanding capital stock of
each of the Subsidiaries is duly authorized, validly issued, fully paid and
nonassessable and is owned by BEC or a Subsidiary of BEC free and clear of
any liens, security interests, pledges, agreements, claims, charges or
encumbrances of any nature whatsoever. There are no existing options, calls
or commitments of any character relating to the issued or unissued capital
stock or other securities of any Subsidiary of BEC. Except as set forth in
Schedule 2.3, there are no outstanding contractual obligations of BEC or any
Subsidiary of BEC to repurchase, redeem or otherwise acquire any shares of
BEC Common Stock or any capital stock of any Subsidiary of BEC or to provide
funds to, or make any investment (in the form of a loan, capital contribution
or otherwise) in, any Subsidiary of BEC or any other person.

Set forth on Schedule 2.3 is the number of options granted under the BEC
1996 Plan to employees and other participants in respect of each of the ORC
Business and the Bolle Group and the average exercise price relating to the
outstanding options granted under the BEC 1996 Plan.

SECTION 2.4. Authority Relative to this Agreement. Each of BEC and
Purchaser has all necessary corporate power and authority to enter into this
Agreement, subject to obtaining all necessary approvals by BEC's
shareholders, to perform its obligations hereunder and to consummate the
Transactions (as defined below). The execution and delivery of this Agreement
by BEC and Purchaser and the consummation by BEC and Purchaser of the
Transactions have been duly authorized by all necessary corporate action on
the part of BEC and Purchaser and by BEC as the sole shareholder of
Purchaser, subject to obtaining all necessary approvals by BEC's
shareholders. This Agreement has been duly executed and delivered by BEC and
Purchaser and constitutes a legal, valid and binding obligation of each such
corporation, enforceable against each of them in accordance with its terms.

SECTION 2.5. No Conflict; Required Filings and Consents.

(a) The execution and delivery of this Agreement by BEC and do not, and
the performance of this Agreement by BEC and the Purchaser will not, (i)
conflict with or violate any law, regulation, court order, judgment or decree
applicable to BEC or Purchaser or by which any of their property or assets is
bound or affected, (ii) violate or conflict with either the Certificate of
Incorporation or By-laws of either BEC or any Subsidiary of BEC, or (iii)
other than as set forth on Schedule 2.5, result in any breach of or
constitute a default (or any event which with notice or lapse of time or both
would become a default) under, or give to others any rights of termination,
acceleration or cancellation of any right or obligation of BEC or any
Subsidiary of BEC, or result in the creation of a Lien (as hereinafter
defined) on any of the properties or assets of BEC or any BEC subsidiary
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
instrument, permit, license or franchise to which BEC or any Subsidiary of
BEC is a party or by which BEC or any Subsidiary of BEC or any of their
property is bound or affected, except in the case of (i) or (iii) for
conflicts, violations, breaches or defaults which, in the aggregate, would
not have a Material Adverse Effect.

(b) Except for applicable requirements, if any, of the Securities Act of
1933, as amended (the "Securities Act"), Securities Exchange Act of 1934, as
amended (the "Exchange Act"), "takeover" or "blue sky" laws of various
states, the pre-merger notification requirements of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"), and filing
and recordation of appropriate merger documents as required by Delaware Law
and California Law, and the listing agreement with or the rules and
regulations of The New York Stock Exchange, neither BEC nor Purchaser is
required to submit any notice, report or other filing with any governmental
authority, domestic or foreign, in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated hereby. Except as aforesaid, no waiver, consent, approval or
authorization of any governmental or regulatory authority, domestic or
foreign, is required to be obtained or made by BEC or Purchaser in connection
with its execution, delivery or performance of this Agreement.

(c) Except as set forth on Schedule 2.5, neither BEC nor any Subsidiary is
in conflict with, or in default or violation of, (i) any law, rule,
regulation, order, judgment or decree applicable to BEC or any Subsidiary or
by which any property or asset of BEC or any Subsidiary is bound or affected,
or (ii) any note, bond, mortgage, indenture, contracts, agreement, lease,
license, permit, franchise or other

Annex A-7
<PAGE>
instrument or obligation to which BEC or any Subsidiary is a party or by
which BEC or any Subsidiary or any property or asset of BEC or any Subsidiary
is bound or affected, except for any such conflicts, defaults or violations
that would not, individually or in the aggregate, have a Material Adverse
Effect.

SECTION 2.6. SEC Filings; Financial Statements.

(a) BEC has filed all forms, reports and documents required to be filed
with the Securities and Exchange Commission (the "SEC") since December 31,
1996, and has heretofore delivered to the Company in the form filed with the
SEC, its (i) Annual Report on Form 10-K for the year ended December 31, 1996,
(ii) Quarterly Reports on Form 10-Q for the quarters ended March 31, 1997 and
June 30, 1997 and (iii) all other reports or registration statements filed by
BEC with the SEC since January 1, 1997 (collectively, the "BEC SEC Reports").
As of their respective filing dates (or, with respect to registration
statements, their respective effective dates), the BEC SEC Reports (i) were
prepared in all material respects in accordance with the requirements of the
Securities Act or the Exchange Act, as the case may be, and (ii) did not at
the time they were filed contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.

(b) The consolidated financial statements contained in the BEC SEC Reports
(in each case, including any notes thereto) comply in all material respects
with the requirements of the Exchange Act and the rules and regulations
promulgated thereunder by the SEC and have been prepared in accordance with
generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated in the
notes thereto) and fairly present the consolidated financial position of BEC
and its Subsidiaries as at the respective dates thereof and the consolidated
results of operations and changes in financial position of BEC and its
Subsidiaries for the periods indicated, except that the unaudited interim
financial statements were or are subject to normal and recurring year-end
adjustments which were not or are not expected to be material in amount.

(c) Except as reflected or reserved against in the consolidated financial
statements contained in the BEC SEC Reports or set forth on Schedule 2.6, BEC
and its Subsidiaries have no liabilities of any nature (whether accrued,
absolute, contingent or otherwise) which, in the aggregate, could have a
Material Adverse Effect, except for liabilities incurred since June 30, 1997,
in the ordinary course of business and consistent with past practice. Since
June 30, 1997, neither BEC nor any of its Subsidiaries has incurred any
liabilities material to BEC and the Subsidiaries taken as a whole, except (i)
liabilities incurred in the ordinary course of business and consistent with
past practice, (ii) liabilities incurred in connection with or as a result of
the Merger, the Asset Transfer, or the Spinoff or the other transactions
contemplated hereby (the "Transactions") or (iii) liabilities disclosed on
Schedule 2.7.

(d) BEC has heretofore furnished to the Company complete and correct
copies of all material amendments and modifications that have not been filed
by BEC with the SEC to all material agreements, documents and other
instruments that previously had been filed by BEC with the SEC and are
currently in effect.

(e) Set forth in Schedule 2.6 is a copy of the unaudited consolidated pro
forma balance sheet (the "BEC Balance Sheet") as at September 30, 1997 and a
consolidated pro forma statement of income (the "BEC Income Statements"), for
the nine months ended September 30, 1997 of BEC reflecting the ORC Business
as if the Asset Transfer and the Spinoff had been consummated as of such date
and for such period, as the case may be. The BEC Balance Sheet fairly
presents in all material respects the consolidated financial position of BEC
on a pro forma basis based upon the assumptions set forth in the notes
thereto and the BEC Income Statements fairly present in all material respects
the consolidated results of operations prior to interest and taxes of BEC on
a pro forma basis as of their respective dates based upon the assumptions set
forth in the notes thereto.

(f) Set forth in Schedule 2.6 is a copy of the unaudited consolidated
balance sheet (the "ORC Balance Sheet") as at September 30, 1997 and the
related consolidated statement of income (the "ORC Income Statement"), for
the nine months ended September 30, 1997 of ORC Technologies, Inc. The ORC

Annex A-8
<PAGE>
Balance Sheet fairly presents in all material respects the consolidated
financial position of ORC Technologies, Inc. as at its respective date and
the ORC Income Statement fairly present in all material respects the
consolidated results of operations prior to interest and taxes of ORC
Technologies, Inc. as of their respective dates.

(g) BEC has heretofore furnished to the Company a copy of the balance
sheet as at August 31, 1997 and the related statement of income for the eight
month period ended August 31, 1997 of Voltarc Technologies, Inc. ("Voltarc"),
in the same form as provided to BEC by Voltarc and certain of the
stockholders of Voltarc.

(h) The BEC Balance Sheet and the ORC Balance Sheet will reflect the
financial position of BEC and the financial position of ORC, respectively, as
of the Effective Time, except for changes arising as a result of actions or
events permitted under Section 4.2 hereof or Schedule 4.2 thereto and the BEC
investment in Voltarc (as hereinafter defined).

SECTION 2.7. Absence of Certain Changes or Events. Since September 30,
1997, except as contemplated in this Agreement or as previously disclosed in
the BEC SEC Reports or as appears on Schedule 2.7, there has not been and no
agreement has been entered into by BEC or any Subsidiary of BEC to effect:

(a) any change in the business, operations, properties, condition
(financial or otherwise), assets or liabilities (including,
without limitation, contingent liabilities) of BEC or any
Subsidiary of BEC having, individually or in the aggregate, a
Material Adverse Effect;

(b) any damage, destruction or loss (whether or not covered by
insurance) affecting the business or the assets of BEC or any of
its Subsidiaries which individually or in the aggregate has had
or would reasonably be expected to have a Material Adverse
Effect;

(c) any redemption, repurchase or other acquisition by BEC or any of
the Subsidiaries of any outstanding share of capital stock or
other securities of, or ownership interests in, BEC or any
Subsidiary of BEC or any declaration or payment of any dividend
or other distribution in cash, stock or property with respect to
any share of capital stock of BEC;

(d) any entry into or relinquishment of any material commitment or
transaction (including, without limitation, any borrowing or
capital expenditure) other than as contemplated by this Agreement
or the Transfer Agreements, except as permitted by Section 4.2
hereof;

(e) any mortgage, pledge, security interest or imposition of Lien or
other encumbrance on any asset of BEC or any of the Subsidiaries
that is material to the business, financial condition or
operations of BEC and the Subsidiaries taken as a whole, except
as permitted by Section 4.2 hereof;

(f) any change by BEC in accounting principles or methods, except
insofar as may have been required by a change in generally
accepted accounting principles and disclosed in BEC SEC Reports;

(g) any revaluation by BEC of any asset (including, without
limitation, any writing down of the value of inventory or writing
off of notes or accounts receivable), other than in the ordinary
course of business consistent with past practice; or

(h) any amendment of any material term of any outstanding security of
BEC or any of its Subsidiaries; or

(i) any incurrence or assumption or guarantee by BEC or any
Subsidiary of BEC of any indebtedness for borrowed money other
than in the ordinary course of business and in amounts and on
terms consistent with past practice, it being understood that as
of the Effective Time the amount of senior bank indebtedness of
BEC and its Subsidiaries shall not exceed $33,000,000 in the
aggregate, excluding any funds borrowed for the purposes of
lending amounts to Voltarc under the Voltarc Facility and any
expenses in connection with the Transactions other than the
Spinoff paid prior to the Effective Time that do not exceed the
amount set forth in Section 2.11 hereof.

Annex A-9
<PAGE>
Except as set forth in Schedule 2.7, since September 30, 1997, BEC and
its Subsidiaries have conducted their business only in the ordinary course
and in a manner consistent with past practice and have not made any material
change in the conduct of the business or operations of BEC and its
Subsidiaries taken as a whole. Without limiting the generality of the
foregoing, neither BEC nor any Subsidiary of BEC have, since such date,
except for the contracts referred to in the BEC SEC Reports or as disclosed
on Schedule 2.7, made any changes in executive compensation levels or in the
manner in which other key employees of BEC or the Subsidiaries are
compensated or agreed to pay any pension, retirement allowance or other
employee benefit not required or permitted by any plan or arrangement
existing on such date to any director, officer or employee, whether past or
present, or committed itself to any collective bargaining agreement or to any
additional pension, profit-sharing, bonus, incentive, deferred compensation,
stock purchase, stock option, stock appreciation rights, group insurance,
severance pay, retirement or other employee benefit plan or arrangement, or
to any employment or consulting agreement or to amend any of such plans or
any of such agreements in existence on such date.

SECTION 2.8. Litigation. Except as disclosed in the BEC SEC Reports or
set forth on Schedule 2.8 hereto, there are no actions, suits,
investigations, claims or proceedings pending or, to the knowledge of BEC,
threatened against BEC, or any of its Subsidiaries, or any of their
respective properties, which (i) individually or in the aggregate are
reasonably likely to have a Material Adverse Effect, or (ii) seek to delay or
prevent the consummation of the Merger or the Transactions. As of the date
hereof, neither BEC nor any of its Subsidiaries nor any of their property is
subject to any judgment, injunction or decree which individually or in the
aggregate are reasonably likely to have a Material Adverse Effect.

SECTION 2.9. Employee Benefit Plans. Schedule 2.9 lists all the employee
benefit plans, programs, arrangements and contracts maintained for the
benefit of any current or former employee, officer or director of BEC or any
Subsidiary or with respect to which BEC or any Subsidiary could incur
liability (the "BEC Plans"), and the Company has been furnished with a copy
of each BEC Plan and each material document prepared in connection with each
BEC Plan. Except as set forth in Schedule 2.9, (i) none of the BEC Plans are
intended to be qualified under Section 401(a) of the Internal Revenue Code of
1986, as amended (the "Code"); (ii) none of the BEC Plans promise or provide
retiree medical or life insurance benefits to any person; (iii) none of the
Plans promise or provide severance benefits or benefits contingent upon a
change in ownership or control, within the meaning of Section 280G of the
Code nor create any entitlement to receive any payment benefit or amount
which may constitute "Excess Parachute Payments" under the Code; (iv) each
BEC Plan has been operated in all material respects in accordance with its
terms and the requirements of applicable law; (v) with respect to each BEC
Plan which is a defined benefit plan, the aggregate accumulated benefit
obligations of such BEC Plan (as of the date of the most recent actuarial
valuation prepared for such BEC Plan) do not exceed the fair market value of
the assets of such BEC Plan (as of the date of such valuation); (vi) none of
the BEC Plans provide, has provided or agreed to provide, any post-retirement
benefits which are required to be reported on BEC's financial statements
under Financial Accounting Standards Board Statement of Financial Accounting
Standards No. 106; and (vii) neither BEC nor any Subsidiary of the Company
nor any of their respective affiliates has received a notice of deficiency
from the United States Department of Labor or Internal Revenue Service.

SECTION 2.10. Labor Matters. Except as set forth in Schedule 2.10, (i)
there are no controversies pending or, to the best knowledge of BEC,
threatened between BEC or any Subsidiary and any of their respective
employees; (ii) neither BEC nor any Subsidiary is a party to any collective
bargaining agreement or other labor union contract applicable to persons
employed by BEC or any Subsidiary, nor, to the best knowledge of BEC, are
there any activities or proceedings of any labor union to organize any such
employees; (iii) there are no unfair labor practice complaints pending
against BEC or any Subsidiary before the National Labor Relations Board or
other governmental or administrative body involving employees of BEC or any
Subsidiary; and (iv) there is no strike, slowdown, work stoppage or lockout,
or, to the best knowledge of BEC, threat thereof, by or with respect to any
employees of the Company or any Subsidiary.

Annex A-10
<PAGE>
SECTION 2.11. Brokers. No broker, finder or investment banker (other
than Raymond, James Inc.) is entitled to any brokerage, finder's or other fee
or commission in connection with the Transactions based upon arrangements
made by and on behalf of BEC. The details of BEC's arrangements with Raymond
James & Associates Inc. ("Raymond James") are set forth on Schedule 2.11. The
fees and expenses to be incurred by BEC with respect to the Transactions
(other than the Spinoff) are estimated to be approximately $1,250,000, absent
extraordinary and unusual circumstances assuming counsel for BEC will draft
the Joint Proxy Statement-Prospectus other than the sections applicable to
ILC and that BEC will bear printing costs of same. BEC will use its
reasonable best efforts to minimize such costs, obtain back-up for all bills
submitted for professional services and submit such invoices to the Company
for approval prior to payment, which approval will not be unreasonably
withheld or delayed.

SECTION 2.12. Products Liability. Except as disclosed on Schedule 2.12,
there is no notice or claim involving any product manufactured, produced,
distributed or sold by or on behalf of BEC or its Subsidiaries resulting from
an alleged defect in design, manufacture, materials or workmanship, failure
to perform for the use intended or any alleged failure to warn, or from any
breach of express or implied warranties or representations, which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on BEC and its Subsidiaries taken as a whole, without
regard to any insurance coverage. The product liability insurance policies
maintained by BEC are in full force and effect and are adequate for the
business conducted by BEC. BEC has not received any notice from any insurance
carrier declining coverage of any claim or cancelling or threatening to
cancel any such policy.

SECTION 2.13. Conduct of Business. The business of BEC and each of its
Subsidiaries is not being conducted in default or violation of any term,
condition or provision of (i) its respective Certificate of Incorporation or
By-laws or similar organizational documents, or (ii) any note, bond,
mortgage, indenture, contract, lease or other instrument or agreement to
which BEC or any of its Subsidiaries is now a party or by which BEC or any of
its material Subsidiaries or any of their respective properties or assets may
be bound, or (iii) to the best of its knowledge, any federal, state, local or
foreign statute, law, ordinance, rule, regulation, judgment, decree, order,
concession, grant, franchise, permit or license or other governmental
authorization or approval applicable to BEC or any of its Subsidiaries,
except, with respect to the foregoing clauses (ii) and (iii), defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect.

SECTION 2.14. Joint Proxy Statement-Prospectus. None of the information
supplied in writing by BEC, its affiliates, officers, directors,
representatives, financial advisors, agents or employees (collectively,
"Representatives"), for inclusion in the joint proxy statement-prospectus
(such joint proxy statement-prospectus, as amended or supplemented, is herein
referred to as the "Joint Proxy Statement-Prospectus") will, on the date the
Joint Proxy Statement-Prospectus is filed with the SEC, first mailed to
shareholders of the Company and BEC, at the time of the meeting of BEC's
stockholders to consider the issuance of BEC Common Stock in the Merger (the
"BEC Stockholders Meeting"), at the time of the Company Shareholders Meeting
or at the Effective Time, contain any statement which, at such time and in
light of the circumstances under which it will be made, will be false or
misleading with respect to any material fact, or will omit to state any
material fact necessary in order to make the statements therein not false or
misleading. To the extent it contains information or statements pertaining to
BEC or its Subsidiaries, the Joint Proxy Statement-Prospectus will, when
filed, comply as to form in all material respects with the requirements of
the Securities Act and the Exchange Act. Notwithstanding the foregoing, BEC
does not make any representation or warranty with respect to any information
that has been supplied by the Company or its accountants, counsel or other
authorized representatives for use in the Joint Proxy Statement-Prospectus.

SECTION 2.15. Taxes. Except as set forth in Schedule 2.15, (i) all tax
returns required to be filed by, or with respect to, BEC and each of its
Subsidiaries has been timely filed by, or with respect to, BEC and each of
its Subsidiaries; (ii) BEC and each of its Subsidiaries has timely paid all
Taxes shown as due on all Tax Returns filed; (iii) as of the time of filing,
the Tax Returns filed by, or with respect to BEC and each of its Subsidiaries
correctly reflected the facts regarding the income, business, assets,
operations, activities and the status of BEC and each of its Subsidiaries in
all material respects; (iv) BEC and each of its Subsidiaries has made
adequate provision for all taxes payable by them for which no tax return has

Annex A-11
<PAGE>
yet been filed; (v) the charges, accruals and reserves for taxes with
respect to BEC and each of its Subsidiaries are adequate under GAAP to cover
the tax liabilities accruing through the date thereof; (vi) no material
deficiencies for any Taxes have been proposed, asserted or assessed against
or with respect to, BEC or any of its Subsidiaries, and no requests for
waivers of time to assess any Taxes are pending; (vii) the United States
federal income Tax Returns filed by or on behalf of, BEC and each of its
Subsidiaries consolidated in such Tax Returns through December 31, 1993 are
Tax Returns with respect to which the applicable periods for assessment under
applicable law after giving effect to extensions or waivers, has expired;
(viii) income Tax Returns are required to be filed by or on behalf of, BEC
and each of its Subsidiaries in each of the jurisdictions set forth in
Schedule 2.15 and such income Tax Returns have been examined by and settled
with the relevant taxing authority through the date shown opposite such
jurisdiction in Schedule 2.15; (ix) there is no pending or, to the knowledge
of BEC or each of its Subsidiaries, threatened action or proceeding for the
assessment or collection of Taxes against BEC or with respect to, or each of
its Subsidiaries; (x) no extensions for filing of any Tax Return have been
requested by BEC which Tax Return has not since been timely filed nor any
waiver of any statute with limitations been granted by BEC to any taxing
authority; (xi) there are no material tax Liens (as hereinafter defined in
Section 2.16(b) hereof) or charges on any assets of BEC or each of its
Subsidiaries, except Liens or charges for Taxes that are not yet due and
payable; (xii) neither BEC nor any of its Subsidiaries owes any amount
pursuant to any tax sharing or indemnification agreement or arrangement on
pursuant to any agreement or arrangement for the surrender of losses or other
reliefs and will not have any liability (including liabilities arising by
reason of the transactions contemplated by this Agreement) after the date
hereof in respect of any such agreement or arrangement executed or agreed to
prior to the date hereof; (xiii) the transactions contemplated in this
Agreement will not result in the payment by BEC or any BEC Subsidiary of any
"excess parachute payment" within the meaning of Section 280G of the Code;
and (xiv) no acceleration of the vesting schedule for any property that is
substantially nonvested within the meaning of the regulations under Section
83 of the Code will occur in connection with the transactions contemplated by
this Agreement.

(b) Notwithstanding anything to the contrary, for purposes of this Section
2.15 the term "Subsidiary" or "Subsidiaries" shall be deemed to include the
Bolle Group.

SECTION 2.16. BEC Properties and Leases.

(a) BEC and the Subsidiaries have sufficient title to all their properties
and assets and have been issued all related permits, consents and permissions
necessary or appropriate to enable them to conduct their respective
businesses as currently conducted or as contemplated to be conducted. Except
as set forth on Schedule 2.16, all such properties and assets which are
reflected on the ORC Balance Sheet as of September 30, 1997 are sufficient to
conduct the business of ORC Technologies, Inc. as currently conducted.

(b) Except as set forth on Schedule 2.16, each parcel of real property
owned or leased by BEC or any Subsidiary (i) is owned or leased free and
clear of all mortgages, pledges, liens, security interests, conditional and
installment sale agreements, encumbrances, charges or other claims of third
parties of any kind (collectively, "Liens"), other than (A) Liens for current
taxes andassessments not yet past due, (B) inchoate mechanics' and
materialmen's Liens for construction in progress, (C) workmen's, repairmen's,
warehousemen's and carriers' Liens arising in the ordinary course of business
of BEC or such Subsidiary consistent with past practice, and all matters of
record, Liens and other imperfections of title and encumbrances which,
individually or in the aggregate, would not have a Material Adverse Effect
(collectively, "Permitted Liens"), and (ii) is neither subject to any
governmental decree or order to be sold nor is being condemned, expropriated
or otherwise taken by any public authority with or without payment of
compensation therefor, nor, to the best knowledge of BEC, has any such
condemnation, expropriation or taking been proposed.

(c) All leases of real property leased for the use or benefit of BEC or
any Subsidiary to which BEC or any Subsidiary is a party requiring rental
payments in excess of $50,000 during the period of the lease and all
amendments and modifications thereto are in full force and effect and have
not been modified or amended, and there exists no default under any such
lease by BEC or any Subsidiary, nor any event which with notice or lapse of
time or both would constitute a default thereunder by BEC or any Subsidiary.

Annex A-12
<PAGE>
SECTION 2.17. Environmental Matters. (a) Except as set forth on Schedule
2.17, BEC and each Subsidiary is in compliance in all material respects with
all applicable Environmental Laws and has been issued and currently maintains
all required federal, state and local permits, licenses, certificates and
approvals. Neither BEC nor any Subsidiary has been notified of any pending or
threatened action, suit, proceeding or investigation and neither BEC nor any
Subsidiary is aware of any facts, which (a) calls into question, or would
reasonably be expected to call into question, compliance by BEC or any
Subsidiary with any Environmental Laws, (b) seeks, or would reasonably be
expected to form the basis of a meritorious proceeding to seek, to suspend,
revoke or terminate any license, permit or approval necessary for the
operation of BEC's or any Subsidiary's business or facilities, or (c) seeks
to cause, or would reasonably be expected to form the basis of a meritorious
proceeding to cause, any property of BEC or any Subsidiary to be subject to
any restrictions on ownership, use, occupancy or transferability under any
Environmental Law, any of which would reasonably be expected to have a
Material Adverse Effect. Except as set forth on Schedule 2.17, to the best
knowledge of BEC, neither BEC nor any of its Subsidiaries has caused or
permitted its business or property (whether real or personal, owned or leased
and whether or not currently owned or occupied by any such entity) to be used
to generate, manufacture, refine, transport, treat, store, handle, dispose,
transfer, produce, or process Hazardous Materials, except in material
compliance with all applicable Environmental Laws.

(b) Except as set forth in Schedule 2.17, BEC and each of its Subsidiaries
is and has been in compliance in all material respects with all Environmental
Laws, except to the extent such non-compliance would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.

(c) Except as set forth on Schedule 2.17, neither BEC nor any Subsidiaries
has received notice of any violation or notice of regulatory requirements or
has been notified of any threatened or pending action, suit, proceeding or
investigation which calls into question compliance by BEC or any of the BEC
Subsidiaries with any Environmental Laws or suggests that BEC or any of the
its Subsidiaries is a potentially responsible party with regard to any
release or threatened release of Hazardous Materials, or which seeks to
suspend, revoke or terminate any license, permit or approval necessary for
the operation of any facility of BEC or any of its Subsidiaries or for the
generation, handling, storage, treatment or disposal of any Hazardous
Materials, which would reasonably be expected to have a Material Adverse
Effect.

(d) Except as set forth on Schedule 2.17, none of BEC nor any of its
Subsidiaries has any liability of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, arising under or
relating to any Environmental Law, which liability would have a Material
Adverse Effect.

SECTION 2.18. Material Agreements. Except as set forth in Schedule 2.18 to
the best knowledge of BEC, there is no breach or default and there are no
facts which with notice or the passage of time would constitute a breach or
default under, or give rise to any right of termination, amendment,
cancellation or acceleration under, whether as a result of the consummation
of the Transactions or otherwise, any obligation to be performed by any party
to an agreement to which BEC or any Subsidiary is a party.

SECTION 2.19. Insider Interests. Except as set forth in the BEC SEC
Reports filed prior to the date hereof or listed in Schedule 2.9, Schedule
2.19 sets forth all material contracts and agreements of BEC with and other
obligations of BEC to any officer or director of BEC or any of its
Subsidiaries or with the Bolle Group or Voltarc or any of their respective
officers or directors. Except as set forth in Schedule 2.19, no officer or
director of BEC or any of its Subsidiaries and, to the knowledge of BEC, no
entity controlled by any such officer or director and no relative or spouse
who resides with any such officer or director (i) owns, directly or
indirectly, any material interest in any person that is, or is engaged in
business as, a competitor, lessor, lessee, customer or supplier of BEC or any
of its Subsidiaries or (ii) owns, in whole or in part, any tangible or
intangible property that BEC or any of its Subsidiaries or the Bolle Group or
Voltarc uses in the conduct of the business of BEC or any such Subsidiary.

SECTION 2.20. BEC Board. The Board of Directors of BEC has, as of the date
of this Agreement, determined (i) that the Merger is fair to, and in the best
interests of BEC and its stockholders, and (ii) to recommend that the
stockholders of BEC approve and adopt this Agreement and approve the Merger.

Annex A-13
<PAGE>
SECTION 2.21 Fairness Opinion. BEC's Board has received a written opinion
from Raymond, James Inc. to the effect that as of the date hereof, the
Exchange Ratio is fair to BEC's shareholders from a financial point of view
and has delivered to the Company a copy of such opinion.

SECTION 2.22. Trademarks, Patents and Copyrights. BEC and its Subsidiaries
own or possess adequate licenses or other valid rights to use all patents,
patent rights, trademarks, trademark rights, trade names, trade name rights,
copyrights, service marks, trade secrets, applications for trademarks and for
service marks, know-how and other proprietary rights and information
(collectively, "BEC Intellectual Property") used or held for use in
connection with the business of BEC and its Subsidiaries as currently
conducted or as contemplated to be conducted, and BEC is unaware of any
assertion or claim challenging the validity of any of the foregoing which,
individually or in the aggregate, could have a Material Adverse Effect. BEC
and its Subsidiaries own or have valid licenses to all of the BEC
Intellectual Property in each case, free and clear of any Lien. The conduct
of the business of BEC and its Subsidiaries as currently conducted and as
contemplated to be conducted does not and will not conflict in any way with
any BEC Intellectual Property of any third party that, individually or in the
aggregate, could have a Material Adverse Effect. To the knowledge of BEC,
there are no infringements of any proprietary rights of BEC Intellectual
Property owned by or licensed by or to BEC or any Subsidiary which,
individually or in the aggregate, could have a Material Adverse Effect.
Neither BEC nor any Subsidiary has licensed or otherwise permitted the use by
any third party of any BEC Intellectual Property or proprietary information
on terms or in a manner which, individually or in the aggregate, could have a
Material Adverse Effect.

Annex A-14
<PAGE>
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY

The Company hereby represents and warrants to BEC as follows:

SECTION 3.1 Corporate Organization. Each of the Company and its
Subsidiaries (as hereinafter defined) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of
its incorporation and has the requisite corporate power and authority and any
necessary governmental authority and approvals to own, operate or lease the
properties that it purports to own, operate or lease and to carry on its
business as it is now being conducted, and is duly qualified as a foreign
corporation to do business, and is in good standing, in each jurisdiction
where the character of its properties owned, operated or leased or the nature
of its activities makes such qualification necessary, except for such failure
which, when taken together with all other such failures, would not have a
Material Adverse Effect (as defined below). The term "Subsidiary" or
"Subsidiaries" when used in connection with the Company means any corporation
or other legal entity of which the Company (either alone or through or
together with any other Subsidiary) owns more than fifty per cent (50%) of
the stock or other equity interests the holders of which are generally
entitled to vote for the election of the board of directors or other
governing body of such corporation or other legal entity. When used in
connection with the Company or any of its Subsidiaries, the term "Material
Adverse Effect" means any change in or effect that, when taken together with
all other adverse changes and effects, on the business of the Company and its
Subsidiaries that is, or is reasonably likely to be, materially adverse to
the business, results of operations or condition (financial or otherwise),
liabilities or regulatory status of the Company and its Subsidiaries taken as
a whole. Except as disclosed in Schedule 3.1 hereto, the Company does not
directly or indirectly own any equity or similar interest in, or any interest
convertible into or exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business
association or entity.

SECTION 3.2. Certificate of Incorporation and By-Laws. The Company has
furnished to BEC complete and correct copies of the Certificate of
Incorporation and the By-laws of the Company and its Subsidiaries, each as
amended to the date hereof. Such Certificate of Incorporation, By-laws and
the equivalent organizational documents of its Subsidiaries are in full force
and effect. Neither the Company nor any Subsidiary is in violation of any of
the provisions of its Certificate of Incorporation or By-laws or equivalent
organizational documents.

SECTION 3.3. Capitalization. As of the date hereof, the authorized capital
stock of the Company consists of 10,000,000 shares, no par value, of common
stock. As of the date hereof, (i) 4,879,811 shares of Company Common Stock
are issued and outstanding, all of which are validly issued, fully paid and
nonassessable, and (ii) there are 901,299 shares of Company Common Stock
reserved for issuance pursuant to options granted or available for grant
under the Company Plans pursuant to which 849,000 options have been granted
and are outstanding (457,499 options are outstanding under the 1983 Employee
Incentive Stok Option Plan and 391,501 options are outstanding under the 1992
Stock Option Plan), and 350,000 shares of the Company Common Stock have been
reserved for issuance under the Company Stock Purchase Plan, of which 272,738
shares have been purchased and 77,262 shares are available to purchase as of
the date hereof. Schedule 3.3 identifies, as of the date hereof the option
holders, the number of shares of the Company Common Stock subject to each
option held, the exercise prices, vesting schedules and expiration dates of
the outstanding options granted under the Company Plan, and any other plan,
or otherwise granted. Except for the Company Plan, the Company does not
maintain any other plan relating to the issuance, granting or selling of
securities of the Company. All outstanding shares of the Company Common Stock
have been duly authorized and validly issued and are fully paid and
nonassessable and free of preemptive rights. Except as set forth in this
Section 3.3 or on Schedule 3.3, there are not, as of the date hereof, any
outstanding or authorized subscriptions, options, warrants, convertible
securities, calls, rights, commitments or any other agreements of any
character relating to the issued or unissued capital stock or other
securities of the Company to which the Company is a party or by which the
Company is bound obligating the Company to issue, deliver, or sell, or cause
to be issued, delivered or sold, additional shares of capital stock of the
Company or obligating the Company to grant, extend or enter into any
subscription, option, warrant, call, right, commitment or other such
agreement.

Annex A-15
<PAGE>
All the outstanding capital stock of each of the Subsidiaries of the
Company is duly authorized, validly issued, fully paid and nonassessable and
is owned by the Company or a Subsidiary free and clear of any liens, security
interests, pledges, agreements, claims, charges or encumbrances of any nature
whatsoever. There are no existing options, calls or commitments of any
character relating to the issued or unissued capital stock or other
securities of any such Subsidiary. There are no outstanding contractual
obligations of the Company or any Subsidiary to repurchase, redeem or
otherwise acquire any shares of the Company Common Stock or any capital stock
of any Subsidiary or to provide funds to, or make any investment (in the form
of a loan, capital contribution or otherwise) in, any Subsidiary or any other
person.

SECTION 3.4. Authority Relative to this Agreement. The Company has the
necessary corporate power and authority to enter into this Agreement and,
subject to obtaining any necessary shareholder approval of the Merger, to
carry out its obligations hereunder and to consummate the Transactions. The
execution and delivery of this Agreement by the Company and the consummation
by the Company of the Transactions have been duly authorized by all necessary
corporate action on the part of the Company, subject to the approval of the
Merger by the Company's shareholders in accordance with California Law. This
Agreement has been duly executed and delivered by the Company and constitutes
a legal, valid and binding obligation of the Company, enforceable against it
in accordance with its terms. All restrictions on business combinations
contained in the California Law have been satisfied with respect to the
Merger and all Transactions contemplated by this Agreement.

SECTION 3.5. No Conflict; Required Filings and Consents.

(a) The execution and delivery of this Agreement by the Company does not,
and the performance of this Agreement by the Company will not, (i) conflict
with or violate any law, regulation, court order, judgment or decree
applicable to the Company or any of the Subsidiaries or by which they or any
of their property is bound or affected, (ii) violate or conflict with the
Certificate of Incorporation or By-laws or equivalent organizational
documents of the Company or any of its Subsidiaries, or (iii) result in any
breach of or constitute a default (or an event which with notice or lapse of
time or both would become a default) under, or give to others any rights of
termination, acceleration or cancellation of any right or obligation of the
Company or any of its Subsidiaries, or result in the creation of a Lien on
any of the properties or assets of the Company or any of the Subsidiaries
pursuant to, any note, bond, mortgage, indenture, contract, agreement, lease,
instrument, permit, license or franchise to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
they or any of their property is bound or affected, except in the case of (i)
or (iii) for conflicts, violations, breaches or defaults which, in the
aggregate, would not have a Material Adverse Effect.

(b) Except for applicable requirements, if any, of the Securities Act,
Exchange Act, the pre-merger notification requirements of the HSR Act, and
filing and recordation of appropriate merger or other documents as required
by Delaware Law, California Law, "takeover" or "blue sky" laws of various
states and the listing agreement with or rules and regulations of The NASDAQ
Stock Market, the Company is not required to submit any notice, report or
other filing with any governmental authority, domestic or foreign, in
connection with the execution, delivery or performance of this Agreement or
the consummation of the transactions contemplated hereby. Except as
aforesaid, no waiver, consent, approval or authorization of any governmental
or regulatory authority, domestic or foreign, is required to be obtained or
made by the Company in connection with its execution, delivery or performance
of this Agreement.

(c) Neither the Company nor any of its Subsidiaries is in conflict with,
or in default or violation of, (i) any law, rule, regulation, order, judgment
or decree applicable to the Company or any of its Subsidiaries or by which
any property or asset of the Company or any of its Subsidiaries is bound or
affected, or (ii) any note, bond, mortgage, indenture, contracts, agreement,
lease, license, permit, franchise or other instrument or obligation to which
the Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries or any property or asset of the Company or any of its
Subsidiaries is bound or affected, except for any such conflicts, defaults or
violations that would not, individually or in the aggregate, have a Material
Adverse Effect.

Annex A-16
<PAGE>
SECTION 3.6. SEC Filings; Financial Statements.

(a) The Company has filed all forms, reports and documents required to be
filed with the SEC since September 30, 1993, and has heretofore delivered to
BEC, in the form filed with the SEC, its (i) Annual Reports on Form 10-K for
the fiscal year ended September 30, 1994, 1995 and 1996, (ii) Quarterly
Reports on Form 10-Q for the quarters ended December 31, 1996, March 31,
1997, and June 30, 1997 and (iii) all other reports or registration
statements filed by the Company with the SEC since September 30, 1996
(collectively, the "Company SEC Reports"). As of their respective filing
dates (or, with respect to registration statements, their respective
effective dates), the Company SEC Reports (i) were prepared in all material
respects in accordance with the requirements of the Securities Act, or the
Exchange Act, as the case may be, and (ii) did not at the time they were
filed contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of the Subsidiaries is required to file any
statements or reports with the SEC pursuant to Sections 13(a) or 15(d) of the
Exchange Act.

(b) The consolidated financial statements contained in the Company SEC
Reports (in each case, including any notes thereto) comply in all material
respects with the requirements of the Exchange Act and the rules and
regulations promulgated thereunder by the SEC and have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present
the consolidated financial position of the Company and its Subsidiaries as at
the respective dates thereof and the consolidated results of operations and
changes in financial position of the Company and its Subsidiaries for the
periods indicated, except that the unaudited interim financial statements
were or are subject to normal and recurring year-end adjustments which were
not or are not expected to be material in amount.

(c) Except as reflected or reserved against in the consolidated financial
statements contained in the Company SEC Reports or set forth on Schedule 3.6,
the Company and its Subsidiaries have no liabilities of any nature (whether
accrued, absolute, contingent or otherwise) which, in the aggregate, could
have a Material Adverse Effect, except for liabilities incurred since June
30, 1997 in the ordinary course of business and consistent with past
practice. Since June 30, 1997, neither the Company nor any of its
Subsidiaries has incurred any liabilities material to the Company and the
Subsidiaries taken as a whole, except (i) liabilities incurred in the
ordinary course of business and consistent with past practice, (ii)
liabilities incurred in connection with or as a result of the Transactions,
(iii) liabilities disclosed on Schedule 3.7.

(d) The Company has heretofore furnished to BEC complete and correct
copies of all material amendments and modifications that have not been filed
by the Company with the SEC to all material agreements, documents and other
instruments that previously had been filed by the Company with the SEC and
are currently in effect.

(e) Set forth in Schedule 3.7 is a true and complete copy of the unaudited
balance sheet (the "Company Balance Sheet") as at September 28, 1997 and the
related statements of operations and cash flows (the "Company Income
Statements"), for the year ended September 28, 1997 of the Company. The
Company Balance Sheet fairly presents in all material respects the financial
position of the Company as of its respective date and the Company Income
Statements fairly present in all material respects the results of operations
of the Company as of their respective dates.

(f) The Company Balance Sheet will reflect the consolidated financial
position of the Company, as of the Effective Time, except for changes arising
as a result of actions or events permitted under Section 4.2 hereof or
Schedule 4.2 thereto.

SECTION 3.7. Absence of Certain Changes or Events. Since June 30, 1997,
except as contemplated in this Agreement or as previously disclosed in the
Company SEC Reports or as appears on Schedule 3.7, there has not been and no
agreement has been entered into by the Company or any of its Subsidiaries to
effect:

Annex A-17
<PAGE>
(a) any change in the business, operations, properties, condition
(financial or otherwise), assets or liabilities (including,
without limitation, contingent liabilities) of the Company or any
of its Subsidiaries having, individually or in the aggregate, a
Material Adverse Effect;

(b) any damage, destruction or loss (whether or not covered by
insurance) affecting the business or the assets of the Company or
any of its Subsidiaries which individually or in the aggregate
has had or would reasonably be expected to have a Material
Adverse Effect;

(c) any redemption, repurchase or other acquisition by the Company or
any of the Subsidiaries of any outstanding share of capital stock
or other securities of, or ownership interests in, the Company or
any of its Subsidiaries or any declaration or payment of any
dividend or other distribution in cash, stock or property with
respect to any share of capital stock of the Company;

(e) any mortgage, pledge, security interest or imposition of Lien or
other encumbrance on any asset of the Company or any of the
Subsidiaries that is material to the business, financial
condition or operations of the Company and the Subsidiaries taken
as a whole, except as permitted by Section 4.2 hereof;

(f) any change by the Company in accounting principles or methods,
except insofar as may have been required by a change in generally
accepted accounting principles and disclosed in the Company SEC
Reports;

(g) any revaluation by the Company of any asset (including, without
limitation, any writing down of the value of inventory or writing
off of notes or accounts receivable), other than in the ordinary
course of business consistent with past practice; or

(h) any amendment of any material term of any outstanding security of
the Company or any of its Subsidiaries; or

(i) any incurrence or assumption or guarantee by the Company or any
of its Subsidiaries of any indebtedness for borrowed money other
than in the ordinary course of business and in amounts and on
terms consistent with past practice, it being understood that as
of the Effective Time the amount of senior bank indebtedness of
the Company and its Subsidiaries shall not exceed $5,000,000 in
the aggregate, excluding (i) any expenses in connection with the
Transactions paid prior to the Effective Time that do not exceed
the amount set forth in Section 3.11 hereof and (ii) bonuses
awarded to Messrs. Baumgarten and Capra as provided in the term
sheet set forth on Annex G hereto.

Since June 30, 1997, the Company and its Subsidiaries have conducted their
business only in the ordinary course and in a manner consistent with past
practice and have not made any material change in the conduct of the business
or operations of the Company and its Subsidiaries taken as a whole. Without
limiting the generality of the foregoing neither the Company nor its
Subsidiaries has since such date, except for the contracts referred to in the
Company SEC Reports or as disclosed on Schedule 3.7, made any changes in
executive compensation levels or in the manner in which other key employees
of the Company or the Subsidiaries are compensated or agreed to pay any
pension, retirement allowance or other employee benefit not required or
permitted by any plan or arrangement existing on such date to any director,
officer or employee, whether past or present, or committed itself to any
collective bargaining agreement or to any additional pension, profit-sharing,
bonus, incentive, deferred compensation, stock purchase, stock option, stock
appreciation rights, group insurance, severance pay, retirement or other
employee benefit plan or arrangement, or to any employment or consulting
agreement or to amend any of such plans or any of such agreements in
existence on such date.

SECTION 3.8. Litigation. Except as disclosed in the Company SEC Reports or
on Schedule 3.8 hereto, there are no actions, suits, investigations, claims
or proceedings pending or, to the knowledge of

Annex A-18
<PAGE>
the Company, threatened against the Company or any of its Subsidiaries, or
any of their respective properties, which (i) individually or in the
aggregate are reasonably likely to have a Material Adverse Effect, or (ii)
seek to delay or prevent the consummation of the Merger or the Transactions.
As of the date hereof, neither the Company nor any of its Subsidiaries nor
any of their property is subject to any judgment, injunction or decree which
individually or in the aggregate are reasonably likely to have a Material
Adverse Effect, except as disclosed on Schedule 3.8 or in the Company SEC
Reports.

SECTION 3.9. Employee Benefit Plans. Schedule 3.9 lists all the employee
benefit plans, programs, arrangements and contracts maintained for the
benefit of any current or former employee, officer or director of the Company
or any Subsidiary or with respect to which the Company or any Subsidiary
could incur liability (the "Plans"), and BEC has been furnished with a copy
of each Plan and each material document prepared in connection with each
Plan. Except as set forth in Schedule 3.9, (i) none of the Plans are intended
to be qualified under Section 401(a) of the Internal Revenue Code of 1986, as
amended (the "Code"); (ii) none of the Plans promise or provide retiree
medical or life insurance benefits to any person; (iii) none of the Plans
promise or provide severance benefits or benefits contingent upon a change in
ownership or control, within the meaning of Section 280G of the Code nor
create any entitlement to receive any payment benefit or amount which may
constitute "Excess Parachute Payments" under the Code; (iv) each Plan has
been operated in all material respects in accordance with its terms and the
requirements of applicable law; (v) with respect to each Plan which is a
defined benefit plan, the aggregate accumulated benefit obligations of such
Plan (as of the date of the most recent actuarial valuation prepared for such
Plan) do not exceed the fair market value of the assets of such Plan (as of
the date of such valuation); (vi) none of the Plans provide, has provided or
agreed to provide, any post-retirement benefits which are required to be
reported on the Company's financial statements under Financial Accounting
Standards Board Statement of Financial Accounting Standards No. 106; and
(vii) neither the Company nor any Subsidiary of the Company nor any of their
respective affiliates has received a notice of deficiency from the United
States Department of Labor or Internal Revenue Service.

SECTION 3.10. Labor Matters. Except as set forth in Schedule 3.10, (i)
there are no controversies pending or, to the best knowledge of the Company,
threatened between the Company or any Subsidiary and any of their respective
employees; (ii) neither the Company nor any Subsidiary is a party to any
collective bargaining agreement or other labor union contract applicable to
persons employed by the Company or any Subsidiary, nor, to the best knowledge
of the Company, are there any activities or proceedings of any labor union to
organize any such employees; (iii) there are no unfair labor practice
complaints pending against the Company or any Subsidiary before the National
Labor Relations Board or other governmental or administrative body involving
employees of the Company or any Subsidiary; and (iv) there is no strike,
slowdown, work stoppage or lockout, or, to the best knowledge of the Company,
threat thereof, by or with respect to any employees of the Company or any
Subsidiary.

SECTION 3.11. Brokers. No broker, finder or investment banker other than
Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ") is entitled to
any brokerage, finder's or other fee or commission in connection with the
Transactions based upon arrangements made by and on behalf of the Company.
The details of the Company's arrangements with DLJ are set forth on Schedule
3.11. The fees and expenses to be incurred by the Company with respect to the
Transactions are estimated to be approximately $1,250,000, absent
extraordinary and unusual circumstances assuming counsel for the Company will
draft the portion of the Joint Proxy Statement-Prospectus applicable to the
Company and that BEC will bear printing costs of same. The Company will use
its reasonable best efforts to minimize such costs, obtain back-up for all
bills submitted for professional services and submit such invoices to BEC for
approval prior to payment, which approval will not be unreasonably withheld
or delayed.

SECTION 3.12. Products Liability. Except as disclosed on Schedule 3.12,
there is no notice or claim involving any product manufactured, produced,
distributed or sold by or on behalf of the Company or its Subsidiaries
resulting from an alleged defect in design, manufacture, materials or
workmanship, failure to perform for the use intended or any alleged failure
to warn, or from any breach of express or implied warranties or
representations, which, individually or in the aggregate, could reasonably be
expected to have a Material Adverse Effect on the Company and its
Subsidiaries taken as a whole,

Annex A-19
<PAGE>
without regard to any insurance coverage. The products liability insurance
policies maintained by the Company, are in full force and effect and are
adequate for the business conducted by the Company. The Company has not
received any notice from any insurance carrier declining coverage of any
claim or cancelling or threatening to cancel any such policy.

SECTION 3.13. Conduct of Business. The business of the Company and each of
the Subsidiaries is not being conducted in default or violation of any term,
condition or provision of (i) its respective Certificate of Incorporation or
By-laws or similar organizational documents, or (ii) any note, bond,
mortgage, indenture, contract, lease or other instrument or agreement of any
kind to which the Company or any of the Subsidiaries is now a party or by
which the Company or any of the Subsidiaries or any of their respective
properties or assets may be bound, or (iii) to the best of its knowledge any
federal, state, local or foreign statute, law, ordinance, rule, regulation,
judgment, decree, order, concession, grant, franchise, permit or license or
other governmental authorization or approval applicable to the Company or any
of the Subsidiaries, except with respect to the foregoing clauses (ii) and
(iii), defaults or violations that would not, individually or in the
aggregate, have a Material Adverse Effect.

SECTION 3.14. Joint Proxy Statement-Prospectus. None of the information
supplied in writing by the Company, its affiliates, officers, directors or
its Representatives, for inclusion in the Joint Proxy Statement-Prospectus
will on the date the Joint Proxy Statement-Prospectus is filed with the SEC,
first mailed to shareholders in connection with the Company Shareholders
Meeting, at the time of the Company Shareholders Meeting or the BEC
Stockholders Meeting or at the Effective Time, contain any statement, which
at such time and in light of the circumstances under which it will be made,
will be false or misleading with respect to a material fact, or will omit to
state any material fact necessary in order to make the statements therein not
false or misleading. To the extent it contains information or statements
pertaining to the Company or its Subsidiaries, the Joint Proxy
Statement-Prospectus will, when filed, comply as to form in all material
respects with the requirements of the Securities Act and the Exchange Act.
Notwithstanding the foregoing, the Company does not make any representation
or warranty with respect to any information that has been supplied by BEC or
its accountants, counsel or other authorized representatives for use in the
Joint Proxy Statement-Prospectus.

SECTION 3.15. Taxes.

(a) Except as set forth in Schedule 3.15, (i) the Company and each of its
Subsidiaries timely filed all Tax Returns required to be filed by, or with
respect to the Company and each of its Subsidiaries; (ii) the Company and
each Subsidiary has timely paid all Taxes shown as due on all Tax Returns
filed; (iii) as of the time of filing, the Tax Returns filed by, or with
respect to the Company and each Subsidiary of the Company correctly reflected
the facts regarding the income, business, assets, operations, activities and
the status of the Company and each Subsidiary of the Company in all material
respects; (iv) the Company and each of its Subsidiaries has made adequate
provision for all taxes payable by them for which no tax return has yet been
filed; (v) the charges, accruals and reserves for taxes with respect to the
Company and each Subsidiary of the Company are adequate under GAAP to cover
the tax liabilities accruing through the date thereof; (vi) no material
deficiencies for any Taxes have been proposed, asserted or assessed against
or with respect to, the Company or any of its Subsidiaries, and no requests
for waivers of time to assess any Taxes are pending; (vii) the United States
federal income Tax Returns filed by or on behalf of, the Company and each
Subsidiary consolidated in such Tax Returns through September 30, 1995 are
Tax Returns with respect to which the applicable periods for assessment under
applicable law after giving effect to extensions or waivers, has expired;
(viii) the income Tax Returns filed by or on behalf of, the Company and any
of its Subsidiaries required to file such income Tax Returns in any of the
jurisdictions set forth in Schedule 3.15 have been examined by and settled
with the relevant taxing authority through the date shown opposite such
jurisdiction in Schedule 3.15; (ix) there is no pending or, to the knowledge
of the Company or any of its Subsidiaries, threatened action or proceeding
for the assessment or collection of Taxes against the Company or with respect
to, or any Subsidiary; (x) no extensions for filing of any Tax Return have
been requested by the Company which Tax Return has not since been timely
filed nor any waiver of any statute with limitations has been granted by the
Company to any taxing authority; (xi) there are no material tax Liens or
charges on any assets of the Company or any Subsidiary, except Liens or
charges for Taxes that are not yet due and payable; (xii) neither the Company
nor any Subsidiary

Annex A-20
<PAGE>
owes any amount pursuant to any tax sharing or indemnification agreement or
arrangement on pursuant to any agreement or arrangement for the surrender of
losses or other reliefs and will not have any liability (including
liabilities arising by reason of the transactions contemplated by this
Agreement) after the date hereof in respect of any such agreement or
arrangement executed or agreed to prior to the date hereof; (xiii) the
transactions contemplated in this Agreement will not result in the payment by
the Company or any Subsidiary of any "excess parachute payment" within the
meaning of Section 280G of the Code; and (xiv) no acceleration of the vesting
schedule for any property that is substantially nonvested within the meaning
of the regulations under Section 83 of the Code will occur in connection with
the transactions contemplated by this Agreement.

SECTION 3.16. Property and Leases.

(a) The Company and its Subsidiaries have sufficient title to all their
properties and assets and have been issued all related permits, consents and
permissions necessary or appropriate to enable them to conduct their
respective businesses as currently conducted or as contemplated to be
conducted. Except as set forth on Schedule 3.16, all such properties and
assets which are reflected on the Company Balance Sheet as of September 30,
1997 are sufficient to conduct the business of the Company.

(b) Each parcel of real property owned or leased by the Company or any of
its Subsidiaries is owned or leased free and clear of all Liens, other than
Permitted Liens, and is neither subject to any governmental decree or order
to be sold nor is being condemned, expropriated or otherwise taken by any
public authority with or without payment of compensation therefor, nor, to
the best knowledge of the Company, has any such condemnation, expropriation
or taking been proposed.

(c) All leases of real property leased for the use or benefit of the
Company or any Subsidiary to which the Company or any Subsidiary is a party
requiring rental payments in excess of $50,000 during the period of the lease
and all amendments and modifications thereto are in full force and effect and
have not been modified or amended, and there exists no default under any such
lease by the Company or any Subsidiary, nor any event which with notice or
lapse of time or both would constitute a default thereunder by the Company or
any Subsidiary.

SECTION 3.17. Environmental Matters. Except as set forth in Schedule 3.17:

(a) Except as set forth on Schedule 3.17, the Company and each Subsidiary
is in compliance in all material respects with all applicable Environmental
Law and has been issued and currently maintains all required federal, state
and local permits, licenses, certificates and approvals. Neither the Company
nor any Subsidiary has been notified of any pending or threatened action,
suit, proceeding or investigation and neither the Company nor any Subsidiary
is aware of any facts, which (a) calls into question, or would reasonably be
expected to call into question, compliance by the Company or any Subsidiary
with any Environmental Law, (b) seeks, or would reasonably be expected to
form the basis of a meritorious proceeding to seek, to suspend, revoke or
terminate any license, permit or approval necessary for the operation of the
Company's or any Subsidiary's business or facilities, or (c) seeks to cause,
or would reasonably be expected to form the basis of a meritorious proceeding
to cause, any property of the Company or any Subsidiary to be subject to any
restrictions on ownership, use, occupancy or transferability under any
Environmental Law, any of which would reasonably be expected to have a
Material Adverse Effect. To the best knowledge of the Company, neither the
Company nor any of its Subsidiaries has caused or permitted its business or
property (whether real or personal, owned or leased and whether or not
currently owned or occupied by any such entity) to be used to generate,
manufacture, refine, transport, treat, store, handle, dispose, transfer,
produce, or process Hazardous Materials, except in material compliance with
all applicable Environmental Laws.

(b) Except as set forth in Schedule 3.17, the Company and each of its
Subsidiaries is and has been in compliance in all material respects with all
Environmental Laws, except to the extent such non-compliance would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect.

(c) Except as set forth on Schedule 3.17, neither the Company nor any
Subsidiaries has received notice of any violation or notice of regulatory
requirements or has been notified of any threatened or

Annex A-21
<PAGE>
pending action, suit, proceeding or investigation which calls into question
compliance by the Company or any of the BEC Subsidiaries with any
Environmental Laws or suggests that the Company or any of its Subsidiaries is
a potentially responsible party with regard to any release or threatened
release of Hazardous Materials, or which seeks to suspend, revoke or
terminate any license, permit or approval necessary for the operation of any
facility of the Company or any of its Subsidiaries or for the generation,
handling, storage, treatment or disposal of any Hazardous Materials, which
would reasonably be expected to have a Material Adverse Effect.

(d) Except as set forth on Schedule 3.17, none of the Company nor any of
its Subsidiaries has any liability of any kind whatsoever, whether accrued,
contingent, absolute, determined, determinable or otherwise, arising under or
relating to any Environmental Law, which liability would have a Material
Adverse Effect.

SECTION 3.18. Material Agreements. Except as set forth in Schedule 3.18 to
the best knowledge of the Company, there is no breach or default and there
are no facts which with notice or the passage of time would constitute a
breach or default under, or give rise to any right of termination, amendment,
cancellation or acceleration under, whether as a result of the consummation
of the Transactions or otherwise, any obligation to be performed by any party
to an agreement to which the Company or any Subsidiary is a party.

SECTION 3.19. Insider Interests. Except as set forth in the Company SEC
Reports filed prior to the date hereof or listed in Schedule 3.9, Schedule
3.19 sets forth all material contracts, agreements of the Company with and
other obligations of the Company to any officer or director of the Company or
any of its Subsidiaries. Except as set forth in Schedule 3.19, no officer or
director of the Company or any of its Subsidiaries and, to the knowledge of
the Company, no entity controlled by any such officer or director and no
relative or spouse who resides with any such officer or director (i) owns,
directly or indirectly, any material interest in any person that is, or is
engaged in business as, a competitor, lessor, lessee, customer or supplier of
the Company or any of its Subsidiaries or (ii) owns, in whole or in part, any
tangible or intangible property that the Company or any of its Subsidiaries
uses in the conduct of the business of the Company or any such Subsidiary.

SECTION 3.20. Board Approval. The Board of Directors of the Company has,
as of the date of this Agreement, determined (i) that the Merger is fair to,
and in the best interests of the Company and its shareholders, and (ii) to
recommend that the shareholders of the Company approve and adopt this
Agreement and approve the Merger.

SECTION 3.21 Fairness Opinion. The Company's Board of Directors has
received a written opinion from DLJ dated as of the date hereof, to the
effect that as of the date hereof, the Exchange Ratio is fair to the
Company's shareholders from a financial point of view and has delivered to
BEC a copy of such opinion.

SECTION 3.22 Trademarks, Patents and Copyrights. The Company and the
Subsidiaries own or possess adequate licenses or other valid rights to use
all patents, patent rights, trademarks, trademark rights, trade names, trade
name rights, copyrights, service marks, trade secrets, applications for
trademarks and for service marks, know-how and other proprietary rights and
information (collectively, "Intellectual Property") used or held for use in
connection with the business of the Company and the Subsidiaries as currently
conducted or as contemplated to be conducted, and the Company is unaware of
any assertion or claim challenging the validity of any of the foregoing
which, individually or in the aggregate, could have a Material Adverse
Effect. The Company and the Subsidiaries own or have valid licenses to all of
the Intellectual Property in each case, free and clear of any Lien. The
conduct of the business of the Company and the Subsidiaries as currently
conducted and as contemplated to be conducted does not and will not conflict
in any way with any Intellectual Property of any third party that,
individually or in the aggregate, could have a Material Adverse Effect. To
the knowledge of the Company, there are no infringements of any proprietary
rights of Intellectual Property owned by or licensed by or to the Company or
any Subsidiary which, individually or in the aggregate, could have a Material
Adverse Effect. Neither the Company nor any Subsidiary has licensed or
otherwise permitted the use by any third party of any Intellectual Property
or proprietary information on terms or in a manner which, individually or in
the aggregate, could have a Material Adverse Effect.

Annex A-22
<PAGE>
SECTION 3.23. No Dividends, etc. Neither the Company nor any of its
Subsidiaries has (i) declared, paid or effected any extraordinary dividend,
distribution or redemption regarding shares of Company Common Stock that
would prevent the Merger from being treated for federal income tax purposes
as a reorganization qualifying under the provisions of Section 368(a) of the
Code or (ii) sold, disposed of or otherwise transferred such amount of assets
that would prevent the Merger from being treated for federal income tax
purposes as a reorganization qualifying under the provisions of Section
368(a) of the Code.

ARTICLE IV
CONDUCT OF BUSINESS PENDING THE MERGER

SECTION 4.1. Acquisition Proposals. The Company and BEC will notify the
other immediately if any inquiries or proposals including a Superior Proposal
(as defined below) are received by, any information is requested from, or any
negotiations or discussions are sought to be initiated or continued with the
Company or BEC, as the case may be, in each case in connection with any
Acquisition Transaction (as defined below) with the Company or BEC, as the
case may be, or any of their respective Subsidiaries and shall identify such
third party making such inquiry or proposal. Any such notice to the Company
or BEC, as the case may be, shall indicate in reasonable detail the identity
of the person making such proposal, offer, inquiry or contact and the terms
and conditions of such proposal, offer, inquiry or contact. As of the date
hereof, neither BEC nor the Company are participating in discussions or
negotiating with any other entity or group in respect of a bona fide proposal
relating to an Acquisition Transaction (as defined below). Nothing contained
herein, shall preclude the Company or BEC from responding to a bona fide
proposal in accordance with and pursuant to the provisions of Section 4.3.
The Company or BEC, as the case may be, agrees not to release any third party
from, or waive any provision of, any confidentiality or standstill agreement
to which the Company is a party.

SECTION 4.2. Conduct of Business by the Company and BEC Pending the
Merger. Each of the Company and BEC covenants and agrees that, between the
date of this Agreement and the Effective Time, unless BEC or the Company, as
the case may be, shall otherwise consent in writing and except as set forth
in Schedule 4.2, the businesses of the Company and its Subsidiaries and BEC
and its Subsidiaries shall be conducted only in, and the Company and its
Subsidiaries and BEC and its Subsidiaries shall not take any action, except
in the ordinary course of business and in a manner consistent with past
practice and except as set forth in Schedule 4.2, each of the Company and BEC
will use its respective best efforts to preserve substantially intact the
business organization of the Company and its Subsidiaries and BEC and its
Subsidiaries, as the case may be, to keep available the services of their
respective present officers, employees and consultants and to preserve their
respective present relationships with customers, suppliers and other persons
with which they or any of their respective Subsidiaries has significant
business relations. By way of amplification and not limitation, except as
contemplated by this Agreement or the Transactions as set forth in Schedule
4.2, neither the Company, BEC nor any of their respective Subsidiaries shall,
between the date of this Agreement and the Effective Time, directly or
indirectly, do any of the following without the prior written consent of the
other:

(a) (i) issue, sell, pledge, grant, dispose of, distribute, encumber,
authorize, or propose the issuance, sale, pledge, grant,
disposition, distribution, encumbrance or authorization of any
shares of capital stock of any class, or any options, warrants,
convertible securities or other rights of any kind to acquire any
shares of capital stock, or any other ownership interest, of the
Company or BEC or any of their respective Subsidiaries, other
than pursuant to options granted prior to the date hereof and
exercised in accordance with their terms, as in effect prior to
such date; (ii) other than as required to change the name of BEC,
or to increase the number of authorized shares of BEC Common
Stock, or to effect the Reverse Stock Split, amend or propose to
amend the Certificate of Incorporation or By-laws or equivalent
organizational documents of the Company, BEC or any of their
respective Subsidiaries; (iii) split, combine or reclassify any
outstanding shares of Company Common Stock or BEC Common Stock
(except as set forth in Schedule 4.2), or declare, set aside or
pay any dividend or distribution payable in cash, stock, property
or otherwise with respect to the shares of Company Common Stock

Annex A-23
<PAGE>
or BEC Common Stock (except as set forth in Schedule 4.2); (iv)
redeem, purchase or otherwise acquire or offer to redeem,
purchase or otherwise acquire any shares of its capital stock,
except in the performance of its obligations under existing
employee plans; or (v) authorize or propose or enter into any
contract, agreement, commitment or arrangement with respect to
any of the matters set forth in this Section 4.2(a);

(b) (i) acquire (by merger, consolidation, or acquisition of stock or
assets) any corporation, partnership or other business
organization or division thereof; (ii) sell, pledge, dispose of,
or encumber or authorize or propose the sale, pledge, disposition
or encumbrance of any material assets of the Company, BEC or any
of their respective Subsidiaries (except as set forth in Schedule
4.2); (iii) incur any indebtedness for borrowed money, or enter
into any contract or agreement, except in the ordinary course of
business incurred for working capital on a short-term basis
(except as set forth in Schedule 4.2); (iv) make or commit to any
capital expenditure which exceeds $50,000 or make or commit to
make aggregate capital expenditures in excess of $200,000 without
first notifying and obtaining the written approval of BEC or the
Company, or enter into or amend any contract, agreement,
commitment or arrangement with respect to any of the matters set
forth in this Section 4.2(b);

(c) take any action other than pursuant to disclosed contracts (none
of which actions shall be unreasonable or unusual) to grant any
severance or termination pay (otherwise than pursuant to policies
of the Company, BEC or any of their respective Subsidiaries in
effect on the date hereof) or to increase benefits payable under
their respective severance or termination pay policies in effect
on the date hereof;

(d) make any payments (except in the ordinary course of business and
in amounts and in a manner consistent with past practice or
pursuant to disclosed contracts) to any employee of, or
independent contractor or consultant to, the Company, BEC or any
of their respective Subsidiaries, increase the compensation
payable to their respective officers or employees, salaries or
wages of the Company or BEC who are not officers of the Company,
BEC or any of their respective Subsidiaries, as the case may be,
except for increases in the ordinary course of business,
consistent with past practice, enter into any new employee plan,
any new employment or consulting agreement, grant or establish
any new awards under such plan or agreement, or adopt or
otherwise amend any of the foregoing otherwise than in the
ordinary course consistent with past practice;

(e) take any action to change accounting policies or procedures
(including, without limitation, its procedures with respect to
the payment of accounts payable and collection of accounts
receivable);

(f) take any action to cause the shares of (i) Company Common Stock
to cease to be listed on the NASDAQ Stock Market, or (ii) BEC
Common Stock to cease to be listed on either the New York Stock
Exchange or nationally recognized stock exchange or The NASDAQ
Stock Market;

(g) make or change any tax election or settle or compromise any
material federal, state, local or foreign income tax liability;

(h) pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction, in
the ordinary course of business and consistent with past
practice, of liabilities reflected or reserved against in the
Company Balance Sheet or in the BEC Balance Sheet or in either
case subsequently incurred in the ordinary course of business and
consistent with past practice;

(i) settle or compromise any pending or threatened suit, action or
claim against the Company or BEC or any of their respective
directors by any shareholder of the Company or BEC, as the case
may be, relating to the Merger, the Transactions or this
Agreement, or voluntarily cooperate with any third party which
has sought or may hereafter seek to restrain or prohibit or
otherwise oppose the Merger subject to the Company's right to
cooperate with third parties in accordance with Section 4.3
hereof.

Annex A-24
<PAGE>
(j) adopt a plan of complete or partial liquidation, dissolution,
merger, consolidation, restructuring, recapitalization or other
reorganization of the Company, BEC or any of their respective
Subsidiaries (other than as set forth on Schedule 4.2 or the
Merger); or

(k) take, or offer or propose to take, or agree to take in writing or
otherwise, any of the actions described in Section 4.2(a) through
4.2(j) or any action which would make any of the representations
or warranties of the Company or BEC, as the case may be,
contained in this Agreement untrue or incorrect as of the date
when made if such action had then been taken, or would result in
any of the conditions set forth in Article VI not being
satisfied.

SECTION 4.3. No Shopping. Each of the Company, BEC and their respective
Subsidiaries will not, directly or indirectly, through any officer, director,
employee, representative, agent, financial adviser or otherwise, solicit,
initiate or encourage inquiries or submission of proposals or offers from any
person relating to any sale of all or a portion of the assets, business,
properties of (other than immaterial or insubstantial assets or inventory in
the ordinary course of business), or any equity interest in, the Company, BEC
or any of their respective Subsidiaries, as the case may be, or any business
combination with the Company or any of their respective Subsidiaries, as the
case may be, whether by merger, consolidation, sale of assets, tender offer
or otherwise (collectively, an "Acquisition Transaction") or participate in
any negotiation regarding, or furnishing to any other person any information
(except information which has been previously publicly disseminated by the
Company or BEC, as the case may be, in the ordinary course of business) with
respect to, or otherwise cooperate in any way with, or assist in, facilitate
or encourage, any effort or attempt by any other person to do or seek to do
any of the foregoing. Notwithstanding the foregoing, the Company or BEC, as
the case may be, may furnish any information (subject to the execution of a
confidentiality agreement substantially similar to that then in effect
between Company and BEC) and participate in discussions and negotiate with
any such entity or group concerning any potential Acquisition Transaction
involving the Company, BEC or any of their respective Subsidiaries, as the
case may be, if such entity or group has submitted a bona fide proposal to
its Board of Directors, relating to any such transaction which the Company's
or BEC's Board of Directors, as the case may be, reasonably determines would
represent a Superior Proposal (as defined below) to the Merger to the holders
of Company Common Stock or BEC Common Stock, as the case may be. If the Board
of the Company or BEC, as the case may be, after duly considering advice,
written or otherwise, of their respective financial advisors, determines in
good faith that it would be inconsistent with its fiduciary responsibilities
not to approve or recommend a Superior Proposal, then (A) the Company or BEC,
as the case may be, shall not enter into any agreement with respect to the
Superior Proposal and (B) any other obligation of the Company or BEC, as the
case may be, under this Agreement shall not be affected unless this Agreement
is terminated pursuant to Section 7.1(c)(ii) or 7.1(d)(ii), as the case may
be, and all amounts payable pursuant to Section 7.3 are paid to the Company
or BEC, as the case may be, prior to or concurrently with such termination.
As used herein the term "Superior Proposal" means a bona fide proposal made
by a third party to acquire the Company or BEC, as the case may be, pursuant
any Acquisition Transaction that the respective Board determines in its good
faith judgment to be more favorable to the Company's or BEC's shareholders,
as the case may be, than the Merger (after considering the advice, written or
otherwise, of their outside counsel and financial advisor). The Company or
BEC, as the case may be shall use their respective best efforts to cause all
confidential materials previously furnished to any third parties to be
promptly returned to the Company and shall cease any negotiations conducted
in connection therewith or otherwise conducted with any such parties.

SECTION 4.4. Tax Reorganization. Prior to the Effective Time, each party
shall use its reasonable best efforts to cause the Merger to qualify as a
reorganization under the provisions of Section 368(a)(2)(D) of the Code.

Annex A-25
<PAGE>
ARTICLE V
ADDITIONAL AGREEMENTS

SECTION 5.1. Joint Proxy Statement/Prospectus; Registration Statement;
Other Filings; Board Recommendations.

(a) As promptly as practicable after the execution of this Agreement, the
Company and BEC will prepare, and file with the SEC, the Joint Proxy
Statement and BEC will prepare and file with the SEC the Registration
Statement in which the Joint Proxy Statement will be included as a
prospectus. Each of the Company and BEC will cooperate in coordinating a
response to any comments of the SEC, will use its respective reasonable best
efforts to have the Registration Statement declared effective under the
Securities Act as promptly as practicable after such filing and will cause
the Joint Proxy Statement to be mailed to their respective stockholders at
the earliest practicable time. As promptly as practicable after the date of
this Agreement, the Company and BEC will prepare and file any other filings
required under the Exchange Act, the Securities Act or any other Federal,
foreign or Blue Sky laws relating to the Merger and the transactions
contemplated by this Agreement (the "Other Filings"),. Each of the Company
and BEC will notify the other promptly upon the receipt of any comments from
the SEC or its staff and of any request by the SEC or its staff or any other
government officials for amendments of supplements to the Registration
Statement, the Joint Proxy Statement or any Other Filing or for additional
information and will supply the other with copies of all correspondence
between such party or any of its representatives, on the one hand, and the
SEC, or its staff or any other government official, on the other hand, with
respect to the Registration Statement, the Joint Proxy Statement, the Merger
or any Other Filing. The Proxy Statement, the Registration Statement and the
Other Filings will comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment
or supplement to the Joint Proxy Statement, the Registration Statement or any
Other Filings, the Company of BEC, as the case may be, will promptly inform
the other of such occurrence and cooperate in the filing with the SEC or its
staff or any other government officials, and/or mailing to shareholders of
the Company or stockholders of BEC, such amendment or supplement.

(b) The Joint Proxy Statement will include the recommendation of the
Company Board in favor of adoption and approval of this Agreement and
approval of the Merger; except that the Company Board may withdraw, modify or
refrain from making such recommendation to the extent that the Company Board
determined to accept a Superior Proposal or determined, in good faith, after
consultation with outside legal counsel, that compliance with the Board's
fiduciary duties under applicable law would require it to do so, each
pursuant to and in accordance with Section 4.3 and/or 7.1(d), as the case may
be. In addition, the Proxy Statement will include the recommendations of the
BEC Board in favor of (i) the adoption and approval of the Merger Agreement
(including the issuance of shares of BEC Common Stock), (ii) the amendment of
BEC's Certificate of Incorporation to increase its authorized share capital,
(iii) the amendment of BEC's certificate of Incorporation to change the name
of BEC (iv) amendment to the 1996 Plan to increase the number of shares
available for issuance thereunder and (v) the election of new directors
(collectively, the "BEC Stockholders' Proposals" except that the BEC Board
may withdraw, modify or refrain from making such recommendation to the extent
that the BEC Board determined to accept a Superior Proposal or determined, in
good faith, after consultation with outside legal counsel, that compliance
with the Board's fiduciary duties under applicable law would require it to do
so, each pursuant to and in compliance with Section 4.3 and/or 7.1(c), as the
case may be.

SECTION 5.2. Meetings of Shareholders and Stockholders. Promptly after
the date hereof, the Company will take all action necessary in accordance
with California Law and its Articles of Incorporation and Bylaws to convene
the Company Shareholders' Meeting to be held as promptly as practicable, and
in any event (to the extent permissible under applicable law) within 45 days
after the declaration of effectiveness of the Registration Statement, for the
purpose of voting upon this Agreement. The Company will consult with BEC and
use its reasonable best efforts to hold the Company Shareholders' Meeting on
the same day as the BEC Stockholders' Meeting. Promptly after the date
hereof, BEC will take all action necessary in accordance with the Delaware
Law and its Certificate of

Annex A-26
<PAGE>
Incorporation and Bylaws to convene the BEC Stockholders' Meeting to be held
as promptly as practicable, and in any event (to the extent permissible under
applicable law) within 45 days after the declaration of effectiveness of the
Registration Statement. BEC will consult with the Company and will use its
best efforts to hold the BEC Stockholders' Meeting on the same day as the
Company Shareholders' Meeting. For so long as the Board of Directors of the
Company continues to make the recommendation set forth in Section 5.1, the
Company will use its reasonable best efforts to solicit from its shareholders
proxies in favor of the adoption and approval of this Agreement and the
approval of the Merger and will take all other action necessary or advisable
to secure the vote or consent of its shareholders required by the rules of
the National Association of Securities Dealers, Inc. and California Law to
obtain such approvals. For so long as the Board of Directors of BEC continues
to make the recommendations set forth in Section 5.1, BEC will use its best
efforts to solicit from its stockholders proxies in favor of each of the BEC
Stockholders' Proposals.

SECTION 5.3. Third Party Consents. BEC and the Company, as the case may
be, shall obtain all material third party consents required in connection
with the consummation of the Merger pursuant to this Agreement including, but
not limited to, in the case of BEC, any consent required pursuant to the
Amended and Restated Credit Agreement dated as of July 9, 1997.

SECTION 5.4. HSR Act. The Company and BEC shall use their best efforts to
file as soon as practicable notifications under the HSR Act in connection
with the Merger and the Transactions contemplated hereby and to respond as
promptly as practicable to any inquires received from the Federal Trade
Commission and the Antitrust Division of the United States Department of
Justice for additional information or documentation and to respond as
promptly as practicable to all inquiries and requests received from any state
Attorney General or other governmental authority in connection with antitrust
matters. Each party agrees not to, and will cause its representatives not to,
initiate substantive discussions with representatives of the applicable
antitrust regulatory authorities concerning their review of the Merger and
the Transactions under the HSR Act without the prior consent of the other
party hereto, and will not engage in substantive discussions with such
authorities without notifying the other party hereto promptly thereafter of
the substance and content of such discussions.

SECTION 5.5. Additional Agreements. The Company, BEC and Purchaser will
each comply in all material respects with all applicable laws and with all
applicable rules and regulations of any governmental authority in connection
with its execution, delivery and performance of this Agreement, the Merger
and the Transactions contemplated hereby.

SECTION 5.6. Notification of Certain Matters. Each of the Company and BEC
shall give prompt notice to the other of (i) the occurrence, or
non-occurrence of any event whose occurrence, or non-occurrence would be
likely to cause any representation or warranty contained in this Agreement to
be untrue or inaccurate in any material respect at any time from the date
hereof to the Effective Time and (ii) any material failure of the Company,
BEC or Purchaser, as the case may be, or any officer, director, employee or
agent thereof, to comply with or satisfy any covenant, condition or agreement
to be complied with or satisfied by it hereunder; provided, however, that the
delivery of any notice pursuant to this Section 5.6 shall not limit or
otherwise affect the remedies available hereunder to the party receiving such
notice. Failure to provide notice under this Section 5.6 shall not increase
the liability of the party who failed to send or delayed in sending such
notice except to the extent such failure or delay increased the harm or
disadvantage to the party to which the notification should have been
provided.

SECTION 5.7. Access to Information.

(a) From the date hereof to the Effective Time, (i) the Company shall, and
shall cause its Subsidiaries, officers, directors, employees, auditors and
agents to, afford the officers, employees and agents of BEC and Purchaser
complete access at all reasonable times to their officers, employees, agents,
accountants, properties, offices and other facilities and to all books and
records, and shall furnish BEC and Purchaser with all financial, operating
and other data and information as BEC and Purchaser, through their officers,
employees, agents or accountants, may reasonably request and (ii) BEC shall,
and shall cause its Subsidiaries, officers, directors, employees, auditors
and agents to, afford the officers, employees and agents of the Company
complete access at all reasonable times to their officers, employees, agents,

Annex A-27
<PAGE>
accountants, properties, offices and other facilities and to all books and
records, and shall furnish the Company with all financial, operating and
other data and information as the Company, through their officers, employees,
agents or accountants, may reasonably request.

(b) BEC and the Company agree that each shall, and shall cause their
respective Representatives, to hold in strict confidence all data and
information obtained by them from the other or the other's Subsidiaries
pursuant to the terms of the Reciprocal Confidentiality Agreement (the
"Confidentiality Agreement"), dated October 19, 1997, between BEC and the
Company.

(c) Each of the Company and BEC shall have an opportunity after the date
of this agreement through the Effective Time to conduct further due diligence
investigations in respect of the other and their respective Subsidiaries.

SECTION 5.8. Public Announcements. BEC and the Company shall consult with
each other before issuing any press release or otherwise making any public
statements with respect to the Merger and shall not issue any such press
release or make any such public statement before such consultation, except as
may be required by law or any listing agreement with or the rules and
regulations of any securities exchange or the over-the-counter market, as the
case may be, on which any of the securities of BEC or the Company are listed.

SECTION 5.9. Best Efforts; Cooperation. Upon the terms and subject to the
conditions hereof, each of the parties hereto agrees to use its best efforts
to take or cause to be taken all actions and to do or cause to be done all
things necessary, proper or advisable to consummate the Transactions
contemplated by this Agreement and shall use its best efforts to obtain on a
timely manner all necessary waivers, consents, licenses, permits and
approvals, and to effect all necessary registrations and filings, including
the filings required by the Securities Act, the Exchange Act and the HSR Act.
The parties shall cooperate in responding to inquires from, and making
presentation to, regulatory authorities.

SECTION 5.10. Agreement to Defend and Indemnify.

(a) The Company shall, to the fullest extent permitted under applicable
law and regardless of whether the Merger becomes effective, indemnify and
hold harmless, and, after the Effective Time, the Surviving Corporation (each
of the Surviving Corporation and the Company being referred to in this
Section 5.10 as an "Indemnifying Party") shall, to the fullest extent
permitted under applicable law, indemnify and hold harmless, each director,
officer, employee, fiduciary and agent of the Company and each Subsidiary and
their respective subsidiaries and affiliates, including without limitation,
officers and directors serving as such on the date hereof (collectively, the
"Indemnified Parties") against all costs and expenses (including attorneys'
fees), judgments, fines, losses, claims, damages, liabilities and settlement
amounts paid in connection with any claim, action, suit, proceeding or
investigation (whether arising before or after the Effective Time), arising
out of or pertaining to any of the transactions contemplated hereby,
including without limitation, liabilities arising under the Securities Act or
the Exchange Act in connection with the Merger and in the event of any such
claim, action, suit, proceeding or investigation, (i) the Company or the
Surviving Corporation, as the case may be, shall advance the reasonable fees
and expenses of counsel selected by the Indemnified Parties, which counsel
shall be reasonably satisfactory to the Indemnifying Party promptly after
statements therefor are received, provided, however, that neither the Company
nor the Surviving Corporation shall have any obligation under this clause (i)
unless they shall have received an undertaking from the Indemnified Party to
promptly return any amounts paid by the Company or the Surviving Corporation
in the event that it shall ultimately have been determined that the
Indemnified Party is not entitled to be indemnified under applicable law or
any indemnification agreement with the Company to which he is a party, and
(ii) the Indemnifying Party, Company and the Surviving Corporation shall
cooperate in the defense of any such matter and shall provide access to all
documents necessary or beneficial to the defense of any such matter;
provided, however, that neither the Company nor the Surviving Corporation
shall be liable for any settlement effected without its written consent
(which consent shall not be unreasonably withheld, delayed or conditioned);
and provided, further, that neither the Company nor the Surviving Corporation
shall be obligated pursuant to this Section 5.10 to pay the fees and expenses
of more than one counsel for all Indemnified Parties in any single action
except to the extent that in the written opinion of counsel for the
Indemnified Parties, two or more of such Indemnified Parties shall have
conflicting interests in the outcome of such action.

Annex A-28
<PAGE>
(b) BEC agrees to cause the Surviving Corporation to use its best efforts
to purchase "tail" coverage under the Company's current directors' and
officers' liability insurance policies for the Company's officers and
directors in office prior to the Effective Time, covering claims made during
the two (2) year period following the Effective Time, for actions taken prior
to the Effective Time, the premium for which shall be paid in full as of the
Effective Time. BEC shall cause the Surviving Corporation to continue in
effect the indemnification provisions currently provided by the Certificate
of Incorporation and By-laws or any written indemnification agreement of the
Company in effect prior to the date hereof for a period of not less than
three (3) years following the Effective Time. This Section shall survive the
consummation of the Merger. Notwithstanding Section 8.7 hereof, this Section
is intended to be for the benefit of and to grant third party rights to
Indemnified Parties whether or not parties to this Agreement, and each of the
Indemnified Parties shall be entitled to enforce the covenants contained
herein.

(c) Except as provided in Section 5.12 hereof, if BEC, the Surviving
Corporation or any of either of its successor or assigns consolidates with or
merges into any other person and shall not be the continuing or surviving
corporation or entity of such consolidation or merger or transfers all or
substantially all of its properties and assets to any person, then and in
each such case, proper provision shall be made so that the successors and
assigns of BEC or Surviving Corporation assume the obligations set forth in
this Section 5.10.

SECTION 5.11. Action by the Officers, Directors, etc. The Company and BEC
shall use their respective best efforts to cause their respective directors
and executive officers to vote any shares held by them in favor of the
Merger.

SECTION 5.12. Spinoff Agreement. BEC shall use its commercially
reasonable efforts to do such acts as are necessary to effectuate the Asset
Transfer in accordance with the Transfer Agreements and to effect the Spinoff
so that the ORC Business, as a going concern, and all of the properties and
assets comprising the ORC Business shall be fully vested in BEC and its
Subsidiaries and that the Non-ORC Business shall be transferred to and
assumed by Bolle Inc. at or prior to the Effective Time.

SECTION 5.13. Post Merger Directors and Officers BEC. The Board of
Directors of BEC will take all actions necessary to cause the Board of
Directors of BEC as of the Effective Time to be comprised of three designees
of BEC (the "BEC Nominees"), three designees of the Company (the "Company
Nominees") and one designee selected jointly by BEC and the Company, each to
hold office in accordance with the Certificate of Incorporation and By-laws
of BEC. In addition, for a period of two years following the Effective Time,
BEC shall take such actions as may be necessary to cause the BEC Nominees, or
their designees, on the one hand, and the Company Nominees, or their
designees, on the other hand, to be elected or appointed as directors of the
Board of Directors of BEC. Messrs. Martin Franklin, Richard Capra and Ian
Ashken, shall be the initial officers of BEC, serving as Chairman of the
Board, Chief Executive Officer and Chief Financial Officer, respectively, in
each case until their resignation or their respective successors are duly
elected or appointed and qualified. Except for the foregoing officers, none
of the other directors of BEC shall be employees of the Surviving Corporation
and the directors shall be named five days (5) prior to the mailing of the
Joint Proxy Statement-Prospectus to the stockholders of BEC and the
shareholders of the Company.

SECTION 5.14. Increase in Authorized Shares and Reverse Stock
Split. Subject to the terms hereof, at the BEC Stockholders Meeting, BEC (i)
shall propose and recommend that its Certificate of Incorporation be amended
to increase the authorized number of shares of BEC Common Stock thereunder
(provided that such number is not less than the number required to issue
shares by virtue of the Merger and the Transactions); and (ii) intends to
propose and recommend to the stockholders of BEC that the number of shares of
the outstanding BEC Common Stock be subject to a reverse share for two shares
split (the "Reverse Stock Split") so that the number of shares of BEC Common
Stock outstanding immediately after such split shall be 50% of the number of
shares outstanding immediately prior to such split.

SECTION 5.15. BEC Name Change. The Proxy Statement shall include a
proposal to change the name of BEC to Lumen Technologies, Inc. or another
name to be mutually determined by BEC and the Company.

Annex A-29
<PAGE>
SECTION 5.16. Capital Structure. As of or prior to the Effective Time,
BEC shall cause (i) the conversion of more than 50% of the aggregate
principal amount of the Convertible Notes into common stock, and (ii) each of
the BEC Warrants, the Bolle Options, the BEC Preferred Stock and the Benson
Notes to no longer be outstanding in respect of BEC or any of its
Subsidiaries following the Spinoff.

SECTION 5.17. Audited Company Financial Statements. On or before November
30, 1997, the Company shall furnish BEC with a copy of the Company's audited
consolidated balance sheet as at September 28, 1997, and the related audited
consolidated statements of operations and cash flows for the year ended
September 28, 1997 (including any related notes and schedules) (the "Audited
Company Financial Statements"). The Audited Company Financial Statements
shall be substantially the same in all material respects as the Company
Balance Sheet and the Company Income Statements, which are set forth in
Schedule 3.7.

SECTION 5.18. Rights Agreement. None of the common share purchase rights
issued pursuant to and in connection with the Rights Agreement dated as of
September 29, 1989 between the Company and Security Pacific National Bank, as
amended, shall be exercised or triggered at or prior to the Effective Time.

ARTICLE VI
CONDITIONS OF MERGER

SECTION 6.1. Conditions to Obligations of Each Party to Effect the
Merger. The respective obligations of each party to effect the Merger shall
be subject to the satisfaction at or prior to the Effective Time of the
following conditions; provided, however, that no party shall refuse to
consummate the Merger if a condition is not satisfied as a result of a breach
by such party of any agreement, representation, warranty or covenant of such
party under this Agreement:

(a) Shareholder Approval. The Merger and this Agreement shall have been
approved and adopted by the requisite vote of the shareholders of the
Company in accordance with California Law and the Certificate of
Incorporation of the Company and by the requisite vote of the stockholders
of BEC in accordance with Delaware Law, the Certificate of Incorporation
of BEC and The New York Stock Exchange; and an increase in the authorized
number of shares of BEC Common Stock shall have been duly approved by the
requisite vote under applicable law by the stockholders of BEC; and

(b) The Registration Statement-Prospectus. The Registration
Statement-Prospectus filed by BEC with respect to the BEC Common Stock to
be issued in the Merger shall have been declared effective by the SEC; and
no stop order suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding for that
purpose, and no similar proceeding in respect of the Proxy Statement,
shall have been initiated or threatened by the SEC; and

(c) Listing of BEC Common Stock. The BEC Common Stock to be issued in
connection with the transactions contemplated by the Merger Agreement
shall have been authorized for listing on a nationally recognized stock
exchange or The NASDAQ Stock Market upon official notice of issuance;

(d) HSR Waiting Period. The waiting period applicable to the consummation
of the Merger under the HSR Act shall have expired or been terminated;

(e) No Prohibition. No preliminary or permanent injunction or other
order, decree or ruling issued by a court of competent jurisdiction or by
a governmental, regulatory or administrative agency or commission nor any
statute, rule, regulation or executive order promulgated or enacted by any
governmental authority shall be in effect (temporary, preliminary or
permanent) which is then in effect and has the effect of making the Merger
or the Transactions illegal or otherwise materially restricting,
preventing or prohibiting their consummation;

(f) No Material Adverse Effect. There shall have been no event or events
which have occurred which, individually or in the aggregate, shall have
had a Material Adverse Effect on the Company or BEC respectively; and

Annex A-30
<PAGE>
(g) Consummation of the Asset Transfer and Bolle Spinoff. BEC shall
have executed the Transfer Agreements and the Employment Agreements and
consummated the Asset Transfer in accordance with the terms of the
Transfer Agreements and shall have consummated the Spinoff.

SECTION 6.2. Additional Conditions to Obligations of BEC. The obligations
of BEC and Purchaser to effect the Merger is also subject to the fulfillment
of the following conditions unless waived by BEC:

(a) Representations and Warranties. The representations and warranties of
the Company contained in this Agreement shall have been true and correct
in all material respects as of the date of this Agreement. In addition,
the representations and warranties of the Company contained in this
Agreement shall be true and correct in all material respects on and as of
the Effective Time except for changes contemplated by this Agreement and
except for those representations and warranties which address matters only
as of a particular date (which shall remain true and correct as of such
particular date), with the same force and effect as if made on and as of
the Effective Time.

(b) Agreements, Conditions and Covenants. The Company shall have complied
in all material respects with all agreements, conditions and covenants
required by this Agreement to be performed or complied with by it on or
before the Effective Time.

(c) Demand for Appraisal Rights. Holders of not more than 4.9% of the
shares of Company Common Stock shall have made a demand for payment
pursuant to appraisal, dissenters' or similar rights under California Law
or other applicable law by the conclusion of the Company Shareholders
Meeting.

SECTION 6.3. Additional Conditions to Obligations of the Company. The
obligations of the Company to effect the Merger is also subject to the
fulfillment of the following conditions unless waived by the Company:

(a) Representations and Warranties. The representations and warranties of
BEC and Purchaser contained in this Agreement shall have been true and
correct in all material respects as of the date of this Agreement. In
addition, the representations and warranties of BEC and the Purchaser of
the Company contained in this Agreement shall be true and correct in all
material respects on and as of the Effective Time except for changes
contemplated by this Agreement and except for those representations and
warranties which address matters only as of a particular date (which shall
remain true and correct as of such particular date), with the same force
and effect as if made on and as of the Effective Time.

(b) Agreements, Conditions and Covenants. BEC and the Purchaser shall
have complied in all material respects with all agreements, conditions and
covenants required by this Agreement to be performed or complied with by
them on or before the Effective Time.

(c) Tax Opinion. The Company shall have received an opinion of Davis Polk
& Wardwell in form and substance reasonably satisfactory to the Company,
on the basis of certain facts, representations and assumptions set forth
in such opinion, dated the Effective Time, to the effect the Merger will
be treated for federal income tax purposes as a reorganization qualifying
under the provisions of Section 368(a) of the Code and that each of BEC,
Purchaser and the Company will be a party to the reorganization within the
meaning of Section 368(b) of the Code. In rendering such opinion, such
counsel shall be entitled to rely upon certain representations from the
Company, certain shareholders of the Company and BEC, in each case in the
form and substance reasonably satisfactory to such counsel.

Annex A-31
<PAGE>
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER

SECTION 7.1. Termination. This Agreement may be terminated at any time
before the Effective Time:

(a) By mutual consent of the Boards of Directors of BEC and the Company;
or

(b) By either BEC or the Company if:

(i) the Merger shall not have been consummated by March 31, 1998,
(unless extended by mutual consent of BEC and the Company) provided,
however, that the right to terminate this Agreement under this Section
7.1(b) will not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in,
the failure of the Merger to occur on or before such date;

(ii) if a court of competent jurisdiction or governmental, regulatory
or administrative agency or commission shall have issued an order,
decree or ruling or taken any other action (which order, decree or
ruling the parties hereto shall use their best efforts to lift), in
each case permanently restraining, enjoining or otherwise prohibiting
the Transactions contemplated by this Agreement and such order,
decree, ruling or other action shall have become final and
nonappealable; or

(iii) if the other party shall have breached or failed to perform in
any material respect any of its material obligations, covenants or
agreements contained in this Agreement (other than with respect to
Articles II and III of this Agreement) and if curable, such other
party shall have failed to cure such breach within ten (10) Business
Days after written notice of such failure; or

(iv) if any of the material representations and warranties of the other
party as may be set forth in Article II of this Agreement in respect
of BEC and the Purchaser and Article III of this Agreement in respect
of the Company shall not have been true and correct in any material
respect when made or, except for any such representations and
warranties made as of a specific date, shall have ceased to be true
and correct as of such date in any material respect; or

(i) the Board of Directors of the Company (x) withdraws, modifies or
changes its recommendation of this Agreement or the Merger in a manner
adverse to BEC and Purchaser, (y) recommends to the holders of shares
of Company Common Stock any proposal with respect to a tender offer,
merger, consolidation, share exchange or similar transaction involving
the Company or any of its Subsidiaries, other than the Merger and the
Transactions, or (z) resolves to do any of the foregoing; or

(ii) prior to the Effective Time, a corporation, partnership, person or
other entity or group shall have made a bona fide offer of an
Acquisition Transaction that the Board of Directors of BEC reasonably
determines in its good faith judgment is a Superior Proposal, and if,
in the opinion of the Board of Directors of BEC, the failure to
recommend or accept such offer would violate the BEC Board of
Directors' fiduciary duties to BEC's stockholders under applicable
law; provided that any such termination by BEC shall not be effective
until payment of the fees required by Section 7.3(a) and Section
7.3(b);

(iii) the Chairman of the Board and all directors of the Company fail
to vote in favor of the Merger at the Company Shareholders Meeting; or

(d) By the Company if:

(i) the Board of Directors of BEC (x) withdraws, modifies or changes
its recommendation of this Agreement or the Merger in a manner adverse
to the Company, (y) recommends to the holders of shares of BEC Common
Stock any proposal with respect to a tender offer, merger,
consolidation, share exchange or similar transaction involving BEC or
any of its Subsidiaries, in lieu of the Merger and the Transactions
contemplated by this Agreement, or (z) resolves to do any of the
foregoing;

Annex A-32
<PAGE>
(ii) prior to the Effective Time, a corporation, partnership, person
or other entity or group shall have made a bona fide offer of an
Acquisition Transaction that the Board of the Company reasonably
determines in its good faith judgment is a Superior Proposal and if,
in the opinion of the Board of Directors of the Company, the failure
to recommend or accept such offer would violate the Board's fiduciary
duties to the Company's shareholders under applicable law; provided
that any such termination by the Company shall not be effective until
payment of the fees required by Section 7.3(a) and Section 7.3(b);

(iii) the Chairman of the Board, the Chief Executive Officer and all
directors of BEC fail to vote in favor of the Merger at the BEC
Stockholders' Meeting.

SECTION 7.2. Effect of Termination. In the event of termination of this
Agreement as provided in Section 7.1 hereof, this Agreement shall forthwith
become void and there shall be no liability on the part of BEC, Purchaser or
the Company, except as set forth in Sections7.3 and 8.1 hereof, and nothing
herein shall relieve any party from liability for any breach hereof.

SECTION 7.3. Termination Fees and Expenses.

(a) If this Agreement is terminated by the Company pursuant to Section
7.1(d)(ii) hereof or by BEC pursuant to Sections 7.1(b)(iii) or (iv) or
7.1(c)(i) or (iii) hereof, the Company shall pay to BEC promptly (but in no
event later than one (1) business day following such termination) by
certified check or wire transfer to an account designated by BEC an amount
equal to all actual out-of-pocket costs and expenses of BEC up to a maximum
of $1,500,000 incurred in connection with this Agreement and the transactions
contemplated hereby, including, without limitation, printing, legal,
accounting, investment banking, professional and service fees and expenses
("Expenses") which amount shall be payable in same day funds. If this
Agreement is terminated by BEC pursuant to Section 7.1(c)(ii) hereof or by
the Company pursuant to Sections 7.1(b)(iii) or (iv) or 7.1(d)(i) or (iii)
hereof, BEC shall pay to the Company promptly (but in no event later than one
(1) business termination) by certified check or wire transfer to an account
designated by the Company an amount equal to the Expenses incurred by the
Company which shall be payable in same day funds. Upon the occurrence of any
event entitling a party to payment of their Expenses, the party requesting
Expenses shall promptly provide the other party with invoices or other
reasonable evidence of the Expenses upon request, and the party shall
forthwith return any portion of Expenses reimbursed by the other party as to
which such invoices or other evidence are not received.

(b) In addition to the payment of expenses, as provided in Section 7.3(a),
if this Agreement has been terminated: (x) either by the Company pursuant to
Section 7.1(d)(ii) hereof or by BEC pursuant to Sections 7.1(b)(iii) or
7.1(c)(i) or (iii) hereof; or (y) either by BEC pursuant to Section
7.1(c)(ii) hereof or by the Company pursuant to Sections 7.1(b)(iii) (other
than as a result of a failure to comply with Sections 5.3 or 5.16) or
7.1(d)(i) or (iii) hereof, the Company shall pay to BEC, in the case of
clause (x) of this Section 7.3(b), or BEC shall pay to the Company, in the
case of clause (y) of this Section 7.3(b), a fee ("Fee") in the amount of
$3,000,000 by certified check or wire transfer to an account designated by
BEC or the Company, as the case may be, which amount shall be payable in same
day funds concurrently with the terination of this Agreement.

(i) any person (a "Company Acquisition Person") (including, without
limitation, the Company or any affiliate thereof), other than BEC, or any of
its affiliates, shall have become the beneficial owner of more than twenty
per cent (20%) of the then outstanding shares of Company Common Stock and the
Transactions shall not have been consummated (other than as a result of
termination of this Agreement in accordance with Sections 7.1(a), (b),
(c)(ii), (d)(i) or (d)(iii); and

(ii) any such Company Acquisition Person shall have consummated an
Acquisition Transaction with the Company within twelve (12) months of the
date hereof;

then, in the event of the occurrence of both (i) and (ii), the Company shall
promptly pay BEC (but in no event later than one (1) business day after the
occurrence of such events) the Expenses and Fee set forth in Section 7.3(a)
and (b) above, respectively, which amounts shall be payable in immediately
available funds.

Annex A-33
<PAGE>
(d) In the event that:

(i) any person (a "BEC Acquisition Person") (including, without
limitation, BEC or any affiliate thereof), other than the Company, or any
of its affiliates, shall have become the beneficial owner of more than
twenty per cent (20%) of the then outstanding shares of BEC Common Stock
and the Transactions shall not have been consummated (other than as a
result of a termination of this Agreement in accordance with Sections
7.1(a), (b), (c)(i), (c)(iii) or (d)(ii); and

(ii) any such BEC Acquisition Person shall have consummated an Acquisition
Transaction with BEC within twelve (12) months of the date hereof;

then, in the event of the occurrence of both (i) and (ii), BEC shall promptly
pay the Company (but in no event later than on (1) business day after the
occurrence of such events) the Expenses and the Fee set forth in Sections
7.3(a) and (b) above, respectively, which amounts shall be payable in
immediately available funds.

(e) Except as set forth in this Section 7.3 and in Section 8.3, all costs
and expenses incurred in connection with this Agreement, the Merger and the
Transactions shall be paid by the party incurring such expenses, whether or
not the Merger is consummated.

(f) In the event that the Company or BEC, as the case may be, shall fail
to pay the Fee or any Expenses when due, the term "Expenses" shall be deemed
to include the costs and expenses actually incurred or accrued by BEC,
Purchaser or the Company, as the case may be, and their respective
shareholders and affiliates (including, without limitation, fees and expenses
of counsel) in connection with the collection under and enforcement of this
Section 7.3, together with interest on such unpaid Fees and Expenses,
commencing on the date that the Fees or such Expenses became due, at a rate
equal to the rate of interest publicly announced by Citibank, N.A., from time
to time, in the City of New York, as such bank's base rate plus three per
cent (3%).

ARTICLE VIII
GENERAL PROVISIONS

SECTION 8.1. Non-Survival of Representations, Warranties and
Agreements. The representations, warranties and agreements in this Agreement
shall terminate at the Effective Time or the termination of this Agreement
pursuant to Section 7.1, as the case may be, except that the agreements set
forth in Article I and Section 5.10 shall survive the Effective Time
indefinitely and those set forth in Section 5.7(b), 5.7(c), 7.3 and Article
VIII shall survive termination indefinitely.

SECTION 8.2. Notices. All notices and other communications given or made
pursuant to hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the following addresses (or at such other
address for a party as shall be specified by like notice, except that notices
of changes of address shall be effective upon receipt):

(a) if to BEC or Purchaser:
BEC Group, Inc.
555 Theodore Fremd Avenue
Suite B-302
Rye, New York 10580
Attention: Mr. Martin E. Franklin.

with a copy to:

Kane Kessler, P.C.
1350 Avenue of the Americas -- 26th Floor
New York, New York 10019
Attention: Robert L. Lawrence, Esq.

(b) if to the Company:

Annex A-34
<PAGE>
ILC Technologies, Inc.
399 Java Drive
Sunnyvale, CA 94089
Attention: Richard D. Capra

with a copy to:

Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Attention: Keith Kearney

SECTION 8.3. Expenses. Except as provided in Section 7.3 hereof, all
costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such
costs and expenses; provided, however, that the filing fees with respect to
the notifications required under the HSR Act shall be borne equally by the
Company and BEC.

SECTION 8.4. Certain Definitions. For purposes of this Agreement, the
term:

(a) "affiliate" of a person means a person that directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is
under common control with, the first mentioned person;

(b) "BEC Warrants" means the warrants to purchase BEC Common Stock issued
in connection with the Share Purchase Agreement dated June 4, 1997, as
amended, among BEC and Bolle, Inc., Mr. Robert Bolle, Mr. Maurice Bolle,
Mr. Franck Bolle, Mrs. Patricia Bolle Passaquay, Mrs. Brigette Bolle and
Mrs. Christelle Roche.

(d) "Benson Notes" shall mean the 8% Convertible Subordinated Notes due
2001 which were originally issued to Benson Eyecare Corporation.

(e) "Bolle Options" means options under the 1996 Plan granted by BEC to
participants who will be related to the Bolle Group.

(f) "Business Day" means any day on which the principal offices of the
SEC in Washington, D.C. are open to accept filings, or, in the case of
determining a date when any payment is due, any day on which banks are not
required or authorized to close in the City of New York.

(g) "Contribution Agreement" means the Bill of Sale and Assignment
Agreement to be entered into between Bolle, Inc. and BEC, in substantially
the form annexed hereto as Annex B.

(h) "control" (including the terms "controlled by" and "under common
control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a person,
whether through the ownership of stock, as trustee or executor, by
contract or credit arrangement or otherwise; and

(i) "Convertible Notes" shall mean BEC's 8% Convertible Subordinated
Notes due 2002; and

(j) "Employment Agreements" means employment/consulting agreements
between Henry C. Baumgarten and Richard D. Capra and, in each case, BEC in
form and substance satisfactory to the parties to this Agreement and
substantially on the terms provided in the term sheet attached hereto as
Annex G, but in the standard form of BEC's employment or consulting
agreements.

(k) "Environmental Laws" means any federal, state or local statute,
common law, ordinance, code, rule, regulation, order, decree, injunction
or permit regulating, relating to, or imposing liability or standards of
conduct concerning, any environmental matters or conditions, environmental
protection or conservation, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended; the Superfund Amendments and Reauthorization Act of
1986, as amended; the Resource Conservation And Recovery Act, as

Annex A-35
<PAGE>
amended; the Toxic Substances Control Act, as amended; the Clean Air Act,
as amended; the Clean Water Act, as amended; together with all regulations
promulgated thereunder, and any other "Superfund" or "Superlien" law.

(l) "Hazardous Materials" means and includes any pollutant, contaminant,
or hazardous, toxic or dangerous waste, substance or material (including
without limitation petroleum products, asbestos-containing materials and
lead), the generation, handling, storage, transportation, disposal,
treatment, release, discharge or emission of which is subject to any
Environmental Law.

(m) "Indemnity Agreement" means the Indemnity Agreement to be entered
into among BEC, Purchaser and Bolle, Inc. in substantially the form
annexed hereto as Annex C.

(n) "Management Services Agreement" means the Management Services
Agreement to be entered into between Bolle, Inc. and BEC in substantially
the form annexed hereto as Annex D.

(o) "ORC" shall mean ORC Technologies, Inc.; and

(p) "ORC Business" means the businesses, assets and liabilities of, or
directly related to, ORC Technologies, Inc., ORC Caribe, Optical Radiation
Foreign Sales Corporation and Voltarc Technologies, Inc. and including all
assets and liabilities included in BEC's consolidated pro forma balance
sheet set forth in Schedule 2.6 to this Agreement; provided, that "ORC
Business" shall not include any items or matters identified in Schedule A
or Schedule B to the Contribution Agreement.

(q) "person" means an individual, corporation, partnership, association,
trust or any unincorporated organization.

(r) "Sterling Note" means the Convertible Callable Subordinated Debenture
Due September 15, 2015, which is convertible into shares of common stock
of Sterling Vision, Inc.

(s) "Tax" or "Taxes" shall mean (i) any tax, governmental fee or other
like assessment or charge of any kind whatsoever (including, without
limitation, withholding on amounts paid to or by any person), together
with any interest, penalty, addition to tax or additional amount imposed
by any governmental authority responsible for the imposition of any such
tax (domestic or foreign), (ii) liability for the payment of any amounts
of the type described in (i) as a result of BEC or the Company, as the
case may be, or their respective Subsidiaries being a member of an
affiliated, consolidated, combined or unitary group, or being a party to
any agreement or arrangement whereby liability of the BEC or the Company,
as the case may be, or their respective Subsidiaries for payments of such
amounts was determined or taken into account with reference to the
liability of any other person, and (iii) liability of BEC or the Company,
as the case may be, or their respective Subsidiaries for the payment of
any amounts as a result of being party to any tax sharing agreement
arrangement, or with respect to the payment of any amounts of the type
described in (i) or (ii) as a result of any express or implied obligation
to indemnify any other person.

(t) "Tax Returns" shall mean any and all returns, reports and information
statements with respect to Taxes paid or required to be paid with any
governmental entity, authority or agency, empowered to collect Taxes or
enforce laws relating thereto, whether domestic or foreign.

(u) "Voltarc" shall mean Voltarc Technologies, Inc.; and

(v) "Voltarc Facility" means the subordinated revolving credit facility
in the amount of $800,000 made available to Voltarc Technologies, Inc. by
BEC.

SECTION 8.5. Heading. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.

SECTION 8.6. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the Transactions contemplated hereby is not affected in
any manner adverse to any party. Upon such determination that any term or
other provision is invalid, illegal or incapable of being enforced, the

Annex A-36
<PAGE>
parties hereto shall negotiate in good faith to modify this Agreement so as
to effect the original intent of the parties as closely as possible in an
acceptable manner to the end that the Transactions contemplated hereby are
fulfilled to the maximum extent possible.

SECTION 8.7. Entire Agreement; No Third Party Beneficiaries. This
Agreement will constitute a binding agreement only when executed and
delivered by the parties hereto and at such time will constitute the entire
agreement and will supersede any and all other prior agreements and
undertakings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof except with respect to the
Confidentiality Agreement and, except as otherwise expressly provided herein,
is not intended to confer upon any other person any rights or remedies
hereunder.

SECTION 8.8. Waiver. At any time before the Effective Time, any party
hereto may (a) extend the time for the performance of any of the obligations
or other acts of the other parties hereto, (b) waive any inaccuracies in the
representations and warranties contained herein or in any document delivered
pursuant hereto and (c) waive compliance with any of the agreements or
conditions contained herein. Any agreement on the part of a party hereto to
any such extension or waiver shall be valid only as against such party and
only if set forth in an instrument in writing signed by such party.

SECTION 8.9. Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto by action taken by BEC and Purchaser, and by
action taken by or on behalf of the Company's Board at any time before the
Effective Time; provided, however, that, after approval of the Merger by the
shareholders of the Company, no amendment may be made which would reduce the
amount or change the type of consideration into which each share of Company
Common Stock will be converted upon consummation of the Merger. This
Agreement may not be amended except by an instrument in writing signed by the
parties hereto.

SECTION 8.10. Assignment. This Agreement shall not be assigned by
operation of law or otherwise, except that BEC and Purchaser may assign all
or any of its rights hereunder to any affiliate of BEC and Purchaser provided
that no such assignment shall relieve the assigning party of its obligations
hereunder.

SECTION 8.11. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York, except that
Delaware Law shall apply with respect to the Merger in Delaware and
California Law shall apply with respect to the Merger in California, in each
case without regard to the principles of conflicts of law thereof.

SECTION 8.12. Counterparts; Telecopier. This Agreement may be executed in
one or more counterparts and by facsimile, and by the different parties
hereto in separate counterparts, each of which when executed shall be deemed
to be an original but all of which shall constitute one and the same
agreement. Delivery of an executed counterpart of a signature page to this
Agreement by telecopier shall be effective as delivery of a manually executed
counterpart of this Agreement.

IN WITNESS WHEREOF, BEC, Purchaser and the Company have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.

Annex A-37
<PAGE>

BEC GROUP, INC.

Attest: /s/ Ian Ashken By:/s/ Martin E. Franklin
--------------------- ----------------------------
Name: Martin E. Franklin
Title: Chairman and CEO

BILC ACQUISITION CORP.

Attest: /s/ Ian Ashken By:/s/ Martin E. Franklin
--------------------- ----------------------------
Name: Martin E. Franklin
Title: Chairman and CEO

ILC TECHNOLOGY, INC.

Attest: By:/s/ Richard D. Capra
--------------------- ----------------------------
Name: Richard D. Capra
Title: President and COO

Annex A-38
<PAGE>
AMENDMENT NO. 1 TO
AGREEMENT AND PLAN OF MERGER

AMENDMENT NO. 1 TO AGREEMENT AND PLAN OF MERGER, dated as of January ,
1998 among BEC Group, Inc., a Delaware corporation ("BEC"), BILC Acquisition
Corp., a Delaware corporation and a wholly-owned subsidiary of Parent
("Purchaser"), and ILC Technology, Inc., a California corporation (the
"Company").

W I T N E S S E T H:

WHEREAS, BEC, Purchaser and the Company are parties to that certain
Agreement and Plan of Merger, dated as of October 30, 1997 (the "Merger
Agreement");

WHEREAS, the Board of Directors of the Parent has determined that after
consummation of a one-for-two reverse stock split of its outstanding shares
of Common Stock the contemplated issuance of additional shares in the Merger
Agreement is unnecessary;

WHEREAS, the parties to the Merger Agreement desire that the Board of
Directors of BEC be comprised of nine individuals, not seven as contemplated
by the Merger Agreement; and

WHEREAS, in light of such developments since the execution of the Merger
Agreement, each of the parties, has determined that it is in the best
interests of its stockholders to amend the Merger Agreement as set forth
below.

1. Sections 5.1(b)(ii) and 5.1(b)(v) of the Merger Agreement are each
hereby amended by deleting such section in its entirety and inserting the
following Sections 5.1(b)(ii) and 5.1(b)(v), respectively, in lieu thereof:

"(ii) the amendment of BEC's Certificate of Incorporation to effect
the Reverse Stock Split (as defined below)"

"(v) the election of four (4) additional members to the BEC Board"

2. Section 5.13 of the Merger Agreement is hereby amended by deleting such
section in its entirety and inserting the following in lieu thereof;

"SECTION 5.13. Post Merger Directors and Officers BEC. The Board of
Directors of BEC will take all actions necessary to cause the Board
of Directors of BEC as of the Effective Time to be comprised of four
designees of BEC (the "BEC Nominees"), and four designees of the
Company (the "Company Nominees"), each to hold office in accordance
with the Certificate of Incorporation and By-laws of BEC. Following
the Effective Time, the BEC Board, which will then consist of the BEC
Nominees and the Company Nominees, will select one additional
director who will hold office in accordance with the Certificate of
Incorporation and By-laws of BEC. In addition, for a period of two
years following the Effective Time, BEC shall take such actions as
may be necessary to cause the BEC Nominees, or their designees, on
the one hand, and the Company Nominees, or their designees, on the
other hand, to be elected or appointed as directors of the Board of
Directors of BEC. Messrs. Martin Franklin, Richard Capra and Ian
Ashken, shall be the initial officers of BEC, serving as Chairman of
the Board, Chief Executive Officer and Chief Financial Officer,
respectively, in each case until their resignation or their
respective successors are duly elected or appointed and qualified.
Except for the foregoing officers, none of the other directors of BEC
shall be employees of the Surviving Corporation and the directors
shall be Martin E. Franklin, Ian G.H. Ashken, David L. Moore and
William T. Sullivan, on the one hand as the BEC Nominees, and
Harrison H. Augur, Henry C. Baumgartner, Richard D. Capra and George
B. Clairmont, on the other hand as the Company Nominees."

Annex A-39
<PAGE>
3. Section 5.14 of the Merger Agreement is hereby amended by deleting
such section in its entirety and inserting the following in lieu thereof:

"SECTION 5.14. Reverse Stock Split. Subject to the terms hereof, at
the BEC Stockholders Meeting, BEC shall propose and recommend to the
stockholders of BEC that the number of shares of the outstanding BEC
Common Stock be subject to a reverse one share for two shares split
(the "Reverse Stock Split") so that the number of shares of BEC
Common Stock outstanding immediately after such split shall be 50% of
the number of shares outstanding immediately prior to such split."

4. Section 6.1(a) of the Merger Agreement is hereby amended by deleting
such section in its entirety and inserting the following in lieu thereof:

"(a) Shareholder Approval. The Merger and this Agreement shall have
been approved and adopted by the requisite vote of the shareholders
of the Company in accordance with California Law and the Certificate
of Incorporation of the Company and by the requisite vote of the
stockholders of BEC in accordance with Delaware Law, the Certificate
Incorporation of BEC and The New York Stock Exchange and the Reverse
Stock Split shall have been duly approved by the requisite vote under
applicable law by the stockholders of BEC; and"

5. The Bill of Sale and Assignment Agreement, which is Annex C of the
Merger Agreement, is hereby amended by deleting Annex C in its entirety and
replacing it with a revised Annex C. The revised Annex C is attached hereto
as Exhibit A.

6. Capitalized terms used but not defined in this Amendment No. 1 to the
Merger Agreement shall have the respective meanings ascribed thereto in the
Merger Agreement.

7. Except as expressly amended by this Amendment No. 1 to the Merger
Agreement, the Merger Agreement shall remain in full force and effect as the
same was in effect immediately prior to the effectiveness of this Amendment
No. 1 to the Merger Agreement.

8. This Amendment No. 1 to the Merger Agreement shall be governed and
construed on the same basis as the Merger Agreement, as set forth therein.

IN WITNESS WHEREOF, BEC, Purchaser and the Company have caused this
Amendment No. 1 to the Merger Agreement to be executed as of the date first
written above by their respective officers thereunto duly authorized.

BEC GROUP, INC.

By: /s/ Martin E. Franklin
-------------------------
Name: Martin E. Franklin
Title: Chief Executive
Officer

ILC TECHNOLOGY, INC.

By: /s/ Henry Baumgartner
-------------------------
Name: Henry Baumgartner
Title: Chairman and CEO

BILC ACQUISITION CORP.

By: /s/ Martin E. Franklin
-------------------------
Name: Martin E. Franklin
Title: Chairman and CEO

Annex A-40
<PAGE>
EXHIBIT A
BILL OF SALE AND ASSIGNMENT AGREEMENT

THIS BILL OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT, dated as of
October 1, 1997, is made in consideration of Ten Dollars ($10.00) and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, between BEC GROUP, INC., a Delaware corporation
("Assignor") and BOLLE INC., a Delaware corporation ("Assignee").

1. Assignor hereby grants, conveys, sells, assigns, transfers and delivers
to Assignee, its successors and assigns, and Assignee hereby purchases and
accepts from Assignor, all of Assignor's right, title and interest in all
assets and liabilities of Assignor, other than (i) the assets and liabilities
of or relating to Assignor's ORC Business (as defined below) and (ii) the
items listed in Schedule A hereto. All such assets and liabilities conveyed
hereby are referred to hereinafter as the "Acquired Assets". The Acquired
Assets include (without limitation) the items listed in Schedule B attached
hereto. For purposes of this Agreement, the ORC Business shall mean (i) all
shares of capital stock of Assignor's following subsidiaries and/or
affiliates: ORC Technologies, Inc., ORC Caribe, Optical Radiation Foreign
Sales Corporation, and Voltarc Technologies, Inc. held by Assignor or by any
of such entities and the business, assets and liabilities of or directly
related to such entities; and (ii) all assets and liabilities included in
Assignor's pro forma balance sheet attached hereto as Exhibit I; provided,
that notwithstanding anything contained in this Paragraph 1 to the contrary,
Assignor retains all right, title and interest in and to the items identified
in Schedule A hereto, but the parties mutually acknowledge and agree that
such items identified in Schedule A do not constitute part of the ORC
Business.

2. Title to the Acquired Assets shall pass to Assignee upon the date of
this Assignment Agreement.

3. (a) Assignee assumes, and agrees to pay when and as due and to
discharge, all debts, liabilities, obligations, taxes, liens and encumbrances
of any kind, character or description, whether accrued, absolute, contingent
or otherwise (and whether or not reflected or reserved against in the balance
sheets, books of account and records of Assignor) in respect of (a) the
Acquired Assets and/or (b) the items identified in Schedule A hereto.

(b) Assignee hereby agrees that to the extent Assignee exchanges all, but
not less than all, of its shares of Foster Grant Holdings, Inc. Series A
Preferred Stock (the "FGH Preferred Stock") for shares of common stock ("AAi
Common Stock") of Accessories Associates, Inc. ("AAi"), Assignee shall
deliver to Assignor 35.71% (such portion of the shares of AAi Common Stock is
hereinafter referred to as the "Assignor Shares") of all of such exchanged
shares of AAi Common Stock received by Assignee together with any rights
attaching thereto (including, but not limited to, the registration rights
referred to in the Exchange and Registration Rights Agreement dated as of
December 11, 1996 and made between AAi and Assignor). However, in the event
that Assignee does not obtain the Assignor Shares, Assignee hereby agrees to
pay to Assignor the first $2.5 million received by Assignee from proceeds
(the "Proceeds") relating to (i) the sale by Assignee of the FGH Preferred
Stock or (ii) the redemption by Foster Grant Holdings, Inc. of the FGH
Preferred Stock. In the event that Assignor does not receive either the
Assignor Shares or $2.5 million from Assignee, as described above, on or
before the date that is five years after the effective date of Assignor's
merger with ILC Technologies, Inc., Assignee shall promptly pay to Assignor,
an amount equal to $2.5 million less any amount previously paid to Assignor
by Assignee from the Proceeds.

4. Assignee hereby further agrees to execute and deliver an
indemnification agreement, in form satisfactory to Assignor, pursuant to
which Assignee shall indemnify and hold Assignor harmless from and against
any and all loss, damage or expense (a) related to or arising from or in
connection with the Acquired Assets and/or (b) otherwise not related to or
arising from or in connection with the ORC Business (including, without
limitation, related to or arising in connection with the items identified in
Schedule A hereto).

5. Assignor hereby constitutes and appoints Assignee its true and lawful
attorney, with full power of substitution, in the name of Assignee or in the
name of Assignor, but on behalf of and for the sole benefit of Assignee, to
institute and prosecute all proceedings which Assignee may deem proper in
order to receive, collect, assert or enforce any claim, right or title of any
kind in or to the Acquired Assets, to

Annex A-41
<PAGE>
defend and compromise any and all such action and execute instruments in
relation thereto as Assignee shall deem advisable. Without limiting the
foregoing, Assignor hereby authorizes Assignee and its officers to endorse or
assign any instrument, contract or chattel paper relating to the Acquired
Assets.

6. Assignor further agrees that it will at any time and from time to time,
at the request of Assignee, execute and deliver to Assignee all other and
further instruments necessary to vest in Assignee full title, right and
interest in or to any of the property, assets or rights which this instrument
purports to transfer to Assignee.

7. All of the terms and provisions of this Assignment will be binding upon
Assignor and its respective successors and assigns and will inure to the
benefit of Assignee and its respective successors and assigns.

8. This Bill of Sale and Assignment Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of New York.

IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Bill of Sale and Assignment Agreement a of the date first above written.

ASSIGNOR
BEC GROUP, INC.

By:
--------------------------------
Name: Martin E. Franklin
Title: Chairman and Chief
Executive Officer

ASSIGNEE:
BOLLE INC.

By:
--------------------------------
Name: Gary Kiedaisch
Title:

Annex A-42
<PAGE>
SCHEDULE A

RIGHTS, INTEREST, ETC. RETAINED BY BEC
IN CONNECTION WITH WHICH BOLLE
WILL ASSUME LIABILITY AND INDEMNIFY BEC

I. Rights and obligations under various arrangements with HMG World-Wide
Corporation (and its subsidiary Intermark Corp.), including (without
limitation):

A. Stock Purchase Agreement, dated as of September 30, 1995, by and
between BEC Group, Inc. as assignee of Benson Eyecare Corporation
("Benson") and Intermark Corp.

B. Assignment and Assumption Agreement, dated September 30, 1995.

C. Guaranty, dated September 30, 1995, by Benson in favor of HMG
Worldwide In-Store Marketing Corporation.

II. Certain agreements relating to arrangements among Wells Fargo Bank
(Texas), National Association, as successors to First Interstate Bank
of Texas, N.A., and BEC, as successor to Foster Grant Group, L.P.:

A. Guaranty Agreement by BEC, dated March 31, 1995, in favor of
First Interstate Bank (as amended).

B. Indemnity Agreement, dated March 31, 1994 [sic], from Foster
Grant Group, L.P. et al in favor of First Interstate Bank, N.A.
(as amended).

III. Any remaining Benson or BEC obligations and rights relating to:

A. The Agreement and Plan of Merger among Benson Eyecare
Corporation, BEC Acquisition Corp. and Bolle America, Inc., dated
as of July 26, 1995.

B. The Asset Purchase Agreement by and among Benson Eyecare
Corporation, BEC Group, Inc. and Optical Radiation Corporation
and Monsanto Company, dated 5/3/96.

C. The merger of Essilor Acquisition Corporation into Benson Eyecare
Corporation, effective on May 3, 1996.

IV. Pending Litigation:

A. Herb Morris & Partners, Ltd. v. Opti-Ray, Inc. and Benson Eyecare
Corporation.

B. Thomas W. Dornfeld v. Omega Optical Co., L.P., Omega Group
Limited, and Benson Eyecare Corporation

C. Magnivision, Inc. v. The Bonneau Company

D. Alan Katz, Trustee, v. Essomega Corporation, f/k/a Benson Eyecare
Corporation, and BEC Group, Inc.

V. Stock Purchase and Option Agreement, dated November 14, 1996, by and
among BEC and Lantis Eyewear Corporation (as amended), relating to
shares transferred to Assignee by this Assignment. Assignor and
Assignee, by execution and delivery of this Assignment, mutually
acknowledge and agree that Assignee will promptly deliver such shares
at Assignor's direction upon any execution of such option and that
Assignor will promptly transfer to Assignee all consideration
received in connection with any such exercise.

Annex A-43
<PAGE>
SCHEDULE B

LIST OF ASSETS/LIABILITIES
ASSIGNED TO/ASSUMED BY
BOLLE INC.

I. All interests, rights, duties and obligations of BEC Group, Inc.
("BEC") relating to Accessories Associates, Inc. ("AAi"), including
(without limitation):

A. Stock Purchase Agreement, dated as of November 13, 1996, by and
among BEC, AAi, et al.

B. Exchange and Registration Rights Agreement, dated December 11,
1996, by and among AAi, Foster Grant Holdings, Inc. ("FGH"), BEC,
et al.

C. Certificate No. P-1, representing 100 shares of FGH Series A
Preferred Stock.

II. All interests, rights, duties and obligations in and related to
Superior Vision Services, Inc.:

A. Loan Agreement, dated September 30, 1994 (as subsequently
amended).

B. Revolving Credit Promissory Note, dated September 30, 1994, for
maximum principal amount of $1,000,000 (as amended) and any note
issued in replacement or substitution therefor.

C. Share Certificate No. 5, representing 8,800 shares of common
stock.

D. Share Certificate No. 1, representing 17,825 shares Series A
Preferred Stock.

E. Share Certificate No. 3, representing 41,782 shares of Series B
Preferred Stock.

F. BEC's rights and obligations pursuant to ancillary documents,
such as the Shareholder Agreement (as subsequently amended).

III. Certain Assets, Rights and Obligations Relating to Sterling Vision,
Inc.

A. Covenant not to compete and guarantee of Pembridge Optical
Partners, Inc. obligations pursuant to Asset Purchase Agreement,
dated August 26, 1994, by and between Pembridge Optical Partners,
Inc. and Sterling Vision, Inc.

B. Note Amendment and Conversion Agreement, dated April 21, 1997,
and all rights and obligations in connection therewith.

IV. Management Agreement between BEC and Eyecare Products, plc.

V. All BEC's rights, title and interest in and to shares of stock of
Eyecare Products, plc. subject to the agreement described in
Schedule B.V. hereto.

VI. All right and interest in and to rental payments receivable by BEC
(as assignor) pursuant to:

A. Industrial Lease by and between Bartley Optical Sales, Inc. and
ORC Technologies, Inc. (f/k/a Optical Radiation Corporation)
dated as of December 8, 1995; and

B. Lease Agreement, dated as of May 3, 1996, by and between Monsanto
Company and ORC Technologies, Inc., (f/k/a Optical Radiation
Corporation).

In each case, subject to all of the remaining terms and
conditions of each such lease and the rights of assignor's senior
lenders with respect thereto.

VII. Share Certificate No. OC72 and EC73, representing (respectively)
1,174 shares of Optical Acquisition Corp. stock and 1,174 shares of
Eyecare Acquisition Corp. stock.

VIII. Share Certificate No. 1, representing 1,000 shares of common stock
of ORC Management Corporation.

Annex A-44
<PAGE>
ANNEX B

VOTING AGREEMENT

VOTING AGREEMENT, dated as of October 30, 1997 (the "Agreement"), between
ILC Technology, Inc., a California corporation (the "Company"), and Martin E.
Franklin (the "Stockholder").

WHEREAS, BEC Group, Inc. (the "Parent"), BILC Acquisition Corp.
("Purchaser") and the Company, have entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"; capitalized
terms not otherwise defined herein shall have their respective meanings as
set forth in the Merger Agreement), which provides, among other things, upon
the terms and subject to the conditions thereof, for the acquisition of the
Company through a merger pursuant to which the Company will merge with and
into the Purchaser (the "Merger"); and

WHEREAS, as the date hereof, the Stockholder beneficially (as defined in
Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as amended)
owns 1,433,064 shares of common stock, par value $.01 per share of Parent
(the "Shares"); and

WHEREAS, as a condition to the willingness of the Company to enter into
the Merger Agreement, the Company has required that the Stockholder agree,
and in order to induce the Company to enter into the Merger Agreement, the
Stockholder has agreed to vote, or cause to be voted, in favor of the Merger,
all Shares beneficially owned by such Stockholder, upon the terms and subject
to the conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby,
the parties hereto agree as follows:

ARTICLE 1.

AGREEMENT TO VOTE

SECTION 1.01. Voting Agreement. Until the Termination Date (as hereinafter
defined), the Stockholder agrees with the Company, that he shall vote, or
cause to be voted, in favor of the Merger and the Transactions contemplated
thereby, all of his respective Shares.

SECTION 1.02. Legend. The Stockholder agrees to note conspicuously on the
stock certificates representing his respective Shares, that the Stockholder
has entered into this Agreement and to note any restrictions against transfer
of his Shares, as may be required to be in compliance with the state of
Delaware's General Corporation Law of the State of Delaware ("DGCL").

ARTICLE 2.

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER

The Stockholder hereby represents and warrants to the Company as follows:

SECTION 2.01. Authority Relative to This Agreement. He has all necessary
power and authority to execute and deliver this Agreement, to perform his
obligations hereunder and to consummate the transactions contemplated hereby.
This Agreement has been duly and validly executed and delivered by such
Stockholder, constitutes a legal, valid and binding obligation of
Stockholder, enforceable against him in accordance with its terms, subject to
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).

SECTION 2.02. No Conflict. The execution and delivery of this Agreement by
the Stockholder does not, and the performance of this Agreement by the
Stockholder will not (i) require any consent, approval, authorization or
permit of, or filing with or notification to any governmental or regulatory
authority, domestic or foreign, (ii) conflict with or violate any law, rule,
regulation, order, judgment or decree applicable to the Stockholder or by
which any property or asset of the Stockholder is bound or affected, or (iii)
result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give to
others any right of termination, amendment,

Annex B-1
<PAGE>
acceleration or cancellation of, or result in the creation of a lien or
other encumbrance of any nature whatsoever on any property or asset of the
Stockholder or pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or
obligation to which such Stockholder is a party or by which the Stockholder
or any property or asset of the Stockholder is bound or affected.

SECTION 2.03. Title to the Shares. As of the date hereof, the Stockholder
is the beneficial owner of 1,433,064 Shares of BEC Common Stock, which are
all the shares of Company Common Stock owned, either of record or
beneficially, by such Stockholder. The Stockholder owns all such Shares free
and clear of all security interests, liens, claims, pledges, options, rights
of first refusal, agreements, limitations on the Stockholder's voting rights,
charges and other encumbrances of any nature whatsoever (other than those
arising under the Securities Act of 1933, as amended, and any applicable
state securities or "blue sky" laws), and, except as provided in this
Agreement, the Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Shares.

ARTICLE 3.

PROXY OF THE STOCKHOLDER

SECTION 3.01. Proxy. The Stockholder hereby irrevocably appoints Henry C.
Baumgarten or Richard D. Capra, until the Termination Date (as hereinafter
defined), as his attorney and proxy pursuant to the provisions of Section 212
of the DGCL, with full power of substitution, to vote in favor of the Merger
with respect to the Shares now owned or that may hereafter be acquired by
such Stockholder and all other securities issued to the Stockholder in
respect of such Shares, which the Stockholder is entitled to vote at any
meeting of stockholders of Parent (whether annual or special and whether or
not an adjourned or postponed meeting) or consent in lieu of any such meeting
or otherwise; provided, however, that Stockholder grants a proxy hereunder
only with respect to voting in favor of facilitating the Merger. This proxy
and power of attorney is irrevocable and coupled with an interest. The
Stockholder hereby revokes all other proxies and powers of attorney with
respect to his Shares (and all other securities issued to such Stockholder in
respect of such Shares) which it may have heretofore appointed or granted,
and, no subsequent proxy or power of attorney shall be given or written
consent executed and if given or executed shall not be effective) by the
Stockholder with respect thereto.

ARTICLE 4.

MISCELLANEOUS

SECTION 4.01. Further Assurances. The parties will execute and deliver all
such further documents and instruments and take all such further action as
may be necessary in order to consummate the transactions contemplated hereby.

SECTION 4.02. Specific Performance. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
was not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof, in addition to
any other remedy at law or in equity.

SECTION 4.03. Entire Agreement. This Agreement constitutes the entire
agreement between the Company and the Stockholder with respect to the subject
matter hereof and supersedes all prior agreements and understandings, both
written and oral, between the Company and the Stockholder with respect to the
subject matter hereof.

SECTION 4.04. Assignment; Parties In Interest.

(a) This Agreement shall not be assigned by operation of law or otherwise.

(b) This Agreement shall be binding upon, inure solely to the benefit of,
and be enforceable by, the parties hereto and their successors. Nothing in
this Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement.

Annex B-2
<PAGE>
SECTION 4.05. Amendment; Waiver. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto. The parties hereto
may (i) extend the time for the performance of any obligation or other act of
the other parties hereto, (ii) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto
and (iii) waive compliance with any agreement or condition contained herein.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by all of the parties to be bound thereby.

SECTION 4.06. Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of
law, or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of this Agreement is not affected in any manner materially
adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties
hereto shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable manner in order that the terms of this Agreement remain as
originally contemplated to the fullest extent possible.

SECTION 4.07. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
telecopy, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respect parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 4.07):

if to the Company:

ILC Technology, Inc.
399 Java Drive
Sunnyvale, California 94089
Telecopier No.: (408) 744-0829
Attention: Henry C. Baumgarten

with a copy to:

Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 450-4800
Attention: Keith Kearney, Esq.

if to the Stockholder:

Mr. Martin E. Franklin
c/o BEC Group, Inc.
555 Theodore Fremd Avenue
Suite B-302
Rye, New York 10580
Telecopier No.: (914) 967-9403

with a copy to:

Kane Kessler, P.C.
1350 Avenue of the Americas -- 26th Floor
New York, New York 10019
Telecopier No.: (212) 245-3009
Attention: Robert L. Lawrence, Esq.

SECTION 4.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of Delaware applicable to
contracts executed in and to be performed in that State.

Annex B-3
<PAGE>
SECTION 4.09. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.

SECTION 4.10. Termination. This Agreement and the proxy granted hereunder
shall terminate on the first to occur of (a) the termination of the Merger
Agreement in accordance with Section 7.1 thereof; or (b) one year from the
date hereof (the "Termination Date"). In the event of the termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of the Company or the Stockholder under this Agreement,
except with regard to any breach of this Agreement prior to such termination.

SECTION 4.11. Counterparts. This Agreement may be executed in one or more
counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of
which taken together shall constitute one and the same agreement.

IN WITNESS WHEREOF, the Company has caused this Agreement to be executed
by its officer thereunto duly authorized and the Stockholder has duly
executed this Agreement, each as of the date first written above.

ILC TECHNOLOGY, INC.

By: /s/ Richard D. Capra
-----------------------------------
Name: Richard D. Capra
Title: President and COO

STOCKHOLDER

By: /s/ Martin E. Franklin
-----------------------------------

Annex B-4
<PAGE>
ANNEX C

VOTING AGREEMENT

VOTING AGREEMENT, dated as of October 27, 1997 (the "Agreement"), between
BEC Group, Inc., a Delaware corporation ("Parent"), BILC Acquisition Corp., a
Delaware corporation and an indirect wholly-owned subsidiary of Parent
("Purchaser"), and Henry C. Baumgarten (the "Stockholder").

WHEREAS, Parent, Purchaser and ILC Technology, Inc., a California
corporation (the "Company"), have entered into an Agreement and Plan of
Merger, dated as of the date hereof (the "Merger Agreement"; capitalized
terms not otherwise defined herein shall have their respective meanings as
set forth in the Merger Agreement), which provides, among other things, upon
the terms and subject to the conditions thereof, for the acquisition of the
Company through a merger pursuant to which the Company will merge with and
into the Purchaser (the "Merger"); and

WHEREAS, as of the date hereof, the Stockholder beneficially (as defined
in Rule 13d-3 promulgated under the Securities Exchange Act of 1934, as
amended) owns 98,738 shares of common stock, no par value, of the Company
(the "Shares"); and

WHEREAS, as a condition to the willingness of Parent and Purchaser to
enter into the Merger Agreement, the Parent and Purchaser have required that
the Stockholder agree, and in order to induce the Parent and Purchaser to
enter into the Merger Agreement, the Stockholder has agreed to vote, or cause
to be voted, in favor of the Merger and the Transactions, all Shares
beneficially owned by such Stockholder, upon the terms and subject to the
conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements contained herein, and intending to be legally bound hereby,
the parties hereto agree as follows:

ARTICLE 1.

AGREEMENT TO VOTE

SECTION 1.01. Voting Agreement. Until the Termination Date (as
hereinafter defined), the Stockholder agrees with the Parent and Purchaser,
that he shall vote, or cause to be voted, in favor of the Merger and the
Transactions contemplated thereby, all of his respective Shares.

ARTICLE 2.

REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDER

The Stockholder hereby represents and warrants to each of the Parent and
Purchaser as follows:

Annex C-1
<PAGE>
affected, or (iii) result in any breach of or constitute a default (or an
event which with notice or lapse of time or both would become a default)
under, or give to others any right of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or other encumbrance of
any nature whatsoever on any property or asset of the Stockholder or pursuant
to, any note, bond, mortgage, indenture, contract, agreement, lease, license,
permit, franchise or other instrument or obligation to which such Stockholder
is a party or by which the Stockholder or any property or asset of the
Stockholder is bound or affected.

SECTION 2.03. Title to the Shares. As of the date hereof, the Stockholder
is the beneficial owner of 98,738 Shares of Company Common Stock, which are
all the shares of Company Common Stock owned, either of record or
beneficially, by such Stockholder. The Stockholder owns all such Shares free
and clear of all security interests, liens, claims, pledges, options, rights
of first refusal, agreements, limitations on the Stockholder's voting rights,
charges and other encumbrances of any nature whatsoever (other than those
arising under the Securities Act of 1933, as amended, and any applicable
state securities or "blue sky" laws), and, except as provided in this
Agreement, the Stockholder has not appointed or granted any proxy, which
appointment or grant is still effective, with respect to the Shares.

ARTICLE 3.

PROXY OF THE STOCKHOLDER

SECTION 3.01. Proxy. The Stockholder hereby irrevocably appoints Martin E.
Franklin or Ian Ashken, until the Termination Date (as hereinafter defined),
as his attorney and proxy pursuant to the provisions of Section 700 of the
CCC, with full power of substitution, to vote in favor of the Merger and the
Transactions with respect to the Shares now owned or that may hereafter be
acquired by such Stockholder and all other securities issued to the
Stockholder in respect of such Shares, which the Stockholder is entitled to
vote at any meeting of stockholders of the Company (whether annual or special
and whether or not an adjourned or postponed meeting) or consent in lieu of
any such meeting or otherwise; provided, however, that Stockholder grants a
proxy hereunder only with respect to voting in favor of facilitating the
Merger and the Transactions. This proxy and power of attorney is irrevocable
and coupled with an interest. The Stockholder hereby revokes all other
proxies and powers of attorney with respect to his Shares (and all other
securities issued to such Stockholder in respect of such Shares) which it may
have heretofore appointed or granted, and, no subsequent proxy or power of
attorney shall be given or written consent executed and if given or executed
shall not be effective) by the Stockholder with respect thereto.

ARTICLE 4.

MISCELLANEOUS

SECTION 4.03. Entire Agreement. This Agreement constitutes the entire
agreement between the Parent, Purchaser and the Stockholder with respect to
the subject matter hereof and supersedes all prior agreements and
understandings, both written and oral, between the Parent, Purchaser and the
Stockholder with respect to the subject matter hereof.

SECTION 4.04. Assignment; Parties In Interest.

(a) This Agreement shall not be assigned by operation of law or otherwise.

Annex C-2
<PAGE>
(b) This Agreement shall be binding upon, inure solely to the benefit of,
and be enforceable by, the parties hereto and their successors and permitted
assigns. Nothing in this Agreement, express or implied, is intended to or
shall confer upon any other person any right, benefit or remedy of any nature
whatsoever under or by reason of this Agreement.

SECTION 4.05. Amendment; Waiver. This Agreement may not be amended except
by an instrument in writing signed by the parties hereto. The parties hereto
may (i) extend the time for the performance of any obligation or other act of
the other parties hereto, (ii) waive any inaccuracy in the representations
and warranties contained herein or in any document delivered pursuant hereto
and (iii) waive compliance with any agreement or condition contained herein.
Any such extension or waiver shall be valid if set forth in an instrument in
writing signed by all of the parties to be bound thereby.

if to the Parent or Purchaser:

BEC Group, Inc.
555 Theodore Fremd Avenue
Suite B-302
Rye, New York 10580
Telecopier No.: (914) 967-9403
Attention: Executive Vice President, Mr. Ian Ashken

with a copy to:

Kane Kessler, P.C.
1350 Avenue of the Americas -- 26th Floor
New York, New York 10019
Telecopier No.: (212) 245-3009
Attention: Robert L. Lawrence, Esq.

if to the Stockholder:

Mr. Henry C. Baumgarten
ILC Technologies, Inc.
399 Java Drive
Sunnyvale, CA 94089
Telecopier No.: (408) 744-0829

with a copy to:

Keith Kearney, Esq.
Davis Polk & Wardwell
450 Lexington Avenue
New York, New York 10017
Telecopier No.: (212) 450-4800

Annex C-3
<PAGE>
SECTION 4.08. Governing Law. This Agreement shall be governed by, and
construed in accordance with the laws of the State of California applicable
to contracts executed in and to be performed in that State.

SECTION 4.09. Headings. The descriptive headings contained in this
Agreement are included for convenience of reference only and shall not affect
in any way the meaning or interpretation of this Agreement.

SECTION 4.10. Termination. This Agreement and the proxy granted hereunder
shall terminate on the first to occur of (a) the termination of the Merger
Agreement in accordance with Section 7.1 thereof; or (b) one year from the
date hereof (the "Termination Date"). In the event of the termination of this
Agreement, this Agreement shall forthwith become void and there shall be no
liability on the part of Parent or Purchaser or the Stockholder under this
Agreement, except with regard to any breach of this Agreement prior to such
termination.

IN WITNESS WHEREOF, each of Parent and Purchaser has caused this Agreement
to be executed by its officer thereunto duly authorized and the Stockholder
has duly executed this Agreement, each as of the date first written above.

BEC GROUP, INC.

By: /s/ Ian Ashken
--------------------------------
Name: Ian Ashken
Title: Executive Vice President

BILC ACQUISITION CORP.

By: /s/ Ian Ashken
--------------------------------
Name: Ian Ashken
Title: Executive Vice President

STOCKHOLDER

By: /s/ Henry C. Baumgartner
-------------------------------

Annex C-4
<PAGE>
ANNEX D

October 30, 1997

Board of Directors
BEC Group, Inc.
International Corporate Center at Rye
555 Theodore Fremd Avenue
Suite B-302
Rye, New York 10580

Members of the Board:

You have requested our opinion as to the fairness, from a financial point
of view, to BEC Group, Inc. ("BEC" or the "Company") of a business
combination (the "Transaction") in which BEC (after the spin-off of Bolle
Inc. to BEC's shareholders) will acquire all of the stock of ILC
Technologies, Inc. ("ILCT") from its shareholders. The terms of the
Transaction are embodied in the draft definitive agreement (the "Stock
Purchase Agreement") dated October 30, 1997. The terms of the Transaction
include, among other things, that BEC will acquire the stock of ILCT in
exchange for 21,286,484 shares of BEC common stock (the "Consideration"),
issuing 4.3621 shares of BEC for each share of ILCT.

In connection with our review of the Transaction and the preparation of
this opinion, we have examined (i) the financial terms and conditions of the
Transaction as contained in the executed Letter of Intent and the Stock
Purchase Agreement, (ii) the audited financial statements of the Company for
the years ended December 31, 1995 and 1996, (iii) the unaudited financial
statements of ILCT for the years ended September 30, 1995 and 1996, (iv) the
unaudited interim financial statements of the Company for the period ended
June 30, 1997 and ILCT for the period ended June 30, 1997, (v) certain
internal financial forecasts and projections prepared by the management of
the Company for the Company and the management of ILCT for ILCT, (vi) certain
internal financial forecasts and projections provided by managements of both
ILCT and BEC for the Company assuming the Transaction occurs and certain cost
savings and other synergies are achieved, and (vii) certain other publicly
available financial information. Additionally, we held discussions with
senior management of the Company and ILCT regarding past and current
operations and the financial condition and prospects of the Company, ILCT and
the combined operations of ILCT and the Company and considered other matters
which we deemed relevant to our inquiry.

We have assumed and relied upon the accuracy and completeness of all such
information provided to us or publicly available and have not independently
made any attempt to verify such information. We have not made any attempt to
make or obtain an independent appraisal of the value of the assets or the
liabilities (contingent or otherwise) of the Company or ILCT. This opinion is
not meant to be an indication of the price at which BEC's common stock will
trade at any time or a recommendation as to any action a BEC shareholder
should take. With respect to all information provided by management of either
BEC or ILCT, we have assumed that it represents the best currently available
knowledge and judgment of such management and has been reasonably prepared.
We have relied on the managements of BEC and ILCT to advise us promptly if
any information previously provided became inaccurate or was required to be
updated during the period of our review.

We express no opinion as to the underlying business decision to conduct
the spin-off of Bolle Inc. or the availability or advisability of any
alternatives to the spin-off of Bolle Inc. Raymond James did not structure
the spin-off of Bolle Inc. or negotiate the terms of the spin-off of Bolle
Inc. and is not expressing an opinion on the valuation of Bolle Inc.

We have also been assured by BEC's management that except for the spin-off
of Bolle Inc. to BEC's shareholders, the Company is not party to any pending
material transactions including, but not limited to, any external financing,
recapitalizations, acquisitions or merger discussions, other than the
Transaction. Likewise, we have been assured by ILCT's management that ILCT is
not party to any pending material

Annex D-1
<PAGE>
transactions including, but not limited to, any external financing,
recapitalizations, acquisitions or merger discussions, other than the
Transaction. Our opinion is based on market, financial, economic and other
conditions existing as of the date of this letter and any change in such
conditions would require a reevaluation of this opinion.

In conducting our investigation and analyses and in arriving at our
opinion expressed herein, we have taken into account such accepted financial
and investment banking procedures and considerations as we deemed relevant,
including the review of (i) historical and projected revenues, operating
earnings, net income and capitalization of the Company and ILCT and certain
other companies we believe to be comparable to the Company and ILCT, (ii) the
current financial position and operating results of the Company and ILCT and
forecasted results of such entities, (iii) the historical market prices and
trading activities of the Company's and ILCT's common stock, (iv) reported
financial terms of business combinations comparable to the Transaction, (v)
the value of the Consideration to be paid, (vi) the projected proforma
operating results and financial position for the Company assuming the
Transaction had occurred, and (vii) the general condition of the securities
markets.

Raymond James & Associates, Inc. ("Raymond James") is actively involved in
investment banking activities and regularly undertakes the evaluation of
investment securities in connection with public offerings, private
placements, business combinations and similar transactions. Raymond James has
served as a financial advisor to BEC concerning the Transaction and will be
paid fees for services provided pursuant to this engagement upon closing of
the Transaction. Raymond James will be paid a fee for this opinion upon
closing of the Transaction. In addition, the Company has agreed to reimburse
Raymond James for its expenses incurred during this engagement and to
indemnify Raymond James against certain liabilities arising out of issuance
of this opinion.

In the ordinary course of business, Raymond James may trade in the
securities of BEC and ILCT for Raymond James' own account and for the
accounts of customers and, accordingly, may at any time hold a long or short
position in such securities.

It is understood that this letter is for the information of the Board of
Directors of BEC. This letter does not constitute a recommendation of any
type to any shareholder as to how such shareholder should vote in connection
with the Transaction, and is not intended to confer rights or remedies upon
ILCT or the shareholders of ILCT or the Company. This opinion is not to be
quoted or referred to, in whole or in part, in any registration statement,
prospectus or proxy statement, or in any other document used in connection
with the offering or sale of securities, nor shall this letter be used for
any other purpose, without our prior written consent.

Based upon and subject to the foregoing, it is our opinion that as of
October 30, 1997 the terms of the Transaction are fair, from a financial
point of view, to BEC and its shareholders.

Very truly yours,

RAYMOND JAMES & ASSOCIATES, INC.

Annex D-2
<PAGE>
ANNEX E

November 4, 1997

Board of Directors
ILC Technology, Inc.
399 Java Drive
Sunnyvale, CA 94089

Dear Sirs:

You have requested our opinion as to the fairness from a financial point
of view to the stockholders of ILC Technologies, Inc. (the "Company") of the
Exchange Ratio (as defined below) pursuant to the terms of the Agreement and
Plan of Merger, dated as of October 30, 1997 (the "Agreement"), among BEC
Group, Inc. ("BEC"), BILC Acquisition Corp., a wholly owned subsidiary of BEC
(the "Purchaser") and the Company, pursuant to which the Company will be
merged (the "Merger") with and into the Purchaser.

Pursuant to the Agreement, each share of common stock, no par value
("Company Common Stock"), of the Company (other than treasury shares or with
respect to which appraisal rights have been exercised), will be converted
into, subject to certain exceptions, the right to receive 4.3621 shares of
common stock par value $0.01 per share ("BEC Common Stock"), of BEC, subject
to adjustment to reflect any convertible notes of the Company remaining
outstanding at the effective time of the Merger (the "Exchange Ratio").

In arriving at our opinion, we have reviewed the Agreement and the
exhibits thereto, dated October 30, 1997, and the Contribution Agreement,
dated as of October 30, 1997, between BEC and Bolle, Inc. and its related
entities and the documents entered into in connection therewith. We also have
reviewed financial and other information that was publicly available or
furnished to us by the Company and BEC including information provided during
discussions with their respective managements. Included in the information
provided during discussions with the respective managements were certain
financial projections of the Company for the period beginning September 30,
1997 and ending December 31, 1998 prepared by the management of the Company
and certain financial projections of BEC for the period beginning September
30, 1997 and ending December 31, 1999 prepared by the management of BEC. In
addition, we have compared certain financial and securities data of the
Company and BEC with various other companies whose securities are traded in
public markets, reviewed the historical stock prices and trading volumes BEC
Common Stock and Company Common Stock, reviewed prices and premiums paid in
certain other business combinations, and conducted such other financial
studies, analyses and investigations as we deemed appropriate for purposes of
this opinion.

In rendering our opinion, we have relied upon and assumed the accuracy and
completeness of all of the financial and other information that was available
to us from public sources, that was provided to us by the Company and BEC or
their respective representatives, or that was otherwise reviewed by us. In
particular, we have relied upon the estimates of the management of the
Company of the operating synergies achievable as a result of the Merger and
upon our discussion of such synergies with the management of BEC. With
respect to the financial projections reviewed by us, we have assumed that
they have been reasonably prepared on the basis reflecting the best currently
available estimates and judgments of the management of the Company and BEC as
to the future operating and financial performance of the Company and BEC,
respectively. We have not assumed any responsibility for making an
independent evaluation of any assets or liabilities or for making any
independent verification of any of the information reviewed by us. We have
relied as to certain legal matters on advice of counsel to the Company.

Our opinion is necessarily based on economic, market, financial and other
conditions as they exist on, and on the information made available to us as
of, the date of this letter. It should be understood that, although
subsequent developments may affect this opinion, we do not have any
obligation to update,

Annex E-1
<PAGE>
revise or reaffirm this opinion. We are expressing no opinion herein as to
the prices at which BEC Common Stock will actually trade at any time. Our
opinion does not address the relative merits of the Merger and the other
business strategies being considered by the Company's Board of Directors, nor
does it address the Board's decision to proceed with the Merger. Our opinion
does not constitute a recommendation to any stockholder as to how such
stockholder should vote on the proposed transaction.

Donaldson, Lufkin & Jenrette Securities Corporation ("DLJ"), as part of
its investment banking services, is regularly engaged in the valuation of
businesses and securities in connection with mergers, acquisitions,
underwritings, sales and distributions of listed and unlisted securities,
private placements and valuations for corporate and other purposes.

Based upon the foregoing and such other factors as we deem relevant, we
are of the opinion that the Exchange Ratio is fair to the holders of Company
Common Stock from a financial point of view.

Very truly yours,

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

By:
-------------------------------
Frederick C. Lane
Managing Director

Annex E-2
<PAGE>
ANNEX F
CHAPTER 13 OF THE CALIFORNIA
GENERAL CORPORATION LAW

SECTION 1300. REORGANIZATION OR SHORT-FORM MERGER; DISSENTING SHARES;
CORPORATE PURCHASE AT FAIR MARKET VALUE; DEFINITIONS

(a) If the approval of the outstanding shares (Section 152) of a
corporation is required for a reorganization under subdivisions (a) and (b)
or subdivision (e) or (f) of Section 1201, each shareholder of the
corporation entitled to vote on the transaction and each shareholder of a
subsidiary corporation in a short-form merger may, by complying with this
chapter, require the corporation in which the shareholder holds shares to
purchase for cash at their fair market value the shares owned by the
shareholder which are dissenting shares as defined in subdivision (b). The
fair market value shall be determined as of the day before the first
announcement of the terms of the proposed reorganization or short-form
merger, excluding any appreciation or depreciation in consequence of the
proposed action, but adjusted for any stock split, reverse stock split, or
share dividend which becomes effective thereafter.

(b) As used in this chapter, "dissenting shares" means shares which come
within all of the following descriptions:

(1) Which were not immediately prior to the reorganization or short-form
merger either (A) listed on any national securities exchange certified by the
Commissioner of Corporations under subdivision (o) of Section 25100 or (B)
listed on the list of OTC margin stocks issued by the Board of Governors of
the Federal Reserve System, and the notice of meeting of shareholders to act
upon the reorganization summarizes this section and Sections 1301, 1302, 1303
and 1304; provided, however, that this provision does not apply to any shares
with respect to which there exists any restriction on transfer imposed by the
corporation or by any law or regulation; and provided, further, that this
provision does not apply to any class of shares described in subparagraph (A)
or (B) if demands for payment are filed with respect to 5 percent or more of
the outstanding shares of that class.

(2) Which were outstanding on the date for the determination of
shareholders entitled to vote on the reorganization and (A) were not voted in
favor of the reorganization or, (B) if described in subparagraph (A) or (B)
of paragraph (1) (without regard to the provisos in that paragraph), were
voted against the reorganization, or which were held of record on the
effective date of a short-form merger; provided, however, that subparagraph
(A) rather than subparagraph (B) of this paragraph applies in any case where
the approval required by Section 1201 is sought by written consent rather
than at a meeting.

(3) Which the dissenting shareholder has demanded that the corporation
purchase at their fair market value, in accordance with Section 1301.

(4) Which the dissenting shareholder has submitted for endorsement, in
accordance with Section 1302.

(c) As used in this chapter, "dissenting shareholder" means the
recordholder of dissenting shares and includes a transferee of record.

SECTION 1301. NOTICE TO HOLDERS OF DISSENTING SHARES IN REORGANIZATIONS;
DEMAND FOR PURCHASE; TIME; CONTENTS

(a) If, in the case of a reorganization, any shareholders of a corporation
have a right under Section 1300, subject to compliance with paragraphs (3)
and (4) of subdivision (b) thereof, to require the corporation to purchase
their shares for cash, such corporation shall mail to each such shareholder a
notice of the approval of the reorganization by its outstanding shares
(Section 152) within 10 days after the date of such approval, accompanied by
a copy of Sections 1300, 1302, 1303, 1304 and this section, a statement of
the price determined by the corporation to represent the fair market value of
the dissenting shares, and a brief description of the procedure to be
followed if the shareholder desires to exercise the shareholder's right under
such sections. The statement of price constitutes an offer by the corporation
to purchase at the price stated any dissenting shares as defined in
subdivision (b) of Section 1300, unless they lose their status as dissenting
shares under Section 1309.

Annex F-1
<PAGE>
(b) Any shareholder who has a right to require the corporation to
purchase the shareholder's shares for cash under Section 1300, subject to
compliance with paragraphs (3) and (4) of subdivision (b) thereof, and who
desires the corporation to purchase such shares shall make written demand
upon the corporation for the purchase of such shares and payment to the
shareholder in cash of their fair market value. The demand is not effective
for any purpose unless it is received by the corporation or any transfer
agent thereof (1) in the case of shares described in clause (i) or (ii) of
paragraph (1) of subdivision (b) of Section 1300 (without regard to the
provisos in that paragraph), not later than the date of the shareholders'
meeting to vote upon the reorganization, or (2) in any other case within 30
days after the date on which the notice of the approval by the outstanding
shares pursuant to subdivision (a) or the notice pursuant to subdivision (i)
of Section 1110 was mailed to the shareholder.

(c) The demand shall state the number and class of the shares held of
record by the shareholder which the shareholder demands that the corporation
purchase and shall contain a statement of what such shareholder claims to be
the fair market value of those shares as of the day before the announcement
of the proposed reorganization or short-form merger. The statement of fair
market value constitutes an offer by the shareholder to sell the shares at
such price.

SECTION 1302. SUBMISSIONS OF SHARE CERTIFICATES FOR ENDORSEMENT;
UNCERTIFICATED SECURITIES

Within 30 days after the date on which notice of the approval by the
outstanding shares or the notice pursuant to subdivision (i) of Section 1110
was mailed to the shareholder, the shareholder shall submit to the
corporation at its principal office or at the office of any transfer agent
thereof, (a) if the shares are certificated securities, the shareholder's
certificates representing any shares which the shareholder demands that the
corporation purchase, to be stamped or endorsed with a statement that the
shares are dissenting shares or to be exchanged for certificates of
appropriate denomination so stamped or endorsed or (b) if the shares are
uncertificated securities, written notice of the number of shares which the
shareholder demands that the corporation purchase. Upon subsequent transfers
of the dissenting shares on the books of the corporation, the new
certificates, initial transaction statement, and other written statements
issued therefor shall bear a like statement, together with the name of the
original dissenting holder of the shares.

SECTION 1303. PAYMENT OF AGREED PRICE WITH INTEREST; AGREEMENT FIXING FAIR
MARKET VALUE; FILING; TIME OF PAYMENT

(a) If the corporation and the shareholder agree that the shares are
dissenting shares and agree upon the price of the shares, the dissenting
shareholder is entitled to the agreed price with interest thereon at the
legal rate on judgments from the date of the agreement. Any agreements fixing
the fair market value of any dissenting shares as between the corporation and
the holders thereof shall be filed with the secretary of the corporation.

(b) Subject to the provisions of Section 1306, payment of the fair market
value of dissenting shares shall be made within 30 days after the amount
thereof has been agreed or within 30 days after any statutory or contractual
conditions to the reorganization are satisfied, whichever is later, and in
the case of certificated securities, subject to surrender of the certificates
therefor, unless provided otherwise by agreement.

Annex F-2
<PAGE>
SECTION 1304. ACTION TO DETERMINE WHETHER SHARES ARE DISSENTING SHARES OR
FAIR MARKET VALUE; LIMITATION; JOINDER; CONSOLIDATION; DETERMINATION OF
ISSUES; APPOINTMENT OF APPRAISERS

(a) If the corporation denies that the shares are dissenting shares, or
the corporation and the shareholder fail to agree upon the fair market value
of the shares, then the shareholder demanding purchase of such shares as
dissenting shares or any interested corporation, within six months after the
date on which notice of the approval by the outstanding shares (Section 152)
or notice pursuant to subdivision (i) of Section 1110 was mailed to the
shareholder, but not thereafter, may file a complaint in the superior court
of the proper county praying the court to determine whether the shares are
dissenting shares or the fair market value of the dissenting shares or both
or may intervene in any action pending on such a complaint.

(b) Two or more dissenting shareholders may join as plaintiffs or be
joined as defendants in any such action and two or more such actions may be
consolidated.

(c) On the trial of the action, the court shall determine the issues. If
the status of the shares as dissenting shares is in issue, the court shall
first determine that issue. If the fair market value of the dissenting shares
is in issue, the court shall determine, or shall appoint one or more
impartial appraisers to determine, the fair market value of the shares.

SECTION 1305. REPORT OF APPRAISERS; CONFIRMATION; DETERMINATION BY COURT;
JUDGMENT; PAYMENT; APPEAL, COSTS

(a) If the court appoints an appraiser or appraisers, they shall proceed
forthwith to determine the fair market value per share. Within the time fixed
by the court, the appraisers, or a majority of them, shall make and file a
report in the office of the clerk of the court. Thereupon, on the motion of
any party, the report shall be submitted to the court and considered on such
evidence as the court considers relevant. If the court finds the report
reasonable, the court may confirm it.

(b) If a majority of the appraisers appointed fail to make and file a
report within 10 days from the date of their appointment or within such
further time as may be allowed by the court or the report is not confirmed by
the court, the court shall determine the fair market value of the dissenting
shares.

(c) Subject to the provisions of Section 1306, judgment shall be rendered
against the corporation for payment of an amount equal to the fair market
value of each dissenting share multiplied by the number of dissenting shares
which any dissenting shareholder who is a party, or who has intervened, is
entitled to require the corporation to purchase, with interest thereon at the
legal rate from the date on which judgment was entered.

(d) Any such judgment shall be payable forthwith with respect to
uncertificated securities and, with respect to certificated securities, only
upon the endorsement and delivery to the corporation of the certificates for
the shares described in the judgment. Any party may appeal from the judgment.

(e) The costs of the action, including reasonable compensation to the
appraisers to be fixed by the court, shall be assessed or apportioned as the
court considers equitable, but, if the appraisal exceeds the price offered by
the corporation, the corporation shall pay the costs (including in the
discretion of the court attorneys' fees, fees of expert witnesses and
interest at the legal rate on judgments from the date of compliance with
Sections 1300, 1301 and 1302 if the value awarded by the court for the shares
is more than 125 percent of the price offered by the corporation under
subdivision (a) of Section 1301).

SECTION 1306. PREVENTION OF IMMEDIATE PAYMENT; STATUS AS CREDITORS; INTEREST

To the extent that the provisions of Chapter 5 prevent the payment to any
holders of dissenting shares of their fair market value, they shall become
creditors of the corporation for the amount thereof together with interest at
the legal rate on judgments until the date of payment, but subordinate to all
other creditors in any liquidation proceeding, such debt to be payable when
permissible under the provisions of Chapter 5.

Annex F-3
<PAGE>
SECTION 1307. DIVIDENDS ON DISSENTING SHARES

Cash dividends declared and paid by the corporation upon the dissenting
shares after the date of approval of the reorganization by the outstanding
shares (Section 152) and prior to payment for the shares by the corporation
shall be credited against the total amount to be paid by the corporation
therefor.

SECTION 1308. RIGHTS OF DISSENTING SHAREHOLDERS PENDING VALUATION; WITHDRAWAL
OF DEMAND FOR PAYMENT

Except as expressly limited in this chapter, holders of dissenting shares
continue to have all the rights and privileges incident to their shares,
until the fair market value of their shares is agreed upon or determined. A
dissenting shareholder may not withdraw a demand for payment unless the
corporation consents thereto.

SECTION 1309. TERMINATION OF DISSENTING SHARE AND SHAREHOLDER STATUS

Dissenting shares lose their status as dissenting shares and the holders
thereof cease to be dissenting shareholders and cease to be entitled to
require the corporation to purchase their shares upon the happening of any of
the following:

(a) The corporation abandons the reorganization. Upon abandonment of the
reorganization, the corporation shall pay on demand to any dissenting
shareholder who has initiated proceedings in good faith under this chapter
all necessary expenses incurred in such proceedings and reasonable attorneys'
fees.

(b) The shares are transferred prior to their submission for endorsement
in accordance with Section 1302 or are surrendered for conversion into shares
of another class in accordance with the articles.

(c) The dissenting shareholder and the corporation do not agree upon the
status of the shares as dissenting shares or upon the purchase price of the
shares, and neither files a complaint or intervenes in a pending action as
provided in Section 1304, within six months after the date on which notice of
the approval by the outstanding shares or notice pursuant to subdivision (i)
of Section 1110 was mailed to the shareholder.

(d) The dissenting shareholder, with the consent of the corporation,
withdraws the shareholder's demand for purchase of the dissenting shares.

SECTION 1310. SUSPENSION OF RIGHT TO COMPENSATION OR VALUATION PROCEEDINGS;
LITIGATION OF SHAREHOLDERS' APPROVAL

If litigation is instituted to test the sufficiency or regularity of the
votes of the shareholders in authorizing a reorganization, any proceedings
under Sections 1304 and 1305 shall be suspended until final determination of
such litigation.

SECTION 1311. EXEMPT SHARES

This chapter, except Section 1312, does not apply to classes of shares
whose terms and provisions specifically set forth the amount to be paid in
respect to such shares in the event of a reorganization or merger.

SECTION 1312. RIGHT OF DISSENTING SHAREHOLDER TO ATTACK, SET ASIDE OR RESCIND
MERGER OR REORGANIZATION; RESTRAINING ORDER OR INJUNCTION; CONDITIONS

(a) No shareholder of a corporation who has a right under this chapter to
demand payment of cash for the shares held by the shareholder shall have any
right at law or in equity to attack the validity of the reorganization or
short-form merger, or to have the reorganization or short-form merger set
aside or rescinded, except in an action to test whether the number of shares
required to authorize or approve the reorganization have been legally voted
in favor thereof; but any holder of shares of a class whose terms and
provisions specifically set forth the amount to be paid in respect to them in
the event of a reorganization or short-form merger is entitled to payment in
accordance with those terms and provisions

Annex F-4
<PAGE>
or, if the principal terms of the reorganization are approved pursuant to
subdivision (b) of Section 1202, is entitled to payment in accordance with
the terms and provisions of the approved reorganization.

(b) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, subdivision (a) shall not
apply to any shareholder of such party who has not demanded payment of cash
for such shareholder's shares pursuant to this chapter; but if the
shareholder institutes any action to attack the validity of the
reorganization or short-form merger or to have the reorganization or
short-form merger set aside or rescinded, the shareholder shall not
thereafter have any right to demand payment of cash for the shareholder's
shares pursuant to this chapter. The court in any action attacking the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded shall not restrain
or enjoin the consummation of the transaction except upon 10 days' prior
notice to the corporation and upon a determination by the court that clearly
no other remedy will adequately protect the complaining shareholder or the
class of shareholders of which such shareholder is a member.

(c) If one of the parties to a reorganization or short-form merger is
directly or indirectly controlled by, or under common control with, another
party to the reorganization or short-form merger, in any action to attack the
validity of the reorganization or short-form merger or to have the
reorganization or short-form merger set aside or rescinded, (1) a party to a
reorganization or short-form merger which controls another party to the
reorganization or short-form merger shall have the burden of proving that the
transaction is just and reasonable as to the shareholders of the controlled
party, and (2) a person who controls two or more parties to a reorganization
shall have the burden of proving that the transaction is just and reasonable
as to the shareholders of any party so controlled.

Annex F-5

<PAGE>
PROXY

BEC GROUP, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF BEC GROUP, INC.
FOR THE SPECIAL MEETING OF STOCKHOLDERS--FEBRUARY , 1998

The undersigned stockholder hereby appoints Martin E. Franklin and Ian G.H.
Ashken and each of them, the true and lawful attorneys and proxies of the
undersigned with full power of substitution, to vote all shares of Common
Stock of BEC Group, Inc. ("BEC"), which the undersigned is entitled to vote
at the Special Meeting of Stockholders of the Company to be held on January
12, 1998 and at any and all adjournments and postponements thereof, for the
transaction of such business as may properly come before the Meeting,
including the items set forth on the reverse side hereof.

The shares represented by this Proxy will be voted in the manner directed
herein, but if no direction is made with respect to the voting of Common
Stock, this Proxy will be voted FOR (i) the approval and adoption of the
Agreement and Plan of Merger, as amended, and the issuance of shares
thereunder; (ii) the approval of an amendment of the Restated Certificate of
Incorporation to effect a one-for-two reverse split; (iii) the election of 4
additional directors to BEC's Board of Directors; (iv) the approval of an
amendment to the Restated Certificate of Incorporation to change the name of
BEC Group, Inc. to "Lumen Technologies, Inc."; and (v) the approval of an
amendment to the 1996 Stock Incentive Plan.

YOU ARE ENCOURAGED TO SPECIFY YOUR CHOICES BY MARKING THE APPROPRIATE BOXES,
SEE REVERSE SIDE, BUT YOU NEED NOT MARK ANY BOXES IF YOU WISH TO VOTE IN
ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. THE PROXIES CANNOT
VOTE YOUR SHARES UNLESS YOU SIGN AND RETURN THIS CARD.

(Please sign on reverse side)
(OVER)

<PAGE>

[X] Please mark your votes as in this example.
The Board of Directors recommends a vote FOR the Proposals.

1. APPROVAL AND ADOPTION OF AGREEMENT AND PLAN OF MERGER, AS AMENDED AND
THE ISSUANCE OF SHARES THEREUNDER:
FOR [ ] AGAINST [ ] ABSTAIN [ ]

2. APPROVAL OF AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO EFFECT A ONE-FOR-TWO REVERSE SPLIT:
FOR [ ] AGAINST [ ] ABSTAIN [ ]

3. ELECTION OF 4 ADDITIONAL DIRECTORS TO BEC'S BOARD OF DIRECTORS:
[ ] FOR all nominees listed below
(except as marked to the contrary below)

[ ] WITHHOLD AUTHORITY to vote for
all nominees listed below

Harrison H. Augur, Henry C. Baumgartner, Richard D. Capra,
George B. Clairmont

INSTRUCTION: To withhold authority to vote for any individual nominee,
strike a line through or otherwise strike the nominee's
name in the list above.

4. APPROVAL OF AN AMENDMENT TO THE RESTATED CERTIFICATE OF INCORPORATION
TO CHANGE THE NAME OF BEC GROUP, INC. TO "LUMEN TECHNOLOGIES, INC.":
FOR [ ] AGAINST [ ] ABSTAIN [ ]

5. APPROVAL OF AN AMENDMENT TO THE 1996 STOCK INCENTIVE PLAN:
FOR [ ] AGAINST [ ] ABSTAIN [ ]

IN THEIR DISCRETION, THE PROXIES ARE
AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS
AS MAY PROPERLY COME BEFORE THE MEETING.

SIGNATURE(S)
--------------------------------------------

DATE
--------------------------------------------
Please sign exactly as name appears hereon.
Joint owners should each sign. When signing
as attorney, executor, administrator,
trustee or guardian, please give full title
as such.

<PAGE>
PROXY

ILC TECHNOLOGY, INC.
399 Java Drive
Sunnyvale, CA 94089
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF
ILC TECHNOLOGY, INC. FOR USE AT THE SPECIAL MEETING OF SHAREHOLDERS ON ,
, 1998

The undersigned hereby appoints HENRY C. BAUMGARTNER, RICHARD D. CAPRA, and
each of them, as Proxies, with the powers the undersigned would have if
personally present and with power to appoint his substitute, and hereby
authorizes them to represent and to vote, as designated below, all the shares
of ILC Technology, Inc. held of record by the undersigned on January 12,
1998, at the Special Meeting of Shareholders to be held on , , 1998,
at 11:00 a.m. local time at 277 Park Avenue, 18th Floor, New York, New York,
or any adjournment or postponement thereof, upon all subjects which may come
before the meeting including the matters described in the Joint Proxy
Statement/Prospectus furnished herewith. The shares represented by this proxy
shall be voted in the following manner.

1. PROPOSAL TO APPROVE AND ADOPT AN AGREEMENT AND PLAN OF MERGER, DATED AS
OF OCTOBER 30, 1997, AS AMENDED, AMONG BEC GROUP, INC., BILC
ACQUISITION CORP. AND ILC TECHNOLOGY, INC.:
FOR [ ] AGAINST [ ] ABSTAIN [ ]

(Please sign on reverse side)
(OVER)

<PAGE>
WHEN PROPERLY EXECUTED AND RETURNED TO THE COMPANY, THIS PROXY WILL BE VOTED
IN THE MANNER DIRECTED HEREIN BY THE UNDERSIGNED SHAREHOLDER.
IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED FOR PROPOSAL 1 AND AT THE
DISCRETION OF THE PROXY HOLDERS UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME
BEFORE THE MEETING.

Please sign exactly as name appears below.

When shares are held by joint tenants, both
should sign. When signing as attorney,
executor, administrator, trustee or
guardian, give full title as such. If a
corporation, sign in full corporate name by
President or other authorized officer. If a
partnership, sign in partnership name by
authorized person.

Dated: , 1998

--------------------------------------------
(Signature)

--------------------------------------------
(Signature If Held Jointly)

PLEASE VOTE, SIGN, DATE AND RETURN THIS
PROXY CARD PROMPTLY USING THE ENCLOSED
ENVELOPE

<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Section 145 of the DGCL makes provision for the indemnification of
officers and directors of corporations in terms sufficiently broad to
indemnify the officers and directors of BEC under certain circumstances from
liabilities (including reimbursement of expenses incurred) arising under the
Securities Act.

As permitted by the DGCL, the BEC Certificate provides that, to the
fullest extent permitted by the DGCL, no director shall be liable to BEC or
to its stockholders for monetary damages for breach of his fiduciary duty as
a director. Delaware law does not permit the elimination of liability (i) for
any breach of the director's duty of loyalty to BEC or its stockholders, (ii)
for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) in respect of certain
unlawful dividend payments or stock redemptions or repurchases or (iv) for
any transaction from which the director derives an improper personal benefit.
The effect of this provision in the BEC Certificate is to eliminate the
rights of BEC and its stockholders (through stockholders' derivative suits on
behalf to BEC) to recover monetary damages against a director for breach of
fiduciary duty as a director thereof (including breaches resulting from
negligent or grossly negligent behavior) except in the situations described
in clauses (i)-(iv), inclusive, above. These provisions will not alter the
liability of directors under federal securities laws.

BEC's Bylaws provide that BEC may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative
or investigative (other than an action by or in the right of BEC) by reason
of the fact that he is or was a director, officer, employee or agent of BEC
or is or was serving at the request of BEC as a director, officer, employee
or agent of another corporation or enterprise, against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually
and reasonably incurred by such person in connection with such action, suit
or proceeding if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the best interests of BEC,
and, with respect to any criminal action or proceeding, had no reasonable
cause to believe such person's conduct was unlawful.

The Bylaws also provide that BEC may indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of BEC to procure a judgment in
its favor by reason of the fact that such person acted in any of the
capacities set forth above, against expenses (including attorneys' fees)
actually and reasonably incurred by such person in connection with the
defense or settlement of such action or suit if such person acted under
similar standards, except that no indemnification may be made in respect of
any claim, issue or matter as to which such person shall have been adjudged
to be liable to BEC unless and only to the extent that the Court of Chancery
of the State of Delaware or the court in which such action or suit was
brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Court
of Chancery or such other court shall deem proper.

The Bylaws also provide that to the extent a director or officer of BEC
has been successful in the defense of any action, suit or proceeding referred
to in the previous paragraphs or in the defense of any claim, issue, or
matter therein, he shall be indemnified against expenses (including
attorneys' fees) actually and reasonably incurred by him in connection
therewith; that indemnification provided for in the Bylaws shall not be
deemed exclusive of any other rights to which the indemnified party may be
entitled; and that BEC may purchase and maintain insurance on behalf of a
director or officer of BEC against any liability asserted against him or
incurred by him in any such capacity or arising out of his status as such
whether or not BEC would have the power to indemnify him against such
liabilities under such Bylaws.

II-1
<PAGE>
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------------------------
<S> <C>
*2.1 Agreement and Plan of Merger, dated as of October 30, 1997, by and among BEC, Acquisition Corp.
and ILC (incorporated by reference from Annex A to the Joint Proxy Statement/Prospectus).
**2.2 Amendment No. 1 to the Merger Agreement dated January 6, 1998 by and among BEC, Acquisitions
Corp. and ILC (incorporated by reference from Annex A to the Joint Proxy Statement/Prospectus).
3.1 Restated Certificate of Incorporation of BEC. Incorporated by reference to Exhibit 3.1 to BEC's
Registration Statement on Form S-1.
3.2 By-laws of BEC. Incorporated by reference to Exhibit 3.2 to BEC's Registration Statement on
Form S-1.
3.3 Certificate of Designations of the Series A Preferred Stock of BEC Group, Inc. Incorporated by
reference to the Form 8-K, date of event--July 10, 1997.
***3.4 Form of Certificate of Amendment to Restated Certificate of Incorporation of BEC.
*3.5 Form of Amendment to the Bylaws of BEC.
4.1 1996 BEC Group, Inc. Stock Incentive Plan. Incorporated by reference to Exhibit 4.1 to BEC's
Registration Statement on Form S-1.
4.2 Form of Agreement for Conversion and Exchange of Note, by and among Benson Eyecare Corporation;
BEC Group, Inc.; and Convertible Note holders. Incorporated by reference to Annex F to Benson
Eyecare Corporation's Proxy Statement dated April 5, 1996.
+4.3 BEC Group, Inc. 1996 Employee Stock Purchase Plan (this exhibit as filed includes the
subscription and withdrawal forms for Plan participants). Incorporated by reference to Exhibit
4.2 to BEC's Quarterly Report on Form 10-Q for the period ended June 30, 1996.
4.4 Form of Registration Rights Agreement, dated as of May 3, 1996, by and among BEC and
Convertible Note holders. Incorporated by reference to Exhibit 4.4 to BEC's Registration
Statement on Form S-3.
4.5 Form of Indenture, dated as of May 3, 1996, including form of Convertible Note. Incorporated by
reference to Exhibit 4.5 to BEC's Registration Statement on Form S-3.
+***4.6 Form of Amended and Restated BEC 1996 Stock Incentive Plan (supercedes the form filed with
Amendment No. 1 to the Registration Statement on Form S-4 filed with the Commission on January
12, 1998).
***5.1 Opinion of Kane Kessler, P.C., including consent.
**8.1 Tax Opinion of Davis Polk & Wardwell.
10.1 Agreement and Plan of Merger, dated as of February 11, 1996, between Essilor International,
S.A., Essilor of America, Inc., Essilor Acquisition Corporation, Benson Eyecare Corporation,
BEC Group, Inc. and Omega Opco, Inc. Incorporated by reference to Exhibit 10.1 to BEC's
Registration Statement on Form S-1.
10.2 Form of Spinoff Agreement between Benson Eyecare Corporation and BEC Group, Inc. Incorporated
by reference to Exhibit 10.2 to BEC's Registration Statement on Form S-1.
10.3 Indemnification Agreement, dated as of February 11, 1996, by and among Essilor International,
S.A., Essilor of America, Inc., Essilor Acquisition Corporation, Benson Eyecare Corporation,
and BEC Group, Inc. Incorporated by reference to Exhibit 10.3 to BEC's Registration Statement
on Form S-1.

II-2
<PAGE>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------------------------
10.4 Form of Indemnification Agreement. Incorporated by reference to Exhibit 10.4 to BEC's Current
Report on Form 10-Q.
10.5 Asset Purchase Agreement, dated as of February 11, 1996, by and among Benson Eyecare
Corporation, BEC Group, Inc. and Optical Radiation Corporation and Monsanto Company.
Incorporated by reference to Exhibit 10.2 to Benson Eyecare Corporation's Current Report on
Form 8-K, dated February 12, 1996.
10.6 Credit Agreement among BEC Group, Inc. and NationsBank, N.A., et al, dated as of April 3, 1996.
Filed together with such Exhibit 10.6 are copies of the following ancillary agreements
(incorporated by reference to Exhibit 10.6 to BEC's Quarterly Report on Form 10-Q for the
period ended June 30, 1996):
(a)Subsidiary Guaranty Agreement, dated as of April 3, 1996, among certain subsidiaries of BEC
Group, Inc. and NationsBank, N.A.
(b)Assignment of Patents, Trademarks, Copyrights and Licenses, dated as of April 3, 1996.
(c)Intellectual Property Security Agreement, dated as of April 3, 1996.
(d)Stock Pledge Agreement, dated as of April 3, 1996.
(e)Collateral Assignment of Partnership Interests, dated as of April 3, 1996.
(f)Security Agreement, dated as of April 3, 1996.
10.7 Amendment No. 1 to Credit Agreement (see Exhibit 10.6, above) dated as of June 17, 1996, by and
among BEC, et al. Incorporated by reference to BEC's Annual Report on Form 10-K for the year
ended December 31, 1996.
10.8 Amendment No. 2 to Credit Agreement (see Exhibit 10.6, above), dated as of October 31, 1996, by
and among the Company et al. Incorporated by reference to Exhibit 10.1 to the Company's
Quarterly Report on Form 10-Q for the period ended September 30, 1996.
10.9 Amendment No. 3 to Credit Agreement (see Exhibit 10.6, above), dated December 1996, by and
among BEC, et al. Incorporated by reference to BEC's Annual Report on Form 10-K for the year
ended December 31, 1996.
10.10 Stock Purchase Agreement, dated as of November 13, 1996, by and among BEC Group, Inc., Foster
Grant Group, L.P., Foster Grant Holdings, L.P. and Accessories Associates, Inc. Incorporated by
reference to Exhibit 2.1 to BEC's Quarterly Report on Form 10-Q/A for the period ended
September 30, 1996.
+10.11 Employment Agreement, dated as of July 1, 1993, between BEC and Mr. Martin E. Franklin.
Incorporated by reference to Exhibit 10.34 to Benson Eyecare Corporation's Registration
Statement on Form S-1.
+10.12 Amendment No. 1, dated as of October 31, 1996, to Employment Agreement dated July 1, 1993,
between BEC and Mr. Martin E. Franklin. Incorporated by reference to BEC's Annual Report on
Form 10-K for the year ended December 31, 1996.
+10.13 Employment Agreement, dated as of July 1, 1993, between BEC and Mr. Ian G.H. Ashken.
Incorporated by reference to Exhibit 10.2 to Benson Eyecare Corporation's Registration
Statement on Form S-1.
+10.14 Amendment No. 1, dated as of October 31, 1996, to Employment Agreement dated July 1, 1993,
between BEC Mr. Ian G.H. Ashken. Incorporated by reference to BEC's Annual Report on Form 10-K
for the year ended December 31, 1996.

II-3
<PAGE>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------------------------
10.15 Merger Agreement, dated as of June 30, 1994, among BEC (as assignee), Benson Acquisition
Company, Inc. and Optical Radiation Corporation. Incorporated by reference to Exhibit 99.1 to
Benson Eyecare Corporation's Current Report on Form 8-K, date of event June 30, 1994.
10.16 Amendment No. 1 to Merger Agreement, dated as of July 6, 1994, among BEC (as assignee), Benson
Acquisition Company, Inc. and Optical Radiation Corporation. Incorporated by reference to
Exhibit 99.2 to Benson Eyecare Corporation's Current Report on Form 8-K, date of event June 30,
1994.
10.17 Amendment No. 2 to Merger Agreement, dated as of August 29, 1994, by and among BEC, Optical
Radiation Corporation and Benson Acquisition Corporation. Incorporated by reference to Annex E
to Benson Eyecare Corporation's Registration Statement on Form S-4, dated September 12, 1994.
10.18 Agreement and Plan of Reorganization, dated as of September 30, 1994, by and among Superior
Vision Services, Inc., BEC (as assignee) and Charles D. Fritch, M.D. BEC agrees to furnish
supplementally to the Commission upon request a copy of any omitted schedules or exhibits.
Incorporated by reference to Exhibit 10.2 to Benson Eyecare Corporation's Quarterly Report on
Form 10-Q for the period ended September 30, 1994.
10.19 Loan Agreement by and among BEC (as assignee) and First Interstate Bank of Texas, N.A.,
relating to the real property located in Dallas, Texas. Incorporated by reference to Exhibit
10.24 to Benson Eyecare Corporation's Annual Report on Form 10-K for the year ended December
31, 1995.
10.20 First Amendment to Loan Agreement (see Exhibit 10.19, above) and Other Loan Documents, dated
May 3, 1996, by and among Foster Grant Group, L.P., BEC, and, First Interstate Bank of Texas,
N.A. Incorporated by reference to BEC's Annual Report on Form 10-K for the year ended December
31, 1996.
10.21 Second Amendment to Loan Agreement (see Exhibit 10.19, above) and Other Loan Documents, dated
December 12, 1996, by and among Wells Fargo Bank (Texas), N.A. (as successor to First
Interstate Bank of Texas, N.A.), ORC Management Corporation, Foster Grant Group, L.P., and BEC.
Incorporated by reference to BEC's Annual Report on Form 10-K for the year ended December 31,
1996.
10.22 Deed of Trust, Security Agreement and Financing Statement, dated March 31, 1995, relating to
mortgage of real property located in Dallas, Texas. Incorporated by reference to BEC's Annual
Report on Form 10-K for the year ended December 31, 1996.
10.23 Agreement and Plan of Merger, dated as of July 26, 1995, among Benson Eyecare Corporation,
Benson Acquisition Corp., and, Bolle America, Inc. Incorporated by reference to Exhibit 10.1 to
Benson Eyecare Corporation's Current Report on Form 8-K, dated August 3, 1995.
10.24 Separation Agreement by and between BEC and Mr. William T. Sullivan. Incorporated by reference
to BEC's Annual Report on Form 10-K for the year ended December 31, 1996.
10.25 Amended and Restated Share Purchase Agreement, dated July 9, 1997, by and among BEC Group, Inc.
and Bolle Inc., on the one hand, and Mr. Robert Bolle, Mr. Maurice Bolle, Mr. Franck Bolle,
Mrs. Patricia Bolle Passaquay, Ms. Brigitte Bolle and Mrs. Christelle Roche (collectively, the
"Sellers"). Incorporated by reference to the Form 8-K, date of event July 10, 1997.
10.26 Warrant Agreement, dated as of July 9, 1997, by and among BEC and each of the Sellers.
Incorporated by reference to the Form 8-K, date of event July 10, 1997.

II-4
<PAGE>
EXHIBIT NO. DESCRIPTION
- --------------- -----------------------------------------------------------------------------------------------
10.27 Amended and Restated Credit Agreement, dated as of July 10, 1997, among BEC Group, Inc., as
Borrower, and NationsBank National Association, Bank of Boston Connecticut, Caisse Nationale de
Credit Agricole, European American Bank, Imperial Bank, National City Bank of Kentucky, and the
other financial institutions from time to time parties thereto, as Lenders, and NationsBank,
National Association, as Agent. Incorporated by reference to the Form 8-K, date of event July
10, 1997.
*10.28 Voting Agreement, dated as of October 30, 1997, between ILC and Martin E. Franklin
(incorporated by reference from Annex B to the Joint Proxy Statement/Prospectus).
*10.29 Voting Agreement, dated as of October 30, 1997, between BEC, Acquisition Corp. and Henry C.
Baumgartner (incorporated by reference from Annex C to the Joint Proxy Statement/Prospectus).
*10.30 Form of Indemnification Agreement between BEC, Acquisition Corp. and Bolle.
**10.31 Form of Bill of Sale and Assignment Agreement between BEC and Bolle (supercedes the form filed
with the Registration Statement on Form S-4 filed with the Commission on November 19, 1997).
*10.32 Form of Management Services Agreement between Bolle and BEC.
*10.33 Fairness Opinion of Raymond James & Associates, Inc. (incorporated by reference from Annex D to
the Joint Proxy Statement/Prospectus).
*10.34 Fairness Opinion of Donaldson, Lufkin & Jenrette Securities Corporation (incorporated by
reference from Annex E to the Joint Proxy Statement/Prospectus).
*21.1 Subsidiaries of BEC.
***23.1 Consent of Kane Kessler, P.C. (included in Exhibit 5.1).
***23.2 Consent of Price Waterhouse LLP.
***23.3 Consent of Arthur Andersen LLP.
***23.4 Consent of KPMG Peat Marwick LLP.
***23.5 Consent of Raymond James & Associates, Inc.
***23.6 Consent of Donaldson, Lufkin & Jenrette Securities Corporation
**23.7 Consent of Davis Polk & Wardwell (included in Exhibit 8.1).
*24.1 Power of Attorney (included on signature page).
</TABLE>

- ------------
+ Management or compensatory plan.
* Filed with the Registration Statement on Form S-4 filed with the
Commission on November 19, 1997.
** Filed with Amendment No. 1 to the Registration Statement on Form S-4
filed with the Commission on January 12, 1998.
*** Filed herewith.

II-5
<PAGE>
ITEM 22. UNDERTAKINGS

BEC hereby undertakes

1. To file, during any period in which it offers or sales are being made,
a post-effective amendment to this registration statement:

(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission
pursuant to Rule 424(b) if, in the aggregate, the changes in volume and
price represent no more than a 20% change in the maximum aggregate
offering price set forth in the "Calculation of the Registration Fee"
table in the effective registration statement; and

(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.

2. That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering.

3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.

4. BEC hereby undertakes that, for purposes of determining any liability
under the Securities Act, each filing of BEC's annual report pursuant to
Section 13(a) or 15(d) of the Exchange Act that is incorporated by reference
in the registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial bona fide
offering thereof.

5. BEC hereby undertakes to deliver or cause to be delivered with the
prospectus, to each person to whom the prospectus is sent or given, the
latest annual report to security holders that is incorporated by reference in
the prospectus and furnished pursuant to and meeting the requirements of Rule
14A-3 or Rule 14c-3 under the Exchange Act; and, where interim financial
information required to be presented by Article 3 of Regulation S-X is not
set forth in the prospectus, to deliver, or cause to be delivered to each
person to whom the prospectus is sent or given, the latest quarterly report
that is specifically incorporated by reference in the prospectus to provide
such interim financial information.

6. (i) BEC hereby undertakes as follows: that prior to any public
reoffering of the securities registered hereunder through use of a prospectus
which is a part of this registration statement, by any person or party who is
deemed to be an underwriter within the meaning of Rule 145(c), BEC undertakes
that such reoffering prospectus will contain the information called for by
the applicable registration form with respect to reofferings by persons who
may be deemed underwriters, in addition to the information called for by the
other items of the applicable form.

(ii) BEC undertakes that every prospectus: (i) that is filed pursuant to
paragraph 6(i) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act and is used in
connection with an offering of securities subject to Rule 415, will be filed
as a part of an amendment to the registration statement and will not be used
until such amendment is effective, and that, for purposes of determining any
liability under the Securities Act, each such post-effective amendment shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

II-6
<PAGE>
7. Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of BEC pursuant to the foregoing provisions, or otherwise, BEC has
been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by BEC of expenses incurred or paid by a
director, officer or controlling person of BEC in the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
controlling person in connection with the securities being registered, BEC
will, unless in the opinion of its counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.

8. (i) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form of
prospectus filed by BEC pursuant to Rule 424(b)(1) or (4) or 497(h) under the
Securities Act shall be deemed to be part of this registration statement as
of the time it was declared effective.

(ii) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.

9. BEC hereby undertakes to respond to requests for information that is
incorporated by reference into the prospectus pursuant to Items 4, 10(b), 11,
or 13 of this Form, within one business day of receipt of such request, and
to send the incorporated documents by first class mail or other equally
prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the
date of responding to the request.

10. BEC hereby undertakes to supply by means of a post-effective amendment
all information concerning a transaction, and the company being acquired
involved therein, that was not the subject of and included in the
registration statement when it became effective.

II-7
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act, BEC has duly caused
this amendment to registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in New York City, State of New York,
on January 27, 1998.
BEC GROUP, INC.

By: /s/ Martin E. Franklin
----------------------
Martin E. Franklin
Chairman of the Board
of Directors
and Chief Executive
Officer

II-8
<PAGE>
Pursuant to the requirements of the Securities Act, this amendment to
registration statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
NAME TITLE DATE
- -------------------------------- --------------------------------------- -------------------

<S> <C> <C>
/s/Martin E. Franklin Chairman of the Board of Directors
-------------------------------- and Chief Executive Officer
Martin E. Franklin (Principal Executive Officer) January 27, 1998

Executive Vice President of Finance and
Administration,
/s/Ian G.H. Ashken Chief Financial Officer,
-------------------------------- Assistant Secretary and Director
Ian G.H. Ashken (Principal Accounting Officer) January 27, 1998

*
--------------------------------
Nora A. Bailey Director January 27, 1998

*
--------------------------------
Richard W. Hanselman Director January 27, 1998

*
--------------------------------
David L. Moore Director January 27, 1998

*
--------------------------------
Charles F. Sydnor Director January 27, 1998

*
--------------------------------
William T. Sullivan Director January 27, 1998

* By:/s/ Martin E. Franklin
----------------------------
Attorney-in-fact

</TABLE>

II-9
<PAGE>
EXHIBIT INDEX

<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION PAGE
- --------------- ---------------------------------------------------------------------------------------- --------
<S> <C> <C>
*2.1 Agreement and Plan of Merger, dated as of October 30, 1997, by and among BEC,
Acquisition Corp. and ILC (incorporated by reference from Annex A to the Joint Proxy
Statement/Prospectus).
**2.2 Amendment No. 1 to the Merger Agreement dated January 6, 1998 by and among BEC,
Acquisitions Corp. and ILC (incorporated by reference from Annex A to the Joint Proxy
Statement/Prospectus).
***3.4 Form of Certificate of Amendment to Restated Certificate of Incorporation of BEC.
*3.5 Form of Amendment to the Bylaws of BEC.
+***4.6 Form of Amended and Restated BEC 1996 Stock Incentive Plan (supercedes the form filed
with Amendment No. 1 to the Registration Statement on Form S-4 filed with the Commission
on January 12, 1998).
***5.1 Opinion of Kane Kessler, P.C., including consent.
**8.1 Tax Opinion of Davis Polk & Wardwell.
*10.28 Voting Agreement, dated as of October 30, 1997, between ILC and Martin E. Franklin
(incorporated by reference from Annex B to the Joint Proxy Statement/Prospectus).
*10.29 Voting Agreement, dated as of October 30, 1997, between BEC, Acquisition Corp. and Henry
C. Baumgartner (incorporated by reference from Annex C to the Joint Proxy
Statement/Prospectus).
*10.30 Form of Indemnification Agreement between BEC, Acquisition Corp. and Bolle.
**10.31 Form of Bill of Sale and Assignment Agreement between BEC and Bolle (supercedes the form
filed with the Registration Statement on Form S-4 filed with the Commission on November
19, 1997).
*10.32 Form of Management Services Agreement between Bolle and BEC.
*10.33 Fairness Opinion of Raymond James & Associates, Inc. (incorporated by reference from
Annex D to the Joint Proxy Statement/Prospectus).
*10.34 Fairness Opinion of Donaldson, Lufkin & Jenrette Securities Corporation (incorporated by
reference from Annex E to the Joint Proxy Statement/Prospectus).
*21.1 Subsidiaries of BEC.
***23.1 Consent of Kane Kessler, P.C. (included in Exhibit 5.1).
***23.2 Consent of Price Waterhouse LLP.
***23.3 Consent of Arthur Andersen LLP.
***23.4 Consent of KPMG Peat Marwick LLP.
***23.5 Consent of Raymond James & Associates, Inc.
***23.6 Consent of Donaldson, Lufkin & Jenrette Securities Corporation
**23.7 Consent of Davis Polk & Wardwell (included in Exhibit 8.1).
*24.1 Power of Attorney (included on signature page).
</TABLE>

<PAGE>

[FORM OF]

CERTIFICATE OF AMENDMENT
OF THE
RESTATED CERTIFICATE OF INCORPORATION
OF
BEC GROUP, INC.

(Under Section 242 of the General Corporation Law)

It is hereby certified that:

FIRST: The name of the corporation is BEC Group, Inc. (the
"Corporation").

SECOND: The Restated Certificate of Incorporation of the Corporation
is hereby amended by striking out Article First thereof and by substituting in
lieu of said Article First the following new Article First:

"The name of the Corporation (hereinafter referred to as the
"Corporation") is:

LUMEN TECHNOLOGIES, INC."

THIRD: The Restated Certificate of Incorporation of the Corporation is
hereby further amended by striking out Article Fourth thereof and by
substituting in lieu of said Article Fourth the following new Article Fourth:

"The total number of shares of stock which the Corporation shall
have authority to issue is 50,000,000 shares of common stock,
having a par value of $.01 per share and 500,000 shares of
preferred stock having a par value of $1.00 per share. There is
hereby expressly vested in the Board of Directors the authority
to fix in the resolution or resolutions providing for the issue
of each series of such preferred stock, the voting power and the
designations, preferences and relative, participating,
operational or other rights of each such series, and the
qualifications, limitations or restrictions thereof. Shares of
preferred stock may be issued from time to time in one or more
series as may from time to time be determined by the Board of
Directors, each such series to be distinctly designated.

Effective upon the filing of this Certificate of Amendment with
the

<PAGE>

Secretary of State of the State of Delaware (the "Effective
Time"), each two shares of common stock, par value $.01 per
share, issued and outstanding immediately prior to the Effective
Time (the "Old Common Stock") shall automatically be reclassified
and continued, without any action on the part of the holder
thereof, as one share of common stock, par value $.01 per share
(the "New Common Stock") and, in lieu of any interest of a
fraction of a share of New Common Stock, each holder whose
aggregate holdings of Old Common Stock prior to the Effective
Time amounted to a number of shares not evenly divisible by two,
shall be entitled to receive for and in lieu of such interest in
such fraction of a share of Old Common Stock ("Share"), at the
Effective Time, and upon the surrender of the stock certificates
formerly representing shares of Old Common Stock, an amount in
cash equal to the closing price on The New York Stock Exchange
for a share of Old Common Stock on the trading day prior to the
Effective Time multiplied by one."

FOURTH: The foregoing amendments of the Restated Certificate of
Incorporation of the Corporation herein certified have been duly adopted in
accordance with the provisions of Section 242 of the General Corporation Law of
the State of Delaware.

IN WITNESS WHEREOF, this document has been executed by Martin E.
Franklin, its Chairman of the Board and Chief Executive Officer, on the date
set forth below.

Dated: ___________, 1998

-----------------------------
Martin E. Franklin
Chairman of the Board
and Chief Executive Officer
BEC Group, Inc.

<PAGE>

BEC GROUP, INC.
1996 STOCK INCENTIVE PLAN
(AMENDED AND RESTATED AS OF OCTOBER 30, 1997)

1. PURPOSE

The purpose of the Plan is to provide a means through which the Company and
its Subsidiaries and Affiliates may attract able persons to enter and remain in
the employ of the Company and its Subsidiaries and Affiliates and to provide a
means whereby employees, directors and consultants of the Company and its
Subsidiaries and Affiliates can acquire and maintain Common Stock ownership, or
be paid incentive compensation measured by reference to the value of Common
Stock, thereby strengthening their commitment to the welfare of the Company and
its Subsidiaries and Affiliates and promoting an identity of interest between
stockholders and these employees.

So that the appropriate incentive can be provided, the Plan provides for
granting Incentive Stock Options, Nonqualified Stock Options, Stock
Appreciation Rights, Restricted Stock Awards, Phantom Stock Unit Awards,
Performance Share Unit Awards and Stock Bonus Awards, or any combination of the
foregoing. The Plan also provides for the automatic formula grant of Restricted
Stock to Non-Employee Directors.

2. DEFINITIONS

The following definitions shall be applicable throughout the Plan.

(a) "Affiliate" means any affiliate of the Company within the meaning of 17
CFR ss. 230.405.

(b) "Award" means, individually or collectively, any Incentive Stock
Option, Nonqualified Stock Option, Stock Appreciation Right, Restricted Stock
Award, Phantom Stock Unit Award, Performance Share Unit Award, Stock Bonus
Award or Director Stock Award.

(c) "Award Period" means a period of time within which performance is
measured for the purpose of determining whether an Award of Performance Share
Units has been earned.

(d) "Benson" means Benson Eyecare Corporation, a Delaware corporation and
former Parent of the Company.

(e) "Board" means the Board of Directors of the Company.

(f) "Cause" means the Company, a Subsidiary or Affiliate having cause to
terminate a Participant's employment or service under any existing employment,
consulting or any other agreement

<PAGE>

between the Participant and the Company or a Subsidiary or Affiliate or, in the
absence of such an employment, consulting or other agreement, upon (i) the
determination by the Committee that the Participant has ceased to perform his
duties to the Company, a Subsidiary or Affiliate (other than as a result of his
incapacity due to physical or mental illness or injury), which failure amounts
to an intentional and extended neglect of his duties to such party, (ii) the
Committee's determination that the Participant has engaged or is about to
engage in conduct materially injurious to the Company, a Subsidiary or
Affiliate or (iii) the Participant having been convicted of a felony.

(g) "Change in Control" shall, unless the Board otherwise directs by
resolution adopted prior thereto or, in the case of a particular award, the
applicable Award agreement states otherwise, be deemed to occur if (i) any
"person" (as that term is used in Sections 13 and 14(d)(2) of the Exchange Act)
is or becomes the beneficial owner (as that term is used in Section 13(d) of
the Exchange Act), directly or indirectly, of 50% or more of either the
outstanding shares of Common Stock or the combined voting power of the
Company's then outstanding voting securities entitled to vote generally, (ii)
during any period of two consecutive years beginning on the date of the
consummation of the Spinoff, individuals who constitute the Board at the
beginning of such period cease for any reason to constitute at least a majority
thereof, unless the election or the nomination for election by the Company's
shareholders of each new director was approved by a vote of at least
three-quarters of the directors then still in office who were directors, or
approved by directors, at the beginning of the Spinoff period or (iii) the
Company undergoes a liquidation or dissolution or a sale of all or
substantially all of the assets of the Company. Neither the Spinoff nor any
merger, consolidation or corporate reorganization in which the owners of the
combined voting power of the Company's then outstanding voting securities
entitled to vote generally prior to said combination, own 50% or more of the
resulting entity's outstanding voting securities shall, by itself, be
considered a Change in Control.

(h) "Code" means the Internal Revenue Code of 1986, as amended. Reference
in the Plan to any section of the Code shall be deemed to include any
amendments or successor provisions to such section and any regulations under
such section.

(i) "Committee" means the full Board, the Compensation Committee of the
Board or such other committee of at least two people as the Board may appoint
to administer the Plan.

(j) "Common Stock" means the common stock par value $0.01 per share, of the
Company.

(k) "Company" means BEC Group, Inc.

2
<PAGE>

(l) "Date of Grant" means the date on which the granting of an Award is
authorized or such other date as may be specified in such authorization.

(m) "Director Stock Option" means the Award of a Nonqualified Stock Option
to Non-Employee Directors pursuant to Section 12.

(n) "Director Stock Option Agreement" means the agreement entered into with
respect to a Director Stock Option pursuant to Section 12.

(o) "Disability" means disability as defined in the long-term disability
plan of the Company, a Subsidiary or Affiliate, as may be applicable to the
Participant in question, or, in the absence of such a plan, the complete and
permanent inability by reason of illness or accident to perform the duties of
the occupation at which a Participant was employed or served when such
disability commenced or, if the Participant was retired when such disability
commenced, the inability to engage in any substantial gainful activity, in
either case as determined by the Committee based upon medical evidence
acceptable to it.

(p) "Disinterested Person" means a person who is (i) a "nonemployee
director" within the meaning of Rule 16b-3 under the Exchange Act, or any
successor rule or regulation and (ii) an "outside director" within the meaning
of Section 162(m) of the Code; provided, however, that clause (ii) shall apply
only with respect to grants of Awards with respect to which the Company's tax
deduction could be limited by Section 162(m) of the Code if such clause did not
apply.

(q) "Eligible Person" means any (i) person regularly employed by the
Company, a Subsidiary or Affiliate who satisfies all of the requirements of
Section 6; provided, however, that no such employee covered by a collective
bargaining agreement shall be an Eligible Person unless and to the extent that
such eligibility is set forth in such collective bargaining agreement or in an
agreement or instrument relating thereto; (ii) director of the Company, a
Subsidiary or Affiliate; or (iii) consultant to the Company, a Subsidiary or
Affiliate.

(r) "Exchange Act" means the Securities Exchange Act of 1934.

(s) "Fair Market Value" on a given date means (i) if the Stock is listed on
a national securities exchange, the mean between the highest and lowest sale
prices reported as having occurred on the primary exchange with which the Stock
is listed and traded on the date prior to such date, or, if there is no such
sale on that date, then on the last preceding date on which such a sale was
reported; (ii) if the Stock is not listed on any national securities exchange
but is quoted in the National Market System of the National Association of
Securities Dealers

3
<PAGE>

Automated Quotation System on a last sale basis, the average between the high
bid price and low ask price reported on the date prior to such date, or, if
there is no such sale on that date, then on the last preceding date on which a
sale was reported; (iii) if the Stock is not listed on a national securities
exchange nor quoted in the National Market System of the National Association
of Securities Dealers Automated Quotation System on a last sale basis, the
amount determined by the Committee to be the fair market value based upon a
good faith attempt to value the Stock accurately and computed in accordance
with applicable regulations of the Internal Revenue Service; or (iv)
notwithstanding clauses (i) - (iii) above, with respect to Awards granted as of
the consummation of the Spinoff, the price at which the Stock first begins
trading in a public trading market in connection with the Spinoff.

(t) "Holder" means a Participant who has been granted an Award.

(u) "Incentive Stock Option" means an Option granted by the Committee to a
Participant under the Plan which is designated by the Committee as an Incentive
Stock Option pursuant to Section 422 of the Code.

(v) "Merger" means the merger of ILC Technologies, Inc. with and into BILC
Acquisition Corp., a wholly owned subsidiary of the Company, as contemplated in
the Agreement and Plan of Merger, dated as of October 30, 1997 as amended by
Amendment No. 1 to the Merger Agreement dated January 6, 1998, by and among ILC
Technologies, Inc., BILC Acquisition Corp. and the Company.

(w) "Non-Employee Director" means a director of the Company who is not also
an employee of the Company.

(x) "Nonqualified Stock Option" means an Option granted by the Committee to
a Participant under the Plan which is not designated by the Committee as an
Incentive Stock Option.

(y) "Normal Termination" means termination of employment or service with
the Company and all Subsidiaries and Affiliates:

(i) Upon retirement pursuant to the retirement plan of the Company,
a Subsidiary or Affiliate, as may be applicable at the time to
the Participant in question;

(ii) On account of Disability;

(iii) With the written approval of the Committee; or

(iv) By the Company, a Subsidiary or Affiliate without Cause.

(z) "Option" means an Award granted under Section 7 of the Plan.

(aa) "Option Period" means the period described in Section 7(c).

(ab) "Option Price" means the exercise price set for an Option described in
Section 7(a).

4
<PAGE>

(ac) "Participant" means an Eligible Person who has been selected by the
Committee to participate in the Plan and to receive an Award pursuant to
Section 6 and a Non-Employee Director who has received an automatic grant of
Restricted Stock pursuant to Section 12.

(ad) "Performance Goals" means the performance objectives of the Company, a
Subsidiary or Affiliate during an Award Period or Restricted Period established
for the purpose of determining whether, and to what extent, Awards will be
earned for an Award Period or Restricted Period.

(ae) "Performance Share Unit" means a hypothetical investment equivalent
equal to one share of Stock granted in connection with an Award made under
Section 9 of the Plan.

(af) "Phantom Stock Unit" means a hypothetical investment equivalent equal
to one share of Stock granted in connection with an Award made under Section 10
of the Plan.

(ag) "Plan" means the Company's 1996 Stock Incentive Plan (Amended and
Restated as of October 30, 1997).

(ah) "Restricted Period" means, with respect to any share of Restricted
Stock or any Phantom Stock Unit, the period of time determined by the Committee
during which such Award is subject to the restrictions set forth in Section 10.

(ai) "Restricted Stock" means shares of Stock issued or transferred to a
Participant subject to forfeiture and the other restrictions set forth in
Section 10.

(aj) "Restricted Stock Award" means an Award of Restricted Stock granted
under Section 10 of the Plan.

(ak) "Securities Act" means the Securities Act of 1933, as amended.

(al) "Stock" means the Common Stock or such other authorized shares of
stock of the Company as the Committee may from time to time authorize for use
under the Plan.

(am) "Stock Appreciation Right" or "SAR" means an Award granted under
Section 8 of the Plan.

5
<PAGE>

(an) "Stock Bonus" means an Award granted under Section 11 of the Plan.

(ao) "Stock Option Agreement" means the agreement between the Company and a
Participant who has been granted an Option pursuant to Section 7 which defines
the rights and obligations of the parties as required in Section 7(d).

(ap) "Subsidiary" means any subsidiary of the Company as defined in Section
424(f) of the Code.

(aq) "Vested Unit" shall have the meaning ascribed thereto in Section
10(e).

3. EFFECTIVE DATE, DURATION AND SHAREHOLDER APPROVAL

The Plan is effective as of April 2, 1996, the date of adoption of the Plan
by the Board. The effectiveness of the Plan and the validity of any and all
Awards granted pursuant to the Plan is contingent upon approval of the Plan by
the stockholders of the Company in a manner which complies with Rule 16b-3
promulgated pursuant to the Exchange Act and Section 422(b)(1) of the Code.
Unless and until the stockholders approve the Plan in compliance therewith, no
Award granted under the Plan shall be effective. See Section 18 for the
applicability of the shareholder approval requirements of Section 162(m) of the
Code.

The expiration date of the Plan, after which no Awards may be granted
hereunder, shall be April 2, 2006; provided, however, that the administration
of the Plan shall continue in effect until all matters relating to the payment
of Awards previously granted have been settled.

4. ADMINISTRATION

The Committee shall administer the Plan. Unless the full Board is acting as
the Committee, each member of the Committee shall, at the time he takes any
action with respect to an Award under the Plan, be a Disinterested Person. The
majority of the members of the Committee shall constitute a quorum. The acts of
a majority of the members present at any meeting at which a quorum is present
or acts approved in writing by a majority of the Committee shall be deemed the
acts of the Committee.

Subject to the provisions of the Plan, the Committee shall have exclusive
power to:

(a) Select the Eligible Persons to participate in the Plan;

(b) Determine the nature and extent of the Awards, other than Director
Stock Options, to be made to each Participant;

6
<PAGE>

(d) Determine the duration of each Award Period and Restricted Period,
except with respect to a Director Stock Option;

(e) Determine the conditions to which the payment of Awards, other than
Director Stock Options, may be subject;

(f) Establish the Performance Goals for each Award Period;

(g) Prescribe the form of Stock Option Agreement or other form or forms
evidencing Awards; and

(h) Cause records to be established in which there shall be entered, from
time to time as Awards are made to Participants, the date of each Award, the
number of Incentive Stock Options, Nonqualified Stock Options, SARs, Phantom
Stock Units, Performance Share Units, shares of Restricted Stock and Stock
Bonuses awarded to each Participant, the expiration date, the Award Period and
the duration of any applicable Restricted Period.

The Committee shall have the authority, subject to the provisions of the
Plan, to establish, adopt, or revise such rules and regulations and to make all
such determinations relating to the Plan as it may deem necessary or advisable
for the administration of the Plan. The Committee's interpretation of the Plan
or any documents evidencing Awards granted pursuant thereto and all decisions
and determinations by the Committee with respect to the Plan shall be final,
binding, and conclusive on all parties unless otherwise determined by the
Board.

5. GRANT OF AWARDS; SHARES SUBJECT TO THE PLAN

The Committee may, from time to time, grant Awards of Options, Stock
Appreciation Rights, Restricted Stock, Phantom Stock Units, Performance Share
Units and/or Stock Bonuses to one or more Eligible Persons; provided, however,
that:

(a) Subject to Section 14, the aggregate number of shares of Stock
available for issuance with respect to all Awards is 4,250,000 shares;

(b) Such shares shall be deemed to have been used in payment of Awards
whether they are actually delivered or the Fair Market Value equivalent of such
shares is paid in cash. In the event any Option, SAR not attached to an Option,
Restricted Stock, Phantom Stock Unit or Performance Share Unit shall be
surrendered, terminate, expire, or be forfeited, the number of shares of Stock
no longer subject thereto shall thereupon be released and shall thereafter be
available for new Awards under the Plan;

(c) Stock delivered by the Company in settlement of Awards under the Plan
may be authorized and unissued Stock or Stock held

7
<PAGE>

in the treasury of the Company or may be purchased on the open market or by
private purchase; and

(d) No person may be granted Options or SARs under the Plan with respect to
more than 1,000,000 shares of Stock.

6. ELIGIBILITY

Participation shall be limited to Eligible Persons who have received
written notification from the Committee, or from a person designated by the
Committee, that they have been selected to participate in the Plan and
Non-Employee Directors who receive Director Stock Options.

7. DISCRETIONARY GRANT OF STOCK OPTIONS

The Committee is authorized to grant one or more Incentive Stock Options or
Nonqualified Stock Options to any Eligible Person; provided, however, that no
Incentive Stock Options shall be granted to any Eligible Person who is not an
employee of the Company or a Subsidiary. Each Option so granted shall be
subject to the following conditions, or to such other conditions as may be
reflected in the applicable Stock Option Agreement.

(a) OPTION PRICE. The exercise price ("Option Price") per share of Stock
for each Option shall be set by the Committee at the time of grant but shall
not be less than (i) in the case of an Incentive Stock Option, and subject to
Section 7(e), the Fair Market Value of a share of Stock at the Date of Grant,
and (ii) in the case of a Non-Qualified Stock Option, the par value of a share
of Stock; provided, however, that all Options intended to qualify as
"performance-based compensation" under Section 162(m) of the Code shall have an
Option Price per share of Stock no less than the Fair Market Value of a share
of Stock on the Date of Grant.

(b) MANNER OF EXERCISE AND FORM OF PAYMENT. Options which have become
exercisable may be exercised by delivery of written notice of exercise to the
Committee accompanied by payment of the Option Price. The Option Price shall be
payable in cash and/or shares of Stock valued at the Fair Market Value at the
time the Option is exercised (provided, however, that such shares have either
been held for six months or previously acquired on the open market) or, in the
discretion of the Committee, either (i) in other property having a fair market
value on the date of exercise equal to the Option Price, or (ii) by delivering
to the Committee a copy of irrevocable instructions to a stockbroker to deliver
promptly to the Company an amount of sale or loan proceeds sufficient to pay
the Option Price.

(c) OPTION PERIOD AND EXPIRATION. Options shall vest and become exercisable
in such manner and on such date or dates determined by the Committee and shall
expire after such period, not to exceed ten years, as may be determined by the
Committee

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<PAGE>

(the "Option Period"); provided, however, that notwithstanding any vesting
dates set by the Committee, the Committee may in its sole discretion accelerate
the exercisability of any Option, which acceleration shall not affect the terms
and conditions of any such Option other than with respect to exercisability. If
an Option is exercisable in installments, such installments or portions thereof
which become exercisable shall remain exercisable until the Option expires.
Unless otherwise stated in the applicable Option Agreement, the Option shall
expire earlier than the end of the Option Period in the following
circumstances:

(i) If prior to the end of the Option Period, the Holder shall
undergo a Normal Termination, the Option shall expire on the
earlier of the last day of the Option Period or the date that
is three months after the date of such Normal Termination. In
such event, the Option shall remain exercisable by the Holder
until its expiration, only to the extent the Option was
exercisable at the time of such Normal Termination.

(ii) If the Holder dies prior to the end of the Option Period and
while still in the employ or service of the Company, a
Subsidiary or Affiliate, or within three months of Normal
Termination, the Option shall expire on the earlier of the last
day of the Option Period or the date that is twelve months
after the date of death of the Holder. In such event, the
Option shall remain exercisable by the person or persons to
whom the Holder's rights under the Option pass by will or the
applicable laws of descent and distribution until its
expiration, only to the extent the Option was exercisable by
the Holder at the time of death.

(iii) If the Holder ceases employment or service with the Company and
all Subsidiaries and Affiliates for reasons other than Normal
Termination or death, the Option shall expire immediately upon
such cessation of employment or service.

(d) STOCK OPTION AGREEMENT - OTHER TERMS AND CONDITIONS. Each Option
granted under the Plan shall be evidenced by a Stock Option Agreement, which
shall contain such provisions as may be determined by the Committee and, except
as may be specifically stated otherwise in such Stock Option Agreement, which
shall be subject to the following terms and conditions:

(i) Each Option or portion thereof that is exercisable shall be
exercisable for the full amount or for any part thereof.

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<PAGE>

(ii) Each share of Stock purchased through the exercise of an Option
shall be paid for in full at the time of the exercise. Each
Option shall cease to be exercisable, as to any share of Stock,
when the Holder purchases the share or exercises a related SAR
or when the Option expires.

(iii) Subject to Section 13(k), Options shall not be transferable by
the Holder except by will or the laws of descent and
distribution and shall be exercisable during the Holder's
lifetime only by him.

(iv) Each Option shall vest and become exercisable by the Holder in
accordance with the vesting schedule established by the
Committee and set forth in the Stock Option Agreement.

(v) Each Stock Option Agreement may contain a provision that, upon
demand by the Committee for such a representation, the Holder
shall deliver to the Committee at the time of any exercise of
an Option a written representation that the shares to be
acquired upon such exercise are to be acquired for investment
and not for resale or with a view to the distribution thereof.
Upon such demand, delivery of such representation prior to the
delivery of any shares issued upon exercise of an Option shall
be a condition precedent to the right of the Holder or such
other person to purchase any shares. In the event certificates
for Stock are delivered under the Plan with respect to which
such investment representation has been obtained, the Committee
may cause a legend or legends to be placed on such certificates
to make appropriate reference to such representation and to
restrict transfer in the absence of compliance with applicable
federal or state securities laws.

(vi) Each Incentive Stock Option Agreement shall contain a provision
requiring the Holder to notify the Company in writing
immediately after the Holder makes a disqualifying disposition
of any Stock acquired pursuant to the exercise of such
Incentive Stock Option. A disqualifying disposition is any
disposition (including any sale) of such Stock before the later
of (a) two years after the Date of Grant of the Incentive Stock
Option or (b) one year after the date the Holder acquired the
Stock by exercising the Incentive Stock Option.

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<PAGE>

(e) INCENTIVE STOCK OPTION GRANTS TO 10% STOCKHOLDERS. Notwithstanding
anything to the contrary in this Section 7, if an Incentive Stock Option is
granted to a Holder who owns stock representing more than ten percent of the
voting power of all classes of stock of the Company or of a Subsidiary, the
Option Period shall not exceed five years from the Date of Grant of such Option
and the Option Price shall be at least 110 percent of the Fair Market Value (on
the Date of Grant) of the Stock subject to the Option.

(f) $100,000 PER YEAR LIMITATION FOR INCENTIVE STOCK OPTIONS. To the extent
the aggregate Fair Market Value (determined as of the Date of Grant) of Stock
for which Incentive Stock Options are exercisable for the first time by any
Participant during any calendar year (under all plans of the Company and its
Subsidiaries) exceeds $100,000, such excess Incentive Stock Options shall be
treated as Nonqualified Stock Options.

(g) VOLUNTARY SURRENDER. The Committee may permit the voluntary surrender
of all or any portion of any Nonqualified Stock Option and its corresponding
SAR, if any, granted under the Plan to be conditioned upon the granting to the
Holder of a new Option for the same or a different number of shares as the
Option surrendered or require such voluntary surrender as a condition precedent
to a grant of a new Option to such Participant. Such new Option shall be
exercisable at an Option Price, during an Option Period, and in accordance with
any other terms or conditions specified by the Committee at the time the new
Option is granted, all determined in accordance with the provisions of the Plan
without regard to the Option Price, Option Period, or any other terms and
conditions of the Nonqualified Stock Option surrendered.

8. STOCK APPRECIATION RIGHTS

Any Option granted under the Plan may include SARs, either at the Date of
Grant or, except in the case of an Incentive Stock Option, by subsequent
amendment. The Committee also may award SARs to Eligible Persons independent of
any Option. An SAR shall be subject to such terms and conditions not
inconsistent with the Plan as the Committee shall impose, including, but not
limited to, the following:

(a) VESTING. SARs granted in connection with an Option shall become
exercisable, be transferable and shall expire according to the same vesting
schedule, transferability rules and expiration provisions as the corresponding
Option. An SAR granted independent of an Option shall become exercisable, be
transferable and shall expire in accordance with a vesting schedule,
transferability rules and expiration provisions as established by the Committee
and reflected in an Award agreement.

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<PAGE>

(b) AUTOMATIC EXERCISE. If on the last day of the Option Period (or in the
case of an SAR independent of an Option, the period established by the
Committee after which the SAR shall expire), the Fair Market Value of the Stock
exceeds the Option Price (or in the case of an SAR granted independent of an
Option, the Fair Market Value of the Stock on the Date of Grant), the Holder
has not exercised the SAR or the corresponding Option, and neither the SAR nor
the corresponding Option has expired, such SAR shall be deemed to have been
exercised by the Holder on such last day and the Company shall make the
appropriate payment therefor.

(c) PAYMENT. Upon the exercise of an SAR, the Company shall pay to the
Holder an amount equal to the number of shares subject to the SAR multiplied by
the excess, if any, of the Fair Market Value of one share of Stock on the
exercise date over the Option Price, in the case of an SAR granted in
connection with an Option, or the Fair Market Value of one share of Stock on
the Date of Grant, in the case of an SAR granted independent of an Option. With
respect to SARs exercised before the Company has been subject to the reporting
requirements of Section 13(a) of the Exchange Act for one year, the Company
shall issue or transfer to the Participant shares of Stock with a Fair Market
Value at such time equal to 100 percent of any such excess. With respect to
SARs exercised after the Company has been subject to such reporting
requirements for at least one year, the Company shall pay such excess in cash,
in shares of Stock valued at Fair Market Value, or any combination thereof, as
determined by the Committee. Fractional shares shall be settled in cash.

(d) METHOD OF EXERCISE. A Participant may exercise an SAR at such time or
times as may be determined by the Committee at the time of grant by filing an
irrevocable written notice with the Committee or its designee, specifying the
number of SARs to be exercised, and the date on which such SARs were awarded.

(e) EXPIRATION. Except as otherwise provided in the case of SARs granted in
connection with Options, an SAR shall expire on a date designated by the
Committee which is not later than ten years after the Date of Grant of the SAR.

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<PAGE>

9. PERFORMANCE SHARES

(a) AWARD GRANTS. The Committee is authorized to establish Performance
Share programs to be effective over designated Award Periods determined by the
Committee. At the beginning of each Award Period, the Committee will establish
in writing Performance Goals based upon financial objectives for the Company
for such Award Period and a schedule relating the accomplishment of the
Performance Goals to the Awards to be earned by Participants. Performance Goals
may include absolute or relative growth in earnings per share or rate of return
on stockholders' equity or other measurement of corporate performance and may
be determined on an individual basis or by categories of Participants. The
Committee shall determine the number of Performance Share Units to be awarded,
if any, to each Participant who is selected to receive such an Award. The
Committee may add new Participants to a Performance Share program after its
commencement by making pro rata grants.

(b) DETERMINATION OF AWARD. At the completion of a Performance Share Award
Period, or at other times as specified by the Committee, the Committee shall
calculate the number of shares of Stock earned with respect to each
Participant's Performance Share Unit Award by multiplying the number of
Performance Share Units granted to the Participant by a performance factor
representing the degree of attainment of the Performance Goals.

(c) PARTIAL AWARDS. A Participant for less than a full Award Period,
whether by reason of commencement or termination of employment or otherwise,
shall receive such portion of an Award, if any, for that Award Period as the
Committee shall determine.

(d) PAYMENT OF PERFORMANCE SHARE UNIT AWARDS. Performance Share Unit Awards
shall be payable in that number of shares of Stock determined in accordance
with Section 9(b); provided, however, that, at its discretion, the Committee
may make payment to any Participant in the form of cash upon the specific
request of such Participant. The amount of any payment made in cash shall be
based upon the Fair Market Value of the Stock on the day prior to payment.
Payments of Performance Share Unit Awards shall be made as soon as practicable
after the completion of an Award Period.

(e) ADJUSTMENT OF PERFORMANCE GOALS. The Committee may, during the Award
Period, make such adjustments to Performance Goals as it may deem appropriate,
to compensate for, or reflect, (i) extraordinary or non-recurring events
experienced during an Award Period by the Company or by any other corporation
whose performance is relevant to the determination of whether Performance Goals
have been attained; (ii) any significant changes that may have occurred during
such Award Period in applicable accounting rules or principles or changes in
the Company's method of accounting or in that of any other corporation whose
performance is relevant to the determination of

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<PAGE>

whether an Award has been earned or (iii) any significant changes that may have
occurred during such Award Period in tax laws or other laws or regulations that
alter or affect the computation of the measures of Performance Goals used for
the calculation of Awards; provided, however, that with respect to such Awards
intended to qualify as "performance-based compensation" under Section 162(m) of
the Code, such adjustment shall be made only to the extent that the Committee
determines that such adjustments may be made without a loss of deductibility
for such Award under Section 162(m) of the Code.

10. DISCRETIONARY RESTRICTED STOCK AWARDS AND PHANTOM STOCK UNITS

(a) AWARD OF RESTRICTED STOCK AND PHANTOM STOCK UNITS.

(i) The Committee shall have the authority (1) to grant Restricted
Stock and Phantom Stock Unit Awards to Eligible Persons, (2) to
issue or transfer Restricted Stock to Participants, and (3) to
establish terms, conditions and restrictions applicable to such
Restricted Stock and Phantom Stock Units, including the
Restricted Period, which may differ with respect to each
grantee, the time or times at which Restricted Stock or Phantom
Stock Units shall be granted or become vested and the number of
shares or units to be covered by each grant.

(ii) The Holder of a Restricted Stock Award shall execute and
deliver to the Company an Award agreement with respect to the
Restricted Stock setting forth the restrictions applicable to
such Restricted Stock. If the Committee determines that the
Restricted Stock shall be held in escrow rather than delivered
to the Holder pending the release of the applicable
restrictions, the Holder additionally shall execute and deliver
to the Company (i) an escrow agreement satisfactory to the
Committee, and (ii) the appropriate blank stock powers with
respect to the Restricted Stock covered by such agreements. If
a Participant shall fail to execute a Restricted Stock
agreement and, if applicable, an escrow agreement and stock
powers, the Award shall be null and void. Subject to the
restrictions set forth in Section 10(b), the Holder shall
generally have the rights and privileges of a stockholder as to
such Restricted Stock, including the right to vote such
Restricted Stock. At the discretion of the Committee, cash
dividends and stock dividends with respect to the Restricted

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<PAGE>

Stock may be either currently paid to the Holder or withheld by
the Company for the Holder's account, and interest may be paid
on the amount of cash dividends withheld at a rate and subject
to such terms as determined by the Committee. Cash dividends or
stock dividends so withheld by the Committee shall not be
subject to forfeiture.

(iii) Upon the Award of Restricted Stock, the Committee shall cause a
stock certificate registered in the name of the Holder to be
issued and, if it so determines, deposited together with the
stock powers with an escrow agent designated by the Committee.
If an escrow arrangement is used, the Committee shall cause the
escrow agent to issue to the Holder a receipt evidencing any
stock certificate held by it registered in the name of the
Holder.

(iv) The terms and conditions of a grant of Phantom Stock Units
shall be reflected in a written Award agreement. No shares of
Stock shall be issued at the time a Phantom Stock Unit Award is
made, and the Company will not be required to set aside a fund
for the payment of any such Award. Holders of Phantom Stock
Units shall receive an amount equal to the cash dividends paid
by the Company upon one share of Stock for each Phantom Stock
Unit then credited to such Holder's account ("Dividend
Equivalents"). The Committee shall, in its sole discretion,
determine whether to credit to the account of, or to currently
pay to, each Holder of an Award of Phantom Stock Units such
Dividend Equivalents. Dividend Equivalents credited to a
Holder's account shall be subject to forfeiture on the same
basis as the related Phantom Stock Units, and may bear interest
at a rate and subject to such terms as are determined by the
Committee.

(b) RESTRICTIONS.

(i) Restricted Stock awarded to a Participant shall be subject to
the following restrictions until the expiration of the
Restricted Period, and to such other terms and conditions as
may be set forth in the applicable Award agreement: (1) if an
escrow arrangement is used, the Holder shall not be entitled to
delivery of the stock certificate; (2) the shares shall be
subject to the restrictions on transferability set forth in the
Award agreement; (3) the shares shall be

15
<PAGE>

subject to forfeiture to the extent provided in subparagraph
(d) and the Award Agreement and, to the extent such shares are
forfeited, the stock certificates shall be returned to the
Company, and all rights of the Holder to such shares and as a
shareholder shall terminate without further obligation on the
part of the Company.

(ii) Phantom Stock Units awarded to any Participant shall be subject
to (1) forfeiture until the expiration of the Restricted
Period, to the extent provided in subparagraph (d) and the
Award agreement, and to the extent such Awards are forfeited,
all rights of the Holder to such Awards shall terminate without
further obligation on the part of the Company and (2) such
other terms and conditions as may be set forth in the
applicable Award agreement.

(iii) The Committee shall have the authority to remove any or all of
the restrictions on the Restricted Stock and Phantom Stock
Units whenever it may determine that, by reason of changes in
applicable laws or other changes in circumstances arising after
the date of the Restricted Stock Award or Phantom Stock Award,
such action is appropriate.

(c) RESTRICTED PERIOD. The Restricted Period of Restricted Stock and
Phantom Stock Units shall commence on the Date of Grant and shall expire from
time to time as to that part of the Restricted Stock and Phantom Stock Units
indicated in a schedule established by the Committee.

(d) FORFEITURE PROVISIONS. Except to the extent determined by the Committee
and reflected in the underlying Award agreement, in the event a Holder
terminates employment with the Company and all Subsidiaries and Affiliates
during a Restricted Period, that portion of the Award with respect to which
restrictions have not expired ("Non-Vested Portion") shall be treated as
follows.

(i) Upon the voluntary resignation of a Participant or discharge by
the Company, a Subsidiary or Affiliate for Cause, the
Non-Vested Portion of the Award shall be completely forfeited.

(ii) Upon Normal Termination, the Non-Vested Portion of the Award
shall be prorated for service during the Restricted Period and
shall be received as soon as practicable following termination.

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<PAGE>

(iii) Upon death, the Non-Vested Portion of the Award shall be
prorated for service during the Restricted Period and paid to
the Participant's beneficiary as soon as practicable following
death.

(e) DELIVERY OF RESTRICTED STOCK AND SETTLEMENT OF PHANTOM STOCK UNITS.
Upon the expiration of the Restricted Period with respect to any shares of
Stock covered by a Restricted Stock Award, the restrictions set forth in
Section 10(b) and the Award agreement shall be of no further force or effect
with respect to shares of Restricted Stock which have not then been forfeited.
If an escrow arrangement is used, upon such expiration, the Company shall
deliver to the Holder, or his beneficiary, without charge, the stock
certificate evidencing the shares of Restricted Stock which have not then been
forfeited and with respect to which the Restricted Period has expired (to the
nearest full share) and any cash dividends or stock dividends credited to the
Holder's account with respect to such Restricted Stock and the interest
thereon, if any.

Upon the expiration of the Restricted Period with respect to any Phantom
Stock Units covered by a Phantom Stock Unit Award, the Company shall deliver to
the Holder, or his beneficiary, without charge, one share of Stock for each
Phantom Stock Unit which has not then been forfeited and with respect to which
the Restricted Period has expired ("Vested Unit") and cash equal to any
Dividend Equivalents credited with respect to each such Vested Unit and the
interest thereon, if any; provided, however, that, if so noted in the
applicable Award agreement, the Committee may, in its sole discretion, elect to
pay cash or part cash and part Stock in lieu of delivering only Stock for
Vested Units. If cash payment is made in lieu of delivering Stock, the amount
of such payment shall be equal to the Fair Market Value of the Stock as of the
date on which the Restricted Period lapsed with respect to such Vested Unit.

(f) STOCK RESTRICTIONS. Each certificate representing Restricted Stock
awarded under the Plan shall bear the following legend until the lapse of all
restrictions with respect to such Stock:

"Transfer of this certificate and the shares represented hereby is
restricted pursuant to the terms of a Restricted Stock Agreement, dated as
of _________, between BEC Group, Inc. and __________ . A copy of such
Agreement is on file at the offices of the Company at 555 Theodore Avenue,
Rye, New York 10580."

Stop transfer orders shall be entered with the Company's transfer agent and
registrar against the transfer of legended securities.

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<PAGE>

11. STOCK BONUS AWARDS

The Committee may issue unrestricted Stock under the Plan to Eligible
Persons, alone or in tandem with other Awards, in such amounts and subject to
such terms and conditions as the Committee shall from time to time in its sole
discretion determine. Stock Bonus Awards under the Plan shall be granted as, or
in payment of, a bonus, or to provide incentives or recognize special
achievements or contributions.

12. AUTOMATIC GRANTS OF STOCK OPTIONS TO NON-EMPLOYEE DIRECTORS

Upon the consummation of the Merger each Non-Employee Director shall be
automatically granted a Nonqualified Stock Option to purchase 10,000 shares of
Stock. Thereafter, on the date any person first becomes a Non-Employee
Director, such person shall be automatically granted without further action by
the Board or the Committee a Nonqualified Stock Option to purchase 10,000
shares of Stock. Thereafter, beginning in 1999, for the remainder of the term
of the Plan and provided he remains a Non-Employee Director of the Company, on
the date of each of the Company's Annual Meeting of Stockholders, each
Non-Employee Director shall be automatically granted without further action by
the Board or the Committee a Nonqualified Stock Option to purchase 2,500 shares
of Stock. All such Options granted to Non-Employee Directors shall hereinafter
be referred to as Director Stock Options.

(a) OPTION PRICE; TERM. All Director Stock Options shall have an Option
Price per share equal to the Fair Market Value of a share of Stock on the Date
of Grant. All Director Stock Options shall vest and become exercisable over a
period of four years at the rate of 25% of each grant annually on each of the
four consecutive anniversaries of the Date of Grant directly following the Date
of Grant provided the Non-Employee Director's services as a director continues
through each such anniversary. The term of each Director Stock Option ("Term"),
after which each such Option shall expire, shall be ten years from the date of
Grant.

(b) EXPIRATION. If prior to the expiration of the Term of a Director Stock
Option the Non-Employee Director shall cease to be a member of the Board for
any reason other than his death, the Director Stock Option shall expire on the
earlier of the expiration of the Term or the date that is three months after
the date of such cessation. If prior to the expiration of the Term of a
Director Stock Option a Non-Employee Director shall cease to be a member of the
Board by reason of his death, the Director Stock Option shall expire on the
earlier of the expiration of the Term or the date that is one year after the
date of such cessation. In the event a Non-Employee Director ceases to be a
member of the Board for any reason, any unexpired Director Stock Option shall
thereafter be exercisable until its expiration only

18
<PAGE>

to the extent that such Option was exercisable at the time of such cessation.

(c) DIRECTOR STOCK OPTION AGREEMENT. Each Director Stock Option shall be
evidenced by a Director Stock Option Agreement, which shall contain such
provisions as may be determined by the Committee.

(d) NONTRANSFERABILITY. Subject to Section 13(k), Director Stock Options
shall not be transferable except by will or the laws of descent and
distribution and shall be exercisable during the Non-Employee Director's
lifetime only by him.

13. GENERAL

(a) ADDITIONAL PROVISIONS OF AN AWARD. Awards under the Plan also may be
subject to such other provisions (whether or not applicable to the benefit
awarded to any other Participant) as the Committee determines appropriate
including, without limitation, provisions to assist the Participant in
financing the purchase of Stock upon the exercise of Options, provisions for
the forfeiture of or restrictions on resale or other disposition of shares of
Stock acquired under any Award, provisions giving the Company the right to
repurchase shares of Stock acquired under any Award in the event the
Participant elects to dispose of such shares, and provisions to comply with
Federal and state securities laws and Federal and state tax withholding
requirements. Any such provisions shall be reflected in the applicable Award
agreement.

(b) PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise specifically
provided in the Plan, no person shall be entitled to the privileges of stock
ownership in respect of shares of Stock which are subject to Awards hereunder
until such shares have been issued to that person.

(c) GOVERNMENT AND OTHER REGULATIONS. The obligation of the Company to make
payment of Awards in Stock or otherwise shall be subject to all applicable
laws, rules, and regulations, and to such approvals by governmental agencies as
may be required. Notwithstanding any terms or conditions of any Award to the
contrary, the Company shall be under no obligation to offer to sell or to sell
and shall be prohibited from offering to sell or selling any shares of Stock
pursuant to an Award unless such shares have been properly registered for sale
pursuant to the Securities Act with the Securities and Exchange Commission or
unless the Company has received an opinion of counsel, satisfactory to the
Company, that such shares may be offered or sold without such registration
pursuant to an available exemption therefrom and the terms and conditions of
such exemption have been fully complied with. The Company shall be under no
obligation to register for sale under the Securities Act any of the shares of
Stock to be offered or sold under the Plan. If the

19
<PAGE>

shares of Stock offered for sale or sold under the Plan are offered or sold
pursuant to an exemption from registration under the Securities Act, the
Company may restrict the transfer of such shares and may legend the Stock
certificates representing such shares in such manner as it deems advisable to
ensure the availability of any such exemption.

(d) TAX WITHHOLDING. Notwithstanding any other provision of the Plan, the
Company, a Subsidiary or an Affiliate, as appropriate, shall have the right to
deduct from all Awards cash and/or Stock, valued at Fair Market Value on the
date of payment, in an amount necessary to satisfy all Federal, state or local
taxes as required by law to be withheld with respect to such Awards and, in the
case of Awards paid in Stock, the Holder or other person receiving such Stock
may be required to pay to the Company or a Subsidiary, as appropriate, prior to
delivery of such Stock, the amount of any such taxes which the Company or
Subsidiary is required to withhold, if any, with respect to such Stock. Subject
in particular cases to the disapproval of the Committee, the Company may accept
shares of Stock of equivalent Fair Market Value in payment of such withholding
tax obligations if the Holder of the Award elects to make payment in such
manner.

(e) CLAIM TO AWARDS AND EMPLOYMENT RIGHTS. No employee or other person
shall have any claim or right to be granted an Award under the Plan or, having
been selected for the grant of an Award, to be selected for a grant of any
other Award. Neither the Plan nor any action taken hereunder shall be construed
as giving any Participant any right to be retained in the employ or service of
the Company, a Subsidiary or an Affiliate.

(f) DESIGNATION AND CHANGE OF BENEFICIARY. Each Participant shall file with
the Committee a written designation of one or more persons as the beneficiary
who shall be entitled to receive the amounts payable with respect to an Award
of Performance Share Units, Phantom Stock Units or Restricted Stock, if any,
due under the Plan upon his death. A Participant may, from time to time, revoke
or change his beneficiary designation without the consent of any prior
beneficiary by filing a new designation with the Committee. The last such
designation received by the Committee shall be controlling; provided, however,
that no designation, or change or revocation thereof, shall be effective unless
received by the Committee prior to the Participant's death, and in no event
shall it be effective as of a date prior to such receipt. If no beneficiary
designation is filed by the Participant, the beneficiary shall be deemed to be
his or her spouse or, if the Participant is unmarried at the time of death, his
or her estate.

(g) PAYMENTS TO PERSONS OTHER THAN PARTICIPANTS. If the Committee shall
find that any person to whom any amount is payable under the Plan is unable to
care for his affairs because of illness or accident, or is a minor, or has
died, then any payment due to such person or his estate (unless a prior claim

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<PAGE>

therefor has been made by a duly appointed legal representative) may, if the
Committee so directs the Company, be paid to his spouse, child, relative, an
institution maintaining or having custody of such person, or any other person
deemed by the Committee to be a proper recipient on behalf of such person
otherwise entitled to payment. Any such payment shall be a complete discharge
of the liability of the Committee and the Company therefor.

(h) NO LIABILITY OF COMMITTEE MEMBERS. No member of the Committee shall be
personally liable by reason of any contract or other instrument executed by
such member or on his behalf in his capacity as a member of the Committee nor
for any mistake of judgment made in good faith, and the Company shall indemnify
and hold harmless each member of the Committee and each other employee, officer
or director of the Company to whom any duty or power relating to the
administration or interpretation of the Plan may be allocated or delegated,
against any cost or expense (including counsel fees) or liability (including
any sum paid in settlement of a claim) arising out of any act or omission to
act in connection with the Plan unless arising out of such person's own fraud
or willful bad faith; provided, however, that approval of the Board shall be
required for the payment of any amount in settlement of a claim against any
such person. The foregoing right of indemnification shall not be exclusive of
any other rights of indemnification to which such persons may be entitled under
the Company's Articles of Incorporation or By-Laws, as a matter of law, or
otherwise, or any power that the Company may have to indemnify them or hold
them harmless.

(i) GOVERNING LAW. The Plan shall be governed by and construed in
accordance with the internal laws of the State of New York without regard to
the principles of conflicts of law thereof.

(j) FUNDING. Except as provided under Section 10, no provision of the Plan
shall require the Company, for the purpose of satisfying any obligations under
the Plan, to purchase assets or place any assets in a trust or other entity to
which contributions are made or otherwise to segregate any assets, nor shall
the Company maintain separate bank accounts, books, records or other evidence
of the existence of a segregated or separately maintained or administered fund
for such purposes. Holders shall have no rights under the Plan other than as
unsecured general creditors of the Company, except that insofar as they may
have become entitled to payment of additional compensation by performance of
services, they shall have the same rights as other employees under general law.

(k) NONTRANSFERABILITY. A person's rights and interest under the Plan,
including amounts payable, may not be sold, assigned, donated, or transferred
or otherwise disposed of, mortgaged, pledged or encumbered except, in the event
of a Holder's death, to a designated beneficiary to the extent

21
<PAGE>

permitted by the Plan, or in the absence of such designation, by will or the
laws of descent and distribution; provided, however, the Committee may, in its
sole discretion, allow for transfer of Awards other than Incentive Stock
Options to other persons or entities, subject to such conditions or limitations
as it may establish.

(l) RELIANCE ON REPORTS. Each member of the Committee and each member of
the Board shall be fully justified in relying, acting or failing to act, and
shall not be liable for having so relied, acted or failed to act in good faith,
upon any report made by the independent public accountant of the Company and
its Subsidiaries and Affiliates and upon any other information furnished in
connection with the Plan by any person or persons other than himself.

(m) RELATIONSHIP TO OTHER BENEFITS. No payment under the Plan shall be
taken into account in determining any benefits under any pension, retirement,
profit sharing, group insurance or other benefit plan of the Company or any
Subsidiary except as otherwise specifically provided in such other plan.

(n) EXPENSES. The expenses of administering the Plan shall be borne by the
Company and its Subsidiaries and Affiliates.

(o) PRONOUNS. Masculine pronouns and other words of masculine gender shall
refer to both men and women.

(p) TITLES AND HEADINGS. The titles and headings of the sections in the
Plan are for convenience of reference only, and in the event of any conflict,
the text of the Plan, rather than such titles or headings shall control. (Q)
TERMINATION OF EMPLOYMENT. For all purposes herein, a person who transfers from
employment or service with the Company to employment or service with a
Subsidiary or Affiliate or vice versa shall not be deemed to have terminated
employment or service with the Company, a Subsidiary or Affiliate.

14. CHANGES IN CAPITAL STRUCTURE

Awards granted under the Plan and any agreements evidencing such Awards,
the maximum number of shares of Stock subject to all Awards and the maximum
number of shares of Stock with respect to which any one person may be granted
Options or SARs during any year shall be subject to adjustment or substitution,
as determined by the Committee in its sole discretion, as to the number, price
or kind of a share of Stock or other consideration subject to such Awards or as
otherwise determined by the Committee to be equitable (i) in the event of
changes in the outstanding Stock or in the capital structure of the Company by
reason of stock dividends, stock splits, reverse stock splits,
recapitalizations, reorganizations, mergers, consolidations, combinations,
exchanges, or other relevant changes in

22
<PAGE>

capitalization occurring after the Date of Grant of any such Award or (ii) in
the event of any change in applicable laws or any change in circumstances which
results in or would result in any substantial dilution or enlargement of the
rights granted to, or available for, Participants in the Plan, or which
otherwise warrants equitable adjustment because it interferes with the intended
operation of the Plan. In addition, in the event of any such adjustments or
substitution, the aggregate number of shares of Stock available under the Plan
shall be appropriately adjusted by the Committee, whose determination shall be
conclusive. Any adjustment in Incentive Stock Options under this Section 14
shall be made only to the extent not constituting a "modification" within the
meaning of Section 424(h)(3) of the Code, and any adjustments under this
Section 14 shall be made in a manner which does not adversely affect the
exemption provided pursuant to Rule 16b-3 under the Exchange Act. Further, with
respect to Awards intended to qualify as "performance-based compensation" under
Section 162(m) of the Code, such adjustments or substitutions shall be made
only to the extent that the Committee determines that such adjustments or
substitutions may be made without a loss of deductibility for Awards under
Section 162(m) of the Code. The Company shall give each Participant notice of
an adjustment hereunder and, upon notice, such adjustment shall be conclusive
and binding for all purposes.

Notwithstanding the above, in the event of any of the following:

A. The Company is merged or consolidated with another corporation or
entity and, in connection therewith, consideration is received by
shareholders of the Company in a form other than stock or other equity
interests of the surviving entity;

B. All or substantially all of the assets of the Company are acquired by
another person;

C. The reorganization or liquidation of the Company; or

D. The Company shall enter into a written agreement to undergo an event
described in clauses A, B or C above,

then the Committee may, in its discretion and upon at least 10 days advance
notice to the affected persons, cancel any outstanding Awards and pay to the
Holders thereof, in cash or stock, or any combination thereof, the value of
such Awards based upon the price per share of Stock received or to be received
by other shareholders of the Company in the event. The terms of this Section 14
may be varied by the Committee in any particular Award agreement.

23
<PAGE>

15. EFFECT OF CHANGE IN CONTROL

Except to the extent reflected in a particular Award agreement:

(a) In the event of a Change in Control, notwithstanding any vesting
schedule with respect to an Award of Options (including Director Stock
Options), SARs, Phantom Stock Units or Restricted Stock, such Option or SAR
shall become immediately exercisable with respect to 100 percent of the shares
subject to such Option or SAR, and the Restricted Period shall expire
immediately with respect to 100 percent of such Phantom Stock Units or shares
of Restricted Stock.

(b) In the event of a Change in Control, all incomplete Award Periods in
effect on the date the Change in Control occurs shall end on the date of such
change, and the Committee shall (i) determine the extent to which Performance
Goals with respect to each such Award Period have been met based upon such
audited or unaudited financial information then available as it deems relevant,
(ii) cause to be paid to each Participant partial or full Awards with respect
to Performance Goals for each such Award Period based upon the Committee's
determination of the degree of attainment of Performance Goals, and (iii) cause
all previously deferred Awards to be settled in full as soon as possible.

(c) In addition, in the event of a Change in Control, the Committee may in
its discretion and upon at least 10 days' advance notice to the affected
persons, cancel any outstanding Awards and pay to the Holders thereof, in cash
or stock, or any combination thereof, the value of such Awards based upon the
price per share of Stock received or to be received by other shareholders of
the Company in the event.

(d) The obligations of the Company under the Plan shall be binding upon any
successor corporation or organization resulting from the merger, consolidation
or other reorganization of the Company, or upon any successor corporation or
organization succeeding to substantially all of the assets and business of the
Company. The Company agrees that it will make appropriate provisions for the
preservation of Participant's rights under the Plan in any agreement or plan
which it may enter into or adopt to effect any such merger, consolidation,
reorganization or transfer of assets.

16. NONEXCLUSIVITY OF THE PLAN

Neither the adoption of this Plan by the Board nor the submission of this
Plan to the stockholders of the Company for approval shall be construed as
creating any limitations on the power of the Board to adopt such other
incentive arrangements as it may deem desirable, including, without limitation,
the granting of stock options otherwise than under this Plan, and

24
<PAGE>

such arrangements may be either applicable generally or only in specific cases.

17. AMENDMENTS AND TERMINATION

The Board may at any time terminate the Plan. Subject to Section 14, with
the express written consent of an individual Participant, the Board or the
Committee may cancel or reduce or otherwise alter outstanding Awards if, in its
judgment, the tax, accounting, or other effects of the Plan or potential
payouts thereunder would not be in the best interest of the Company. The Board
or the Committee may, at any time, or from time to time, amend or suspend and,
if suspended, reinstate, the Plan in whole or in part; provided, however, that
without further stockholder approval neither the Board nor the Committee shall
make any amendment to the Plan which would materially alter the Plan or which
would specifically:

(a) Materially increase the maximum number of shares of Stock which may be
issued pursuant to Awards, except as provided in Section 14;

(b) Change the minimum Option Price;

(d) Extend the termination date of the Plan.

* * *

As adopted by the Board of Directors of
BEC Group, Inc. as of April 2, 1996 and
as amended and restated as of October 30. 1997.

<PAGE>

KANE KESSLER, PC.
1350 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019

January 27, 1998

BEC Group, Inc.
555 Theodore Fremd Avenue
Suite B-302
Rye, New York 10580

Re: BEC Group, Inc.
Registration Statement on Form S-4 (File No. 333-40519)
-------------------------------------------------------

Ladies and Gentlemen:

We have acted as special counsel to BEC Group, Inc., a Delaware
corporation ("BEC"), in connection with the preparation of the Registration
Statement on Form S-4, as amended (the "Registration Statement") being filed by
BEC on or about the date hereof with the Securities and Exchange Commission
(the "Commission") under the Securities Act of 1933, as amended (the "Act"),
with respect to up to 23,000,000 shares of common stock, par value $0.01 per
share, of BEC ("Common Stock"), to be registered with the Commission pursuant
to the Act. The Common Stock is being registered in connection with the merger
of BILC Acquisition Corp., a Delaware corporation, a wholly-owned subsidiary of
BEC ("Merger Sub"), with ILC Technology, Inc., a California corporation
("ILC"). The Common Stock is described in the Joint Proxy Statement/Prospectus
(the "Prospectus") included in the Registration Statement to which this opinion
is an exhibit.

In connection therewith, we have examined originals or copies,
certified or otherwise identified to our satisfaction, of such documents,
corporate records and other

<PAGE>

BEC Group, Inc.
January 27, 1998
Page 2

instruments as we have deemed necessary or appropriate for purposes of this
opinion. We have relied as to factual matters on certificates or other
documents furnished by BEC or its officers and by government authorities. We
have assumed the authenticity of all documents submitted to us as originals and
the conformity to original documents of all documents submitted to us as
copies.

Based on the foregoing, we are of the opinion that the shares of
Common Stock to which the Registration Statement relates, when issued as
described in the Prospectus, will be duly authorized, validly issued, fully
paid and nonassessable.

The opinion set forth herein is subject to the following additional
qualifications and assumptions:

(a) BEC's stockholders shall have approved the Agreement and Plan of
Merger, dated as of October 30, 1997, as amended by Amendment
No. 1 thereto dated January 6, 1998, among BEC, ILC and Merger
Sub (collectively, the "Merger Agreement") and the issuance of
shares of Common Stock pursuant to the Merger Agreement;

(b) The Merger Agreement or a certificate of merger shall have been
filed with the Secretary of State of the State of Delaware and
the Secretary of State of the State of California in such form
as is required by, and executed and acknowledged in accordance
with the relevant provisions of, the General Corporation Law of
the State of Delaware and the Corporations Code of the State of
California;

(c) BEC's stockholders shall have approved an amendment to the
Amended and Restated Certificate of Incorporation of BEC in the
form filed as Exhibit 3.4 to the Registration Statement (the
"Amendment to the Restated Certificate") to effect a one-for-two
reverse stock split of the issued and outstanding shares of
Common Stock, and the Amendment to the Restated Certificate,
shall have been duly executed, acknowledged and filed with the
Secretary of State of the State of Delaware.

We are qualified to practice law in the State of New York and do not
purport to be experts on, or to express any opinion herein concerning any law,
other than the laws of the State of New York, the General Corporation Law of
the State of Delaware and the federal laws of the United States of America.

<PAGE>

BEC Group, Inc.
January 27, 1998
Page 3

We are aware that we are referred to under the heading "Legal
Matters" in the Prospectus and we hereby consent to the use of our name in the
Prospectus and the filing of this opinion as an exhibit to the related
Registration Statement.

Very truly yours,

/s/ Kane Kessler
KANE KESSLER, P.C.

<PAGE>
EXHIBIT 23.2

CONSENT OF INDEPENDENT ACCOUNTANTS

We hereby consent to the use in the Prospectus constituting part of this
Registration Statement on Amendment No. 2 to Form S-4 of BEC Group, Inc. of
our report dated March 10, 1997, except as to the first three paragraphs of
Note 2 and Note 17, as to which the date is November 14, 1997, relating to
the consolidated financial statements of BEC Group, Inc., which appears in
such Prospectus. We also consent to the reference to us under the heading
"Experts" in such Prospectus.

/s/ PRICE WATERHOUSE LLP

PRICE WATERHOUSE LLP

Dallas, Texas
January 27, 1998

<PAGE>
EXHIBIT 23.3

CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS

As independent public accountants, we hereby consent to the use of our report
dated December 1, 1997 (and to all references to our Firm) included in or
made a part of this registration statement (Registration Statement File No.
333-40519).

/s/ ARTHUR ANDERSEN LLP

ARTHUR ANDERSEN LLP

San Jose, California
January 27, 1998

<PAGE>
EXHIBIT 23.4

THE BOARD OF DIRECTORS
BOLLE AMERICA, INC.

We consent to the use of our report included herein and to the reference to
our firm under the heading "Experts" in the prospectus.

/s/ KPMG PEAT MARWICK LLP

KPMG PEAT MARWICK LLP

January 27, 1998
Denver, Colorado

<PAGE>
EXHIBIT 23.5

CONSENT OF RAYMOND JAMES & ASSOCIATES, INC.

The undersigned on behalf of Raymond James & Associates ("RJ") hereby
consent to the inclusion of RJ's fairness opinion delivered on October 30,
1997 to the Board of Directors of BEC Group, Inc. ("BEC") in BEC's
Registration Statement on Form S-4, filed with the Securities and Exchange
Commission on November 17, 1997.

/s/ Ike Ikavnias

Raymond James & Associates, Inc.
Vice President

January 27, 1998

<PAGE>
EXHIBIT 23.6

CONSENT OF DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION

We hereby consent to (i) the inclusion of our opinion letter, dated November
4, 1997 to the Board of Directors of ILC Technology, Inc. (the "Company") as
Annex E to the Joint Proxy Statement/Prospectus of the Company relating to
the Merger of the Company with BEC Group, Inc. and (ii) all references to DLJ
in the sections captioned "Summary -- Opinions of Financial Advisors", "The
Merger -- ILC's Reasons for the Merger", "The Merger -- Material Contacts and
Board Deliberations" and "The Merger -- Opinion of ILC's Financial Advisor"
of the Joint Proxy Statement/Prospectus of BEC Group, Inc. which forms a part
of this Registration Statement on Form S-4. In giving such consent, we do not
admit that we come within the category of persons whose consent is required
under, and we do not admit that we are "experts" for purposes of, the
Securities Act of 1933, as amended, and the rules and regulations promulgated
thereunder.

DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION

By: /s/ Frederick C. Lane
-------------------------------
Frederick C. Lane
Managing Director

New York, New York
January 28, 1998