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[LOGO]  BANK OF AMERICA                                 BUSINESS LOAN AGREEMENT
        NATIONAL TRUST AND SAVINGS ASSOCIATION
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This Agreement dated as of December 7, 1995, is between Bank of America
National Trust and Savings Association (the "Bank") and Tab Products Co.
(the "Borrower").

1.    FACILITY NO. 1: LINE OF CREDIT AMOUNT AND TERMS

1.1   LINE OF CREDIT AMOUNT.

(a)   During the availability period described below, the Bank will provide a
      line of credit to the Borrower. The amount of the line of credit (the
      "Facility 1 Commitment") is Ten Million Dollars ($10,000,000).

(b)   This is a revolving line of credit. During the availability period, the
      Borrower may repay principal amounts and reborrow them.

(c)   The Borrower agrees not to permit the outstanding principal balance of
      the line of credit to exceed the Facility 1 Commitment.

1.2   AVAILABILITY PERIOD.  The line of credit is available between the date
      of this Agreement and October 31, 1996 (the "Facility No. 1 Expiration
      Date") unless the Borrower is in default.

1.3   INTEREST RATE.

(a)   Unless the Borrower elects an optional interest rate as described
      below, the interest rate is the Bank's Reference Rate.

(b)   The Reference Rate is the rate of interest publicly announced from time
      to time by the Bank in San Francisco, California, as its Reference
      Rate. The Reference Rate is set by the Bank based on various factors,
      including the Bank's costs and desired return, general economic
      conditions and other factors, and is used as a reference point for
      pricing some loans. The Bank may price loans to its customers at,
      above, or below the Reference Rate. Any change in the Reference Rate
      shall take effect at the opening of business on the day specified in
      the public announcement of a change in the Bank's Reference Rate.

1.4   REPAYMENT TERMS.

(a)   The Borrower will pay interest on January 1, 1996, and then monthly
      thereafter until payment in full of any principal outstanding under this
      line of credit.

(b)   The Borrower will repay in full all principal and any unpaid interest
      or other charges outstanding under this line of credit no later than
      the Facility No. 1 Expiration Date.

(c)   Any amount bearing interest at an optional interest rate (as described
      below) may be repaid at the end of the applicable interest period,
      which shall be no later than the Facility No. 1 Expiration Date.

1.5   OPTIONAL INTEREST RATES.  Instead of the interest rate based on the
      Bank's Reference Rate, the Borrower may elect to have all or portions
      of the line of credit (during the availability period) bear interest at
      the rate(s) described below during an interest period agreed to by the
      Bank and the Borrower. Each interest rate is a rate per year. Interest
      will be paid on the last day of each interest period, and on the first
      day each month during the interest period. At the end of any interest
      period, the interest rate will revert to the rate based on the
      Reference Rate, unless the Borrower has designated another optional
      interest rate for the portion.

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1.6  FIXED RATE. The Borrower may elect to have all or portions of the
     principal balance of the line of credit bear interest at the Fixed Rate,
     subject to the following requirements:

(a)  The "Fixed Rate" means the fixed interest rate the Bank and the Borrower
     agree will apply to the portion during the applicable interest period.

(b)  The interest period during which the Fixed Rate will be in effect will
     be no shorter than 30 days and no longer than 180 days.

(c)  Each Fixed Rate portion will be for an amount not less than Five Hundred
     Thousand Dollars ($500,000).

(d)  The Borrower may not elect a Fixed Rate with respect to any portion of
     the principal balance of the line of credit which is scheduled to be
     repaid before the last day of the applicable interest period.

(e)  Any portion of the principal balance of the line of credit already
     bearing interest at the Fixed Rate will not be converted to a different
     rate during its interest period.

(f)  Each prepayment of a Fixed Rate portion, whether voluntary, by reason
     of acceleration or otherwise, will be accompanied by the amount of
     accrued interest on the amount prepaid, and a prepayment fee equal to
     the amount (if any) by which:

     (i)   the additional interest which would have been payable on the amount
           prepaid had it not been paid until the last day of the interest
           period, exceeds

     (ii)  the interest which would have been recoverable by the Bank by
           placing the amount prepaid on deposit in the certificate of
           deposit market for a period starting on the date on which it
           was prepaid and ending on the last day of the interest period
           for such portion.

1.7   OFFSHORE RATE. The Borrower may elect to have all or portions of the
principal balance of the line of credit bear interest at the Offshore Rate,
subject to the following requirements:

(a)  The "Offshore Rate" means the interest rate the Bank and the Borrower
     agree will apply to the portion during the applicable interest period.

(b)  The interest period during which the Offshore Rate will be in effect will
     be no shorter than 30 days and no longer than 180 days. The last day of
     the interest period will be determined by the Bank using the practices
     of the offshore dollar inter-bank market.

(c)  Each Offshore Rate portion will be for an amount not less than Five
     Hundred Thousand Dollars ($500,000).

(d)  The Borrower may not elect an Offshore Rate with respect to any portion
     of the principal balance of the line of credit which is scheduled to be
     repaid before the last day of the applicable interest period.

(e)  Any portion of the principal balance of the line of credit already
     bearing interest at the Offshore Rate will not be converted to a
     different rate during its interest period.

(f)  Each prepayment of an Offshore Rate portion, whether voluntary, by
     reason of acceleration or otherwise, will be accompanied by the amount
     of accrued interest on the amount prepaid, and a prepayment fee equal to
     the amount (if any) by which:

     (i)   the additional interest which would have been payable on the
           amount prepaid had it not been paid until the last day of the
           interest period, exceeds

     (ii)  the interest which would have been recoverable by the Bank by
           placing the amount prepaid on deposit in the offshore dollar
           market for a period starting on the date on which it was prepaid
           and ending on the last day of the interest period for such portion.

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(g)    The Bank will have no obligation to accept an election for an Offshore
       Rate portion if any of the following described events has occurred and
       is continuing:

       (i)    Dollar deposits in the principal amount, and for periods equal
              to the interest period, of an Offshore Rate portion are not
              available in the offshore dollar inter-bank markets; or

       (ii)   the Offshore Rate does not accurately reflect the cost of an
              Offshore Rate portion.

1.8    FOREIGN EXCHANGE FACILITY.

(a)    During the availability period, the Bank at its discretion may enter
       into spot and forward foreign exchange contracts with the Borrower.
       The foreign exchange contract limit will be Four Million U.S. Dollars
       (U.S. $4,000,000), and the settlement limit will be One Million U.S.
       Dollars (U.S. $1,000,000). The "foreign exchange contract limit" is
       the maximum limit on the net difference between the total foreign
       exchange contracts outstanding less the total foreign exchange
       contracts for which the Borrower has already compensated the Bank. The
       "settlement limit" is the maximum limit on the gross total amount of
       all sale and purchase contracts on which delivery is to be effected
       and settlement allowed on any one banking day.

(b)    The Bank shall not be required to pay the Borrower or deliver any
       foreign currency to the Borrower under any foreign exchange contract
       until the Bank receives evidence satisfactory to it that the Borrower
       has paid the Bank the required U.S. Dollars in immediately available
       funds or delivered the required foreign currency to the Bank under such
       foreign exchange contract. The Bank shall not be liable for interest or
       other damages caused by any such failure to pay or deliver or any such
       delay in payment or delivery.

(c)    The Borrower will pay the Bank on demand the Bank's then standard
       foreign exchange contract fees for each contract.

(d)    Foreign exchange contracts will be in form and substance satisfactory
       to the Bank.

(e)    No foreign exchange contracts will mature later than ninety (90) days
       after the Facility No. 1 Expiration Date.

(f)    The Borrower understands the risks of, and is financially able to bear
       any losses resulting from, entering into foreign exchange contracts.
       The Bank shall not be liable for any loss suffered by the Borrower as
       a result of the Borrower's foreign exchange trading. The Borrower will
       enter into each foreign exchange contract in reliance only upon the
       Borrower's own judgment. The Borrower acknowledges that in entering
       into foreign exchange contracts with the Borrower, the Bank is not
       acting as a fiduciary. The Borrower understands that neither the Bank
       nor the Borrower has any obligation to enter into any particular
       foreign exchange contract with the other.

(g)    The Borrower hereby requests the Bank to rely upon and execute the
       Borrower's telephonic instructions regarding foreign exchange
       contracts, and the Borrower agrees that the Bank shall incur no
       liability for its acts or omissions which result from interruption of
       communications, misunderstood communications or instructions from
       unauthorized persons, unless caused by the wilful misconduct of the
       Bank or its officers or employees. The Borrower agrees to protect the
       Bank and hold it harmless from any and all loss, damage, claim, expense
       (including the reasonable fees of outside counsel and the allocated
       costs of staff counsel) or inconvenience, however arising, which the
       Bank suffers or incurs or might suffer or incur, based on or arising
       out of said acts or omissions.

(h)    The Borrower agrees to promptly review all confirmations sent to the
       Borrower by the Bank. The Borrower understands that these confirmations
       are not legal contracts but only evidence of the valid and binding
       oral contract which the Borrower has already entered into with the
       Bank. The Borrower agrees

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      to promptly execute and return to the Bank confirmations which
      accurately reflect the terms of a foreign exchange contract, and
      immediately contact the Bank if the Borrower believes a confirmation
      is not accurate. In the event of a conflict, inconsistency or
      ambiguity between the provisions of this Agreement and the provisions
      of a confirmation, the provisions of this Agreement will prevail.

(i)   The Borrower agrees that the Bank may electronically record all
      telephonic conversations with the Borrower relating to foreign
      exchange contracts and that such tape recordings may be submitted in
      evidence to any court or in any other proceedings relating to such
      contracts. The Borrower agrees that in the event of a conflict,
      inconsistency or ambiguity between the terms of a foreign exchange
      contract as reflected in a tape recording and the terms stated on a
      confirmation, the terms reflected in the tape recording shall control.

(j)   Any sum owed to the Bank under a foreign exchange contract may,
      at the option of the Bank, be added to the principal amount
      outstanding under this Agreement. The amount will bear interest and be
      due as described elsewhere in this Agreement. The Borrower hereby
      authorizes the Bank to debit the Borrower's account with the Bank for
      payments due from the Borrower to the Bank with respect to any foreign
      exchange contract.

(k)   In addition to any other rights or remedies which the Bank may have
      under this Agreement or otherwise, upon the occurrence of an event of
      default under this Agreement, the Bank may:

      (i)    Suspend performance of its obligations to the Borrower under
             any foreign exchange contract;

      (ii)   Declare all foreign exchange contracts, interest and any other
             amounts which are payable by the Borrower to the Bank immediately
             due and payable; and

      (iii)  Without notice to the Borrower, close out any or all foreign
             exchange contracts or positions of the Borrower with the Bank.

      The Bank shall not be under any obligation to exercise any such rights
      or remedies or to exercise them at a time or in a manner beneficial to
      the Borrower. The Borrower shall be liable for any amounts owing to the
      Bank after exercise of any such rights and remedies.

2.    FACILITY NO. 2: TERM LOAN AMOUNT AND TERMS

2.1   OUTSTANDING TERM LOAN. There is outstanding from the Bank to the
Borrower a term loan in the original principal amount of Two Million Five
Hundred Thousand Dollars ($2,500,000). This term loan is currently subject to
the terms and conditions of Facility No. 2 of the Business Loan Agreement
dated August 20, 1993. As of the date of this Agreement, the term loan shall
be deemed to be outstanding as Facility No. 2 under this Agreement, and shall
be subject to all the terms and conditions stated in this Agreement.

2.2   INTEREST RATE. Unless the Borrower elects an optional interest rate as
described below, the interest rate is the Bank's Reference Rate plus 0.75
percentage point.

2.3   REPAYMENT TERMS.

(a)   The Borrower will pay all accrued but unpaid interest on January 1,
      1996, and then monthly thereafter and upon payment in full of the
      principal of the loan.

(b)   The Borrower will repay principal in 80 successive monthly installments
      of Twenty-Six Thousand Forty-One and 67/100 Dollars ($26,041.67)
      starting January 1, 1996. On August 1, 2002, the Borrower will repay
      the remaining principal balance plus any interest then due.

(c)   The Borrower may repay the loan in full or in part at any time. The
      prepayment will be applied to the most remote installment of principal
      due under Paragraph 2.3(b).

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2.4   OPTIONAL INTEREST RATES.  Instead of the interest rate based on the
Bank's Reference Rate, the Borrower may elect to have all or portions of the
loan bear interest at the rate(s) described below during an interest period
agreed to by the Bank and the Borrower. Each interest rate is a rate per
year. Interest will be paid on the last day of each interest period, and on
the first day each month during the interest period. At the end of any
interest period, the interest rate will revert to the rate based on the
Reference Rate, unless the Borrower has designated another optional interest
rate for the portion.

2.5   FIXED RATE.  The Borrower may elect to have all or portions of the
principal balance of the loan bear interest at the Fixed Rate, subject to the
same requirements set forth in subparagraphs (a) through (f) of Paragraph 1.6
(except for purposes of this Facility No. 2, the term "loan" is substituted
for the term "line of credit" in subparagraphs (d) and (e) of Paragraph
1.6).

2.6   LONG TERM RATE.  The Borrower may elect to have all or portions of the
principal balance of the loan bear interest at the Long Term Rate, subject to
the following requirements:

(a)   The interest period during which the Long Term Rate will be in effect
      will be one year or more.

(b)   The "Long Term Rate" means the fixed interest rate the Bank and the
      Borrower agree will apply to the portion during the applicable interest
      period.

(c)   Each Long Term Rate portion will be for an amount not less than Five
      Hundred Thousand Dollars ($500,000).

(d)   Any portion of the principal balance of the loan already bearing
      interest at the Long Term Rate will not be converted to a different rate
      during its interest period.

(e)   The Borrower may prepay the Long Term Rate portion in whole or in part
      in the minimum amount of One Hundred Thousand Dollars ($100,000). The
      Borrower will give the Bank irrevocable written notice of the
      Borrower's intention to make the prepayment, specifying the date and
      amount of the prepayment. The notice must be received by the Bank at
      least 5 banking days in advance of the prepayment. All prepayments of
      principal on the Long Term Rate portion will be applied on the most
      remote principal installment or installments then unpaid

(f)   Each prepayment of a Long Term Rate portion, whether voluntary, by
      reason of acceleration or otherwise, will be accompanied by payment of
      all accrued interest on the amount of the prepayment and the prepayment
      fee described below.

(g)   The prepayment fee will be the sum of fees calculated separately for
      each Prepaid Installment, as follows:

      (i)    The Bank will first determine the amount of interest which would
             have accrued each month for the Prepaid Installment had it
             remained outstanding until the applicable Original Payment Date,
             using the Long Term Rate;

      (ii)   The Bank will then subtract from each monthly interest amount
             determined in (i), above, the amount of interest which would
             accrue for that Prepaid Installment if it were reinvested from
             the date of prepayment through the Original Payment Date, using
             the following rate:

             (A)    If the Original Payment Date is more than 5 years after
                    the date of prepayment:  the Treasury Rate plus one-quarter
                    of one percentage point;

             (B)    If the Original Payment Date is 5 years or less after the
                    date of prepayment:  the Money Market Rate.

      (iii)  If (i) minus (ii) for the Prepaid Installment is greater than
             zero, the Bank will discount the monthly differences to the date
             of prepayment by the rate used in (ii) above.  The sum of the
             discounted monthly differences is the prepayment fee for that
             Prepaid Installment.

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(h)  The following definitions will apply to the calculation of the
     prepayment fee:

     "Money Market" means the domestic certificate of deposit market, the
     eurodollar deposit market or other appropriate money market selected
     by the Bank.

     "Money Market Rate" means the fixed interest rate per annum which the
     Bank determines could be obtained by reinvesting a specified  Prepaid
     Installment in the Money Market from the date of prepayment through the
     Original Payment Date.

     "Original Payment Dates" means the dates on which principal of the Long
     Term Rate  portion would have been paid if there had been no prepayment.
     If a portion of the principal would have been paid later than the end of
     the interest period in effect at the time of prepayment, then the
     Original Payment Date for that portion will be the last day of the
     interest period.

     "Prepaid Installment" means the amount of the prepaid principal of the
     Long Term Rate portion which would have been paid on a single Original
     Payment Date.

     "Treasury Rate" means the interest rate yield for U.S. Government
     Treasury Securities which the Bank determines could be obtained by
     reinvesting a specified Prepaid Installment in such securities from the
     date of prepayment through the Original Payment Date.

(i)  The Bank may adjust the Treasury Rate and Money Market Rate to reflect
     the compounding, accrual basis, or other costs of the Long Term Rate
     portion. Each of the rates is the Bank's estimate only and the Bank is
     under no obligation to actually reinvest any prepayment. The rates will
     be based on information from either the Telerate or Reuters information
     services, THE WALL STREET JOURNAL, or other information sources the
     Bank deems appropriate.

2.7  OFFSHORE RATE. The Borrower may elect to have all or portions of the
principal balance of the loan bear interest at the Offshore Rate, subject to
the same requirements set forth in subparagraphs (a) through (g) of paragraph
1.7 (except for purposes of this Facility No. 2, the term "loan" is
substituted for the term "line of credit" in subparagraphs (d) and (e) of
Paragraph 1.7).

3.   FACILITY NO. 3: TERM LOAN AMOUNT AND TERMS

3.1  OUTSTANDING TERM LOAN. There is outstanding from the Bank to the Borrower
a term loan. As of December 4, 1995, the principal amount outstanding was Seven
Hundred Eighty Thousand Dollars ($780,000). This term loan is currently subject
to the terms and conditions of Facility No. 4 of the Business Loan Agreement
dated August 20, 1993. As of the date of this Agreement, the term loan shall be
deemed to be outstanding as Facility No. 3 under this Agreement, and shall be
subject to all the terms and conditions stated in this Agreement.

3.2  INTEREST RATE. Unless the Borrower elects an optional interest rate as
described below, the interest rate is the Bank's Reference Rate plus
0.75 percentage point.

3.3  REPAYMENT TERMS.
(a)  The Borrower will pay all accrued but unpaid interest on January 1, 1996,
     and then monthly thereafter until payment in full of the principal of the
     loan.

(b)  The Borrower will repay in full any principal, interest or other
     outstanding charges on the loan no later than September 20, 1996.

(c)  The Borrower may prepay the loan in full or in part at any time in an
     amount not less than Twenty-Five Thousand Dollars ($25,000).

3.4  OPTIONAL INTEREST RATES. Instead of the interest rate based on the Bank's
Reference Rate, the Borrower may elect to have all or portions of the loan
bear interest at the rate(s) described below during an

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interest period agreed to by the Bank and the Borrower. Each interest rate is
a rate per year. Interest will be paid on the last day of each interest
period, and on the first day each month during the interest period. At the
end of any interest period, the interest rate will revert to the rate based
on the Reference Rate, unless the Borrower has designated another optional
interest rate for the portion.

3.5    FIXED RATE.  The Borrower may elect to have all or portions of the
principal balance of the loan bear interest at the Fixed Rate, subject to the
same requirements set forth in subparagraphs (a) through (f) of Paragraph 1.6
(except for purposes of this Facility No. 3, the term "loan" is substituted
for the term "line of credit" in subparagraphs (d) and (e) of Paragraph
1.6).

3.6    LONG TERM RATE.  The Borrower may elect to have all or portions of the
principal balance of the loan bear interest at the Long Term Rate, subject to
the same requirements set forth in subparagraphs (a) through (i) of Paragraph
2.6.

3.7    OFFSHORE RATE.  The Borrower may elect to have all or portions of the
principal balance of the loan bear interest at the Offshore Rate, subject to
the same requirements set forth in subparagraphs (a) through (g) of Paragraph
1.7 (except for purposes of this Facility No. 3, the term "loan" is substituted
for the term "line of credit" in subparagraphs (d) and (e) of Paragraph
1.7).

4.    FEES AND EXPENSES

4.1   LOAN FEE.  The Borrower agrees to pay a Thirty-Seven Thousand Five
Hundred Dollar ($37,500) fee due on or before the date of this Agreement.

4.2   EXPENSES.  The Borrower agrees to reimburse the Bank for any expenses it
incurs in the preparation of this Agreement and any agreement or instrument
required by this Agreement. Expenses include, but are not limited to,
reasonable attorneys' fees, including any allocated costs of the Bank's
in-house counsel.

5.    DISBURSEMENTS, PAYMENTS AND COSTS

5.1   REQUESTS FOR CREDIT.  Each request for an extension of credit will be
made in writing in a manner acceptable to the Bank, or by another means
acceptable to the Bank.

5.2   DISBURSEMENTS AND PAYMENTS.  Each disbursement by the Bank and each
payment by the Borrower will be:

(a)   made at the Bank's branch (or other location) selected by the Bank from
      time to time;

(b)   made for the account of the Bank's branch selected by the Bank from
      time to time;

(c)   made in immediately available funds, or such other type of funds
      selected by the Bank;

(d)   evidenced by records kept by the Bank. In addition, the Bank may, at
      its discretion, require the Borrower to sign one or more promissory
      notes.

5.3   TELEPHONE AUTHORIZATION.

(a)   The Bank may honor telephone instructions for advances or repayments or
      for the designation of optional interest rates given by any one of the
      individuals authorized to sign loan agreements on behalf of the Borrower,
      or any other individual designated by any one of such authorized signers.

(b)   Advances will be deposited in and repayments will be withdrawn from the
      Borrower's account number 14934-03755, or such other of the Borrower's
      accounts with the Bank as designated in writing by the Borrower.

(c)   The Borrower indemnifies and excuses the Bank (including its officers,
      employees, and agents) from all liability, loss, and costs in connection
      with any act resulting from telephone instructions it reasonably

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      believes are made by any individual authorized by the Borrower to
      give such instructions. This indemnity and excuse will survive
      this Agreement.

5.4   DIRECT DEBIT.

(a)   The Borrower agrees that interest and principal payments and
      any fees will be deducted automatically on the due date from
      checking account number 14934-03755.

(b)   The Bank will debit the account on the dates the payments become
      due. If a due date does not fall on a banking day, the Bank will debit
      the account on the first banking day following the due date.

(c)   The Borrower will maintain sufficient funds in the account on
      the dates the Bank enters debits authorized by this Agreement. If
      there are insufficient funds in the account on the date the Bank
      enters any debit authorized by this Agreement, the debit will be
      reversed.

5.5   BANKING DAYS. Unless otherwise provided in this Agreement, a
banking day is a day other than a Saturday or a Sunday on which the Bank is
open for business in California. For amounts bearing interest at an offshore
rate (if any), a banking day is a day other than a Saturday or a Sunday on
which the Bank is open for business in California and dealing in offshore
dollars. All payments and disbursements which would be due on a day which
is not a banking day will be due on the next banking day. All payments
received on a day which is not a banking day will be applied to the credit
on the next banking day.

5.6   ADDITIONAL COSTS. The Borrower will pay the Bank, on demand,
for the Bank's costs or losses arising from any statute or regulation,
or any request or requirement of a regulatory agency which is
applicable to all national banks or a class of all national banks.
The costs and losses will be allocated to the loan in a manner
determined by the Bank, using any reasonable method. The costs
include the following:

(a)   any reserve or deposit requirements; and

(b)   any capital requirements relating to the Bank's assets and
      commitments for credit.

5.7   INTEREST CALCULATION. Except as otherwise stated in this
Agreement, all interest and fees, if any, will be computed on the
basis of a 360-day year and the actual number of days elapsed. This
results in more interest or a higher fee than if a 365-day year is
used.

5.8   INTEREST ON LATE PAYMENTS. At the Bank's sole option in each
instance, any amount not paid when due under this Agreement
(including interest) shall bear interest from the due date at the
Bank's Reference Rate for Facility No. 1 and at the Bank's
Reference Rate plus 0.75 percentage point for Facility No. 2 and
Facility No. 3. This may result in compounding of interest.

5.9   DEFAULT RATE. Upon the occurrence and during the continuation
of any default under this Agreement, advances under this Agreement
will at the option of the Bank bear interest at a rate per annum
which is 2.0 percentage point(s) higher than the rate of interest
otherwise provided under this Agreement. This will not constitute a
waiver of any default.

6.    CONDITIONS

The Bank must receive the following items, in form and content
acceptable to the Bank, before it is required to extend any credit
to the Borrower under this Agreement:

6.1   AUTHORIZATIONS. Evidence that the execution, delivery and
performance by the Borrower (and any guarantor) of this Agreement
and any instrument or agreement required under this Agreement have
been duly authorized.

6.2   GUARANTY. A guaranty signed by Tab Products of Canada, Limited
("Tab Canada") in the amount of Two Million Nine Hundred Thousand
Dollars ($2,900,000).

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6.3   OTHER ITEMS.  Any other items that the Bank reasonably requires.

7.    REPRESENTATIONS AND WARRANTIES

When the Borrower signs this Agreement, and until the Bank is repaid in full,
the Borrower makes the following representations and warranties. Each request
for an extension of credit constitutes a renewed representation.

7.1   ORGANIZATION OF BORROWER.  The Borrower is a corporation duly formed
and existing under the laws of the state where organized.

7.2   AUTHORIZATION.  This Agreement, and any instrument or agreement
required hereunder, are within the Borrower's powers, have been duly
authorized, and do not conflict with any of its organizational papers.

7.3   ENFORCEABLE AGREEMENT.  This Agreement is a legal, valid and binding
agreement of the Borrower, enforceable against the Borrower in accordance
with its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and
enforceable.

7.4   GOOD STANDING.  In each state in which the Borrower does business, it
is property licensed, in good standing, and, where required, in compliance
with fictitious name statutes.

7.5   NO CONFLICTS.  This Agreement does not conflict with any law,
agreement, or obligation by which the Borrower is bound.

7.6   FINANCIAL INFORMATION.  All financial and other information that has
been or will be supplied to the Bank is:

(a)   sufficiently complete to give the Bank accurate knowledge of the
      Borrower's (and any guarantor's) financial condition.

(b)   in form and content required by the Bank.

(c)   in compliance with all government regulations that apply.

7.7   LAWSUITS.  There is no lawsuit, tax claim or other dispute pending or
threatened against the Borrower, which, if lost, would impair the Borrower's
financial condition or ability to repay the loan, except as have been
disclosed in writing to the Bank.

7.8   PERMITS, FRANCHISES.  The Borrower possesses all permits, memberships,
franchises, contracts and licenses required and all trademark rights, trade
name rights, patent rights and fictitious name rights necessary to enable it
to conduct the business in which it is now engaged.

7.9   OTHER OBLIGATIONS.  The Borrower is not in default on any obligation
for borrowed money, any purchase money obligation or any other material
lease, commitment, contract, instrument or obligation.

7.10  INCOME TAX RETURNS.  The Borrower has no knowledge of any pending
assessments or adjustments of its income tax for any year.

7.11  NO EVENT OF DEFAULT.  There is no event which is, or with notice or lapse
of time or both would be, a default under this Agreement.

7.12  ERISA PLANS.

(a)   The Borrower has fulfilled its obligations, if any, under the minimum
      funding standards of ERISA and the code with respect to each Plan and
      is in compliance in all material respects with the presently applicable
      provisions of ERISA and the Code, and has not incurred any liability
      with respect to any Plan under Title IV of ERISA.

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BUSLA (7/93)                          -9-                           T2-0760.DOC


<PAGE>

(b)   No reportable event has occurred under Section 4043(b) of ERISA for
      which the PBGC requires 30 day notice.

(c)   No action by the Borrower to terminate or withdraw from any Plan has
      been taken and no notice of intent to terminate a Plan has been filed
      under Section 4041 of ERISA.

(d)   No proceeding has been commenced with respect to a Plan under
      Section 4042 of ERISA, and no event has occurred or condition exists
      which might constitute grounds for the commencement of such a
      proceeding.

(e)   The following terms have the meanings indicated for purposes of this
      Agreement:

      (i)    "Code" means the Internal Revenue Code of 1986, as amended from
             time to time.

      (ii)   "ERISA" means the Employee Retirement Income Act of 1974, as
             amended from time to time.

      (iii)  "PBGC" means the Pension Benefit Guaranty Corporation established
             pursuant to Subtitle A of Title IV of ERISA.

      (iv)   "Plan" means any employee pension benefit plan maintained or
             contributed to by the Borrower and insured by the Pension Benefit
             Guaranty Corporation under Title IV of ERISA.

7.13  LOCATION OF BORROWER. The Borrower's place of business (or, if the
Borrower has more than one place of business, its chief executive office) is
located at the address listed under the Borrower's signature on this
Agreement.

8.    COVENANTS

The Borrower agrees, so long as credit is available under this Agreement and
until the Bank is repaid in full:

8.1   USE OF PROCEEDS (FACILITY NO. 1). To use the proceeds of Facility No. 1
only for working capital.

8.2   FINANCIAL INFORMATION. To provide the following financial information
and statements and such additional information as requested by the Bank from
time to time:

(a)   Within 90 days of the Borrower's fiscal year end, the Borrower's annual
      financial statements. These financial statements must be audited (with
      an unqualified opinion) by a Certified Public Accountant ("CPA")
      acceptable to the Bank. The statements shall be prepared on a
      consolidated basis and must include a supplemental consolidating
      schedule detailing the assets, liabilities, income and expenses of
      each subsidiary, domestic or foreign, of the Borrower.

(b)   Within 45 days of the period's end, the Borrower's quarterly financial
      statements. These financial statements may be Borrower prepared. The
      statements shall be prepared on a consolidated and consolidating basis.

(c)   Within the periods provided in (a) and (b) above, a compliance
      certificate of the Borrower signed by an authorized officer of the
      Borrower setting forth the information and computations (in sufficient
      detail) to establish that the Borrower is in compliance with all
      financial covenants at the end of the period covered by the financial
      statements then being furnished.

(d)   Copies of the Borrower's Form 10-K Annual Report, Form 10-Q Quarterly
      Report and Form 8-K Current Report within 15 days after the date of
      filing with the Securities and Exchange Commission.

8.3   QUICK RATIO. To maintain on a consolidated basis as of the end of each
quarterly accounting period a ratio of quick assets to current liabilities of
at least 1.20:1.0.

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BUSLA (7/93)                         -10-                          T2-0760.DOC


<PAGE>

"Quick assets" means cash, short-term cash investments, net trade receivables
and marketable securities not classified as long-term investments.  "Current
liabilities" includes all debt outstanding to the Bank except the long-term
portion of debt under Facility No. 2 of this Agreement.

8.4  QUICK ASSETS.  To maintain on a consolidated basis as of the end of each
quarterly accounting period quick assets in excess in excess of current
liabilities by at least Ten Million Dollars ($10,000,000).

8.5  TANGIBLE NET WORTH.  To maintain on a consolidated basis as of the end of
each quarterly accounting period tangible net worth equal to at least the sum
of the following:

(a)  Twenty-Eight Million Dollars ($28,000,000); plus

(b)  the sum of 50% of net income after income taxes (without subtracting
     losses) earned in each quarterly accounting period commencing May 31,
     1993.

"Tangible net worth" means the gross book value of the Borrower's assets
(excluding goodwill, patents, trademarks, trade names, organization expense,
treasury stock, unamortized debt discount and expense, deferred research and
development costs, deferred marketing expenses, and other like intangibles)
less total liabilities, including but not limited to accrued and deferred
income taxes, and any reserves against assets.

8.6  TOTAL LIABILITIES TO TANGIBLE NET WORTH RATIO.  To maintain on a
consolidated basis as of the end of each quarterly accounting period that
ends within the time periods specified below a ratio of total liabilities to
tangible net worth not exceeding the corresponding ratios specified below:

<TABLE>
<CAPTION>
            Period                               Ratio
            ------                               -----
            <S>                                  <C>
            From the date of this Agreement
            through May 30, 1996                 1.60:1.0

            On May 31, 1996 and thereafter       1.35:1.0
</TABLE>

"Total liabilities" means the sum of current liabilities plus long term
liabilities including deferred taxes.

8.7  FIXED CHARGE COVERAGE RATIO.  To maintain on a consolidated basis a fixed
charge coverage ratio of at least the amounts indicated for each period
specified below:

<TABLE>
<CAPTION>
            Period                               Ratio
            ------                               -----
            <S>                                  <C>
            From the date of this Agreement
            through May 30, 1997                 1.15:1.0

            From May 31, 1997 through
            February 28, 1998                    1.10:1.0

            From March 1, 1998 and thereafter    1.15:1.0
</TABLE>

"Fixed charge coverage ratio" means the ratio of cash flow to fixed charges.

"Fixed charges" means the sum of (i) the principal payments on debt
(including, without limitation, prepayments and regularly scheduled payments
of the Senior Notes and the Senior Guaranteed Notes (both as defined below)
and regularly scheduled payments (but not prepayments) of debt to the Bank),
(ii) interest expense, and (iii) capital lease expense.

"Cash flow" means (a) the sum of (i) net income after taxes, (ii)
depreciation, (iii) amortization, (iv) interest expense, (v) capital lease
expense, and (vi) net proceeds received by the Borrower resulting from its
issuance of any equity securities after the date of this Agreement
(including, without limitation, proceeds resulting from the exercise of their
options by the holders of options to purchase the Borrower's shares), LESS
(b) the sum of (i) any amounts paid by the Borrower to purchase, redeem
or otherwise acquire any of its shares, (ii) capital expenditures (excluding
capital expenditures for the fiscal year ending May 31, 1996) and (iii)
dividends paid by the Borrower.

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BUSLA (7/93)                         -11-                          T2-0760.DOC

<PAGE>

"Senior Notes" means the Borrower's 8.73% senior promissory note(s) in the
original principal amount of Fifteen Million Dollars ($15,000,000) due March
20, 2001, authorized by and subject to the terms and conditions of that
certain Note Agreement executed as of March 20, 1992, by the Borrower in
favor of The Prudential Insurance Company of America ("Prudential"), as
now in effect and as hereafter amended or restated (the "Note Agreement").

"Senior Guaranteed Notes" means the Borrower's 6.90% senior promissory
note(s) in the original principal amount of Five Million Dollars
($5,000,000) due September 20, 2002, authorized by and subject to the terms
and conditions of the certain Note Agreement executed as of October 7, 1993,
by the Borrower in favor of Prudential, as now in effect and as hereafter
amended or restated (the "Guaranteed Note Agreement").

This ratio will be calculated at the end of each fiscal quarter, using the
results of that quarter and each of the 3 immediately preceding quarters.

8.8    LIMITATION ON LOSSES. Not incur on a consolidated basis a net loss
before taxes and extraordinary items in any two (2) consecutive quarterly
accounting periods after the quarterly accounting period ending May 31, 1995.

8.9    PROFITABILITY. To maintain on a consolidated basis a positive net
income before taxes and extraordinary items and a positive net income after
taxes and extraordinary items (i) as of the end of each quarterly accounting
period on a fiscal year-to-date basis and (ii) for each annual accounting
period.

8.10   OTHER DEBTS. Not to have outstanding or incur any direct or
contingent debts (other than those to the Bank), or become liable for the
debts of others without the Bank's written consent. This does not prohibit:

(a)    Acquiring goods, supplies, or merchandise on normal trade credit.

(b)    Endorsing negotiable instruments received in the usual course of
       business.

(c)    Obtaining surety bonds in the usual course of business.

(d)    Debts in existence on the date of this Agreement disclosed in writing
       to the Bank in the Borrower's financial statement dated May 31, 1995.

(e)    Additional debts for business purposes which do not exceed a total
       principal amount of Five Hundred Thousand Dollars ($500,000)
       outstanding at any one time.
(f)    Contingent debts of the Borrower under its guaranty in the amount of
       Two Hundred Thousand U.S. Dollars (U.S. $200,000) in favor of the
       Australian and New Zealand Banking Company guarantying debt of Tab
       Products Pty. Ltd.

8.11   OTHER LIENS. Not to create, assume, or allow any security interest or
lien (including judicial liens) on property the Borrower now or later owns,
except:

(a)    Deeds of trust and security agreements in favor of the Bank.

(b)    Liens for taxes not yet due.

(c)    Liens outstanding on the date of this Agreement disclosed in writing
       to the Bank.

(d)    Additional purchase money security interests in personal property
       acquired after the date of this Agreement if the total principal amount
       of debts secured by such liens does not exceed Five Hundred Thousand
       Dollars ($500,000) at any one time.

8.12   CAPITAL EXPENDITURES. Not to spend (including the total amount of any
capital leases) more than Three Million Dollars ($3,000,000) in any single
fiscal year to acquire fixed or capital assets.

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BUSLA (7/93)                          -12-                     T2-0760.DOC

<PAGE>

8.13  RESTRICTED PAYMENTS LIMITATION.  Not to directly or indirectly make,
declare, pay or set apart any sum of money or other property for any
restricted payments unless after giving effect thereto (a) no default exists
under this Agreement and (b) the aggregate amount of restricted payments made
after May 31, 1993, does not exceed the sum of (i) Two Million Dollars
($2,000,000) plus (ii) on a cumulative basis, the product of (A) consolidated
net income after taxes for each fiscal quarter commencing with the fiscal
quarter beginning June 1, 1993, and terminating at the end of the last fiscal
quarter preceding the date of any proposed restricted payment multiplied by
(B) the applicable rate.

"Restricted payments" means (a) any dividend payments or other
distributions of cash, assets, properties, or other property rights,
obligations or securities on account of any shares of any class of capital
stock of the Borrower (other than stock dividends) and (b) any repurchases,
redemptions, retirement or other acquisitions of the Borrower's capital stock
or the establishment of any sinking fund or other fund for any such purpose.

"Applicable rate" means (a) for any fiscal period between June 1, 1993 and
May 31, 1995, inclusive, 40% and (b) for any fiscal period after May 31,
1995, 50%.

For purposes of this covenant, "consolidated net income after taxes" does
not include (a) gains and losses on any sale, lease, exchange or other
transfer or disposal of capital assets, (b) extraordinary items, (c) income
from changes in accounting principles, (d) undistributed share of earnings
from non-subsidiary investments, (e) gains or losses from the acquisition of
securities or the retirement of debt, and (f) any gains from write-up of
assets.

8.14  LOANS TO SUBSIDIARIES.  Not to make any loans or advances to any of the
Borrower's subsidiaries.

8.15  OUT OF DEBT PERIOD.  To repay any advances in full, and not to draw any
additional advances on its revolving line of credit, for a period of at least
30 consecutive days in each line-year.  "Line-year" means the period
between October 31, 1995, and October 31, 1996, and each subsequent one-year
period (if any).

8.16  NOTICES TO BANK.  To promptly notify the Bank in writing of:

(a)   any lawsuit over One Million Dollars ($1,000,000) against the Borrower
      (or any guarantor).

(b)   any substantial dispute between the Borrower (or any guarantor) and any
      government authority.

(c)   any failure to comply with this Agreement.

(d)   any material adverse change in the Borrower's (or any guarantor's)
      financial condition or operations.

(e)   any change in the Borrower's name, legal structure, place of business,
      or chief executive office if the Borrrower has more than one place of
      business.

8.17  BOOKS AND RECORDS.  To maintain adequate books and records.

8.18  AUDITS.  To allow the Bank and its agents to inspect the Borrower's
properties and examine, audit and make copies of books and records at any
reasonable time. If any of the Borrower's properties, books or records are in
the possession of a third party, the Borrower authorizes that third party
to permit the Bank or its agents to have access to perform inspections or
audits and to respond to the Bank's requests for information concerning such
properties, books and records.

8.19  COMPLIANCE WITH LAWS.  To comply with the laws (including any
fictitious name statute), regulations, and orders of any government body with
authority over the Borrower's business.

8.20  PRESERVATION OF RIGHTS.  To maintain and preserve all rights, privileges,
and franchises the Borrower now has.

8.21  MAINTENANCE OF PROPERTIES.  To make any repairs, renewals, or
replacements to keep the Borrower's properties in good working condition.

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BUSLA (7/93)                      -13-                             T2-0760.DOC
<PAGE>

8.22   COOPERATION. To take any action requested by the Bank to carry out the
       intent of this Agreement.

8.23   INSURANCE. To maintain insurance as is usual for the business it is in.

8.24   ADDITIONAL NEGATIVE COVENANTS. Not to, without the Bank's written
       consent:

(a)   engage in any business activities substantially different from the
      Borrower's present business.

(b)   liquidate or dissolve the Borrower's business.

(c)   enter into any consolidation, merger, pool, joint venture, syndicate,
      or other combination.

(d)   lease, or dispose of all or a substantial part of the Borrower's
      business or the Borrower's assets.

(e)   acquire or purchase a business or its assets.

(f)   sell or otherwise dispose of any assets for less than fair market
      value, or enter into any sale and leaseback agreement covering any
      of its fixed or capital assets.

(g)   voluntarily suspend its business for more than 5 days in any 30 day
      period.

8.25  ERISA PLANS. To give prompt written notice to the Bank of:

(a)   The occurrence of any reportable event under Section 4043(b) of ERISA
      for which the PBGC requires 30 day notice.

(b)   Any action by the Borrower to terminate or withdraw from a Plan or the
      filing of any notice of intent to terminate under Section 4041 of ERISA.

(c)   Any notice of noncompliance made with respect to a Plan under Section
      4041(b) of ERISA.

(d)   The commencement of any proceeding with respect to a Plan under
      Section 4042 of ERISA.

9.    HAZARDOUS WASTE INDEMNIFICATION

The Borrower will indemnify and hold harmless the Bank from any loss or
liability directly or indirectly arising out of the use, generation,
manufacture, production, storage, release, threatened release, discharge,
disposal or presence of a hazardous substance. This indemnity will apply
whether the hazardous substance is on, under or about the Borrower's property
or operations or property leased to the Borrower. The indemnity includes but
is not limited to attorneys' fees (including the reasonable estimate of the
allocated cost of in-house counsel and staff). The indemnity extends to the
Bank, its parent, subsidiaries and all of their directors, officers,
employees, agents, successors, attorneys and assigns. For these purposes,
the term "hazardous substances" means any substance which is or becomes
designated as "hazardous" or "toxic" under any federal, state or local
law. This indemnity will survive repayment of the Borrower's obligations to
the Bank.

10.   DEFAULT

If any of the following events occur, the Bank may do one or more of the
following: declare the Borrower in default, stop making any additional credit
available to the Borrower, and require the Borrower to repay its entire debt
immediately and without prior notice. With respect to Paragraphs 10.1,
10.4, 10.5, 10.6, 10.9 and 10.11, the Bank agrees that it will not have the
right to exercise its rights under the immediately preceding sentence unless
the Borrower has failed to cure such event of default in a manner acceptable
to the Bank within 5 days of its occurrence (for Paragraphs 10.1, 10.4 and
10.5) or within 5 banking days of the Borrower's receipt of notice of such
event of default (for Paragraphs 10.6, 10.9 and 10.11). If an event of
default occurs under the paragraph entitled "Bankruptcy," below, with respect
to the Borrower, then the entire debt outstanding under this Agreement will
automatically be due immediately.

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BUSLA (7/93)                         -14-                  T2-0760.DOC


<PAGE>

10.1  FAILURE TO PAY. The Borrower fails to make a payment under this
Agreement when due.


10.2  FALSE INFORMATION. The Borrower has given the Bank false or misleading
information or representations.


10.3  BANKRUPTCY. The Borrower (or any guarantor) files bankruptcy petition,
a bankruptcy petition is filed against the Borrower (or any guarantor),
or the Borrower (or any guarantor) makes a general assignment for the
benefit of creditors. The default will be deemed cured if any bankruptcy
petition filed against the Borrower (or any guarantor) is dismissed
within a period of 30 days after the filing; provided, however, that the
Bank will not be obligated to extend any additional credit to the
Borrower during that period.


10.4  RECEIVERS. A receiver or similar official is appointed for the
Borrower's (or any guarantor's) business, or the business is terminated.


10.5  JUDGMENTS. Any judgments or arbitration awards are entered against the
Borrower (or any guarantor), or the Borrower (or any guarantor) enters
into any settlement agreements with respect to any litigation or
arbitration, in an aggregate amount of One Million Dollars ($1,000,000)
or more in excess of any insurance coverage.


10.6  GOVERNMENT ACTION. Any government authority takes action that the Bank
believes materially adversely affects the Borrower's (or any guarantor's)
financial condition or ability to repay.


10.7  MATERIAL ADVERSE CHANGE. A material adverse change occurs in the
Borrower's (or any guarantor's) financial condition, properties or
prospects, or ability to repay the loan, including, without limitation,
any material adverse change evidenced by the comparison of the
Borrower's CPA-audited annual financial statements dated as of May 31,
1995 to the Borrower's draft financial statements for such period as
previously submitted to the Bank.


10.8  CROSS-DEFAULT. Any default occurs and has not been cured or waived in a
manner acceptable to the Bank under any agreement in connection with any
credit the Borrower (or any guarantor) has obtained from anyone else or
which the Borrower (or any guarantor) has guaranteed.


10.9  OTHER BANK AGREEMENTS.  The Borrower (or any guarantor) fails to meet
the conditions of, or fails to perform any obligation under any other
agreement the Borrower (or any guarantor) has with the Bank or any
affiliate of the Bank.


10.10 ERISA PLANS. The occurrence of any one or more of the following events
with respect to the Borrower, provided such event or events could
reasonably be expected, in the judgment of the Bank, to subject the
Borrower to any tax, penalty or liability (or any combination of the
foregoing) which, in the aggregate, could have a material adverse effect
on the financial condition of the Borrower with respect to a Plan:

(a)  A reportable event shall occur with respect to a Plan which is, in
     the reasonable judgement of the Bank likely to result in the
     termination of such Plan for purposes of Title IV of ERISA.


(b)  Any Plan termination (or commencement of proceedings to terminate a
     Plan) or the Borrower's full or partial withdrawal from a Plan.


10.11 OTHER BREACH UNDER AGREEMENT. The Borrower fails to meet the conditions
of, or fails to perform any obligation under, any term of this Agreement
not specifically referred to in this Article.

10.12 PREPAYMENT OF DEBT TO PRUDENTIAL. The Borrower fails, upon making any
partial or full prepayment (whether mandatory, voluntary, by
acceleration or otherwise) of the Senior Notes or the Senior Guaranteed
Notes, to simultaneously prepay, in the order and manner required by the
Bank, its loan under Facility No. 2 in an amount at least equal to 27%
of the amount of the prepayment(s) to Prudential.


10.13 DEFAULT UNDER RELATED DOCUMENTS. Any guaranty, subordination agreement,
security agreement, deed of trust, or other document required by this
Agreement is violated or no longer in effect.

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BUSLA (7/93)                         -15-                          T2-0760.DOC

<PAGE>

10.14 DEBTS OF SUBSIDIARIES. Any subsidiary of the Borrower has outstanding
or incurs any direct or contingent debts (others than those to the Bank), or
becomes liable for the debts of other without the Bank's written consent.
This does not prohibit:

(a)   Acquiring goods, supplies, or merchandise on normal trade credit.

(b)   Endorsing negotiable instruments received in the usual course of
      business.

(c)   Obtaining surety bonds in the usual course of business.

(d)   Debts and lines of credit in existence on the date of this
      Agreement disclosed in writing to the Bank in the Borrower's
      consolidated financial statement dated May 31, 1995.

(e)   Contingent debts of Tab Canada under a guaranty in the
      maximum amount of Five Million Dollars ($5,000,000) in favor of
      Prudential.

(f)   Debts of Tab Products Pty. Ltd. owed to the Australian and
      New Zealand Banking Company in the maximum amount of Two Hundred
      Thousand U.S. Dollars (U.S. $200,000).

10.15 PRUDENTIAL DOCUMENTS. The Borrower fails to promptly provide the Bank
with copies of any extensions, amendments, revisions, renewals, or
restatements of the Senior Notes, Senior Guaranteed Notes, Note Agreement or
Guaranteed Note Agreement.

10.16 FINANCIAL COVENANTS. Any financial covenant under any loan or other
agreement executed by the Borrower evidencing indebtedness permitted in
Paragraph 8.10 is more restrictive than any financial covenant under this
Agreement.

11.   ENFORCING THIS AGREEMENT; MISCELLANEOUS

11.1  GAAP. Except as otherwise stated in this Agreement, all financial
information provided to the Bank and all financial covenants will be made
under generally accepted accounting principles, consistently applied.

11.2  CALIFORNIA LAW. This Agreement is governed by California law.

11.3  SUCCESSORS AND ASSIGNS. This Agreement is binding on the Borrower's and
the Bank's successors and assignees. The Borrower agrees that it may not
assign this Agreement without the Bank's prior consent. The Bank may sell
participations in or assign this loan, and may exchange financial information
about the Borrower with actual or potential participants or assignees. If a
participation is sold or the loan is assigned, the purchaser will have the
right of set-off against the Borrower.

11.4  ARBITRATION.

(a)   This paragraph concerns the resolution of any controversies
      or claims between the Borrower and the Bank, including but not
      limited to those that arise from:

     (i)   This Agreement (including any renewals, extensions or
           modifications of this Agreement);

     (ii)  Any document, agreement or procedure related to or delivered
           in connection with this Agreement;

     (iii) Any violation of this Agreement; or

     (iv)  Any claims for damages resulting from any business conducted
           between the Borrower and the Bank, including claims for injury to
           persons, property or business interests (torts).

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BULSA (7/93)                           -16-                   T2-0760.DOC

<PAGE>

(b)  At the request of the Borrower or the Bank, any such controversies or
     claims will be settled by arbitration in accordance with the United
     States Arbitration Act.  The United States Arbitration Act will apply
     even though this Agreement provides that it is governed by California law.

(c)  Arbitration proceedings will be administered by the American Arbitration
     Association and will be subject to its commercial rules of arbitration.

(d)  For purposes of the application of the statute of limitations, the
     filing of an arbitration pursuant to this paragraph is the equivalent of
     the filing of a lawsuit, and any claim or controversy which may be
     arbitrated under this paragraph is subject to any applicable statute of
     limitations.  The arbitrators will have the authority to decide whether
     any such claim or controversy is barred by the statute of limitations
     and, if so, to dismiss the arbitration on that basis.

(e)  If there is a dispute as to whether an issue is arbitrable, the
     arbitrators will have the authority to resolve any such dispute.

(f)  The decision that results from an arbitration proceeding may be
     submitted to any authorized court of law to be confirmed and enforced.

(g)  The procedure described above will not apply if the controversy or claim,
     at the time of the proposed submission to arbitration, arises from or
     relates to an obligation to the Bank secured by real property located in
     California.  In this case, both the Borrower and the Bank must consent
     to submission of the claim or controversy to arbitration.  If both
     parties do not consent to arbitration, the controversy or claim will be
     settled as follows:

     (i)    The Borrower and the Bank will designate a referee (or a panel of
            referees) selected under the auspices of the American Arbitration
            Association in the same manner as arbitrators are selected in
            Association-sponsored proceedings;

     (ii)   The designated referee (or the panel of referees) will be
            appointed by a court as provided in California Code of Civil
            Procedure Section 638 and the following related sections;

     (iii)  The referee (or the presiding referee of the panel) will be an
            active attorney or a retired judge; and

     (iv)   The award that results from the decision of the referee (or the
            panel) will be entered as a judgment in the court that appointed
            the referee, in accordance with the provisions of California Code
            of Civil Procedure Sections 644 and 645.

(h)  This provision does not limit the right of the Borrower or the Bank to:

     (i)    exercise self-help remedies such as setoff;

     (ii)   foreclose against or sell any real or personal property
            collateral; or

     (iii)  act in a court of law, before, during or after the arbitration
            proceeding to obtain:

            (A)  an interim remedy; and/or

            (B)  additional or supplementary remedies.

(i)  The pursuit of or a successful action for interim, additional or
     supplementary remedies, or the filing of a court action, does not
     constitute a waiver of the right of the Borrower or the Bank, including
     the suing party, to submit the controversy or claim to arbitration if
     the other party contests the lawsuit.  However, if the controversy or
     claim arises from or relates to an obligation to the Bank which is
     secured by real property located in California at the time of the
     proposed submission to arbitration, this right is limited according to
     the provision above requiring the consent of both the Borrower and the
     Bank to seek resolution through arbitration.

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BUSLA (7/93)                         -17-                           T2-0760.DOC

<PAGE>

(j)   If the Bank forecloses against any real property securing this
      Agreement, the Bank has the option to exercise the power of sale under
      the deed of trust or mortgage, or to proceed by judicial foreclosure.

11.5  SEVERABILITY; WAIVERS. If any part of this Agreement is not enforceable,
the rest of the Agreement may be enforced. The Bank retains all rights, even
if it makes a loan after default. If the Bank waives a default, it may enforce
a later default. Any consent or waiver under this Agreement must be in
writing.

11.6  ADMINISTRATION COSTS. The Borrower shall pay the Bank for all reasonable
costs incurred by the Bank in connection with administering this Agreement.


11.7  ATTORNEY'S FEES. The Borrower shall reimburse the Bank for any
reasonable costs and attorneys' fees incurred by the Bank in connection with
the enforcement or preservation of any rights or remedies under this
Agreement any any other documents executed in connection with this Agreement,
and including any amendment, waiver, "workout" or restructuring under this
Agreement. In the event of a lawsuit or arbitration proceeding, the prevailing
party is entitled to recover costs and reasonable attorneys' fees incurred in
connection with the lawsuit or arbitration proceeding, as determined by the
court or arbitrator. As used in this paragraph, "attorneys' fees" includes the
allocated costs of in-house counsel.

11.8  ONE AGREEMENT. This Agreement and any related security or other
agreements required by this Agreement, collectively:

(a)   represent the sum of the understandings and agreements between the Bank
      and the Borrower concerning this credit; and

(b)   replace any prior oral or written agreements between the Bank and the
      Borrower concerning this credit; and

(c)   are intended by the Bank and the Borrower as the final, complete and
      exclusive statement of the terms agreed to by them.

In the event of any conflict between this Agreement and any other agreements
required by this Agreement, this Agreement will prevail.

11.9  NOTICES. All notices required under this Agreement shall be personally
delivered or sent by first class mail, postage prepaid, to the addresses on the
signature page of this Agreement, or to such other addresses as the Bank and
the Borrower may specify from time to time in writing.

11.10 HEADINGS. Article and paragraph headings are for reference only and
shall not affect the interpretation or meaning of any provisions of this
Agreement.

11.11 COUNTERPARTS. This Agreement may be executed in as many counterparts as
neccessary or convenient, any by the different parties on separate
counterparts each of which, when so executed, shall be deemed an original but
all such counterparts shall constitute but one and the same agreement.

11.12 PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes the Business Loan
Agreement entered into as of August 20, 1993, between the Bank and the
Borrower, and any credit outstanding thereunder shall be deemed to be
outstanding under this Agreement.

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<PAGE>

This Agreement is executed as of the date stated at the top of the first page.




Bank of America
National Trust and Savings Association     Tab Products Co.



X  /s/ C.P. Giannotti                    X     /s/ John Palmer
  -----------------------------------        ---------------------------------
By:    Chris P. Giannotti                  By:
Title: Vice President                      Title: V.P. Finance & CFO




                                           X  /s/ Robert Sexton
                                             ---------------------------------
                                           By:
                                           Title: Treasurer & Secretary


ADDRESS WHERE NOTICES TO THE BANK          ADDRESS WHERE NOTICES TO THE BORROWER
ARE TO BE SENT:                            ARE TO BE SENT:

Palo Alto Commercial Banking Office #1493
P.O. Box 180                               1400 Page Mill Road
Palo Alto, CA 94301                        Palo Alto, CA 94304

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