FIRST AMENDMENT TO
TAX ALLOCATION AND INDEMNITY AGREEMENT



        This First Amendment to Tax Allocation and Indemnity Agreement is 
entered into this 15th day of December 1998, by and between BEI 
Electronics, Inc., a Delaware corporation ("Electronics"), and BEI 
Technologies, Inc., a Delaware corporation ("Technologies").

RECITALS

        1.      Electronics and Technologies entered into a Tax Allocation 
and Indemnity Agreement on September 26, 1997, in connection with the 
distribution of Technologies stock to Electronics' shareholders (the 
"Agreement").

        2.      In order better to reflect the parties' original intentions, 
the parties to the Agreement wish to amend and restate certain 
provisions of the Agreement as if they had been originally incorporated 
therein.

        3.      All defined terms used below shall have the same meaning as 
defined in the agreement.

AMENDMENTS

        A.      Article III Section 3.1(a) is hereby amended and restated to 
read as follows:

                3.1     Federal Income Taxes:

                        (a)     For each taxable year (or portion thereof) in 
which Technologies and any other members of the Technologies Subgroup 
are included in the Electronics Affiliated Group consolidated federal 
income tax return, the Technologies Subgroup (1) shall be allocated and 
Technologies shall be responsible for the payment of 100% of the 
Electronics Affiliated Group's federal income tax liability for the year 
(including any alternative minimum tax or environment tax, as determined 
under this Section 3.1), subject to the Subsequent Adjustments 
provisions of Article V of this agreement, and (2) shall be entitled to 
the receipt of any federal income tax refunds (including any alternative 
minimum tax or environment tax, as determined under this Section 3.1) 
received by Electronics for the taxable year.

        B.      Article III Section 3.2(a) is hereby amended and restated to 
read as follows:

                3.2     State Income and Franchise Taxes:

                        (a)     For each taxable year (or portion thereof) for 
which Technologies and/or any other members of the Technologies Subgroup 
are included in any combined state income or franchise tax return filed 
by the Electronics Unitary Group, the Technologies Subgroup (1) shall be 
allocated and Technologies shall be responsible for the payment of all 
state income and franchise taxes (including any alternative minimum tax) 
per any state income and franchise tax returns in Technologies and/or 
any other members of the Technologies Subgroup are included, subject to 
Subsequent Adjustments provisions of Article V of this agreement, and 
(2) shall be entitled to the receipt of any state income and franchise 
tax refunds (including any alternative minimum tax) received by 
Electronics for the taxable year in which Technologies and/or any other 
members of the Technologies Subgroup are included in any combined state 
income or franchise tax return filed by the Electronics Unitary Group.

        IIN WITNESS WHEREOF, the parties hereto have caused this Tax 
Allocation and Indemnity Agreement to be executed by their duly 
authorized representatives.


                                      Electronics

                                      By: _/s/ Thomas W. Fry

                                      Name: Thomas W. Fry

                                      Title: Vice President of Finance and 
                                      Adminstration



                                      Technologies

                                      By: /s/ Robert R. Corr

                                      Name:  Robert R. Corr   

                                      Title: Secretary & Treasurer