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                          BUSINESS LOAN AGREEMENT

This Agreement dated as of November 1, 1998, 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 ("Facility No. 1") to the Borrower. The amount of the line 
     of credit (the "Facility No. 1 Commitment") is Fifteen Million and 00/100 
     Dollars ($15,000,000.00).

(b)  This is a revolving line of credit providing for cash advances and 
     letters 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 
     advances under the line of credit plus the outstanding amounts of any 
     letters of credit, including amounts drawn on letters of credit and not 
     yet reimbursed, to exceed the Facility No. 1 Commitment.

1.2  AVAILABILITY PERIOD. The line of credit is available between the date of 
     this Agreement and November 1, 2000 (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 November 1, 1998, 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. Any interest period for an optional 
     interest rate (as described below) shall expire 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 the optional interest rates 
listed below for this Facility No. 1 during interest periods agreed to by the 
Bank and the Borrower. The optional interest rates shall be subject to the 
terms and conditions described later in this Agreement. Any principal amount 
bearing interest at an optional rate under this Agreement is referred to as a 
"Portion." The following optional interest rates are available:

(a)  Fixed Rates.

(b)  Offshore Rates.

1.6  LETTERS OF CREDIT.

(a)  This line of credit may be used for financing:

     (i)  standby letters of credit with a maximum maturity of 365 days but 
not to extend beyond the Facility No. 1 Expiration Date.

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     (ii)   The amount of letters of credit outstanding at any one time 
            (including amounts drawn on letters of credit and not yet 
            reimbursed) may not exceed Two Million and 00/100 Dollars 
            ($2,000,000.00).

(b)  The Borrower agrees:

     (i)    any sum drawn under a letter of credit 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.

     (ii)   if there is a default under this Agreement, to immediately prepay 
            and make the Bank whole for any outstanding letters of credit.

     (iii)  the issuance of any letter of credit and any amendment to a 
            letter of credit is subject to the Bank's written approval and 
            must be in form and content satisfactory to the Bank and in favor 
            of a beneficiary acceptable to the Bank.
 
     (iv)   to sign the Bank's form Application and Agreement for Standby 
            Letter of Credit.

     (v)    to pay any issuance and/or other fees that the Bank notifies the 
            Borrower will be charged for issuing and processing letters of 
            credit for the Borrower.

     (vi)   to allow the Bank to automatically charge its checking account 
            for applicable fees, discounts, and other charges.

1.7  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 and 00/100 U.S. 
     Dollars (U.S. $4,000,000.00), and the settlement limit will be One 
     Million and 00/100 U.S. Dollars (U.S. $1,000,000.00). 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 obligated to permit the Borrower to enter into any 
     foreign exchange contracts which would exceed the settlement limit. 
     However, if the Bank decides, in its discretion, to waive the settlement 
     limit for foreign exchange contracts which will settle on any particular 
     banking day, the Bank shall not be required to make any U.S. Dollar or 
     foreign currency settlement payment to the Borrower until the Bank 
     receives evidence satisfactory to it that the Borrower has paid the Bank 
     all of the Borrower's U.S. Dollar and foreign currency settlement 
     payments. 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 one hundred eighty 
     (180) 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 willful 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.

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(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 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 and 00/100 Dollars ($2,500,000.00). This term loan is 
currently subject to the terms and conditions of Facility No. 2 of the 
Business Loan Agreement dated August 26, 1996. 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 0.5 
percentage point.

2.3  REPAYMENT TERMS.  

(a)  The Borrower will pay all accrued but unpaid interest on November 1, 
     1998, and then monthly thereafter and upon payment in full of the 
     principal of the loan.

(b)  The Borrower will repay principal in forty six (46) successive monthly 
     installments of Twenty Six Thousand Forty One and 67/100 Dollars 
     ($26,041.67) starting November 1, 1998. On August 1, 2002, the Borrower
     will repay the remaining principal balance plus any interest then due.

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

2.4  OPTIONAL INTEREST RATES.  Instead of the interest rate based on the 
Bank's Reference Rate, the Borrower may elect the optional interest rates 
listed below for this Facility No. 2 during interest periods agreed to by the 
Bank and the Borrower. The optional interest rates shall be subject to the 
terms and conditions described later in this Agreement. Any principal amount 
bearing interest at an optional rate under this Agreement is referred to as a 
"Portion." The following optional interest rates are available:

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(a)  Fixed Rates.

(b)  Offshore Rates.

(c)  Long Term Rates.

3.   FACILITY NO. 3: LINE OF CREDIT AMOUNT AND TERMS

3.1  LINE OF CREDIT AMOUNT.

(a)  During the availability period described below, the Bank will provide a 
     line of credit ("Facility No. 3") to the Borrower. The amount of the line 
     of credit (the "Facility No. 3 Commitment") is One Million Five Hundred 
     Thousand and 00/100 Dollars ($1,500,000.00).

(b)  This is a non-revolving line of credit with a term repayment option, and 
     providing for cash advances. Any amount borrowed, even if repaid before 
     the end of the availability period, permanently reduces the remaining 
     available line of credit.

(c)  The Borrower agrees not to permit the outstanding principal balance of 
     advances under the line of credit to exceed the Facility No. 3 Commitment.

3.2  AVAILABILITY PERIOD. The line of credit is available between the date of 
this Agreement and November 1, 1999 (the "Facility No. 3 Expiration Date") 
unless the Borrower is in default.

3.3  INTEREST RATE. Unless the Borrower elects an optional interest rate as 
described below, the interest rate is the Bank's Reference Rate plus 0.25 
percentage point.

3.4  REPAYMENT TERMS.

(a)  The Borrower will pay interest on November 1, 1998, and then monthly 
     thereafter until payment in full of any principal outstanding under this 
     line of credit.

(b)  The Borrower will repay the principal amount outstanding on the Facility 
     No. 3 Expiration Date in 60 successive equal monthly installments starting 
     December 1, 1999. On November 1, 2004, 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 payment of principal due 
     under Paragraph 3.4(b) above.

3.5  MANDATORY PREPAYMENT; EARLY TERMINATION. Anything herein to the contrary 
notwithstanding, if Facility No. 1, as now in effect or as hereafter renewed, 
amended or restated, terminates for any reason, including, without 
limitation, termination at the request of the Borrower, termination resulting 
from failure by the Bank to renew Facility No. 1 beyond any availability 
period applicable thereto, or termination as otherwise provided or permitted 
under this Agreement, the entire principal balance of these Facility No. 2 
and Facility No. 3, together with all accrued interest thereon, shall be due 
and payable on the effective date of such termination.

3.6  OPTIONAL INTEREST RATES. Instead of the interest rate based on the 
Bank's Reference Rate, the Borrower may elect the optional interest rates 
listed below for this Facility No. 3 during interest periods agreed to by the 
Bank and the Borrower. The optional interest rates shall be subject to the 
terms and conditions described later in this Agreement. Any principal amount 
bearing interest at an optional rate under this Agreement is referred to as 
a "Portion." The following optional interest rates are available:

(a)  Fixed Rates.

(b)  Offshore Rates.

4.   OPTIONAL INTEREST RATES

4.1  OPTIONAL RATES. Each optional interest rate is a rate per year. Interest 
will be paid on the last day of each interest period, and on the first day of 
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. No 
Portion will be converted to a different interest rate during the applicable 
interest period. Upon the occurrence of an event of default under this 
Agreement, the Bank may terminate the availability of optional interest rates 
for interest periods commencing after the default occurs.


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4.2   FIXED RATE. The election of Fixed Rates shall be subject to the 
following terms and requirements:

(a)   The "Fixed Rate" means the fixed interest rate the Bank and Borrower 
      agree will apply 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 Five Hundred 
      Thousand Dollars ($500,000). 

(d)   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 as described
      below. A "prepayment" is a payment of an amount on a date earlier than 
      the scheduled payment date for such amount as required by this Agreement.
      The prepayment fee shall be equal to the amount (if any) by which:

      (i)   the additional interest which would have been payable during the 
            interest period on the amount prepaid had it not been prepaid, 
            exceeds

      (ii)  the interest which would have been recoverable by the 
            Bank by placing the amount prepaid on deposit in the domestic
            certificate of deposit market, the eurodollar deposit market, or 
            other appropriate money market selected by the Bank 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 (or the 
            scheduled payment date for the amount prepaid, if earlier).

4.3   OFFSHORE RATE. The election of Offshore Rates shall be subject to the 
following terms and 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)   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 as
      described below. A "prepayment" is a payment of an amount on a date 
      earlier than the scheduled payment date for such amount as required by 
      this Agreement. The prepayment fee shall be equal to the amount (if any) 
      by which:

      (i)   the additional interest which would have been payable during 
            the interest period on the amount prepaid had it not been prepaid,
            exceeds

      (ii)  the interest which would have been recoverable by the Bank by 
            placing the amount prepaid on deposit in the domestic certificate of
            deposit market, the eurodollar deposit market, or other appropriate
            money market selected by the Bank 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 (or the scheduled payment date for the 
            amount prepaid, if earlier).

(e)    The Bank will have no obligation to accept an election for an Offshore 
       Rate Portion if any of the following described events has occured 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 market; or

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

4.4   LONG TERM RATE. The election of Long Term Rates shall be subject to the 
      following terms and 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).


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(d)   The Borrower may prepay the Long Term Rate Portion in whole or in part 
      in the minimum amount of One Hundred Thousand and 00/100 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 payment of principal then unpaid.

(e)   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.

(f)   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 Treasury 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 Treasury Rate. The Bank will 
            then add together all of the discounted monthly differences for 
            the Prepaid Installment.

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

      "Original Payment Dates" mean the dates on which principal of the 
      Long Term Rate Portion would have been paid if there had been no 
      prepayment. If any 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 amount 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.

(h)   The Bank may adjust the Treasury 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.

5.    FEES AND EXPENSES

5.1   FEES.

(a)   LOAN FEE (FACILITY NO. 1).  The Borrower agrees to pay a loan fee 
      in the amount of Fifty Six Thousand Two Hundred Fifty and 00/100 Dollars
      ($56,250.00). This fee is due on November 1, 1999 and on each anniversary 
      of that date thereafter until the expiration of the availability period 
      (Fee for 1998 was paid on October 16, 1998).

(b)   UNUSED COMMITMENT FEE (FACILITY NO. 3). The Borrower agrees to pay 
      a fee on any difference between the Facility No. 3 Commitment and 
      the amount of credit it actually uses, determined by the weighted average
      credit outstanding during the specified period. The fee will be 
      calculated at 0.25% per year.

      This fee is due on February 1, 1999, and on the first day of each 
      following quarter until the expiration of the availability period. 

(c)   WAIVER FEE. If the Bank, at its discretion, agrees to waive or 
      amend any terms of this Agreement, the Borrower will, at the Bank's 
      option, pay the Bank a fee for each waiver or amendment in an amount 
      advised by the Bank at the time the Borrower requests the waiver or 
      amendment. Nothing in this paragraph shall imply that the Bank is 
      obligated to agree to any waiver or amendment requested by the Borrower.
      The Bank may impose additional requirements as a condition to any waiver
      or amendment. 


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5.2   REIMBURSEMENT COSTS.

(a)   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.


6.    DISBURSEMENTS, PAYMENTS AND COSTS

6.1   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.

6.2   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.

6.3   TELEPHONE AND TELEFAX AUTHORIZATION.

(a)   The Bank may honor telephone or telefax instructions for advances or 
      repayments or for the designation of optional interest rates and telefax 
      requests for the issuance of letters of credit 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 or telefax 
      instructions the Bank reasonably believes are made by any individual 
      authorized by the Borrower to give such instructions. This indemnity and 
      excuse will survive this Agreement's termination.

6.4   DIRECT DEBIT.

(a)   The Borrower agrees that interest and principal payments and any fees 
      will be deducted automatically on the due date 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.

(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.

6.5   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.

6.6   TAXES.  If any payments to the Bank under this Agreement are made from 
outside the United States, the Borrower will not deduct any foreign taxes 
from any payments it makes to the Bank. If any such taxes are imposed on any 
payments made by the Borrower (including payments under this paragraph), the 
Borrower will pay the taxes and will also pay to the Bank, at the time 
interest is paid, any additional amount which the Bank specifies as necessary 
to preserve the after-tax yield the Bank would have received if such taxes 
had not been imposed. The Borrower will  confirm that it has paid the taxes 
by giving the Bank official tax receipts (or notarized copies) within 30 days 
after the due date.

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6.7  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.

6.8  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.  Installments of principal which 
are not paid when due under this Agreement shall continue to bear interest 
until paid.

6.9  DEFAULT RATE.  Upon the occurrence and during the continuation of any 
default under this Agreement, principal amounts outstanding under this 
Agreement will at the option of the Bank bear interest at a rate which is 2 
percentage point(s) higher than the rate of interest otherwise provided under 
this Agreement.  This will not constitute a waiver of any default.

6.10  INTEREST COMPOUNDING.  At the Bank's sole option in each instance, any 
interest, fees or costs which are not paid when due under this Agreement 
shall bear interest from the due date at the Bank's Reference Rate for 
Facility No. 1, at the Bank's Reference Rate plus 0.5 percentage point for 
Facility No. 2 and at the Bank's Reference Rate plus 0.25 percentage point 
for Facility No. 3.  This may result in compounding of interest.

6.11  OVERDRAFTS.  At the Bank's sole option in each instance, the Bank may 
do one of the following:

(a)  The Bank may make advances under this Agreement to prevent or cover an 
     overdraft on any account of the Borrower with the Bank.  Each such advance 
     will accrue interest from the date of the advance or the date on which the 
     account is overdrawn, whichever occurs first, at the interest rate 
     described in this Agreement.

(b)  The Bank may reduce the amount of credit otherwise available under this 
     Agreement by the amount of any overdraft on any account of the Borrower 
     with the Bank.

This paragraph shall not be deemed to authorize the Borrower to create 
overdrafts on any of the Borrower's accounts with the Bank.

7.  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:

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

7.2  GOVERNING DOCUMENTS.  A copy of the Borrower's articles of incorporation.

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

8.  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:

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

8.2  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.

8.3  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.


                                     - 8 -
<PAGE>

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

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

8.6   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, including all 
      material contingent liabilities.

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

8.7   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.

8.8   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.

8.9   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.

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

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

8.12  INSURANCE.  The Borrower has obtained, and maintained in effect, the 
insurance coverage required in the "Covenants" section of this Agreement.

8.13  ERISA PLANS.

(a)   Each Plan (other than a multiemployer plan) is in compliance in 
      all material respects with the applicable provisions of ERISA, the Code 
      and other federal or state law. Each Plan has received a favorable 
      determination letter from the IRS and to the best knowledge of the 
      Borrower, nothing has occurred which would cause the loss of such 
      qualification. The Borrower has fulfilled its obligations, if any, under 
      the minimum funding standards of ERISA and the Code with respect to 
      each Plan, and has not incurred any liability with respect to any Plan 
      under Title IV of ERISA.

(b)   There are no claims, lawsuits or actions (including by any governmental 
      authority), and there has been no prohibited transaction or violation of 
      the fiduciary responsibility rules, with respect to any Plan which has 
      resulted or could reasonably be expected to result in a material adverse 
      effect.

(c)   With respect to any Plan subject to Title IV of ERISA:

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

      (ii)  No action by the Borrower or any ERISA Affiliate 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.

      (iii) No termination 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.

(d)   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 Security Act of 
            1974, as amended from time to time.


                                     - 9 -
<PAGE>

      (iii) "ERISA Affiliate" means any trade or business (whether or not 
            incorporated) under common control with the Borrower within the
            meaning of Section 414(b) or (c) of the Code.

      (iv)  "PBGC" means the Pension Benefit Guaranty Corporation.

      (v)   "Plan" means a pension, profit-sharing, or stock bonus plan 
            intended to qualify under Section 401(a) of the Code, maintained or
            contributed to by the borrower or any ERISA Affiliate, including
            any multiemployer plan within the meaning of Section 4001(a)(3)
            of ERISA.

8.14 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.

8.15 YEAR 2000 COMPLIANCE. The Borrower has developed and budgeted for a 
comprehensive program to address the "year 2000 problem" (that is, the 
inability of computers, as well as embedded microchips in non-computing 
devices, to properly perform date-sensitive functions with respect to certain 
dates prior to and after December 31, 1999). The Borrower has implemented 
that program substantially in accordance with its timetable and budget and 
reasonably anticipates that it will substantially avoid the year 2000 problem 
as to all computers, as well as embedded microchips in non-computing devices, 
that are material to the Borrower's business, properties or operations. The 
Borrower has developed adequate contingency plans to ensure uninterrupted and 
unimpaired business operation in the event of a failure of its own or a third 
party's systems or equipment due to the year 2000 problem, including those of 
vendors, customers, and suppliers, as well as a general failure of or 
interruption in its communications and delivery infrastructure.

9.   COVENANTS

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

9.1  USE OF PROCEEDS. To use the proceeds of Facility No. 1 only for working 
capital and support performance standby letters of credit and to use the 
proceeds of Facility No. 3 only to finance capital expenditure for 1999 
fiscal year.

9.2  FINANCIAL INFORMATION. To provide the following financial information 
and statements in form and content acceptable to the Bank, 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)  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.

(d)  Within the period(s) provided in (a) and (b) above, a compliance 
     certificate of the Borrower signed by an authorized financial officer 
     of the Borrower setting forth (i) 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 and (ii) whether there existed 
     as of the date of such financial statements and whether there exists 
     as of the date of the certificate, any default under this Agreement and, 
     if any such default exists, specifying the nature thereof and the 
     action the Borrower is taking and proposes to take with respect 
     thereto.

9.3  QUICK ASSETS. To maintain on a consolidated basis as of the end of each 
quarterly accounting period quick assets in excess of current liabilities by 
at least Eight Million Dollars ($8,000,000).

"Quick assets" means cash, short-term cash investments, net trade receivables 
and marketable securities not classified as long-term investments. "Current 
liabilities" shall include (a) all obligations classified as current 
liabilities under generally accepted accounting principles, plus (b) all 
principal amounts outstanding under revolving lines of credit, whether 
classified as current or long-term, which are not already included under (a) 
above.

9.4  TOTAL LIABILITIES TO TANGIBLE NET WORTH. To maintain on a consolidated 
basis a ratio of total liabilities to tangible net worth not exceeding 
1.25:1.0.

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


                                     - 10 -
<PAGE>

"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, capitalized or 
deferred research and development costs, deferred marketing expenses, 
deferred receivables, and other like intangibles), less total liabilities, 
including but not limited to accrued and deferred income taxes, and any 
reserves against assets.

9.5  FIXED CHARGE COVERAGE RATIO. To maintain on a consolidated basis a fixed 
charge coverage ratio of at least 1.15:1.0.

"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, and (v) net proceeds 
received by the Borrower resulting from its issuance of any equity securities 
(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 and (ii) dividends paid by the Borrower.

"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 6.9% 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 
that 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.

9.6  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.

9.7  LIMITATION ON LOSSES. Not to incur on a consolidated basis a net loss 
before taxes and extraordinary items in any two (2) consecutive quarterly 
accounting periods.

9.8  OTHER DEBTS. Not to have outstanding or incur any direct or contingent 
liabilities or lease obligations (other than those to the Bank), or become 
liable for the liabilities 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)  Liabilities in existence on the date of this Agreement disclosed in 
     writing to the Bank.

(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.

(g)  Additional debts for the purpose of financing operating or capital 
     leases of the new J.D. Edwards software system which do not exceed a 
     total principal amount of Two Million Seven Hundred Thousand Dollars 
     ($2,700,000).

9.9  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.


                                     - 11 -
<PAGE>

(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.

(e)  Additional liens permitted under Subparagraph (g) above.

9.10  CAPITAL EXPENDITURES. Not to spend (including the total amount of any 
capital leases) more than Seven Million Dollars ($7,000,000) in fiscal year 
1999 and Five Million Dollars ($5,000,000) in any single fiscal year 
thereafter to acquire fixed or capital assets.

9.11  LOANS TO SUBSIDIARIES. Not to make any loans or advances to any of the 
Borrower's subsidiaries, except loans or advances in existence on the date of 
this Agreement disclosed in writing to the Bank.

9.12  LOANS TO OFFICERS. Not to make any loans, advances or other extensions 
of credit (including extensions of credit in the nature of accounts 
receivable or notes receivable arising from the sale or lease of goods or 
services) to any of the Borrower's executives, officers, directors or 
shareholders (or any relatives of any of the foregoing), except in the 
aggregate amount not to exceed One Million Dollars ($1,000,000).

9.13  OUT OF DEBT PERIOD (FACILITY NO. 1). 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 the date of this Agreement and November 1, 1999, and each 
subsequent one-year period (if any).  For the purposes of this paragraph, 
"advances" does not include the undrawn amounts of outstanding letters of 
credit.

9.14  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) 
     business condition (financial or otherwise), operations, properties or 
     prospects, or ability to repay the credit.

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

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

9.16  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.

9.17  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.

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

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

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

9.21  GENERAL BUSINESS INSURANCE. To maintain insurance as is usual for the 
business it is in.

9.22  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.


                                     - 12 -
<PAGE>

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

(c)  enter into any consolidation, merger, or other combination, or become a 
     partner in a partnership, a member of a joint venture, or a member of a 
     limited liability company.

(d)  sell, assign, lease, transfer or otherwise dispose of any assets for less
     than fair market value, or enter into any agreement to do so.

(e)  sell, assign, lease, transfer or otherwise dispose of all or a substantial
     part of the Borrower's business or the Borrower's assets except in the 
     ordinary course of the Borrower's business.

(f)  enter into any sale and leaseback agreement covering any of its fixed 
     assets.

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

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

9.23 ERISA PLANS. With respect to a Plan subject to Title IV of ERISA, to 
give prompt written notice to the Bank of:

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

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

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

9.24 GUARANTIES. To obtain guaranties in the amount no less than the total 
Bank commitments from any of the Borrower's domestic subsidiaries. It is 
provided, however, the revenues or assets of such subsidiaries have to be 10% 
or greater of the consolidated company.

10. 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 attorney's 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. "Hazardous substances" 
means any substance, material or waste that is or becomes designated or 
regulated as "toxic," "hazardous," "pollutant," or "contaminant" or a similar 
designation or regulation under any federal, state or local law (whether 
under common law, statute, regulation or otherwise) or judicial or 
administrative interpretation of such, including without limitation petroleum 
or natural gas. This indemnity will survive repayment of the Borrower's 
obligations to the Bank.

11. DEFAULT

If any of the following events occurs, 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 11.1, 11.4, 
11.5, 11.6, 11.10 and 11.12, 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 11.1, 11.4 and 11.5) 
or within 5 banking days of the Borrower's receipt of notice of such event of 
default (for Paragraphs 11.6, 11.10 and 11.12). 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.

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

11.2 FALSE INFORMATION. The Borrower (or any guarantor) has given the Bank 
false or misleading information or representations.

11.3 BANKRUPTCY. The Borrower (or any guarantor) files a 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


                                     - 13 -
<PAGE>

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.

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

11.5  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.

11.6  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.

11.7  MATERIAL ADVERSE CHANGE. A material adverse change occurs, or is 
reasonably likely to occur, in the Borrower's (or any guarantor's) financial 
condition, properties or prospects, or ability to repay the credit.

11.8  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) had guaranteed.

11.9  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.

11.10 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.

11.11 ERISA PLANS. Any one or more of the following events occurs with 
respect to a Plan of the Borrower subject to Title IV of ERISA, 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:

(a)   A reportable event shall occur under Section 4043(c) of ERISA with 
      respect to a Plan.

(b)   Any Plan termination (or commencement of proceedings to terminate a 
      Plan) or the full or partial withdrawal from a Plan by the Borrower or 
      any ERISA Affiliate.

11.12 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. This includes any 
failure or anticipated failure by the Borrower to comply with any financial 
covenants set forth in this Agreement, whether such failure is evidenced by 
financial statements delivered to the Bank or is otherwise known to the 
Borrower or the Bank.

11.13 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, within 30 days from the date of any such 
extensions, amendments, revisions, renewals, or restatements.

11.14 DEBTS OF SUBSIDIARIES. Any subsidiary of the Borrower has outstanding 
or incurs any direct or contingent debts (other than those to the Bank), or 
becomes 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 and lines of credit in existence on the date of this Agreement 
      disclosed in writing to the Bank.

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

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


                                     - 14 -
<PAGE>

11.5  FINANCIAL COVENANTS.  Any financial covenant under any loan or other 
agreement executed by the Borrower evidencing indebtedness permitted in 
Paragraph 9.8 is more restrictive than any financial covenant under this 
Agreement.

12.    ENFORCING THIS AGREEMENT; MISCELLANEOUS

12.1   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.

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

12.3   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.

12.4   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).

(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 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.


                                     - 15 -
<PAGE>


(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 form 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.

(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.

12.5  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.

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

12.7  ATTORNEYS' 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 and any other documents executed in connection with this Agreement, 
and in connection with 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. In the event that any case is 
commenced by or against the Borrower under the Bankruptcy code (Title 11, 
United States Code) or any similar or successor statute, the Bank is entitled 
to recover costs and reasonable attorneys' fees incurred by the Bank related 
to the preservation, protection, or enforcement of any rights of the Bank in 
such a case. As used in this paragraph, "attorneys' fees" includes the 
allocated costs of the Bank's in-house counsel.

12.8  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;

(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.

12.9  INDEMNIFICATION. The Borrower will indemnify and hold the Bank harmless 
from any loss, liability, damages, judgments, and costs of any kind relating 
to or arising directly or indirectly out of (a) this Agreement or any 
document required hereunder, (b) any credit extended or committed by the Bank 
to the Borrower hereunder, and (c) any litigation or proceeding related to or 
arising out of this Agreement, any such document, or any such credit. This 
indemnity includes but is not limited to attorneys' fees (including the 
allocated cost of in-house counsel). This indemnity extends to the Bank, its 
parent, subsidiaries and all of their directors, officers, employees, agents, 
successors, attorneys, and assigns. This indemnity will survive repayment of 
the Borrower's obligations to the Bank. All sums due to the Bank hereunder 
shall be obligations of the Borrower, due and payable immediately without 
demand.

12.10 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.


                                     - 16 -
<PAGE>

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

12.12 COUNTERPARTS. This Agreement may be executed in as many counterparts as 
necessary or convenient, and 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.

12.13 PRIOR AGREEMENT SUPERSEDED. This Agreement supersedes the Business Loan 
Agreement entered into as of August 26, 1996, between the Bank and the 
Borrower, and any credit outstanding thereunder shall be deemed to be 
outstanding under this Agreement.

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/ Chris P. Giannotti                    X /s/ David J. Davis
 -------------------------------------       ----------------------------------
By: Chris P. Giannotti, Vice President      By: David J. Davis, SVP,
                                                Operations and Chief Financial
Address where notices to the Bank               Officer
are to be sent:
                                            X /s/ Robert J. Sexton
Palo Alto Commercial Banking Office #01493   ----------------------------------
530 Lytton Ave.                             By:
Palo Alto, CA 94301
                                            Address for Notices:

                                            1400 Page Mill Road
                                            Palo Alto, CA 94304






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