BEI ELECTRONICS, INC.

                      EIGHTH AMENDMENT TO CREDIT AGREEMENT


     This EIGHTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is dated as of
July 31, 1997 and entered  into by and among BEI  Electronics,  Inc., a Delaware
corporation,  BEI  Sensors & Systems  Company,  Inc.,  a  Delaware  corporation,
Defense Systems Company,  Inc., a Delaware corporation,  and BEI Medical Systems
Company,  Inc., a Delaware  corporation  (each a "Borrower" and collectively the
"Borrowers"),  the financial  institutions  listed on the signature pages hereof
(each a "Lender" and  collectively  the "Lenders"),  CIBC Inc., as agent for the
Lenders (the "Agent"), and Canadian Imperial Bank of Commerce, as the Designated
Issuer,  and is made with reference to that certain Credit Agreement dated as of
June 1, 1993, as amended by the First Amendment to Credit  Agreement dated as of
September 3, 1993,  as amended by the Second  Amendment to Credit  Agreement and
Limited  Waiver dated as of April 1, 1994, as amended by the Third  Amendment to
Credit  Agreement  dated as of  September  30,  1994,  as  amended by the Fourth
Amendment to Credit  Agreement dated as of June 1, 1995, as amended by the Fifth
Amendment to Credit  Agreement dated as of June 1, 1996, as amended by the Sixth
Amendment to Credit Agreement dated as of October 31, 1996 and as amended by the
Seventh  Amendment  to Credit  Agreement  dated as of  February  28, 1997 (as so
amended,  the "Credit Agreement") by and among the Borrowers,  the Lenders,  the
Agent  and  the  Designated  Issuer.   Capitalized  terms  used  herein  without
definition  shall  have the same  meanings  herein  as set  forth in the  Credit
Agreement.

                                    RECITALS

     WHEREAS,  the Borrowers have requested an extension of the Maturity Date of
the Credit Agreement,  and the Lenders, the Agent and the Designated Issuer have
so agreed;

     WHEREAS,  the Borrowers,  the Lenders,  the Agent and the Designated Issuer
desire to amend the Credit Agreement as set forth below;

     NOW, THEREFORE, in consideration of the premises and agreements, provisions
and covenants herein contained, the parties hereto agree as follows:

1.   Amendments to the Credit Agreement.

     1.1.   Amendments to Section 1.01: Defined Terms. The following definitions
            in Section 1.01 of the Credit  Agreement are hereby  amended to read
            in their entirety as follows:

               "'Maturity  Date':  September 27, 1997,  or, if earlier,  the day
            immediately prior to the distribution date of a tax free spin-off of
            any of the Borrowers' Subsidiaries."

               "'Revolving Commitment': The amount of $15,000,000 as such amount
            may be reduced  pursuant  to Sections  2.1(c) and 2.1(d).  As of the
            Maturity Date, the Lenders' obligation to make Revolving Loans after
            such date shall  expire and the amount of the  Revolving  Commitment
            shall be reduced to an amount equal to the Letter of Credit Usage as
            of such date."

2.   Conditions to Effectiveness. This Amendment shall be deemed effective as of
     July 31, 1997 (the "Eighth Amendment Effective Date") upon the satisfaction
     of all of the following conditions precedent:



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     2.1.    The Agent shall have  received  for each Lender and the  Designated
             Issuer   counterparts   hereof  duly  executed  on  behalf  of  the
             Borrowers,  the Agent and the Lenders (or notice of the approval of
             this Amendment by the Lenders  satisfactory to the Agent shall have
             been received by the Agent).

     2.2.    The Agent  shall have  received  a closing  fee in the amount of US
             $6,000.00.

     2.3.    All  corporate  and  other  proceedings  taken  or to be  taken  in
             connection  with  the  transactions  contemplated  hereby  and  all
             documents incidental thereto not previously found acceptable by the
             Agent,  acting on behalf of the Lenders,  and its counsel  shall be
             satisfactory  in form and  substance to the Agent and such counsel,
             and the  Agent  and  such  counsel  shall  have  received  all such
             counterpart  originals or certified copies of such documents as the
             Agent may reasonably request.

3.   Borrowers'  Representations and Warranties.  In order to induce the Lenders
     to enter  into this  Amendment  and to amend the  Credit  Agreement  in the
     manner provided herein, the Borrowers  represent and warrant to each Lender
     that the following statements are true, correct and complete:

     3.1.    Corporate  Power and  Authority.  The Borrowers  have all requisite
             corporate  power and authority to enter into this  Amendment and to
             carry out the  transactions  contemplated  by,  and  perform  their
             respective  obligations  under,  the Credit Agreement as amended by
             this  Amendment  (the  "Amended  Agreement").  The  Certificate  of
             Incorporation  and  Bylaws of each of the  Borrowers  have not been
             amended  since  September  30,  1994,  except for the bylaws of BEI
             Electronics, Inc. which were amended as of June 30, 1997 (a copy of
             the amended bylaws have been delivered to Agent).

     3.2.    Authorization  of  Agreements.  The  execution and delivery of this
             Amendment and the  performance  of the Amended  Agreement have been
             duly  authorized by all necessary  corporate  action on the part of
             the Borrowers.

     3.3.    No Conflict.  The  execution  and delivery by the Borrowers of this
             Amendment  and the  performance  by the  Borrowers  of the  Amended
             Agreement do not and will not  contravene (i) any law or regulation
             binding  on or  affecting  any of  the  Borrowers  or any of  their
             respective  Subsidiaries,  (ii) the Certificate of Incorporation or
             Bylaws of any of the  Borrowers,  (iii)  any  order,  judgement  or
             decree of any court of other agency of government binding on any of
             the Borrowers or any of their  respective  Subsidiaries or (iv) any
             contractual   restriction  binding  on  or  affecting  any  of  the
             Borrowers or any of their respective Subsidiaries.

     3.4.    Governmental  Consents. The execution and delivery by the Borrowers
             of this  Amendment  and the  performance  by the  Borrowers  of the
             Amended  Agreement do not or will not require any  authorization or
             approval  of, or other  action by, or notice to or filing  with any
             government authority or regulatory body.

     3.5.    Binding  Obligation.  This Amendment and the Amended Agreement have
             been duly  executed  and  delivered  by the  Borrowers  and are the
             binding  obligations  of the  Borrowers,  enforceable  against  the
             Borrowers in accordance with their respective terms, except as such
             enforceability   may  be   limited   by   bankruptcy,   insolvency,
             reorganization,  liquidation,  moratorium  or other similar laws of
             general  application  and  equitable   principles  relating  to  or
             affecting creditors' rights.



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     3.6.    Absence of Default. No event has occurred and is continuing or will
             result from the  consummation of the  transactions  contemplated by
             this  Amendment  that  would  constitute  an Event of  Default or a
             Potential Event of Default.

4.   Miscellaneous.

     4.1.    Reference to and Effect on the Credit  Agreement and the Other Loan
             Documents.

             4.1.1. On and after  the  Eighth  Amendment  Effective  Date,  each
                    reference  in the  Credit  Agreement  to  "this  Agreement",
                    "hereunder",  "hereof",  "herein",  or words of like  import
                    referring to the Credit Agreement, and each reference in the
                    other   Loan   Documents   to   the   "Credit    Agreement",
                    "thereunder",  "thereof",  or words of like import referring
                    to the Credit Agreement shall mean and be a reference to the
                    Amended Agreement.

             4.1.2. Except as specifically amended by this Amendment, the Credit
                    Agreement and the other Loan Documents  shall remain in full
                    force and effect and are hereby ratified and confirmed.

             4.1.3. Without limiting the generality of the provisions of Section
                    10.01 of the Credit  Agreement,  nothing  in this  Amendment
                    shall by deemed to (a)  constitute a waiver of compliance by
                    the  Borrowers  with  respect  to  any  term,  provision  or
                    condition of the Credit Agreement or any other instrument or
                    agreement  referred to therein or (b) prejudice any right or
                    remedy that the Agent or any Lender may now have or may have
                    in  the  future  under  or in  connection  with  the  Credit
                    Agreement or any other  instrument or agreement  referred to
                    therein.

     4.2.    Fees and Expenses.  The Borrowers  acknowledge that all costs, fees
             and expenses as described in Section 10.05 of the Credit  Agreement
             incurred  by the  Agent  and  its  counsel  with  respect  to  this
             Amendment and the documents and  transactions  contemplated  hereby
             shall be for the account of the Borrowers.

     4.3.    Headings.  Section and  subsection  headings in this  Amendment are
             included  herein for  convenience  of reference  only and shall not
             constitute  a part of this  Amendment  for any other  purpose or be
             given any substantive effect.

     4.4.    Applicable  Law. THIS AMENDMENT  SHALL BE GOVERNED BY, AND SHALL BE
             CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
             STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES.

     4.5.    Counterparts.  This  Amendment  may be  executed  in any  number of
             counterparts   and  by   different   parties   hereto  in  separate
             counterparts, each of which when so executed and delivered shall be
             deemed  an  original,  but all  such  counterparts  together  shall
             constitute but one and the same instrument,  signature pages may be
             detached  from  multiple  separate  counterparts  and attached to a
             single  counterpart  so that all  signature  pages  are  physically
             attached to the same document.



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IN WITNESS  WHEREOF,  the parties  hereto have caused this  Amendment to be duly
executed and delivered by their respective officers thereunto duly authorized as
of the date first written above.


                                      BEI ELECTRONICS, INC.


                                      By:        \Robert R. Corr\
                                         ---------------------------------------
                                      Title:      Treasurer
                                            ------------------------------------

                                      BEI SENSORS & SYSTEMS COMPANY, INC.


                                      By:        \Robert R. Corr\
                                         ---------------------------------------
                                      Title:      Treasurer
                                            ------------------------------------

                                      DEFENCE SYSTEMS COMPANY, INC.


                                      By:        \Robert R. Corr\
                                         ---------------------------------------
                                      Title:      Treasurer
                                            ------------------------------------

                                      BEI MEDICAL SYSTEMS COMPANY, INC.


                                      By:        \Robert R. Corr\
                                         ---------------------------------------
                                      Title:       Treasurer
                                            ------------------------------------

                                      CIBC INC., Individually and as Agent


                                      By:        \Cyd Petre\
                                         ---------------------------------------
                                      Title:      Authorized Signatory
                                            ------------------------------------

                                      CANADIAN IMPERIAL BANK OF COMMERCE, as the
                                      Designated Issuer


                                      By:       \Cyd Petre\
                                         ---------------------------------------
                                      Title:     Authorized Signatory
                                            ------------------------------------