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                                                                   EXHIBIT 10.4 

                            TAX ALLOCATION AGREEMENT

                                 BY AND BETWEEN

                                  ODETICS, INC.

                                       AND

                               ATL PRODUCTS, INC.



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                            TAX ALLOCATION AGREEMENT

         THIS TAX ALLOCATION AGREEMENT (the "Agreement"), dated as of March 1,
1997, by and between ODETICS, INC., a Delaware corporation ("Odetics"), and ATL
PRODUCTS, INC., a Delaware corporation ("ATL"), is entered into in connection
with the initial public offering ("IPO") of ATL. For purposes of this Agreement,
ATL shall also be deemed to refer to ATL Products, Inc., a California
corporation, as predecessor of ATL.

         WHEREAS, Odetics on behalf of itself and its present and future
subsidiaries other than ATL and its subsidiaries (the "Odetics Group"), and ATL
on behalf of itself and its subsidiaries (the "ATL Group") have determined that
it is necessary and desirable to provide for allocation between the Odetics
Group and the ATL Group of all responsibilities, liabilities and benefits
relating to taxes paid or payable by either group for all taxable periods,
whether beginning before, on or after the IPO, and to provide for certain other
matters;

         NOW, THEREFORE, in consideration of the mutual agreements, provisions
and covenants contained in this Agreement, the parties hereby agree as follows:


                                    ARTICLE I
                                   DEFINITIONS

         1.1 Code: The Internal Revenue Code of 1986, as amended.

         1.2 Effective Date: April 1, 1996.

         1.3 Post-Spinoff Period: Any taxable period of ATL ending after the
distribution by Odetics of all of its ATL stock.

         1.4 Pre-Spinoff Period: Any taxable period of ATL ending on or before
the distribution by Odetics of all of its ATL stock.

         1.5 Spinoff: The distribution by Odetics of all of its ATL stock.

         1.6 Tax or Taxes: All taxes of the Odetics Group and the ATL Group,
including any additions to tax, interest and penalties relating to such taxes.

         1.7 Tax Benefit: The tax effect of any loss, deduction, credit or other
item that decreases taxes paid or payable.



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         1.8 Tax Detriment: The tax effect of any income, gain, recapture of
credit or other item that increases taxes paid or payable.


                                   ARTICLE II
                              FILING OF TAX RETURNS

         2.1 Pre-Spinoff Period Income Tax Returns

             (a) Federal Income Tax Returns. The income and other tax items of 
ATL for any Pre-Spinoff Period shall be included in the Odetics consolidated 
federal income tax return; provided that ATL is a member of the Odetics 
"affiliated group" within the meaning of Section 1504 of the Code. Odetics shall
prepare and timely file all consolidated federal income tax returns for all such
periods.

             (b) State Income Tax Returns. Odetics shall prepare and timely file
any consolidated or combined state income tax return that includes an Odetics
Group member and an ATL Group member for all Pre-Spinoff Periods.

         2.2 Other Tax Returns. All tax reports or returns for Pre-Spinoff
Periods not covered by Section 2.1 and all tax reports or returns for
Post-Spinoff Periods shall be prepared and filed by ATL for the ATL Group and by
Odetics for the Odetics Group unless otherwise mutually agreed to by them.

                                   ARTICLE III
                                PAYMENT OF TAXES

         3.1 Payment of Taxes in General

             (a) Except as otherwise provided in this Article III, Odetics shall
pay, and shall indemnify and hold harmless ATL and each other member of the ATL
Group from and against, all Taxes attributable to the Odetics Group and the ATL
Group (including any Taxes arising to any member of the ATL Group by virtue of
Section 1.1502-6 of the Treasury Regulations), whether heretofore or hereafter
arising or incurred. Odetics shall be entitled to any reduction in or refund of
Taxes for which it is responsible pursuant to the preceding sentence (except any
reduction in or refund of Taxes resulting from carrybacks of ATL as described in
Section 3.4).

             (b) ATL shall pay, and shall indemnify and hold harmless each
Odetics Group member from and against, (i) all Taxes attributable to the ATL 
Group (in the case of income or franchise Taxes, as determined under Section 
3.2) for any Pre-Spinoff Period commencing on or after the Effective Date and
(ii) all Taxes for any Post-Spinoff



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Period that are attributable to the ATL Group. ATL shall be entitled to any
reduction in or refund of Taxes for which it is responsible pursuant to the
preceding sentence.

             (c) Notwithstanding anything to the contrary herein, Odetics shall
be responsible for, and shall indemnify the ATL Group against any Taxes
resulting from the reorganization of the international operations of Odetics and
ATL prior to the IPO.

             (d) If a member of the Odetics Group or the ATL Group, as the case
may be, receives a refund of Taxes to which the other group is entitled under
this Article III, then such member shall remit such refund to the other group by
promptly sending such refund to Odetics or ATL, as the case may be.

        3.2  Allocation and Payment of Income and Franchise Taxes

             (a) The consolidated Tax liability of the Odetics consolidated
group for each year commencing on or after the Effective Date shall be
apportioned among the Odetics Group and ATL Group members in accordance with
this paragraph. For purposes of this Agreement, the consolidated Tax liability
shall include any liability for alternative minimum Tax. The Tax liability for a
taxable year shall be apportioned only among the members of the Odetics
consolidated group with separate company taxable income for that year (the
"Profit Members"). The Tax liability will be allocated to the Profit Members in
the same ratio as each Profit Member's separate company taxable income bears to
the total of the separate company taxable incomes of all Profit Members. No Tax
liability will be allocated to members of the affiliated group with a taxable
loss computed on a separate return basis ("Loss Members"). The Profit Members
will make payments to Loss Members for Tax Benefits to the Profit Members as a
result of losses or credits generated by the Loss Members. For purposes of
allocating alternative minimum Tax, alternative minimum taxable income amounts
shall be substituted for taxable income amounts in the foregoing calculation.

             (b) The principles set forth in Section 3.2(a) shall be applied for
the allocation of state income Taxes in states where the Odetics affiliated
group files consolidated or combined returns, with appropriate modifications, to
account for differences in the tax laws of the United States and individual
states. As a general rule, the amount of the consolidated or combined Tax
liability to a particular state shall be allocated among the profitable members
of a combined or consolidated group filing in such state based on the relative
amounts of their deemed taxable income in that state. For this purpose, each
member of the consolidated or combined group of corporations filing in a
particular state shall generally be treated as having an amount of deemed
taxable income in that state which that member would be required to report to
the state if the member were filing a separate franchise or income tax return
for the state, but applying the combined apportionment factors which are in
effect for the subject consolidated or combined group of corporations (rather
than the member's individual factors).



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             (c) Payment of the consolidated or combined income or franchise Tax
liability for a taxable period shall be made according to the schedule of
estimated tax installments and final payments prescribed in the Code or
applicable state law. ATL shall pay to Odetics the ATL Group members' share of
each Tax payment within five (5) days of receiving notice from Odetics, but in
no event more than ten (10) days prior to the due date for each such payment and
no later than such due date. Any overpayment of estimated Tax shall be promptly
refunded to the member which made such overpayment.

       3.3   Adjustments to Tax Liability and Tax Attributes

             (a) Odetics shall be responsible for, and shall indemnify and hold
harmless each member of the ATL Group from and against, all adjustments to Taxes
attributable to the Odetics Group, whether heretofore or hereafter arising or
incurred, except Taxes for which the members of the ATL Group are liable
pursuant to Section 3.1(b).

             (b) Except as provided in Section 3.3(c), Odetics shall be entitled
to any Tax Benefit and shall bear any Tax Detriment resulting from adjustments
to Taxes attributable to the Odetics Group or the ATL Group (except adjustments
resulting from carrybacks of ATL from a Post-Spinoff Period). If an adjustment
to a tax item attributable to the Odetics Group increases the Tax liability of
the Odetics Group and correspondingly reduces a Tax liability for which the ATL
Group is responsible under this Agreement, ATL shall pay promptly to Odetics the
amount of the Tax Benefit realized by the ATL Group. If an adjustment to a tax
item attributable to the Odetics Group reduces the Tax liability of the Odetics
Group and correspondingly increases a Tax liability for which the ATL Group is
responsible under this Agreement, Odetics shall pay promptly to ATL the amount
of the Tax Detriment realized by the ATL Group.

             (c) ATL shall be responsible for, and shall indemnify and hold
harmless each Odetics Group member from and against, all adjustments to Taxes
(i) for any Pre-Spinoff Period commencing on or after the Effective Date with
respect to the ATL Group and (ii) for any Post-Spinoff Period with respect to
the ATL Group. If an adjustment to a tax item for which ATL is responsible under
this Section 3.3 increases the Tax liability of the ATL Group and
correspondingly reduces the Tax liability of the Odetics Group, Odetics shall
pay promptly to ATL the amount of the Tax Benefit realized by the Odetics Group.
If an adjustment to a tax item for which ATL is responsible under this Section
3.3 reduces the Tax liability of the ATL Group and correspondingly increases the
Tax liability of the Odetics Group, ATL shall pay promptly to Odetics the amount
of the Tax Detriment incurred by the Odetics Group.

        3.4  Carrybacks from Post-Spinoff Periods to Pre-Spinoff Periods.
Any loss, credit or other item attributable to the ATL Group and arising in a
Post-Spinoff Period may be carried back to a consolidated or combined return of
the Odetics affiliated group for a



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Pre-Spinoff Period as permitted under applicable law. Odetics shall cooperate
with any ATL Group member to the extent reasonably necessary (including, without
limitation, amending any return and filing any claim for refund) for such member
to realize the Tax Benefit of carrying such loss, credit or other item back to
such Pre-Spinoff Period. Odetics shall remit promptly to ATL any refund or
reduction in Tax resulting from such carryback; provided, however, that the
amount payable in respect of any such refund shall be reduced by the amount of
any Tax incurred by any Odetics Group member as a result of the accrual or
receipt of the refund.

                                   ARTICLE IV
                                   COOPERATION

        4.1  Cooperation in General

             (a) Each of Odetics and ATL agrees to make available to the other
party documents and records in its custody and in the custody of any member of
its group, to furnish other information and otherwise to cooperate to the extent
reasonably required for the filing of tax returns and the handling of audits of
such other party.

             (b) So long as the ATL Group is included in the consolidated
financial statements of Odetics, ATL shall timely provide the necessary
financial information of the ATL Group to Odetics so that Odetics may prepare a
consolidated tax provision to meet its deadlines.

        4.2  Notice, Defense and Settlement of Tax Claims

             (a) If a member of the Odetics Group or ATL Group receives written
notice of a deficiency, contest, audit or other proceeding with respect to a
proposed Tax liability for which a member of the other group is or may be liable
under this Agreement (including liability hereunder to indemnify or reimburse a
member of the other group), then the recipient shall notify the other group of
such matter by promptly sending written notice thereof to Odetics or ATL, as the
case may be. Odetics and ATL shall cooperate to contest and defend any such
proposed Tax liability, with each party bearing its own expenses relating to
such proceeding. The corporation that is liable under applicable law for such
proposed Tax liability (without regard to this Agreement) shall not settle,
compromise or otherwise agree to pay such liability without the consent of the
party that is liable for such Tax under this Agreement. Such consent shall not
be unreasonably withheld.

             (b) Odetics shall be responsible for responding to any notice of
deficiency, contest, audit or other proceedings with respect to a proposed Tax
liability of a consolidated or combined federal or state tax return of the
Odetics Group or the ATL Group for a Pre-Spinoff Period. ATL shall be
responsible for responding to any notice



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of deficiency, contest, audit or other proceedings with respect to a proposed
Tax liability of a stand-alone tax return of ATL or any member of the ATL Group
for a Pre-Spinoff Period. In addition, ATL shall be responsible for responding
to any proposed claims for Taxes other than income or franchise taxes, including
but not limited to sales, property and payroll Taxes, attributable to the ATL
Group for a Pre-Spinoff Period. Odetics shall bear the expense of and have
control of such proceedings relating to the ATL Group except in cases involving
Taxes for which the ATL Group is responsible under this Agreement.

         4.3 Confidentiality. The members of both the Odetics Group and the ATL
Group understand the confidential nature of financial information disclosed in
tax returns and the related supporting documentation. Each of Odetics and ATL
(on behalf of themselves and the members of their respective groups) hereby
agrees not to release any tax and supporting documentation or information with
respect to the other party to any outside party (including taxing authorities)
without the consent of the other party, which consent shall not be unreasonably
withheld.

                                    ARTICLE V
                             RESOLUTION OF DISPUTES

         Any dispute or ambiguity concerning the amount of any payment provided
for under this Agreement shall be resolved, in a manner consistent with the
principles and procedures set forth in this Agreement, by an internationally
recognized accounting firm (a so-called "Big-Six" accounting firm) jointly
selected by Odetics and ATL. The judgment of such accounting firm shall be
conclusive and binding upon each of the parties to this Agreement. The
accounting firm's fee shall be borne equally by Odetics and ATL.

                                   ARTICLE VI
                                     GENERAL

         6.1 Waiver. Any waiver by any party of any default by the other party
hereunder shall not be deemed to be a continuing waiver of such default or a
waiver of any other default or of any of the terms and conditions of this
Agreement.

         6.2 Amendments. The terms and conditions of this Agreement may not be
superseded, modified or amended except in writing stating that it is such a
modification and signed by an authorized representative of each party hereto.

         6.3 Governing Law; Forum Selection. This Agreement shall be governed by
the laws of the State of California, without reference to conflict of laws
principles. All disputes arising out of this Agreement shall be subject to the
exclusive jurisdiction and venue of the California state courts of Orange County
(or, if there is exclusive federal



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jurisdiction, the United States District Court for the Southern District of
California), and the parties consent to the personal and exclusive jurisdiction
and venue of these courts.

         6.4 Attorneys' Fees. The prevailing party in any legal action brought
by one party against the other shall be entitled, in addition to any other
rights and remedies it may have, to reimbursement for its expenses incurred
thereby, including court costs and reasonable attorneys' fees.

         6.5 Complete Agreement. This Agreement constitutes the entire agreement
between the parties as to the subject matter hereof, and supersedes and replaces
all prior or contemporaneous agreements, written or oral, regarding such subject
matter, including any prior tax sharing or tax allocation agreements.

         6.6 Binding Agreement. This Agreement shall be binding upon and inure
to the benefit of each party hereto, its respective successors and assigns, and
each member of the Odetics Group and the ATL Group not a party hereto.

         6.7 Notices. Any notice which any party desires or is obligated to give
to the other shall be given in writing or by facsimile or telex and sent to the
chief financial officer of the other party. Except as otherwise expressly
provided herein, notice shall be deemed to have been received on the earlier of
the date when actually received or ten (10) days after being deposited in the
mail, postage prepaid, registered or certified mail, or within one (1) day if by
facsimile or telex, promptly confirmed in writing, properly addressed to the
other party.

         6.8 Headings; Counterparts. Headings to sections of this Agreement are
to facilitate reference only, do not form a part of this Agreement and shall not
in any way affect the interpretation hereof. This Agreement may be executed in
two (2) or more counterparts or duplicate originals, all of which shall be
regarded as one and the same instrument, and which shall be the official and
governing version in the interpretation of this Agreement.

         6.9 Partial Invalidity. If any provision in this Agreement shall be
found or be held to be invalid or unenforceable in any jurisdiction in which
this Agreement is being performed, then the meaning of said provision shall be
construed, to the extent feasible, so as to render the provision enforceable,
and if no feasible interpretation would save such provision, it shall be severed
from the remainder of this Agreement which shall remain in full force and
effect. In such event, the parties shall negotiate, in good faith, a substitute,
valid and enforceable provision which most nearly effects the parties' intent in
entering this Agreement.

         6.10 Additional Members. If during a Pre-Spinoff Period any other
corporation becomes a member of the Odetics Group or the ATL Group, then such
corporation shall join in and be bound by this Agreement.



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         6.11 Effect of Prior Tax Allocation Agreement. The parties are parties
to an existing tax allocation agreement. Such prior allocation agreement is
superseded by this Agreement retroactive to the Effective Date.

         IN WITNESS WHEREOF, Odetics and ATL have caused this Agreement to be
duly executed by their respective officers, each of whom is duly authorized, as
of the date first above written.


                                                ODETICS, INC.


                                                By  /s/ JOEL SLUTZKY
                                                   -----------------------------
                                                Title  CEO
                                                      --------------------------


                                                ATL PRODUCTS, INC.


                                                By   /s/ KEVIN C. DALY
                                                   -----------------------------
                                                Title  CEO
                                                      --------------------------



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