<PAGE>


                  AMENDMENT NO. 1 TO PRODUCT ROYALTY AGREEMENT

     This Amendment No. 1 to Product Royalty Agreement (this "Amendment") is
entered into as of January 29, 2001 (the "Effective Date") by and between BEI
Medical Systems, Inc. a Delaware corporation ("Company"), and Milton H.
Goldrath, M.D., and individual ("Goldrath").

     Whereas, the parties desire to amend the Product Royalty Agreement by and
between the parties dated as of December 28, 1993, (the "Agreement") as set
forth in this Amendment;

     NOW THEREFORE, in consideration of the mutual covenants set forth herein,
the parties agree as follows:

1.   Unless otherwise specifically defined herein, the capitalized terms in this
     Amendment have the definitions set forth in the Agreement.

2.   Except as expressly amended by this Amendment, the terms and conditions of
     the Agreement remain in full force and effect.

3.   The Agreement and this Amendment together constitute the entire agreement
     between the parties concerning its subject matter, and supercede any prior
     or contemporaneous agreements whether written or oral. In the event of any
     conflict or inconsistency between the Agreement and this Amendment, this
     Amendment shall prevail and control.

4.   Section 2.A. of the Agreement is hereby amended by replacing [*] with [*].

5.   Section 11 of the Agreement is hereby amended by replacing the second
     sentence of such Section in its entirety with the following:

          The Company may, in its sole discretion, assign this Agreement in
          whole or in part (i) to any Affiliate of the Company, (ii) IN
          CONNECTION WITH THE MERGER OR SALE OF THE COMPANY OR A SALE OF
          SUBSTANTIALLY ALL OF ITS ASSETS IN ONE TRANSACTION OR SERIES OF
          RELATED TRANSACTIONS, or (iii) with the written consent of Goldrath
          (not unreasonably withheld) to any other third party. THIS AGREEMENT
          WILL BE BINDING UPON AND INURE TO THE BENEFIT OF EACH PARTY'S
          RESPECTIVE LEGAL REPRESENTATIVES, HEIRS, AND PERMITTED SUCCESSORS AND
          ASSIGNS.

6.   Section 12.A of the Agreement is hereby amended by replacing the second
     sentence of such Section in its entirety with the following:

          A party may disclose the terms of this Agreement to accountants and
          attorneys and |_|THE COMPANY MAY DISCLOSE THE TERMS OF THIS AGREEMENT
          to prospective purchaser of all or a material portion of the
          |_|COMPANY'S (or, if applicable, its subsidiary's) stock, assets,
          products lines or businesses (PROVIDED THAT SUCH PERSIONS ARE BOUND BY
          AN AGREEMENT TO KEEP THE TERMS OF THIS AGREEMENT CONFIDENTIAL); to
          financiers and lenders; and/or to other professional advisors


[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                      -1-
<PAGE>

          |_|  denotes deleted text.

7.   The Agreement is hereby amended by deleting and replacing in their entirety
     Schedules 1 and 2 of the Agreement with the amended Schedules 1 and 2
     attached hereto as Exhibit A.

8.   This Amendment may be amended or modified only by a subsequent writing
     signed by both parties to this Amendment. If any provision of this
     Amendment is declared invalid, illegal or unenforceable, such provision
     shall be severed and all remaining provision shall continue in full force
     and effect. This Amendment may be executed in counterparts, each of which
     shall be an original as against any party whose signature appears on such
     counterpart and all of which together shall constitute one and the same
     instrument.

IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute and deliver this Amendment as of the Effective Date
set forth above.


BEI MEDICAL SYSTEMS, INC.                     MILTON H. GOLDRATH M.D.:

By:  /s/ Richard W. Turner                    By: /s/ Milton H. Goldrath
     -----------------------------                ------------------------------

Name: Richard W. Turner                       Name:
      ----------------------------                 -----------------------------

Title: President                              Title:
       ---------------------------                  ----------------------------


                                      -2-
<PAGE>


                                    EXHIBIT A

                                   SCHEDULE 1

Covered Products:

         A system for prefusion of the uterus to accomplish endometrial
ablation.

Royalty Bearing Products:

           ---------------------------------- ----------------------------------
           Company Product #                  Description
           ---------------------------------- ----------------------------------
           [*]                                [*]
           ---------------------------------- ----------------------------------
           [*]                                [*]
           ---------------------------------- ----------------------------------

[*]

                                   SCHEDULE 2

                                     PATENTS

     --------------------- ------------------------------- ---------------------
           Patent #              Patent Description                Patent
                                                                  Expiration
     --------------------- ------------------------------- ---------------------
             [*]                      [*]                            [*]
     --------------------- ------------------------------- ---------------------
             [*]                      [*]                            [*]
     --------------------- ------------------------------- ---------------------



[*] CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY WITH
THE COMMISSION.  CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH RESPECT TO THE
OMITTED PORTIONS.

                                      -3-