<PAGE>


                                                                 Exhibit 10.39

                                TAB PRODUCTS CO.

                           CHANGE OF CONTROL AGREEMENT
                           ---------------------------

       This Change of Control Agreement (the "Agreement") is effective as of
October 17, 1996, by and between Jack Peth (the "Employee"), and Tab
Products Co., a Delaware corporation (the "Company").

                                    RECITALS

       A.     The Employee presently serves at the pleasure of the Board of
Directors as Acting President and Chief Executive Officer of the Company and
performs significant strategic and management responsibilities necessary to the
continued conduct of the Company's business and operations.

       B.     The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its stockholders to assure
that the Company will have the continued dedication and objectivity of the
Employee, notwithstanding the possibility or occurrence of a Change of Control
(as defined below) of the Company.

       C.     The Board believes that it is imperative to provide the Employee
with certain severance benefits upon the Employee's termination of employment
following a Change of Control which provide the Employee with enhanced financial
security and provide sufficient incentive and encouragement to the Employee to
remain with the Company following a Change of Control.

       D.     The Board has determined that it is in the best interests of the
Company and its stockholders to provide Employee with certain severance benefits
upon the Employee's termination of employment by the Company apart from a Change
of Control.

       E.     Certain capitalized terms used in the Agreement are defined in
Section 3 below.

       In consideration of the mutual covenants herein contained, and in
consideration of the continuing employment of Employee by the Company, the
parties agree as follows:

       1.     TERMS OF EMPLOYMENT.  The Company and the Employee agree that the
Employee's employment is at will, and that their employment relationship may be
terminated by either party at any time, with or without cause.  If the
Employee's employment terminates for any reason, the Employee shall not be
entitled to any payments, benefits, damages, awards or compensation other than
as provided by this Agreement.  The provisions of this Agreement shall terminate
on October 1, 2001 (except that the Employee's employment by the Company shall
continue to be "at will").  Any termination of this Agreement shall not affect
any required payment or benefit that accrues prior to such termination.

                                        1

<PAGE>

       2.     SEVERANCE BENEFITS.  Subject to Sections 2(d) and 2(e) below,

              (a)    TERMINATION FOLLOWING A CHANGE OF CONTROL.  If the
Employee's employment is terminated within one (1) month prior to or twelve (12)
months following a Change of Control, then the Employee shall be entitled to
receive severance benefits as follows:

                     (i)    INVOLUNTARY TERMINATION.  If the Employee's
employment is terminated as a result of Involuntary Termination (as defined in
Section 3(b) below), then the Employee shall be entitled to receive severance
pay in an amount equal to 150% of the Employee's annual base salary at the time
of such termination, plus the full amount of Employee's annual bonus at the
"on-target" level for the fiscal year in which Employee is terminated, which
amount shall be paid in lieu of any bonus or commission that may be owing, or
becomes owed to Employee at any time thereafter.  Any severance payments to
which the Employee is entitled pursuant to this section shall be paid in a lump
sum within thirty (30) days of the Employee's termination.  In addition, for a
period of up to eighteen (18) months after any termination under this
Section 2(a)(i), (i) the Company shall, if permitted under the Company's
existing health insurance plan at no additional premium to the Company, continue
Employee's existing group health insurance coverage, or if not so permitted,
reimburse the Employee for any COBRA premiums paid by the Employee for continued
group health insurance coverage and (ii) the Company shall continue to pay
premiums for life insurance maintained by the Company on behalf of Employee in
the same amount of coverage as was in place prior to the termination of
employment, PROVIDED THAT such insurance coverage can be continued on an
individual basis following Employee's termination and PROVIDED FURTHER that the
Company shall not be required to pay any additional premium amount for
individual coverage (the "Employment Benefits").  Such Employment Benefits shall
terminate upon the earlier of (i) eighteen (18) months from the date of the
Employee's termination or (ii) upon commencement of New Employment by the
Employee.  In addition, Employee shall be entitled to reimbursement of up to
$10,000 worth of outplacement services actually used.

                     (ii)   VOLUNTARY RESIGNATION.  If the Employee's employment
terminates by reason of the Employee's voluntary resignation (and is not an
Involuntary Termination or a Termination for Cause), then the Employee shall not
be entitled to receive severance or other benefits following the date of such
termination under the terms of this Agreement, and the Company shall have no
obligation to provide for the continuation of any health and medical benefit or
life insurance plans existing on the date of such termination except as
otherwise required by applicable law.

                     (iii)  DISABILITY; DEATH.  If the Company terminates the
Employee's employment as a result of the Employee's Disability, or such
Employee's employment is terminated at any time due to the death of the
Employee, then the Employee shall not be entitled to receive severance or other
benefits following the date of such termination under the terms of this
Agreement, and the Company shall have no obligation to provide for the
continuation of any health and medical benefit or life insurance plans existing
on the date of such termination except as otherwise required by applicable law.

                                        2

<PAGE>

                     (iv)   TERMINATION FOR CAUSE.  If the Employee is
terminated for Cause, then the Employee shall not be entitled to receive any
severance or other benefits following the date of such termination under the
terms of this Agreement, and the Company shall have no obligation to provide for
the continuation of any health and medical benefit or life insurance plans
existing on the date of such termination except as otherwise required by
applicable law.

                     (v) ACCELERATION OF STOCK OPTIONS.  The Employee shall be
entitled to acceleration of vesting for Employee's stock options as provided
under the Company's 1991 Stock Option Plan or any applicable successor plan.

              (b)    TERMINATION APART FROM CHANGE OF CONTROL.  (i) If the
Employee's employment is terminated by reason of an Involuntary Termination
either prior to the occurrence of a Change of Control or after the expiration of
twelve (12) months following a Change of Control, then the Employee shall be
entitled to receive the following: (A) severance pay in an amount equal to 50%
of the Employee's annual base salary at the time of the termination; (B) if
targets have been met through the date of Employee's termination, the amount of
Employee's on-target bonus for the fiscal year in which Employee's employment
was terminated, multiplied by a fraction the numerator of which is the number of
full months of Employee's employment during such fiscal year and the denominator
of which is twelve (12), PROVIDED THAT the  amounts payable under
subsections (i)(A) and (ii)(B) shall be paid in a lump sum within thirty (30)
days of the Employee's termination; (C) in the event Employee has not commenced
New Employment by the end of the sixth month following the termination (the
"Initial Period"), Employee shall be entitled to additional severance pay in the
amount of 67% of Employee's monthly base salary at the time of termination,
which amount shall be payable monthly on the first day of each of the six months
following the Initial Period (the "Additional Period"), PROVIDED THAT, such
monthly payments shall terminate upon the commencement of New Employment by the
Employee and in any event shall terminate following the sixth such payment; and
(D) in the event Employee shall commence New Employment during the Initial
Period or the Additional Period, the Employee shall be entitled to receive an
additional severance payment in accordance with the schedule attached hereto as
EXHIBIT A, payable in a lump sum thirty (30) days after Employee's notice of
commencement of New Employment.

       (ii)  In addition, for a period of up to twelve (12) months after any
Involuntary Termination covered under this Section 2(b), the Company shall
provide the Employment Benefits, provided that such Employment Benefits shall
terminate upon the earlier of (A) twelve months from the date of the Employee's
termination or(B) upon commencement of New Employment by the Employee and the
Employee shall be entitled to reimbursement for up to $10,000 worth of
outplacement services actually used.
       (iii)  Following an Involuntary Termination subject to this Section 2(b)
which occurs prior to June 9, 1997, acceleration of 30,000 then unvested shares
of any stock option granted to the Employee under the Company's 1991 Stock
Option Plan shall automatically occur as set forth under this Section 2(b)(iii)
and the Employee shall automatically have the right to exercise all or any
portion of such stock option to the extent so accelerated, in addition to any
portion of the option exercisable prior to acceleration.

                                        3

<PAGE>

       (iv)  If the Employee's employment is terminated by reason of voluntary
resignation, Disability, death or for Cause either prior to the occurrence of a
Change of Control or after the expiration of twelve (12) months following a
Change of Control, then the Employee shall not be entitled to receive any
severance or other benefits following the date of such termination under the
terms of this Agreement, and the Company shall have no obligation to provide for
the continuation of any health and medical benefit or life insurance plans
existing on the date of such termination except as otherwise required by
applicable law.

              (c)    REPURCHASE OPTION.  In partial consideration of the
benefits granted Employee hereunder, Employee hereby grants to the Company the
right (the "Company Repurchase Option"), exercisable in the sole discretion of
the Company, to repurchase from the owner thereof, on the terms set forth in
this Section 2(c), any and all shares of the capital stock of the Company
beneficially owned by Employee (or by any transferee of Employee or subsequent
transferee, except as otherwise provided below) which shall have been acquired
by Employee pursuant to the exercise of any stock option granted to Employee by
the Company (the "Repurchase Shares").

              (i)    EXERCISE OF COMPANY REPURCHASE OPTION.  The Company may
exercise the Company Repurchase Option by written notice to Employee, Employee's
legal representative, or other owner of the Repurchase Shares, as the case may
be, during the Repurchase Period.  The "Repurchase Period" shall commence upon
the date of Employee's termination of employment for any reason or no reason,
other than (A) any termination of employment occurring less than thirty (30)
days prior to a Change of Control and (B) any termination of employment
following a Change of Control.  The Repurchase Period shall terminate, with
respect to Repurchase Shares acquired upon the exercise of any Company stock
option, on the later of (A) the date ten (10) days after the commencement of the
Repurchase Period or (B) the date ten (10) days after such Company stock option
is last exercised; provided, however, that the Repurchase Period with respect to
all Repurchase Shares shall terminate on the date which is thirty (30) days
prior to a Change of Control.  If the Company fails to give such notice of
exercise during the Repurchase Period, the Company Repurchase Option shall
terminate (unless the Company and Employee have agreed in writing to extend the
time for the exercise of the Company Repurchase Option).

              (ii)   PAYMENT FOR REPURCHASE SHARES.  The repurchase price per
share being repurchased by the Company pursuant to the Company Repurchase Option
shall be an amount equal to the greater of (A) the closing price per share of
the class of securities subject to the Company Repurchase Option as reported on
the securities exchange or market system constituting the primary market for
such class of the Company's securities (the "Closing Price") on the date of
Employee's termination of employment or (B) the Closing Price on the date of the
exercise of any Company stock option (the "Determination Date").  For purposes
of establishing the Determination Date, if the date of termination of Employee's
employment does not fall on a day on which such class of securities is traded on
such exchange or market system, the repurchase price per share shall be
determined in accordance with the preceding sentence on the last day on which
such securities were so traded.  If there is then no public market for the class
of securities subject to the Company Repurchase Option, the repurchase price per
share shall be the fair market value per share of such class of securities as
determined in good faith by the Board of Directors of

                                        4

<PAGE>

the Company.  Payment by the Company to the owner of the Repurchase Shares shall
be made in cash on or before the last day of the Repurchase Period.  For
purposes of the foregoing, cancellation of any indebtedness of Employee to the
Company shall be treated as payment to Employee in cash to the extent of the
unpaid principal and any accrued interest canceled.

              (iii)  ASSIGNMENT OF COMPANY REPURCHASE OPTION.  The Company shall
have the right to assign the Company Repurchase Option at any time, whether or
not such option is then exercisable, to one or more persons as may be selected
by the Company.

              (iv)   TRANSFEREES OF REPURCHASE SHARES.  All transferees and
subsequent transferees of the Repurchase Shares or any interest therein, other
than the Company or any transferees who acquired such shares pursuant to a sale
of such shares in a "brokers' transaction" within the meaning of Rule 144 under
the Securities Act of 1933, as amended, shall be required as a condition of such
transfer to agree in writing (in a form satisfactory to the Company) to receive
and hold such Repurchase Shares or any interest therein subject to all of the
terms and conditions of this Section 2(c).  Any transfer of Repurchase Shares
shall be void unless the requirements of this Section 2(c) are satisfied.  The
Company may at any time place legends referencing the Company Repurchase Option
on certificates representing the Repurchase Shares.

              (d) RELEASE OF CLAIMS; RESIGNATION.  Employee's entitlement to any
benefits under this Section 2 is conditioned upon Employee's execution and
delivery to the Company of (i) a general release of claims in a form
satisfactory to the Company and (ii) a resignation from all of Employee's
positions with the Company, including from the Board of Directors and any
committees thereof on which Employee serves, in a form satisfactory to the
Company.

              (e) LIMITATION OF PAYMENTS AND BENEFITS.

                     (i)    To the extent that any of the payments and benefits
provided for in this Agreement or otherwise payable to the Employee constitute
"parachute payments" within the meaning of Section 280G of the Internal Revenue
Code of 1986, as amended (the "Code"), and, but for this Section 2(e), would be
subject to the excise tax imposed by Section 4999 of the Code or any similar or
successor provision, the aggregate amount of such payments and benefits shall be
reduced, but only to the extent necessary so that none of such payments and
benefits are subject to excise tax pursuant to Section 4999 of the Code.

                     (ii)   Within sixty (60) days after the later of
termination of employment or the related Change in Control, the Company shall
notify the Employee in writing if it believes that any reduction in the payments
and benefits that would otherwise be paid or provided to the Employee under the
terms of this Agreement is required to comply with the provisions of
Subsection 2(e)(i).  If the Company determines that any such reduction is
required, it will provide the Employee with copies of the information used and
calculations made by the Company to determine the amount of such reduction.  The
Company shall determine, in a fair and equitable manner after consultation with
the Employee, which payments and benefits are to be reduced so as to result in
the maximum benefit for the Employee.

                                        5

<PAGE>

                     (iii)  Within thirty (30) days after the Employee's receipt
of the Company's notice pursuant to Subsection 2(e)(ii), the Employee shall
notify the Company in writing if the Employee disagrees with the amount of
reduction determined by the Company, or the selection of the payments and the
benefits to be reduced.  As part of such notice, the Employee shall also advise
the Company of the amount of reduction, if any, that the Employee has, in good
faith, determined to be necessary to comply with the provisions of
Subsection 2(e)(i) and/or the payments and benefits to be reduced.  Failure by
the Employee to provide this notice within the time allowed will be treated by
the Company as acceptance by the Employee of the amount of reduction determined
by the Company and/or the payments and benefits to be reduced.  If any
differences regarding the amount of the reduction and/or the payments and
benefits to be reduced have not been resolved by mutual agreement within sixty
(60) days after the Employee's receipt of the Company's notice pursuant to
Subsection 2(e)(ii), the amount of reduction and/or the payments and benefits to
be reduced as determined by the Employee will be conclusive and binding on both
parties unless, prior to the expiration of such sixty (60) day period, the
Company notifies the Employee in writing of the Company's intention to have the
matter submitted to arbitration for resolution and proceeds to do so promptly.
If the Company gives no notice to the Employee of a required reduction as
provided in Subsection 2(e)(ii), the Employee may unilaterally determine the
amount of reduction required, if any, and/or the payments and benefits to be
reduced, and, upon written notice to the Company, the amount and/or the payments
and benefits to be reduced will be conclusive and binding on both parties.

                     (iv)   If, as a result of the reductions required by
Subsection 2(e)(i), the amounts previously paid to the Employee exceed the
amount to which the Employee is entitled, the Employee will promptly return the
excess amount to the Company.

              (f) CONSULTING SERVICES.  In consideration for the other benefits
provided hereunder, during the twelve (12) months following any Involuntary
Termination subject to Section 2(b) hereof, Employee shall provide consulting
services to the Company at the request of the Chairman or the Chief Executive
Officer.  Such services shall include any reasonable requests for information or
assistance by the Chairman or Chief Executive Officer, including but not limited
to the transition of Employee's duties and shall be provided at mutually
convenient times.

       3.     DEFINITION OF TERMS.  The following terms referred to in this
Agreement shall have the following meanings:

              (a)    CHANGE OF CONTROL.  "Change of Control" shall mean the
occurrence of either of the following events:

                     (i)    Any "person" (as such term is used in Sections 13(d)
and 14(d) of the Securities Exchange Act of 1934, as amended) is or becomes the
"beneficial owner" (as defined in Rule 13d-3 under said Act), directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the total voting power represented by the Company's then outstanding
voting securities; or

                                        6

<PAGE>

                     (ii)   (A) A merger or consolidation of the Company with
any other corporation, other than a merger or consolidation which would result
in the voting securities of the Company outstanding immediately prior thereto
continuing to represent (either by remaining outstanding or by being converted
into voting securities of the surviving entity) at least fifty percent (50%) of
the total voting power represented by the voting securities of the Company or
such surviving entity outstanding immediately after such merger or
consolidation; or (B) the complete liquidation of the Company; or (C) the sale
or disposition by the Company of all or substantially all the Company's assets.

              (b)    INVOLUNTARY TERMINATION.  "Involuntary Termination" shall
mean the Employee's resignation within 60 days after any of the following:

                     (i)    Without the Employee's express written consent, the
assignment to the Employee of any significant duties or the significant
reduction of the Employee's duties, either of which is materially inconsistent
with the Employee's position with the Company and responsibilities in effect
immediately prior to such assignment, or the removal of the Employee from such
position and responsibilities, which is not effected for death, Disability or
for Cause;

                     (ii)   Without the Employee's express written consent, a
substantial reduction, without good business reasons, of the facilities and
perquisites (including office space and location) available to the Employee
immediately prior to such reduction;

                     (iii)  Any reduction by the Company in an amount greater
than 10% in the base salary and/or prospective bonus of the Employee as in
effect immediately prior to such reduction, other than a reduction applied
generally to executive officers of the Company;

                     (iv)   Any reduction by the Company in the kind or level of
employee benefits to which the Employee is entitled immediately prior to such
reduction, other than a reduction applied generally to executive officers of the
Company;

                     (v)    The relocation of the Employee to a facility or a
location more than 40 miles from the Employee's then present location, without
the Employee's express written consent; or

                     (vi)   The failure of the Company to obtain the assumption
of the terms of this Agreement by any successors contemplated in Section 4
below.

PROVIDED, HOWEVER, that the Employee's resignation as a result of any of the
foregoing conditions shall be a voluntary resignation, and not an involuntary
termination, unless the Employee gives written notice of any such condition(s)
to the Board and allows the Company at least 10 days thereafter to correct such
condition(s).  It shall also be an Involuntary Termination if the Company
terminates the Employee for any reason other than Disability, death or for
Cause.

              (c)    CAUSE.  For purposes of this Agreement, a termination "for
Cause" occurs if the Employee is terminated for any of the following reasons:

                                        7

<PAGE>

                     (i)    Theft, dishonesty, or intentional falsification of
any employment or Company records;

                     (ii)   Improper disclosure of the Company's confidential or
proprietary information;

                     (iii)  Any action by the Employee that Employee knew or
should have known could have a material detrimental effect on the Company's
reputation or business;

                     (iv)   The Employee's failure or inability to perform any
reasonable assigned duties after written notice from the Company to the Employee
of, and a reasonable opportunity to cure, such failure or inability; or

                     (v)    The Employee's conviction (including any plea of
guilty or nolo contendre) for any criminal act that impairs his ability to
perform his duties for the Company.

              (d)    DISABILITY.  "Disability" shall mean that the Employee is
unable to perform his duties as an employee of the Company as the result of his
incapacity due to physical or mental illness for 120 days (not necessarily
consecutive) in any one year period.  Termination resulting from Disability may
only be effected after at least 30 days' written notice by the Company of its
intention to terminate the Employee's employment.  In the event that the
Employee resumes the performance of substantially all of his duties as an
employee of the Company before the termination of his employment becomes
effective, the notice of intent to terminate shall automatically be deemed to
have been revoked.

              (e)    NEW EMPLOYMENT.  For purposes of this Agreement, "New
Employment" shall mean any salaried position with any employer.

       4.     EMPLOYEE COVENANT REGARDING NONSOLICITATION.  For a period of one
(1) year following termination of employment for any reason, the Employee shall
not recruit, solicit, or invite the solicitation of any employees of the Company
to terminate their employment with the Company.

       5.     SUCCESSORS.

              (a)    COMPANY'S SUCCESSORS.  Any successor to the Company
(whether direct or indirect and whether by purchase, lease, merger,
consolidation, liquidation or otherwise) to all or substantially all of the
Company's business and/or assets shall assume the obligations under this
Agreement and agree expressly to perform the obligations under this Agreement in
the same manner and to the same extent as the Company would be required to
perform such obligations in the absence of a succession.  For all purposes under
this Agreement, the term "Company" shall include any successor to the Company's
business and/or assets which executes and delivers the assumption agreement
described in this subsection (a) or which becomes bound by the terms of this
Agreement by operation of law.

                                        8

<PAGE>

              (b)    EMPLOYEE'S SUCCESSORS.  All rights of the Employee
hereunder shall inure to the benefit of, and be enforceable by, the Employee's
personal or legal representatives, executors, administrators, successors, heirs,
distributees, devisees and legatees.  Employee shall have no right to assign any
of his obligations or duties under this Agreement to any other person or entity.

       6.     NOTICE.

              (a)    GENERAL.  Notices and all other communications contemplated
by this Agreement shall be in writing and shall be deemed to have been duly
given when personally delivered or when mailed by U.S. registered or certified
mail, return receipt requested and postage prepaid.  In the case of the
Employee, mailed notices shall be addressed to him at the home address which he
most recently communicated to the Company in writing.  In the case of the
Company, mailed notices shall be addressed to its corporate headquarters, and
all notices shall be directed to the attention of its Secretary.

              (b)    NOTICE OF TERMINATION.  Any termination by the Company for
Cause or by the Employee as a result of a voluntary resignation or an
Involuntary Termination shall be communicated by a notice of termination to the
other party hereto given in accordance with Section 6 of this Agreement.  Such
notice shall indicate the specific termination provision in this Agreement
relied upon, shall set forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination under the provision so indicated, and
shall specify the termination date (which shall be not more than 15 days after
the giving of such notice).

       7.     MISCELLANEOUS PROVISIONS.

              (a)    NO DUTY TO MITIGATE.  The Employee shall not be required to
mitigate the amount of any payment contemplated by this Agreement (whether by
seeking New Employment or in any other manner), nor shall any such payment be
reduced by any earnings that the Employee may receive from any other source.

              (b)    WAIVER.  No provision of this Agreement shall be modified,
waived or discharged unless the modification, waiver or discharge is agreed to
in writing and signed by the Employee and by an authorized officer of the
Company (other than the Employee).  No waiver by either party of any breach of,
or of compliance with, any condition or provision of this Agreement by the other
party shall be considered a waiver of any other condition or provision or of the
same condition or provision at another time.

              (c)    CHOICE OF LAW.  The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California.

              (d)    SEVERABILITY.  The invalidity or unenforceability of any
provision or provisions of this Agreement shall not affect the validity or
enforceability of any other provision hereof, which shall remain in full force
and effect.

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<PAGE>

              (e)    ARBITRATION.  In the event of any dispute or claim relating
to or arising out of the Employee's employment relationship with the Company,
this Agreement, or the termination of the Employee's employment with the Company
for any reason (including, but not limited to, any claims of breach of contract,
wrongful termination, fraud or age, race, sex, national origin, disability or
other discrimination or harassment), the Employee and the Company agree that all
such disputes shall be fully, finally and exclusively resolved by binding
arbitration conducted by the American Arbitration Association in Santa Clara
County, California.  The Employee and the Company hereby knowingly and willingly
waive their respective rights to have any such disputes or claims tried to a
judge or jury.  Provided, however, that this arbitration provision shall not
apply to any disputes or claims relating to or arising out of the actual or
alleged misuse or misappropriation of the Company's property, including, but not
limited to, its trade secrets or proprietary information.

              (f)    NO ASSIGNMENT OF BENEFITS.  The rights of any person to
payments or benefits under this Agreement shall not be made subject to option or
assignment, either by voluntary or involuntary assignment or by operation of
law, including (without limitation) bankruptcy, garnishment, attachment or other
creditor's process, and any action in violation of this subsection (f) shall be
void.

              (g)    EMPLOYMENT TAXES.  All payments made pursuant to this
Agreement will be subject to withholding of applicable income and employment
taxes.

              (h)    ASSIGNMENT BY COMPANY.  The Company may assign its rights
under this Agreement to an affiliate, and an affiliate may assign its rights
under this Agreement to another affiliate of the Company or to the Company;
provided, however, that no assignment shall be made if the net worth of the
assignee is less than the net worth of the Company at the time of assignment.
In the case of any such assignment, the term "Company" when used in a section of
this Agreement shall mean the corporation that actually employs the Employee.

              (i)    COUNTERPARTS.  This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together will constitute one and the same instrument.

              (j)    PRIOR AGREEMENTS.  This Agreement shall supersede all prior
arrangements whether written or oral, and understandings, regarding the subject
matter of this Agreement.

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<PAGE>

       IN WITNESS WHEREOF, each of the parties has executed this Agreement, in
the case of the Company by its duly authorized officer, as of the day and year
first above written.


COMPANY                                   TAB PRODUCTS CO.



                                          By:
                                             -----------------------------------

                                          Title:
                                                --------------------------------


EMPLOYEE                                  By:
                                             -----------------------------------



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<PAGE>

                                    EXHIBIT A
                                    ---------

                      SEVERANCE PAYMENT UNDER SECTION 2(b)

In the event that Employee is entitled to severance benefits pursuant to Section
2(b) of the Agreement and commences New Employment within the Initial Period or
the Additional Period (as defined in the Agreement), the Employee shall be
entitled to a severance payment as follows:




    -------------------------------------------------------------------------
            NEW EMPLOYMENT COMMENCES                        SEVERANCE AMOUNT
    -------------------------------------------------------------------------
    -------------------------------------------------------------------------
     During Initial Period                                       $67,500
    -------------------------------------------------------------------------
     During 1st Month Following Initial Period                   $56,250
    -------------------------------------------------------------------------
     During 2nd Month Following Initial Period                   $45,000
    -------------------------------------------------------------------------
     During 3rd Month Following Initial Period                   $33,750
    -------------------------------------------------------------------------
     During 4th Month Following Initial Period                   $22,500
    -------------------------------------------------------------------------
     During 5th Month Following Initial Period                   $11,250
    -------------------------------------------------------------------------
     During 6th Month Following Initial Period                      $0
    -------------------------------------------------------------------------


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