COOPERATIVE COMPUTING INC /DE/, S-1, 1998-04-03

COOPERATIVE COMPUTING INC /DE/
S-1, 1998-04-03

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<PAGE> 1

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON APRIL 3, 1998
REGISTRATION NO. 333-
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
---------------------

FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
---------------------

COOPERATIVE COMPUTING, INC.
(Exact name of registrant as specified in its charter)

<TABLE>
<S> <C> <C>
DELAWARE 7373 94-2160013
(State or other jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
</TABLE>

GLENN E. STAATS
PRESIDENT AND CHIEF EXECUTIVE OFFICER
6207 BEE CAVE ROAD
AUSTIN, TEXAS 78746
(512) 328-2300
(Name, address, including zip code, and telephone
number, including area code, of agent for service)

Copies to:

GLENN D. WEST
WEIL, GOTSHAL & MANGES LLP
100 CRESCENT COURT, SUITE 1300
DALLAS, TEXAS 75201

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective.

If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]

If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ]
---------------

If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
---------------

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
---------------------

CALCULATION OF REGISTRATION FEE

<TABLE>
<CAPTION>
============================================================================================================
PROPOSED MAXIMUM
TITLE OF EACH CLASS OF AMOUNT TO BE AGGREGATE OFFERING AMOUNT OF
SECURITIES TO BE REGISTERED REGISTERED PRICE(A) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
9% Senior Subordinated
Notes due 2008........... $100,000,000 $100,000,000 $29,500
============================================================================================================
</TABLE>

(a) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457(f) under the Securities Act of 1933, as amended.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
================================================================================
<PAGE> 2

Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus shall not constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of these securities
in any State in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of any such State.

SUBJECT TO COMPLETION, DATED APRIL , 1998
PROSPECTUS

OFFER FOR ALL OUTSTANDING
9% SENIOR SUBORDINATED NOTES DUE 2008
IN EXCHANGE FOR
9% SENIOR SUBORDINATED NOTES DUE 2008
OF

COOPERATIVE COMPUTING, INC.

Cooperative Computing, Inc. ("CCI" or the "Company") hereby offers, upon the
terms and subject to the conditions set forth in this Prospectus and the
accompanying Letter of Transmittal (which together constitute the "Exchange
Offer"), to exchange $1,000 principal amount of registered 9% Senior
Subordinated Notes due 2008 (the "New Notes") issued by the Company for each
$1,000 principal amount of unregistered 9% Senior Subordinated Notes due 2008
(the "Old Notes") issued by the Company, of which an aggregate principal amount
of $100,000,000 is outstanding. The form and terms of the New Notes are
identical to the form and terms of the Old Notes except that the New Notes have
been registered under the Securities Act of 1933, as amended (the "Securities
Act"), and will not bear any legends restricting their transfer. The New Notes
will evidence the same debt as the Old Notes and will be issued pursuant to, and
entitled to the benefits of, the Indenture (as defined) governing the Old Notes.
The Exchange Offer is being made in order to satisfy certain contractual
obligations of the Company. See "The Exchange Offer" and "Description of New
Notes." The New Notes and the Old Notes are sometimes collectively referred to
herein as the "Notes."

Interest on the New Notes will be payable semiannually on February 1 and August
1 of each year, commencing on August 1, 1998. The New Notes will mature on
February 1, 2008. Except as described below, the Company may not redeem the New
Notes prior to February 1, 2003. On and after such date, the Company may redeem
the New Notes, in whole or in part, at the redemption prices set forth herein,
together with accrued and unpaid interest, if any, to the redemption date. In
addition, at any time and from time to time on or prior to February 1, 2002, the
Company may, subject to certain requirements, redeem up to 35% of the aggregate
principal amount of the New Notes with the Net Cash Proceeds (as defined)
received from one or more private or public equity offerings at a price equal to
109% of the principal amount to be redeemed, together with accrued and unpaid
interest, if any, to the date of redemption, provided that at least 65% of the
aggregate principal amount of the New Notes remain outstanding immediately after
each such redemption. The New Notes will not be subject to any sinking fund
requirements. Upon a Change of Control (as defined), the Company will be
required to make an offer to repurchase the New Notes at a price equal to 101%
of the principal amount thereof, together with accrued and unpaid interest, if
any, to the date of repurchase and, if the Change of Control occurs prior to
February 1, 2003, the Company will have the right to redeem the Notes at a price
equal to 100% of the principal amount thereof plus the Applicable Premium (as
defined). See "Description of New Notes."

The New Notes will be unsecured and will be subordinated in right of payment to
all existing and future Senior Indebtedness (as defined) of the Company. The New
Notes will rank pari passu with any future Senior Subordinated Indebtedness (as
defined) of the Company and will rank senior to all other subordinated
indebtedness of the Company. The Indenture under which the New Notes will be
issued (the "Indenture") will permit the Company and its Subsidiaries (as
defined) to incur additional indebtedness, including Senior Indebtedness,
subject to certain limitations. See "Description of Notes." The net proceeds
from the sale of the Old Notes were used by the Company to repay certain
indebtedness under the Old Senior Credit Facilities (as defined). See "Use of
Proceeds." As of December 31, 1997, on a pro forma basis after giving effect to
the Offering (as defined) and the application of the net proceeds therefrom,
there would have been $54.8 million of Senior Indebtedness outstanding
(excluding unused commitments), principally under the Restated Senior Credit
Facilities (as defined), and the Company would have had no Senior Subordinated
Indebtedness outstanding other than the Old Notes. See "Description of New
Notes -- Ranking and Subordination."

- --------------------------------------------------------------------------------

SEE "RISK FACTORS" BEGINNING ON PAGE 15 FOR A DISCUSSION OF CERTAIN FACTORS THAT
SHOULD BE CONSIDERED IN CONNECTION WITH AN INVESTMENT IN THE NEW NOTES.

- --------------------------------------------------------------------------------

The Company will accept for exchange any and all Old Notes validly tendered and
not withdrawn prior to 5:00 p.m., New York City time, on , 1998,
unless extended (as so extended, the "Expiration Date"). Tenders of Old Notes
may be withdrawn at any time prior to the Expiration Date. The Exchange Offer is
subject to certain customary conditions. See "The Exchange Offer."

Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. The letter of transmittal accompanying this
Prospectus (the "Letter of Transmittal") states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it is
an "underwriter" within the meaning of the Securities Act. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of New Notes received in exchange for
Old Notes where such Old Notes were acquired by such broker-dealer as a result
of market-making activities or other trading activities. The Company has agreed,
for a period of 90 days after the Expiration Date, to make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution."

No public market existed for the Old Notes before the Exchange Offer. The
Company currently does not intend to list the New Notes on any securities
exchange or to seek approval for quotation through any automated quotation
system, and no active public market for the New Notes is currently anticipated.
The Company will pay all the expenses incident to the Exchange Offer.

The Exchange Offer is not conditioned upon any minimum principal amount of Old
Notes being tendered for exchange pursuant to the Exchange Offer.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.

THE DATE OF THIS PROSPECTUS IS , 1998.
<PAGE> 3

AVAILABLE INFORMATION

As a result of the filing under the Securities Act of the Registration
Statement on Form S-1 with respect to the New Notes (the "Registration
Statement"), of which this Prospectus is a part, the Company will become subject
to the informational requirements of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), and in accordance therewith will file reports and
other information with the Securities and Exchange Commission (the
"Commission"). Such reports and other information may be inspected and copied at
the public reference facilities of the Commission at Judiciary Plaza, 450 Fifth
Street, N.W., Washington, D.C. 20549, and at the Commission's regional offices
at 500 West Madison Street, Suite 1400, Chicago, Illinois 60611, and 7 World
Trade Center, 13th Floor, New York, New York 10048. Copies of such material can
also be obtained at prescribed rates by writing to the Public Reference Section
of the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549.

This Prospectus does not contain all the information set forth in the
Registration Statement and the exhibits and schedules thereto, certain portions
of which have been omitted pursuant to the rules and regulations of the
Commission. Statements made in this Prospectus as to the contents of any
contract, agreement or other document are not necessarily complete. With respect
to each such contract, agreement or other document filed as an exhibit to the
Registration Statement, reference is hereby made to such exhibit for a more
complete description of the matter involved, and each such statement shall be
deemed qualified in its entirety by such reference. Copies of the Registration
Statement and the exhibits thereto are on file with the Commission and may be
examined without charge at the public reference facilities of the Commission
described above. Copies of such materials can also be obtained at prescribed
rates by writing to the Public Reference Section of the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549. The reports, proxy
statements and other information filed by the Company with the Commission may
also be obtained from the web site that the Commission maintains at
http://www.sec.gov.

The Company is required by the Indenture to furnish the holders of the New
Notes with copies of the annual reports and of the information, documents and
other reports specified in Sections 13 and 15(d) of the Exchange Act, so long as
any New Notes are outstanding.

i
<PAGE> 4

FORWARD LOOKING STATEMENTS

THIS PROSPECTUS CONTAINS CERTAIN FORWARD LOOKING STATEMENTS WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995 WITH RESPECT TO
THE FINANCIAL CONDITION, RESULTS OF OPERATIONS AND BUSINESS OF THE COMPANY,
INCLUDING STATEMENTS UNDER THE CAPTIONS "SUMMARY," "UNAUDITED PRO FORMA COMBINED
FINANCIAL INFORMATION," "MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF
OPERATIONS AND FINANCIAL CONDITION" AND "BUSINESS." ALL OF THESE FORWARD LOOKING
STATEMENTS ARE BASED ON ESTIMATES AND ASSUMPTIONS MADE BY MANAGEMENT OF THE
COMPANY, WHICH, ALTHOUGH BELIEVED TO BE REASONABLE, ARE INHERENTLY UNCERTAIN.
THEREFORE, UNDUE RELIANCE SHOULD NOT BE PLACED UPON SUCH ESTIMATES AND
STATEMENTS. NO ASSURANCE CAN BE GIVEN THAT ANY OF SUCH ESTIMATES OR STATEMENTS
WILL BE REALIZED AND IT IS LIKELY THAT ACTUAL RESULTS WILL DIFFER MATERIALLY
FROM THOSE CONTEMPLATED BY SUCH FORWARD LOOKING STATEMENTS. FACTORS THAT MAY
CAUSE SUCH DIFFERENCES INCLUDE THE FOLLOWING: (1) INCREASED COMPETITION; (2)
RAPID TECHNOLOGICAL CHANGE; (3) INCREASED COSTS; (4) RISKS ASSOCIATED WITH THE
INTRODUCTION OF NEW PRODUCTS AND PRODUCT UPGRADES AND DEPENDENCE ON PROPRIETARY
TECHNOLOGY; (5) LOSS OR RETIREMENT OF KEY MEMBERS OF MANAGEMENT; (6) INABILITY
OF THE COMPANY TO SUCCESSFULLY INTEGRATE THE CCI AND TRIAD BUSINESSES OR
BUSINESSES ACQUIRED IN THE FUTURE AND TO REALIZE ANTICIPATED REVENUE AND COST
SAVINGS OPPORTUNITIES; (7) INCREASES IN THE COMPANY'S COST OF BORROWINGS OR
UNAVAILABILITY OF ADDITIONAL DEBT OR EQUITY CAPITAL; AND (8) CHANGES IN GENERAL
ECONOMIC CONDITIONS IN THE MARKETS IN WHICH THE COMPANY MAY, FROM TIME TO TIME,
COMPETE. MANY OF SUCH FACTORS WILL BE BEYOND THE CONTROL OF THE COMPANY AND ITS
MANAGEMENT. FOR FURTHER INFORMATION OR OTHER FACTORS WHICH COULD AFFECT THE
FINANCIAL RESULTS OF THE COMPANY AND SUCH FORWARD LOOKING STATEMENTS, SEE "RISK
FACTORS."

MARKET AND INDUSTRY DATA

Unless otherwise indicated, market data contained herein with respect to
the automotive parts aftermarket industry is based upon reports issued by Lang
Marketing Resources in March 1997 and January 1998 and the 1997 Aftermarket Fact
Book published by the Automotive Aftermarket Parts and Accessories Association.
Market data contained herein with respect to the hardlines and lumber industry
is based upon The National Homecenter News, Volume 23, Numbers 10 and 12 (1997).

USE OF TRADEMARKS AND TRADENAMES

Several trademarks and tradenames appear in this Prospectus. CCI, Triad,
Automotive Aftermarket Information Highway, ServiceExpert, Series 11, Series 12,
Series 14, Eagle, Eagle LS, LaserStation, Ultimate, MarketPace, AdviceLine,
RepairSource, ServiceExpert, Prism, Telepart, ServiceCat and VISTA are federally
registered trademarks of the Company. The Company has federal trademark
applications pending with respect to CCI AutoBahn, J-CON and A-DIS. Shop Key is
a federal trademark of Snap-on Technologies, Inc. Other trademarks and
tradenames are used in this Prospectus to identify the entities claiming the
marks and names of their products. References herein to Snap-on, TruServ, Ace
Hardware, AutoZone, Discount Auto Parts, Pep Boys, Home Depot, Lowe's, Mitchell,
Sears, Midas and Aamco mean, respectively, Snap-on Incorporated, Cotter &
Company, Ace Hardware Corporation, AutoZone, Inc., Discount Auto Parts, Inc.,
The Pep Boys -- Manny, Moe & Jack, The Home Depot, Inc., Lowe's Home Centers,
Inc., Mitchell Repair Information Company, Sears, Roebuck and Co., Midas
International Corporation and Aamco Transmissions, Inc. The Company disclaims
proprietary interest in the marks and names of others.

ii
<PAGE> 5

PROSPECTUS SUMMARY

The following summary is qualified in its entirety by, and should be read
in conjunction with, the more detailed information, risk factors and historical
and pro forma combined financial data, including the related notes, appearing
elsewhere in this Prospectus. As used in this Prospectus, unless the context
otherwise requires, (i) "Holding" means Cooperative Computing Holding Company,
Inc., (ii) the "Company" or "CCI" means Cooperative Computing, Inc., a
wholly-owned subsidiary of Holding, after giving effect to the Triad Acquisition
(as defined), (iii) "Old CCI" means Cooperative Computing, Inc. prior to the
Triad Acquisition and (iv) "Triad" means Triad Systems Corporation and its
subsidiaries prior to the Triad Acquisition.

THE COMPANY

OVERVIEW

The Company is the largest designer, provider and servicer of management
information systems and solutions for the automotive parts aftermarket industry
and is a leading designer, provider and servicer of management information
systems and solutions for the hardlines and lumber industry. The automotive
parts aftermarket industry consists of the production, sale and installation of
both new and remanufactured parts used in the maintenance and repair of
automobiles and light trucks. The hardlines and lumber industry consists of the
sale of products for residential and commercial building construction,
maintenance and repair, lawn and garden and agribusiness. The Company's system
products are designed to significantly improve the profitability of the
Company's customers and, in turn, provide the Company with a stable customer
base as well as a receptive market for new products. The system offerings are
enhanced by extensive information services featuring highly specialized database
products and by customer support and maintenance services. The revenues
associated with these services are of a recurring nature and represented
approximately 55% of total revenues in fiscal 1997 on a pro forma basis. The
Company's pro forma revenues and EBITDA (as defined) for the twelve months ended
September 30, 1997 were $213.5 million and $33.3 million, respectively.

The Company's products are designed to improve the operating efficiency and
profitability of suppliers and retailers by reducing the time required to fill
customer orders. The Company's products enable users to conduct computerized
identification, location and selection of parts, to manage inventory and to
obtain sales history and point-of-sale information. In the automotive parts
aftermarket industry, interconnectivity throughout the distribution channel is
provided by the Company's network of electronically linked customers, which adds
to the efficiency and functionality of the Company's products and enhances
customer profitability.

Management believes that the Company's extensive databases represent the
most sophisticated and extensive industry-specific management information
systems offerings available to the automotive parts aftermarket industry. The
Company is the only provider of industry-specific management information systems
and solutions to every level of the wholesale distribution channel in the
automotive parts aftermarket, which includes manufacturers, warehouse
distributors, parts sales outlets ("PSOs") and service dealers. By servicing all
of these levels, the Company has acquired substantial industry knowledge to
improve and support the information products and services that are made
available to its customers. Management believes that it would be extremely
difficult and costly for others to match the quality, size, coverage and
frequency of updates of the Company's databases due to the extensive quantity of
data available, the variety of sources and the frequency with which relevant
information changes.

industry will continue to be driven by several favorable trends, including (i)
growth in the aggregate number of vehicles in use, (ii) an increase in the
average age of vehicles in operation and (iii) growth in the number of total
miles driven per vehicle each year. Management believes that these factors, when
combined with competitive pressures to decrease costs and increase operating
efficiencies and the historically low profit margin nature of the automotive
parts aftermarket industry, will increase demand for the Company's management
information systems and solutions.

The hardlines and lumber industry, comprised primarily of hardware
retailers, home centers, lumber and building materials suppliers and
manufacturers, agribusiness retailers, lawn and garden retailers and paint
retailers, generated approximately $142 billion in revenues in 1996. Management
believes that revenue growth in the hardlines and lumber industry will continue
to be driven by several favorable trends, including (i) the expansion of the
industry's top 500 retailers, (ii) favorable demographic trends, such as an
increase in dual income families, and (iii) continued expansion of new home
construction and sales and remodeling of existing homes.

COMPETITIVE STRENGTHS

The Company attributes its market leadership and its attractive
opportunities for continued growth and increased profitability to the following
competitive strengths:

- COVERAGE OF ALL LEVELS OF THE AUTOMOTIVE PARTS AFTERMARKET
DISTRIBUTION CHANNEL. The Company has developed products for a substantial
base of customers within each level of the automotive parts aftermarket
industry wholesale distribution channel. The Company's systems are
installed at approximately 400 warehouse distributors (representing
approximately 19% of the estimated warehouse distributors in the United
States) and approximately 12,000 PSOs (representing approximately 22% of
the estimated PSOs in the United States). The Company's customers have
relationships with a substantial portion of the estimated 340,000 service
dealers in the United States, of which management believes less than 20%
currently have management information systems. The Company expects to
capitalize on these relationships to further penetrate the service dealer
level of the wholesale distribution channel. As consumers have come to
expect same day repair service, service dealers are moving towards
computerization to access information concerning availability of parts and
to ensure prompt delivery of specific parts from other distribution
channels. The Company believes that its demonstrated ability to offer
information services and interconnectivity throughout the distribution
channel will enable it to successfully penetrate the service dealer market.

- EXTENSIVE DATABASES. Management believes that the Company maintains
the most extensive databases in the automotive parts aftermarket industry,
which, when used with the Company's systems, are designed to increase
efficiency and accuracy in the selection, pricing and sale of parts. With
over two million different auto parts available to consumers, up to nine
manufacturers for each product line, approximately 100,000 new parts
introduced each year, and over 75,000 parts discontinued each year, the
Company's electronic catalog databases are the most cost effective and
efficient way to access both historical and current parts information. To
duplicate the parts information contained in the Company's databases, a
customer or competitor would require over 1,700 separate parts catalogs and
the ability to periodically update such information. In addition to the
Company's electronic catalogs, the Company provides parts interchange and
parts locator databases which facilitate the identification, location and
selection of automotive parts. The Company also collects product sales
information and sells this information to manufacturers, distributors and
operators in the automotive parts aftermarket and hardlines and lumber
industries. On a pro forma basis the Company spent approximately $23
million for the year ended September 30, 1997 to develop and maintain its
extensive information products.

- MARKET LEADER IN THE GROWING HARDLINES AND LUMBER INDUSTRY. The
hardlines and lumber industry has been slower to invest in management
information systems than the automotive

2
<PAGE> 7

parts aftermarket industry. Of the estimated 60,000 stores in this industry
that are potential users of a management information system, management
estimates that approximately 40% are not computerized. The Company has
successfully developed a strong presence in the hardlines and lumber
industry and has achieved a compound annual growth rate of revenue of
approximately 13.5% between 1992 and 1997. The Company intends to
capitalize on its existing base of approximately 7,800 customer locations,
including its accounts with three major hardlines cooperatives, Hardware
Wholesalers Inc., Ace Hardware and TruServ, and two major wholesale
marketing groups, PRO Group and Distribution America, to market its
products and services to the noncomputerized retail stores. Currently, the
Company commands the leading market share of sales of management
information systems and solutions in the independent hardware and home
center businesses within the hardlines and lumber industry. In fiscal 1997,
on a pro forma basis, the hardlines and lumber business represented
approximately 37% of the Company's total revenues.

- SUBSTANTIAL INSTALLED BASE. With over 27,000 customer locations, the
Company has the largest installed base in each of the two industries it
serves. The accuracy and efficiency of the Company's products and services
are integral to its customers' operations. In fact, several major
customers, including General Parts Inc. in the automotive parts aftermarket
industry and TruServ in the hardlines and lumber industry, have chosen to
outsource portions of their management information systems needs to the
Company. Management believes that its strong customer relationships,
together with the superior performance of the Company's systems and the
significant risks and costs associated with changing to a competitor's
system, provide the Company with a stable customer base and a receptive
market for new product offerings.

- STRONG BASE OF RECURRING REVENUES. Approximately 55% of the
Company's revenues are generated from periodic updates to database
information and software support and maintenance services. These revenues
and the associated profit margins have historically exhibited consistency
and are expected to continue to increase as the Company's installed base
grows. For example, in the automotive parts aftermarket industry, due to
the large number of parts introduced each year and the frequency of catalog
and price list changes, customers rely upon the Company's periodic
information updates. Due to minimal costs associated with adding customers,
incremental recurring revenue typically generates margins that are higher
than those associated with the Company's other sources of revenues.

- BREADTH OF PRODUCT OFFERINGS. Management believes that the Company
possesses the broadest selection of management information systems and
solutions offered in the industries it serves. In the automotive parts
aftermarket industry, the Company currently markets three warehouse
distributor systems, three PSO systems and six service dealer systems, each
targeting a specific level of the distribution channel. The Company's
service dealer solutions, which are integrated with the Company's parts and
repair databases and can be connected to the Company's extensive network of
warehouse distributor and PSO systems, position the Company to capture a
significant share of the emerging service dealer market. In the hardlines
and lumber industry, the Company offers specialized point-of-sale systems
through four product lines which are marketed to (i) hardware stores and
smaller lumber and building materials dealers, many of which are presently
not computerized, (ii) larger lumber and building materials dealers
currently using outdated systems and (iii) agribusiness retailers. With
custom configuration capability within each system, the Company can target
the appropriate solution to the needs of each customer.

BUSINESS STRATEGY

the marketplace. The Company capitalizes on its relationships with its customer
base, allowing it to adapt to changes within the industries it serves, provide
both quality and value in its products and integrate enabling technologies. In
addition to this core strategy, the Company is pursuing the following key
initiatives:

- INCREASE PENETRATION OF AUTOMOTIVE SERVICE DEALER MARKET. The
automotive service dealer market, with approximately 340,000 dealers,
offers significant growth opportunities for the Company. This segment has
recently begun to recognize the operating efficiencies computerization
offers primarily due to the following factors: (i) service dealers'
increased focus on operating efficiencies and profitability, (ii) parts
suppliers' recognition of the importance of fully integrated parts
distribution and willingness to partially fund service dealers' investment
in computerization, (iii) consumer expectations for a more professional and
efficient repair experience and (iv) service dealers' desire to automate
the estimate and repair process. Management believes that the Company's
service dealer product offerings are the most comprehensive in the
industry. With integrated parts, labor and repair databases and the ability
to connect to approximately 12,000 PSOs, management believes that the
Company's service dealer systems are uniquely positioned to meet the needs
of the professional service dealer. The Company has dedicated over 60 sales
and marketing professionals to further penetrate the service dealer market.

- EXPAND HARDLINES REVENUE BASE. The Company intends to continue to
aggressively expand its hardlines and lumber business by focusing on larger
retailers, many of which are outsourcing their point-of-sale systems and
upgrading their existing systems, as well as smaller retailers, many of
which are not computerized. The Company has a strong presence in the
hardlines and lumber industry, with its customer base of over 5,700
accounts with over 7,800 store locations, including members of three major
hardlines cooperatives, Hardware Wholesalers Inc., Ace Hardware and
TruServ, and has exclusive endorsements from two major wholesale marketing
groups, PRO Group and Distribution America. These relationships position
the Company to pursue market share growth within the noncomputerized retail
stores that represent approximately 40% of the estimated 60,000 hardlines
and lumber stores in the United States. The Company also intends to
increase its customer support and maintenance services revenues by offering
a wider range of products and services to its installed base of customers.

- CAPITALIZE ON SYNERGIES TO ENHANCE OPERATING EFFICIENCIES. Following
the acquisition of Triad on February 27, 1997 (the "Triad Acquisition"),
the Company has focused on four major sources of synergies. First, the
Company benefits from a well-balanced corporate platform with Old CCI's
strength in research and development and Triad's strength in sales and
marketing. Second, the Company strengthened its presence in the wholesale
and retail distribution channels of the automotive parts aftermarket
industry. Old CCI's established relationships with national warehouse
distributors and those PSOs in their distribution channel, together with
Triad's strength in the independent warehouse distributors and independent
PSOs, created an enhanced market position thereby strengthening the
Company's ability to further penetrate the service dealer market. Third,
the integration of Old CCI's well developed systems with Triad's extensive
information services creates the opportunity for improved product
offerings. Lastly, since the Triad Acquisition, management estimates that
the Company has achieved annualized cost savings of approximately $4.6
million, principally from the elimination of redundant personnel and
expenses, such as data entry, manufacturing, sales and marketing and
general and administrative overhead, and will generate additional cost
savings of approximately $1.8 million over the next year.

- PURSUE SELECTIVE STRATEGIC ACQUISITION AND ALLIANCE
OPPORTUNITIES. The Company continuously evaluates opportunities to make
acquisitions and establish strategic alliances which complement and expand
its customer base and technology and database content to better serve the
automotive parts aftermarket and hardlines and lumber industries. See
"-- Recent Transactions."
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<PAGE> 9

RECENT TRANSACTIONS

In November 1997, the Company entered into a cross licensing agreement and
a strategic joint marketing agreement with Snap-on Tools ("Snap-on"), a leading
supplier of tools, equipment and computerized systems to the service dealer
market. Under the terms of the cross licensing agreement, Snap-on will integrate
the Company's electronic catalog product into Shop Key, Snap-on's service dealer
management system. Additionally, the Company will make available to end users of
Shop Key systems licensed software that will allow the Shop Key system to have
limited communication capability with PSOs that have a Company system.
Additionally, Snap-on has agreed to market the Company's electronic catalog
product on the Shop Key system through Snap-on's direct sales force of over 300
technical sales representatives and 4,200 sales agents. Under the joint
marketing agreement, Snap-on will integrate the Company's electronic catalog
with Snap-on's CAS System, a service dealer system targeted at retail service
dealer chains. This integrated solution will be jointly marketed to selected
national retail service dealer chains. The Company will be responsible for
billing and collecting monthly catalog fees and will retain all revenue for
sales of its electronic catalog products to Snap-on customers.

On February 10, 1998, the Company consummated the sale of the Old Notes in
a private placement to Chase Securities Inc. and NationsBanc Montgomery
Securities LLC (the "Offering"), and such initial purchasers immediately resold
the Old Notes pursuant to Rule 144A promulgated under the Securities Act.
Concurrently with the consummation of the Offering, the Company (i) amended and
restated its $170.0 million credit facility (the "Old Senior Credit Facilities")
by entering into a new $50.0 million term loan facility (the "New Term Loan
Facility") and a new $50.0 million revolving credit facility (the "New Revolving
Credit Facility," and together with the New Term Loan Facility, the "Restated
Senior Credit Facilities") as more fully described in "Description of the
Restated Senior Credit Facilities" (collectively, the "Refinancing") and (ii)
used the net proceeds from the Offering and the proceeds from the Restated
Senior Credit Facilities to repay the Old Senior Credit Facilities
(collectively, with the Refinancing, the "Transaction").

On March 1, 1998, the Company acquired certain assets of ADP Claims
Solutions Group, Inc. for total consideration (including the assumption of
certain liabilities) of approximately $9.3 million (the "ARISB Acquisition").
These assets provide products and services to the automotive recycling industry.
Management believes that the ARISB Acquisition will increase the Company's
capacity to better serve its customer base and expand into related markets.

COMPANY HISTORY AND OWNERSHIP

The Company represents the combined businesses of Old CCI and Triad.

Old CCI was founded in 1976 by Glenn E. Staats, Ph.D. Old CCI's original
customer focus was a diverse segment of businesses including the automotive
parts aftermarket industry. As the automotive parts aftermarket industry began
to experience significant growth and moved towards computerization, the Company
expanded its automotive parts customer base and developed a wider range of
products and services.

Triad was founded in 1973 as a provider of business and management
information solutions. Over the years, Triad established a presence in the
automotive parts aftermarket industry throughout the United States, Canada,
Puerto Rico, Ireland and the United Kingdom. Triad also developed a significant
presence in the hardlines and lumber industry throughout the United States and
Canada. From 1979 until February 27, 1997, Triad was a publicly held company,
with its common stock quoted on the Nasdaq National Market.

On February 27, 1997, Old CCI consummated the Triad Acquisition. Prior to
the Triad Acquisition, Old CCI maintained a strong presence with warehouse
distributors and a growing presence with PSOs and service dealers. The Triad
Acquisition was consummated to broaden Old CCI's presence with PSOs in order to
further penetrate the service dealer market and to establish a
5
<PAGE> 10

presence in the hardlines and lumber industry. Since the Triad Acquisition,
management of the Company has focused on integrating the strengths of Old CCI
and Triad.

In connection with the Triad Acquisition, affiliates of Hicks, Muse, Tate &
Furst Incorporated ("Hicks Muse") acquired approximately 54.5% of the Common
Stock, par value $0.000125 per share, of Holding ("Holding Common Stock"). Glenn
E. Staats and Preston W. Staats together own approximately 45.4% of the
outstanding Holding Common Stock. Holding owns all of the outstanding common
stock of the Company. See "Stock Ownership and Certain Transactions."

Hicks Muse is a private investment firm with offices in Dallas, New York,
St. Louis and Mexico City that specializes in leveraged acquisitions,
recapitalizations and other principal investing activities. Since its inception
in 1989, Hicks Muse has completed or currently has pending more than 200
transactions having a total transaction value in excess of $26 billion.

6
<PAGE> 11

THE EXCHANGE OFFER

The Exchange Offer......... $1,000 principal amount of New Notes in exchange
for each $1,000 principal amount of Old Notes. As
of the date hereof, Old Notes representing $100
million aggregate principal amount are outstanding.
The terms of the New Notes and the Old Notes are
substantially identical in all material respects,
except that the New Notes will be freely
transferable by the holders thereof except as
otherwise provided herein. See "Description of New
Notes."

Based on an interpretation by the Commission's
staff set forth in no-action letters issued to
third parties unrelated to the Company, the Company
believes that New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be
offered for resale, sold and otherwise transferred
by any person receiving the New Notes, whether or
not that person is the registered holder (other
than any such holder or such other person that is
an "affiliate" of the Company within the meaning of
Rule 405 under the Securities Act), without
compliance with the registration and prospectus
delivery provisions of the Securities Act, provided
that (i) the New Notes are acquired in the ordinary
course of business of that holder or such other
person, (ii) neither the holder nor such other
person is engaging in or intends to engage in a
distribution of the New Notes, and (iii) neither
the holder nor such other person has an arrangement
or understanding with any person to participate in
the distribution of the New Notes. See "The
Exchange Offer -- Purpose and Effect." Each
broker-dealer that receives New Notes for its own
account in exchange for Old Notes, where those Old
Notes were acquired by the broker-dealer as a
result of its market-making activities or other
trading activities, must acknowledge that it will
deliver a prospectus in connection with any resale
of these New Notes. See "Plan of Distribution."

Registration Rights
Agreement................ The Old Notes were sold by the Company on February
10, 1998, in the Offering. In connection with the
Offering, the Company entered into an Exchange and
Registration Rights Agreement with the initial
purchasers of the Old Notes (the "Registration
Rights Agreement") requiring the Company to make
the Exchange Offer. See "The Exchange
Offer -- Purpose and Effect."

Expiration Date............ The Exchange Offer will expire at 5:00 p.m., New
York City time, , 1998, or such later
date and time to which it is extended by the
Company (the "Expiration Date").

Withdrawal................. The tender of the Old Notes pursuant to the
Exchange Offer may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration
Date. Any Old Notes not accepted for exchange for
any reason will be returned without expense to the
tendering holder thereof as promptly as practicable
after the expiration or termination of the Exchange
Offer.

Interest on the New
Notes and Old Notes...... Interest on each New Note will accrue from the date
of issuance of the Old Note for which the New Note
is exchanged or from the
7
<PAGE> 12

date of the last periodic payment of interest on
such Old Note, whichever is later. No additional
interest will be paid on Old Notes tendered and
accepted for exchange.

Conditions to the Exchange
Offer.................... The Exchange Offer is subject to certain customary
conditions, certain of which may be waived by the
Company. See "The Exchange Offer -- Certain
Conditions to Exchange Offer."

Procedures for Tendering
Old
Notes.................... Each holder of Old Notes wishing to accept the
Exchange Offer must complete, sign and date the
Letter of Transmittal, or a copy thereof, in
accordance with the instructions contained herein
and therein, and mail or otherwise deliver the
Letter of Transmittal, or the copy, together with
the Old Notes and any other required documentation,
to the Exchange Agent (as defined) at the address
set forth herein. Persons holding the Old Notes
through the Depository Trust Company ("DTC") and
wishing to accept the Exchange Offer must do so
pursuant to the DTC's Automated Tender Offer
Program, by which each tendering participant will
agree to be bound by the Letter of Transmittal. By
executing or agreeing to be bound by the Letter of
Transmittal, each holder will represent to the
Company that, among other things, (i) the New Notes
acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the
person receiving such New Notes, whether or not
such person is the registered holder of the Old
Notes, (ii) neither the holder nor any such other
person is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the
holder nor any such other person has an arrangement
or understanding with any person to participate in
the distribution of such New Notes, and (iv)
neither the holder nor any such other person is an
"affiliate," as defined under Rule 405 promulgated
under the Securities Act, of the Company. Pursuant
to the Registration Rights Agreement, the Company
is required to file a "shelf" registration
statement for a continuous offering pursuant to
Rule 415 under the Securities Act in respect of the
Old Notes if (i) because of any change in law or
applicable interpretations of the staff of the
Commission, the Company is not permitted to effect
the Exchange Offer, (ii) the Exchange Offer is not
consummated within 225 days of the Offering, (iii)
any holder of Private Exchange Securities (as
defined) requests within 60 days after the Exchange
Offer, (iv) any applicable law or interpretations
do not permit any holder of Old Notes to
participate in the Exchange Offer, (v) any holder
of Old Notes participates in the Exchange Offer and
does not receive freely transferrable New Notes in
exchange for Old Notes or (vi) the Company so
elects.

Acceptance of Old Notes and
Delivery of New Notes.... The Company will accept for exchange any and all
Old Notes which are properly tendered (and not
withdrawn) in the Exchange Offer prior to 5:00
p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer
will be delivered promptly following the Expiration
Date. See "The Exchange Offer -- Terms of the
Exchange Offer."

8
<PAGE> 13

Exchange Agent............. Norwest Bank Minnesota, National Association, is
serving as Exchange Agent (the "Exchange Agent") in
connection with the Exchange Offer.

Federal Income Tax
Considerations........... The exchange pursuant to the Exchange Offer should
not be a taxable event for federal income tax
purposes. See "Certain Federal Income Tax
Considerations."

Effect of Not Tendering.... Old Notes that are not tendered or that are
improperly tendered and not accepted will,
following the completion of the Exchange Offer,
continue to be subject to the existing restrictions
upon transfer thereof. The Company will have no
further obligation to provide for the registration
under the Securities Act of such Old Notes.

9
<PAGE> 14

THE NEW NOTES

Issuer....................... Cooperative Computing, Inc.

Securities Offered........... $100,000,000 aggregate principal amount of 9%
Senior Subordinated Notes due 2008.

Maturity..................... February 1, 2008.

Interest Payment Dates....... February 1 and August 1 of each year, commencing
August 1, 1998.

Sinking Fund................. None.

Optional Redemption.......... Except as described below, the Company may not
redeem the New Notes prior to February 1, 2003.
On and after such date, the Company may redeem
the New Notes, in whole or in part, at the
redemption prices set forth herein, together with
accrued and unpaid interest, if any, to the date
of redemption. In addition, at any time and from
time to time on or prior to February 1, 2002, the
Company may redeem up to 35% of the aggregate
principal amount of the New Notes with the net
cash proceeds of one or more private or public
equity offerings, at a redemption price equal to
109% of the principal amount to be redeemed,
together with accrued and unpaid interest, if
any, to the date of redemption, provided that at
least 65% of the originally issued aggregate
principal amount of the New Notes remains
outstanding after each such redemption. See
"Description of New Notes -- Optional
Redemption."

Change of Control............ Upon the occurrence of a Change of Control, the
Company will be required to make an offer to
repurchase the New Notes at a price equal to 101%
of the principal amount thereof, together with
accrued and unpaid interest, if any, to the date
of purchase. In addition, if the Change of
Control occurs prior to February 1, 2003, the
Company will have the right to redeem the New
Notes at a price equal to 100% of the principal
amount thereof plus the Applicable Premium. See
"Description of New Notes -- Change of Control."

Ranking...................... The New Notes will be unsecured and will be
subordinated in right of payment to all existing
and future Senior Indebtedness of the Company.
The New Notes will rank pari passu with any
future Senior Subordinated Indebtedness of the
Company and will rank senior to all Indebtedness
of the Company that is neither Senior
Indebtedness nor Senior Subordinated
Indebtedness. As of December 31, 1997, on a pro
forma basis after giving effect to the
Transaction, the aggregate principal amount of
the Company's outstanding Senior Indebtedness
would have been $54.8 million (excluding unused
commitments) and the Company would have had no
Senior Subordinated Indebtedness outstanding
other than the New Notes. See "Description of New
Notes -- Ranking and Subordination."

Restrictive Covenants........ The Indenture limits, among other things, (i) the
incurrence of additional indebtedness by the
Company and its Subsidiaries (as defined), (ii)
the issuance of Disqualified Capital Stock (as

10
<PAGE> 15

defined) by the Company and preferred stock by
the Company's Subsidiaries, (iii) the payment of
dividends on, and redemption of, capital stock of
the Company, (iv) investments, (v) sales or swaps
of assets, (vi) transactions with affiliates and
(vii) consolidations, mergers and transfers of
all or substantially all of the Company's assets.
The Indenture also prohibits certain restrictions
on distributions from Subsidiaries. However, all
of these limitations and prohibitions are subject
to a number of important qualifications and
exceptions that are to be contained in the
Indenture. See "Description of New
Notes -- Certain Covenants."

USE OF PROCEEDS

There will be no cash proceeds to the Company from the exchange pursuant to
the Exchange Offer. The Company used the net proceeds from the Offering to repay
approximately $95 million of borrowings outstanding under the Old Senior Credit
Facilities.

RISK FACTORS

Prospective investors should carefully consider all of the information set
forth in this Prospectus and, in particular, should evaluate the specific risk
factors set forth under "Risk Factors" for risks involved with an investment in
the New Notes.

---------------------

The Company is a Delaware corporation. Its principal executive offices are
located at 6207 Bee Cave Road, Austin, Texas 78746, and its telephone number is
(512) 328-2300.

11
<PAGE> 16

SUMMARY UNAUDITED PRO FORMA FINANCIAL DATA

THE COMPANY

The following table sets forth certain summary unaudited pro forma financial
data of the Company for the periods ended and as of the dates indicated as
further described in the Unaudited Pro Forma Financial Information included
elsewhere herein. The unaudited summary pro forma statement of operations data
for the period ended September 30, 1997 gives effect to the Triad Acquisition
and the Transaction as if they had occurred at the beginning of the period. The
unaudited summary pro forma statement of operations data for the period ended
December 31, 1997 gives effect to the Transaction as if it had occurred at the
beginning of the period. The unaudited summary pro forma balance sheet data give
effect to the Transaction as if it had occurred at the balance sheet date.
"Other Data" below, not directly derived from the Unaudited Pro Forma Financial
Information or the audited consolidated financial statements of Old CCI or
Triad, have been presented to provide additional analysis. The Summary Unaudited
Pro Forma Financial Data for the twelve months ended September 30, 1997 do not
purport to represent what the Company's results of operations or financial
condition would have actually been had the Triad Acquisition and the Transaction
been consummated as of such date or to project the Company's results of
operations or financial condition for any future period. The Summary Unaudited
Pro Forma Financial Data for the three months ended December 31, 1997 do not
purport to represent what the Company's results of operations or financial
condition would have actually been had the Transaction been consummated as of
such date or to project the Company's results of operations or financial
conditions for any future period. The Summary Unaudited Pro Forma Financial Data
have been derived from and should be read in conjunction with the Unaudited Pro
Forma Financial Information and the notes thereto, the unaudited interim
consolidated financial statements of the Company and the respective notes
thereto, the audited consolidated financial statements of Old CCI, Triad and the
Company and the respective notes thereto and "Management's Discussion and
Analysis of Results of Operations and Financial Condition," each included
elsewhere herein.

<TABLE>
<CAPTION>
TWELVE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, 1997 DECEMBER 31, 1997
------------------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues................................................ $213,513 $ 51,915
Cost of revenues........................................ 131,301 31,615
-------- --------
Gross profit............................................ 82,212 20,300
Operating expenses...................................... 118,573(1) 26,363
-------- --------
Operating loss.......................................... (36,361) (6,063)
Interest expense........................................ 14,163 3,701
Other income (expense), net............................. 1,485 (78)
-------- --------
Loss before income taxes................................ (49,039) (9,842)
Income tax benefit...................................... 6,263 2,959
-------- --------
Net loss................................................ $(42,776) $ (6,883)
======== ========

BALANCE SHEET DATA (AT END OF PERIOD):
Working capital......................................... $ 7,703 $ 9,278
Total assets............................................ 308,354 301,678
Total debt, including current maturities................ 150,817(2) 154,839(2)
Stockholders' equity.................................... 48,263 41,747
OTHER DATA:
EBITDA(3)............................................... $ 33,335(1) 6,050
EBITDA margin(4)........................................ 15.6% 11.7%
Capital expenditures(5)................................. $ 20,653 4,780
Ratio of total debt to EBITDA........................... 4.5x 6.4x(6)
Ratio of EBITDA to interest expense..................... 2.4x 1.6x
</TABLE>

- ---------------

(1) Included in operating expenses and excluded from EBITDA is $23.1 million of
in-process research and development acquired and written off in connection
with the Triad Acquisition.

(2) Total debt does not include obligations of the Company resulting from the
sale of lease receivables. See Notes 1 and 7 to the audited consolidated
financial statements of the Company included elsewhere herein.

(3) EBITDA is defined as net income (loss) before interest, income taxes,
depreciation, amortization, extraordinary items and non-cash charges or
credits. The Company has included information concerning EBITDA because it
believes that EBITDA is commonly used by certain investors and analysts as
one measure to analyze and compare companies on the basis of operating
performance and to determine a company's ability to service and incur debt.
EBITDA should not be considered as an alternative to, or more meaningful
than, net income, cash flows from operating activities or other consolidated
income or cash flow statement data prepared in accordance with generally
accepted accounting principles or as a measure of profitability or
liquidity. EBITDA may not be comparable to similarly titled measures
reported by other companies.

(4) EBITDA margin is defined as EBITDA divided by revenues expressed as a
percentage.

(5) Includes investments in property, plant and equipment, expenditures for
service parts and investments in software and databases.

(6) Ratio of total debt to EBITDA for the three months ended December 31, 1997
is calculated by dividing total debt by annualized EBITDA for the quarter.

12
<PAGE> 17

SUMMARY HISTORICAL FINANCIAL DATA

OLD CCI AND CCI

The following table sets forth summary financial data of Old CCI for the
years ended November 30, 1995 and 1996 and the three months ended December 31,
1996 and of the Company for the ten months ended September 30, 1997 and the
three months ended December 31, 1997. The statement of operations data as of
November 30, 1995 and 1996 and September 30, 1997 and the balance sheet data as
of November 30, 1996 and September 30, 1997 set forth below are derived from the
audited consolidated financial statements of Old CCI and the Company, included
elsewhere herein. The statement of operations data as of December 31, 1996 and
the statement of operations data and the balance sheet data as of December 31,
1997 set forth below are derived from the unaudited interim consolidated
financial statements of Old CCI and the Company included elsewhere herein. The
balance sheet data as of November 30, 1995 and December 31, 1996 are derived
from unaudited consolidated financial statements of Old CCI not included herein.
The unaudited consolidated financial statements include all adjustments,
consisting of normal recurring accruals, which the Company considers necessary
for a fair presentation of the consolidated financial position and the
consolidated results of operations for these periods. Operating results for the
three months ended December 31, 1997 are not necessarily indicative of the
results that may be expected for the entire year ending September 30, 1998. The
summary financial data below should be read in conjunction with "Management's
Discussion and Analysis of Results of Operations and Financial Condition,"
"Selected Historical and Pro Forma Financial Data," the unaudited interim
consolidated financial statements of Old CCI and the Company and the respective
notes thereto and the audited consolidated financial statements of Old CCI and
the Company and the respective notes thereto, each included elsewhere herein.

<TABLE>
<CAPTION>
OLD CCI CCI OLD CCI CCI
----------------- ------------------ ----------------- -----------------
YEAR ENDED THREE MONTHS THREE MONTHS
NOVEMBER 30, TEN MONTHS ENDED ENDED
----------------- ENDED ----------------- -----------------
1995 1996 SEPTEMBER 30, 1997 DECEMBER 31, 1996 DECEMBER 31, 1997
---- ---- ------------------ ----------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................... $29,245 $36,734 $140,316 $ 9,453 $ 51,915
Cost of revenues.................. 16,733 21,857 84,464 4,079 31,615
------- ------- -------- ------- --------
Gross profit...................... 12,512 14,877 55,852 5,374 20,300
Operating expenses................ 12,221 13,377 83,080(1) 3,570 26,363
------- ------- -------- ------- --------
Operating income (loss)........... 291 1,500 (27,228) 1,804 (6,063)
Interest expense.................. -- -- 8,403 -- 3,547
Other income (expense), net....... 414 4,231(2) 443 967 (78)
------- ------- -------- ------- --------
Income (loss) before income
taxes........................... 705 5,731 (35,188) 2,771 (9,688)
Income tax (provision) benefit:
Nonrecurring charge for
termination of Subchapter S
election...................... -- -- (2,382) -- --
C Corporation benefit........... -- -- 3,383 -- 2,898
------- ------- -------- ------- --------
Net income (loss)................. $ 705 $ 5,731 $(34,187) $ 2,771 $ (6,790)
======= ======= ======== ======= ========
BALANCE SHEET DATA (AT END OF
PERIOD):
Working capital (deficit)......... $(2,231) $(3,490) $ 603 $(7,991) $ 9,278
Total assets...................... 16,115 18,763 307,940 19,278 302,400
Total debt, including current
maturities...................... 5,089(3) 5,089(3) 144,967(4) 5,589(3) 150,410(4)
Stockholders' equity.............. 5,273 5,227 53,699 4,332 46,898
OTHER DATA:
EBITDA(5)......................... $ 6,113 $ 8,774(2) $ 24,822(1) $ 4,340 $ 6,050
EBITDA margin(6).................. 20.9% 23.9% 17.7% 45.9% 11.7%
Capital expenditures(7)........... $ 6,527 $ 7,141 $ 15,980 $ 5,102 $ 4,780
</TABLE>

- ---------------

(1) Included in operating expenses and excluded from EBITDA is $23.1 million of
in-process research and development acquired and written off in connection
with the Triad Acquisition.

(2) Included in other income, net, and excluded from EBITDA are gains of $3.4
million related to settlement of two breach of contract lawsuits recognized
by Old CCI.

(3) Consists of advances from stockholders repaid during fiscal 1997.

(4) Total debt does not include obligations of the Company resulting from the
sale of lease receivables. See Notes 1 and 7 to the audited consolidated
financial statements of the Company included elsewhere herein.

(5) EBITDA is defined as net income (loss) before interest, income taxes,
depreciation, amortization, extraordinary items and non-cash charges or
credits. The Company has included information concerning EBITDA because it
believes that EBITDA is commonly used by certain investors and analysts as
one measure to analyze and compare companies on the basis of operating
performance and to determine a company's ability to service and incur debt.
EBITDA should not be considered as an alternative to, or more meaningful
than, net income, cash flows from operating activities or other consolidated
income or cash flow statement data prepared in accordance with generally
accepted accounting principles or as a measure of profitability or
liquidity. EBITDA may not be comparable to similarly titled measures
reported by other companies.

(6) EBITDA margin is defined as EBITDA divided by revenues expressed as a
percentage.

(7) Includes investments in property, plant and equipment, expenditures for
service parts and investments in software and databases.

13
<PAGE> 18

SUMMARY HISTORICAL FINANCIAL DATA

TRIAD

The following table sets forth summary financial data of Triad for the
years ended September 30, 1995 and 1996 and for the five months ended February
27, 1997. The statement of operations data set forth below are derived from the
audited consolidated financial statements included elsewhere herein. The summary
financial data below should be read in conjunction with "Management's Discussion
and Analysis of Results of Operations and Financial Condition," "Selected
Historical Financial Data" and the audited financial statements of Triad and the
notes thereto, each included elsewhere herein.

<TABLE>
<CAPTION>
YEAR ENDED
SEPTEMBER 30, FIVE MONTHS
-------------------- ENDED
1995 1996 FEBRUARY 27, 1997
---- ---- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................. $175,077 $175,676 $ 66,432
Cost of revenues.......................................... 88,509 93,808 38,316
-------- -------- --------
Gross profit.............................................. 86,568 81,868 28,116
Operating expenses........................................ 66,036 76,335(1) 27,690
-------- -------- --------
Operating income.......................................... 20,532 5,533 426
Interest and other expenses............................... 6,941 5,944 2,405
Other income, net......................................... -- 2,926 94
-------- -------- --------
Income (loss) before taxes and extraordinary item......... 13,591 2,515 (1,885)
Income tax (provision) benefit............................ (5,165) (956) 290
-------- -------- --------
Income (loss) before extraordinary item................... 8,426 1,559 (1,595)
Extraordinary item........................................ (396) (377) --
-------- -------- --------
Net income (loss)......................................... $ 8,030 $ 1,182 $ (1,595)
======== ======== ========
BALANCE SHEET DATA (AT END OF PERIOD):
Working capital (deficit)................................. $ 1,431 $(17,141) $(31,726)
Total assets.............................................. 132,709 139,753 149,844
Total debt, including current maturities(2)............... 55,609 55,913 66,202
Stockholders' equity...................................... 14,221 16,787 22,688
OTHER DATA:
EBITDA(3)................................................. $ 29,263 $ 26,592(1) $ 4,738
EBITDA margin(4).......................................... 16.7% 15.1% 7.1%
Capital expenditures(5)................................... $ 11,749 $ 12,424 $ 4,673
</TABLE>

- ---------------

(1) Included in operating expenses and excluded from EBITDA is a restructuring
charge of $9.0 million recognized in the historical financial statements of
Triad related to the write-off of capitalized software development costs,
provisions for product issues and costs associated with reductions in
aftermarket sales and support personnel.

(2) Total debt does not include obligations of Triad resulting from the sale of
lease receivables.

(4) EBITDA margin is defined as EBITDA divided by revenues expressed as a
percentage.

(5) Includes investments in property, plant and equipment, expenditures for
service parts and investments in software and databases.

14
<PAGE> 19

RISK FACTORS

In addition to the other information contained in this Prospectus,
prospective investors should consider carefully the following risk factors
before purchasing the New Notes offered hereby. This Prospectus contains
forward-looking statements. These statements are subject to a number of risks
and uncertainties, including the factors set forth below, many of which are
beyond the Company's control.

SUBSTANTIAL LEVERAGE

In connection with the Triad Acquisition the Company incurred substantial
indebtedness, resulting in its leveraged capital structure. As of December 31,
1997, on a pro forma basis after giving effect to the Transaction, the Company
would have had approximately $154.8 million of indebtedness outstanding, and
there would have been approximately $45.0 million available for future
borrowings under the Restated Senior Credit Facilities. See "Capitalization" and
"Description of the Restated Senior Credit Facilities." On a pro forma basis
after giving effect to the Transaction, the Company's earnings would have been
insufficient to cover fixed charges by approximately $9.8 million for the three
months ended December 31, 1997. The Company may incur additional indebtedness in
the future, subject to certain limitations to be contained in the Indenture and
the Restated Senior Credit Facilities. See "Description of the Restated Senior
Credit Facilities" and "Description of New Notes."

The Company's ability to pay interest and principal upon the Restated
Senior Credit Facilities and the New Notes and to satisfy its other debt
obligations will depend upon its future operating performance, including its
ability to realize its goal of significant penetration of the service dealer
market, which will be affected by prevailing economic conditions and financial,
business and other factors, certain of which are beyond its control. There can
be no assurance that the Company's business will generate cash flow at or above
projected levels or that anticipated future growth can be achieved. See
"Management's Discussion and Analysis of Results of Operations and Financial
Condition -- Liquidity and Capital Resources."

The Company's leverage position could have several important consequences
to the holders of the New Notes, including, but not limited to, the following:
(i) the Company will have significant cash requirements to service debt,
reducing funds available for operations and future business opportunities and
increasing the Company's vulnerability to adverse general economic and industry
conditions and competition; (ii) the Company's ability to obtain additional
financing in the future for working capital, capital expenditures, acquisitions,
general corporate or other purposes may be limited; (iii) the Company's
leveraged position and the covenants that are contained in the Indenture and the
Restated Senior Credit Facilities could limit the Company's ability to compete,
as well as its ability to expand, including through acquisitions, and to make
capital improvements; (iv) the Company may be more leveraged than certain of its
competitors, which may place the Company at a competitive disadvantage; and (v)
the Company's ability to refinance the New Notes in order to pay the principal
of the New Notes at maturity or upon a Change of Control may be adversely
affected.

A portion of the consolidated debt of the Company bears interest at a
floating rate; therefore, the financial results of the Company are and will
continue to be affected by changes in prevailing interest rates.

ABILITY TO SERVICE DEBT

The Company's ability to pay interest and principal upon the Restated
Senior Credit Facilities, to pay interest on the New Notes and to satisfy its
other debt obligations will depend upon its future operating performance, which
will be affected by prevailing economic conditions and financial, business and
other factors, certain of which will be beyond its control. In addition, amounts
owing under the Restated Senior Credit Facilities will become due prior to the
maturity of the New Notes and such amounts may need to be refinanced. There can
be no assurance that future borrowings or
15
<PAGE> 20

equity refinancing will be available for the payment or refinancing of the
Company's indebtedness. If the Company is unable to service its indebtedness,
whether in the ordinary course of business or upon acceleration of such
indebtedness, the Company will be forced to pursue one or more alternative
strategies, such as restructuring or refinancing its indebtedness, selling
assets, reducing or delaying capital expenditures or seeking additional equity
capital. There can be no assurance that any of these strategies could be
effected on satisfactory terms, if at all. See "Management's Discussion and
Analysis of Results of Operations and Financial Condition -- Liquidity and
Capital Resources" and "Description of the Restated Senior Credit Facilities."

RESTRICTIVE DEBT COVENANTS

The Indenture and the Restated Senior Credit Facilities contain certain
covenants that restrict, among other things, the Company's ability to incur
additional indebtedness, incur liens, pay dividends or make certain other
restricted payments, make investments, consummate certain asset sales, enter
into certain transactions with affiliates, impose restrictions on the ability of
a subsidiary to pay dividends or make certain payments to the Company, merge or
consolidate with any other person or sell, assign, transfer, lease, convey, or
otherwise dispose of all or substantially all of the assets of the Company. In
addition, the Restated Senior Credit Facilities contain certain other and more
restrictive covenants including restrictions on prepaying indebtedness, such as
the New Notes, and will also require the Company to maintain specified financial
ratios and to satisfy certain financial condition tests. The Company's ability
to meet these financial ratio and financial condition tests can be affected by
events beyond its control and there can be no assurance that the Company will
meet those tests. A breach of any of these covenants could result in a default
under the Restated Senior Credit Facilities or the Indenture.

On August 15 and December 4, 1997, the Company obtained waivers from the
lenders under the Company's Old Senior Credit Facilities in connection with the
breach by the Company of certain financial ratio covenants which the Company
attributes principally to a result of delays in obtaining the approval of the
United States Federal Trade Commission for the Triad Acquisition and the impact
of such delays on the sales of Triad. Certain of the financial ratio and
financial condition covenants have been modified in the Restated Senior Credit
Facilities. See "Description of the Restated Senior Credit Facilities." While
the Company believes that the new financial ratio and financial condition
covenants contained in the Restated Senior Credit Facilities will be met by the
Company, there can be no assurances that the Company will be able to maintain
the financial performance necessary to prevent any future breach of such
covenants.

Upon the occurrence of an event of default under the Restated Senior Credit
Facilities, the lenders thereunder could elect to declare all amounts
outstanding thereunder, together with accrued interest, to be immediately due
and payable. If the Company were unable to pay those amounts, the lenders
thereunder could proceed against the collateral granted to them to secure that
indebtedness. Substantially all of the assets of the Company and its
subsidiaries, including the stock of most of its subsidiaries, have been pledged
as collateral to secure the Company's obligations under the Restated Senior
Credit Facilities and guarantees thereof. If the indebtedness under the Restated
Senior Credit Facilities were to be accelerated, there can be no assurance that
the assets of the Company would be sufficient to repay in full that indebtedness
and the other indebtedness of the Company, including the New Notes. In addition,
if a default occurs with respect to Senior Indebtedness, such as the Restated
Senior Credit Facilities, the subordination provisions of such Senior
Indebtedness would restrict payments to holders of the New Notes. See
"Description of the Restated Senior Credit Facilities" and "Description of New
Notes -- Certain Covenants."

SUBORDINATION OF NEW NOTES TO SENIOR INDEBTEDNESS

The payment of principal, premium, if any, and interest on, and any other
amounts owing in respect of, the New Notes will be subordinated to the prior
payment in full in cash or cash equivalents of all existing and future Senior
Indebtedness of the Company. In the event of the
16
<PAGE> 21

bankruptcy, liquidation, dissolution, reorganization or other winding-up of the
Company, the assets and securities of the Company will be available to pay
obligations on the New Notes only after all Senior Indebtedness has been so paid
in full; accordingly, there may not be sufficient assets remaining to pay
amounts due on any or all of the New Notes then outstanding. In addition, under
certain circumstances, the Company may not pay principal of, premium, if any, or
interest on, or any other amounts owing in respect of, the New Notes, or
purchase, redeem or otherwise retire the New Notes, in the event of certain
defaults with respect to Senior Indebtedness, including Senior Indebtedness
under the Restated Senior Credit Facilities.

As of December 31, 1997, on a pro forma basis after giving effect to the
Offering and the application of the net proceeds therefrom, there would have
been approximately $54.8 million of Senior Indebtedness (excluding unused
commitments) outstanding (principally related to direct borrowings by the
Company under the Restated Senior Credit Facilities). Additional Senior
Indebtedness may be incurred by the Company from time to time, subject to
certain restrictions. See "Description of the Restated Senior Credit
Facilities," "Description of New Notes -- Ranking and Subordination" and
"-- Certain Covenants."

In addition to being subordinated to all existing and future Senior
Indebtedness of the Company, the New Notes will not be secured by any assets of
the Company or its subsidiaries. Obligations under the Restated Senior Credit
Facilities and guarantees thereof are secured by substantially all the assets of
the Company and its direct and indirect subsidiaries. If the Company becomes
insolvent or is liquidated, or if payment under the Restated Senior Credit
Facilities is accelerated, the lenders under the Restated Senior Credit
Facilities will be entitled to exercise the remedies available to a secured
lender under applicable law pursuant to the Restated Senior Credit Facilities.
Accordingly, such lenders will have a prior claim with respect to such assets.
See "Description of the Restated Senior Credit Facilities."

DEPENDENCE ON PROPRIETARY TECHNOLOGY; ACQUISITION OF DATA

The Company's success and ability to compete depend in part upon its
proprietary technology. The Company attempts to protect its proprietary
technology through trademarks, copyrights, trade secrets and confidentiality
agreements with all of its employees. There can be no assurance that the Company
will be able to adequately protect its technology or that competitors will not
develop similar technology independently. No assurance can be given that the
claims allowed on any copyrights held by the Company will be sufficiently broad
to protect the Company's technology or that the Company's copyrights will not be
challenged.

In addition, the Company is subject to the risk of adverse claims and
litigation alleging that it is infringing the proprietary rights of third
parties. Although the Company is not aware that its technology infringes on the
proprietary rights of others and management has not received notice of any
claimed infringements, there can be no assurance that the Company will not be
subject to such third party claims or litigation and that such claims will not
be successful. Any such claim could result in costly litigation or product
shipment delays or force the Company to enter into royalty or license
agreements, any of which could have a material adverse effect on the Company's
business, financial condition and results of operations.

RAPID TECHNOLOGICAL CHANGE

The technology underlying the Company's products and services is
characterized by rapid technological advances, evolving industry standards and
frequent new product introductions. The future success of the Company's business
will depend upon its ability to maintain and enhance its technological
capabilities, develop and market products and services that meet changing
customer needs and successfully anticipate or respond to technological changes,
on a cost-effective and timely basis. There can be no assurance that the Company
will effectively respond to the technological requirements of the changing
market. To the extent the Company determines that new technologies and equipment
are required to remain competitive, the development, acquisition and
17
<PAGE> 22

implementation of such technologies and equipment are likely to continue to
require significant capital investment by the Company. There can be no assurance
that capital will be available for these purposes in the future or that
investments in new technologies will result in commercially viable products. See
"Business -- Business Strategy," "-- Industry Overview" and "-- Products and
Services."

RISK OF SOFTWARE DEFECTS

The Company's products are highly complex and sophisticated and could, from
time to time, contain design or manufacturing defects or software errors. There
can be no assurance that such defects or errors will not delay the release or
shipment of products or, if the defect or error is discovered only after
customers have received the products, that such defect or errors will not result
in increased costs or reduced market acceptance of the Company's products, any
of which could have a material adverse effect on the Company's business,
financial condition and results of operations.

INTEGRATION OF ACQUISITIONS

No assurance can be given that the integration of Old CCI and Triad or of
future acquisitions will be successful or that the anticipated strategic
benefits of the Triad Acquisition or future acquisitions will be realized.
Acquisitions involve a number of special risks, including, but not limited to,
adverse short-term effects on the Company's reported operating results,
diversion of management's attention, standardization of accounting systems,
dependence on retaining, hiring and training key personnel, and unanticipated
problems or legal liabilities. If the Company is unable to successfully
integrate Old CCI and Triad or future acquisitions for these or other reasons,
the Company's business, financial condition and results of operations may be
adversely affected. See "Prospectus Summary -- Recent Transactions" and
"-- Company History and Ownership."

CUSTOMER LEASING

The Company offers its customers lease financing which it believes provides
a competitive advantage in marketing and promoting the Company's products. The
Company has, through lease financing subsidiaries, financed its lease
receivables through a series of arrangements that it believes qualify for
treatment as sales under applicable accounting rules including Financial
Accounting Standard 125, Accounting for Transfers and Servicing of Financial
Assets and Extinguishment of Liabilities ("FAS 125"). As of December 31, 1997,
the Company maintained arrangements available for the sale of such lease
agreements aggregating approximately $65.6 million. Under the Company's current
arrangements, the Company sells the receivables relating to certain customer
leases to banks and lending institutions. The Company retains certain
liabilities relating to the transferred lease receivables, principally relating
to representations and warranties as to the quality and other characteristics of
the receivables, ongoing maintenance and servicing obligations, as well as
retaining liability for losses in the event of lessee nonpayment up to stated
recourse limits (up to 10% of the aggregate initial proceeds adjusted for
certain expenses and payments remitted on the leases) and at full recourse on
lease receivables that did not meet the credit worthiness tests of the banks or
lending institutions. The Company retains a liability on its balance sheet
relating to its estimated exposure under these recourse provisions and for its
servicing obligations. The lease financing arrangements contain restrictive
covenants which allow the Company to discount only while in compliance with such
covenants. In the event of non-compliance, the banks and lending institutions
could assume administrative control (servicing) of the lease portfolio and could
prohibit further transactions under the available credit facilities. A change in
the manner in which such leases are transferred, including whether such transfer
constitutes a sale, and other matters, could adversely affect the accounting and
financial reporting manner in which the Company may report its customer leasing
operations. Such changes could result in a different accounting treatment or in
the Company altering the financing arrangements (subject to the lender's
consent).

18
<PAGE> 23

COMPETITION

The application software and database markets are highly fragmented and
served by multifarious competitors. Competitors range from small, independent
application software producers to large alliances of software producers and
computer systems manufacturers. In addition, the Company faces competition from
distributors and cooperatives that directly market computer systems and database
information to their members and from potential customers that develop systems
and compile and maintain data internally. Many of the Company's competitors have
greater financial and other resources than does the Company. Consequently, the
Company may encounter additional competitive pressures if increased spending is
required to maintain market share or rapid technological change in the industry
occurs. See "-- Rapid Technological Change."

DEPENDENCE UPON KEY PERSONNEL

The Company believes that its success will continue to be dependent upon
its ability to attract and retain skilled managers, technical employees and
other personnel, including its present officers and directors. The loss of
certain key personnel, including Glenn E. Staats, the President and Chief
Executive Officer of the Company, and Preston W. Staats, the Executive Vice
President and Chief Operating Officer of the Company, could have a material
adverse effect on the Company's business, financial condition and results of
operations. To date, the Company has not experienced significant difficulties in
attracting or retaining such personnel. Although the Company is not aware that
any of its key personnel currently intend to terminate their employment, their
future services cannot be assured. None of the Company's key personnel, other
than Messrs. Glenn and Preston Staats, has a written employment agreement or
other written employment arrangement with the Company and all such persons,
other than Messrs. Glenn and Preston Staats, are employed by the Company on an
"at-will" basis. See "Management -- Employment Agreements; Change of Control
Arrangements."

CONTROLLING STOCKHOLDERS

All of the common stock of the Company is owned by Holding, which in turn
is controlled by an affiliate of Hicks Muse and Messrs. Glenn E. Staats and
Preston W. Staats. As a result, Hicks Muse and Messrs. Glenn and Preston Staats
will be able to elect all the members of the Board of Directors of Holding and
therefore direct the management and policies of the Company. The interests of
Hicks Muse and its affiliates and Messrs. Glenn and Preston Staats may differ
from the interests of holders of the New Notes. See "Stock Ownership and Certain
Transactions."

LIMITATION ON CHANGE OF CONTROL

Upon a Change of Control, the Company may be required to offer to purchase
all of the New Notes then outstanding at 101% of the principal amount thereof,
plus accrued and unpaid interest, if any, to the date of purchase. If a Change
of Control were to occur, there can be no assurance that the Company would have
sufficient funds to pay the purchase price for all of the New Notes that the
Company might be required to purchase. In the event that the Company were
required to purchase New Notes pursuant to a Change of Control Offer (as
defined), the Company expects that it would require third party financing;
however, there can be no assurance that the Company would be able to obtain such
financing on favorable terms, if at all. In addition, the Restated Senior Credit
Facilities restrict the Company's ability to repurchase the New Notes, including
pursuant to a Change of Control Offer. A Change of Control will result in an
event of default under the Restated Senior Credit Facilities and may cause the
acceleration of other Senior Indebtedness, if any, in which case the
subordination and other provisions of the New Notes would require payment in
full of the Restated Senior Credit Facilities and any such Senior Indebtedness
before repurchase of the New Notes. See "Description of the Restated Senior
Credit Facilities," "Description of New Notes -- Change of Control" and
"-- Ranking and Subordination."

19
<PAGE> 24

ABSENCE OF PUBLIC MARKET; RESTRICTIONS ON TRANSFER

The Old Notes were issued on February 10, 1998, and the Company is not
aware that any active trading market for the Old Notes has developed. The
Company does not intend to apply for a listing of the New Notes on a securities
exchange or on any automated dealer quotation system. There can be no assurance
as to the liquidity of markets that may develop for the New Notes, the ability
of the holders of the New Notes to sell their New Notes or the prices at which
such holders would be able to sell their New Notes. If such markets were to
exist, the New Notes could trade at prices that may be lower than the initial
market value thereof, depending upon many factors, including prevailing interest
rates and the markets for similar securities.

The liquidity of, and trading market for, the New Notes also may be
adversely affected by general declines in the market for similar securities.
Such a decline may adversely affect such liquidity and trading markets
independent of the financial performance of, and prospects for, the Company.

YEAR 2000 READINESS

Many currently installed computer systems and software products are coded
to accept only two digit entries in the date code field. These date code fields
will need to accept four digit entries to distinguish 21st century dates from
20th century dates. As a result, computer systems and/or software used by many
companies may need to be upgraded to comply with such "Year 2000" requirements.
Although the Company believes its software products are or will be Year 2000
ready, there can be no assurance that the Company's software products contain
all necessary software routines and programs necessary for the accurate
calculation, display, storage and manipulation of data involving dates. If any
of the Company's customers experience Year 2000 problems, such customers could
assert claims for damages against the Company and/or discontinue purchasing
recurring services. Any such litigation could result in substantial costs and
diversion of the Company's resources even if ultimately decided in favor of the
Company. The occurrence of any of the foregoing could have a material adverse
effect on the Company's business, financial condition and results of operations.

20
<PAGE> 25

USE OF PROCEEDS

CAPITALIZATION

The following table sets forth the actual capitalization of the Company as
of December 31, 1997, and as adjusted to give effect to the Transaction as if it
had occurred at December 31, 1997. The information set forth below should be
read in conjunction with the "Summary Unaudited Pro Forma Combined Financial
Data," "Unaudited Pro Forma Financial Information," "Management's Discussion and
Analysis of Results of Operations and Financial Condition" and the Consolidated
Financial Statements of the Company, Old CCI and Triad, and the notes thereto of
each, included elsewhere herein.

<TABLE>
<CAPTION>
AS OF DECEMBER 31, 1997
---------------------------------------------
PRO FORMA PRO FORMA
ACTUAL ADJUSTMENTS COMBINED
------------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Long-term debt:
Old Senior Credit Facilities:
Old Revolving Credit Facility................ $ 14,650 $ (14,650) $ --
Old Term Loan Facility....................... 135,000 (135,000) --
Restated Senior Credit Facilities:
New Revolving Credit Facility(1)............. -- 4,079 4,079
New Term Loan Facility....................... -- 50,000 50,000
Notes........................................... -- 100,000 100,000
Other debt...................................... 760 -- 760
-------- --------- --------
Total long-term debt.................... 150,410(2) 4,429 154,839(2)
-------- --------- --------
Stockholders' equity
Common stock.................................... 4 -- 4
Additional paid-in capital...................... 88,994 -- 88,994
Retained earnings............................... (42,100) (5,151)(3) (47,251)
-------- --------- --------
Total stockholders' equity.............. 46,898 (5,151) 41,747
Total capitalization.................... $197,308 $ (722) $196,586
======== ========= ========
</TABLE>

- ------------------------------

(1) The Company has a $50.0 million New Revolving Credit Facility that may be
drawn for working capital and general corporate purposes, including capital
expenditures of which on a pro forma basis at December 31, 1997
approximately $45.9 million would have been available. See "Management's
Discussion and Analysis of Results of Operations and Financial
Condition -- Liquidity and Capital Resources."

(3) Represents the write-off of costs associated with the Old Senior Credit
Facilities.

21
<PAGE> 26

SELECTED HISTORICAL AND PRO FORMA FINANCIAL DATA

OLD CCI AND CCI

The following table sets forth selected financial data of Old CCI for the
years ended November 30, 1993, 1994, 1995 1996 and the three months ended
December 31, 1996 and the Company for the ten months ended September 30, 1997
and the three months ended December 31, 1997 as well as the unaudited pro forma
financial data for the periods ended and as of the dates indicated as further
described in the Unaudited Pro Forma Financial Information. The balance sheet
data as of November 30, 1996 and September 30, 1997 and the statement of
operations data as of November 30, 1995 and 1996, and September 30, 1997 set
forth below are derived from the audited consolidated financial statements of
Old CCI and the Company included elsewhere herein. The statement of operations
data as of December 31, 1996 and for the period then ended and the statement of
operations data and the balance sheet data as of December 31, 1997 and for the
period then ended set forth below are derived from the interim unaudited
financial statements of Old CCI and the Company included elsewhere herein. The
selected financial data for the years ended November 30, 1993 and 1994 and the
balance sheet data as of November 30, 1995 and December 31, 1996 are derived
from unaudited financial statements of Old CCI. The unaudited consolidated
financial statements include all adjustments, consisting of normal recurring
accruals, which the Company considers necessary for a fair presentation of the
consolidated financial position and the consolidated results of operations for
these periods. Operating results for the three months ended December 31, 1997
are not necessarily indicative of the results that may be expected for the
entire year ending September 30, 1998. The selected financial data below should
be read in conjunction with "Management's Discussion and Analysis of Results of
Operations and Financial Condition," the unaudited interim consolidated
financial statements and the respective notes thereto, the audited consolidated
financial statements of the Company and Old CCI and the respective notes thereto
and the Unaudited Pro Forma Financial Information, each included elsewhere
herein.
<TABLE>
<CAPTION>
OLD CCI CCI OLD CCI CCI
----------------------------------------- ------------- ------------ ------------
TEN MONTHS THREE MONTHS THREE MONTHS
YEAR ENDED NOVEMBER 30, ENDED ENDED ENDED
----------------------------------------- SEPTEMBER 30, DECEMBER 31, DECEMBER 31,
1993 1994 1995 1996 1997 1996 1997
---- ---- ---- ---- ------------- ------------ ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................... $21,818 $27,508 $29,245 $36,734 $ 140,316 $ 9,453 $ 51,915
Cost of revenues.................. 10,114 15,356 16,733 21,857 84,464 4,079 31,615
------- ------- ------- ------- ----------- -------- --------
Gross profit...................... 11,704 12,152 12,512 14,877 55,852 5,374 20,300
Sales and marketing............... 1,185 1,773 2,061 2,038 28,161 626 11,809
Product development............... 3,559 6,768 7,485 8,347 11,890 1,944 4,231
General and administrative........ 2,702 3,311 2,675 2,992 19,929 1,000 10,323
Write off of purchased in-process
research and development........ -- -- -- -- 23,100 -- --
------- ------- ------- ------- ----------- -------- --------
Total operating expenses.......... 7,446 11,852 12,221 13,377 83,080 3,570 26,363
Operating income (loss)........... 4,258 300 291 1,500 (27,228) 1,804 (6,063)
Interest expense.................. -- -- -- -- 8,403 -- 3,547
Other income (expense), net....... -- -- 414 4,231(1) 443 967 (78)
------- ------- ------- ------- ----------- -------- --------
Income (loss) before income
taxes........................... 4,258 300 705 5,731 (35,188) 2,771 (9,688)
Income tax benefit................ -- -- -- -- 1,001 -- 2,898
------- ------- ------- ------- ----------- -------- --------
Net income (loss)................. $ 4,258 $ 300 $ 705 $ 5,731 $ (34,187) $ 2,771 $ (6,790)
======= ======= ======= ======= =========== ======== ========
UNAUDITED PRO FORMA INFORMATION:(2)
Historical income (loss) before
provision for income taxes...... $ 4,258 $ 300 $ 705 $ 5,731 $ (35,188) $ 2,771 N/A
Pro forma income tax (provision)
benefit......................... (1,582) (73) (157) (1,931) 2,392 (934) N/A
------- ------- ------- ------- ----------- --------
Pro forma net income (loss)....... $ 2,676 $ 227 $ 548 $ 3,800 $ (32,796) $ 1,837 N/A
======= ======= ======= ======= =========== ========
BALANCE SHEET DATA (AT END OF PERIOD):
Cash and cash equivalents......... $ 2,730 $ 2,716 $ 1,415 $ 4,004 $ 1,633 $ 307 $ 1,514
Working capital (deficit)......... 5,447 (1,271) (2,231) (3,490) 603 (7,991) 9,278
Total assets...................... 10,300 13,807 16,115 18,763 307,940 19,278 302,400
Total debt, including current
maturities...................... -- 4,389(3) 5,089(3) 5,089(3) 144,967(4) 5,589(3) 150,410(4)
Stockholders' equity.............. 8,701 5,124 5,273 5,227 53,699 4,332 46,898
OTHER DATA:
EBITDA(5)......................... $ 5,992 $ 3,741 $ 6,113 $ 8,774(1) $ 24,822(6) $ 4,340 $ 6,050
EBITDA margin(7).................. 27.5% 13.6% 20.9% 23.9% 17.7% 45.9% 11.7%
Capital expenditures(8)........... $ 2,761 $ 6,219 $ 6,527 $ 7,141 $ 15,980 $ 5,102 $ 4,780
Ratio of earnings to fixed charges
(deficit)(9).................... 15.2x 2.0x 3.1x 17.4x $ (35,188) 26.9x $ (9,688)

<CAPTION>
CCI PRO FORMA CCI PRO FORMA
------------- -------------
TWELVE MONTHS THREE MONTHS
ENDED ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1997
------------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.......................... $213,513 $ 51,915
Cost of revenues.................. 131,301 31,615
-------- --------
Gross profit...................... 82,212 20,300
Sales and marketing............... 47,383 11,809
Product development............... 17,307 4,231
General and administrative........ 30,783 10,323
Write off of purchased in-process
research and development........ 23,100 --
-------- --------
Total operating expenses.......... 118,573 26,363
Operating income (loss)........... (36,361) (6,063)
Interest expense.................. 14,163 3,701
Other income (expense), net....... 1,485 (78)
-------- --------
Income (loss) before income
taxes........................... (49,039) (9,842)
Income tax benefit................ 6,263 2,959
-------- --------
Net income (loss)................. $(42,776) $ (6,883)
======== ========
UNAUDITED PRO FORMA INFORMATION:(2)
Historical income (loss) before
provision for income taxes...... N/A N/A
Pro forma income tax (provision)
benefit......................... N/A N/A

Pro forma net income (loss)....... N/A N/A

BALANCE SHEET DATA (AT END OF PERIO
Cash and cash equivalents......... $ 2,483 $ 1,514
Working capital (deficit)......... 7,703 9,278
Total assets...................... 308,354 301,678
Total debt, including current
maturities...................... 150,817(4) 154,839(4)
Stockholders' equity.............. 48,263 41,747
OTHER DATA:
EBITDA(5)......................... $ 33,335 $ 6,050
EBITDA margin(7).................. 15.6% 11.7%
Capital expenditures(8)........... $ 20,653 $ 4,780
Ratio of earnings to fixed charges
(deficit)(9).................... $(49,039) $ (9,842)
</TABLE>

- ---------------

(1) Included in other income, net, and excluded from EBITDA are net gains of
$3.4 million related to settlement of two breach of contract lawsuits
recognized by Old CCI.
(2) Concurrent with the Triad Acquisition, Old CCI terminated its S Corporation
status. The unaudited pro forma (provision) benefit for income taxes
computes the tax as if Old CCI and CCI had been subject to corporate income
tax for the entire period.
(3) Consists of advances from stockholders repaid during fiscal 1997.
(4) Total debt does not include obligations of the Company resulting from the
sale of lease receivables. See Notes 1 and 7 to the audited consolidated
financial statements of the Company included elsewhere herein.
(5) EBITDA is defined as net income (loss) before interest, income taxes,
depreciation, amortization, extraordinary items and non-cash charges or
credits. The Company has included information concerning EBITDA because it
believes that EBITDA is commonly used by certain investors and analysts as
one measure to analyze and compare companies on the basis of operating
performance and to determine a company's ability to service and incur debt.
EBITDA should not be considered as an alternative to, or more meaningful
than, net income, cash flows from operating activities or other consolidated
income or cash flow statement data prepared in accordance with generally
accepted accounting principles or as a measure of profitability or
liquidity. EBITDA may not be comparable to similarly titled measures
reported by other companies.
(6) Included in operating expenses and excluded from EBITDA is $23.1 million of
in-process research and development acquired and written off in connection
with the Triad Acquisition.
(7) EBITDA margin is defined as EBITDA divided by revenue expressed as a
percentage.
(8) Includes investments in property, plant and equipment, expenditures for
service parts and investments in software and databases.
(9) For purposes of calculating the ratio of earnings to fixed charges, earnings
represent income before the provision for income taxes plus fixed charges.
Fixed charges consist of interest expense, amortization of financing costs
and the portion of rental expense on operating leases which the Company
estimates to be representative of the interest factor attributable to rental
expense. Where earnings were inadequate to cover fixed charges, the
deficiency is shown.

22
<PAGE> 27

SELECTED HISTORICAL FINANCIAL DATA

TRIAD

The following table sets forth selected financial data of Triad for the
years ended September 30, 1993, 1994, 1995 and 1996, and the five months ended
February 27, 1997. The statement of operations and balance sheet data set forth
below are derived from the audited consolidated financial statements of Triad
included elsewhere herein. The selected financial data below should be read in
conjunction with "Management's Discussion and Analysis of Results of Operations
and Financial Condition" and the audited consolidated financial statements of
Triad and the notes thereto included elsewhere herein.

<TABLE>
<CAPTION>
FIVE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED
-------------------------------------------- FEBRUARY 27,
1993 1994 1995 1996 1997
-------- -------- -------- -------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS:
Revenues........................................ $152,818 $167,278 $175,077 $175,676 $ 66,432
Cost of revenues................................ 77,293 84,766 88,509 93,808 38,316
-------- -------- -------- -------- --------
Gross profit.................................... 75,525 82,512 86,568 81,868 28,116
Marketing....................................... 40,149 44,030 46,929 48,688 18,779
Product development............................. 8,118 8,022 8,136 8,414 4,119
General and administrative...................... 11,436 11,099 10,971 10,233 4,792
Restructuring charge............................ -- -- -- 9,000 --
-------- -------- -------- -------- --------
Operating expenses.............................. 59,703 63,151 66,036 76,335 27,690
-------- -------- -------- -------- --------
Operating income................................ 15,822 19,361 20,532 5,533 426
Interest and other expense...................... 7,676 7,459 6,941 5,944 2,405
Other income.................................... -- -- -- 2,926 94
-------- -------- -------- -------- --------
Income (loss) before taxes and extraordinary
item.......................................... 8,146 11,902 13,591 2,515 (1,885)
Income tax (provision) benefit.................. (3,081) (4,523) (5,165) (956) 290
-------- -------- -------- -------- --------
Income (loss) before extraordinary item......... 5,065 7,379 8,426 1,559 (1,595)
Extraordinary item.............................. -- (143) (396) (377) --
-------- -------- -------- -------- --------
Net income (loss)............................... $ 5,065 $ 7,236 $ 8,030 $ 1,182 $ (1,595)
======== ======== ======== ======== ========
BALANCE SHEET DATA (AT END OF PERIOD):

Working capital (deficit)....................... $ 2,298 $ 84 $ 1,431 $(17,141) $(31,726)
Total assets.................................... 131,379 136,363 132,709 139,753 149,844
Total debt, including current maturities(1)..... 72,352 63,406 55,609 55,913 66,202
Stockholders' equity............................ 3,114 12,141 14,221 16,787 22,688
OTHER DATA:
EBITDA(2)....................................... $ 24,245 $ 27,448 $ 29,263 $ 26,592(3) $ 4,738
EBITDA margin(4)................................ 15.9% 16.4% 16.4% 15.1% 7.1%
Capital expenditures(5)......................... 3,029 3,416 $ 11,749 $ 12,424 $ 4,673
Ratio of earnings to fixed charges(6)........... 1.9x 2.4x 2.5x 1.3x 0.3x
</TABLE>

- ---------------

(1) Total debt does not include obligations of Triad resulting from the sale of
lease receivables.

(2) EBITDA is defined as net income (loss) before interest, income taxes,
depreciation, amortization, extraordinary items and non-cash charges or
credits. The Company has included information concerning EBITDA because it
believes that EBITDA is commonly used by certain investors and analysts as
one measure to analyze and compare companies on the basis of operating
performance and to determine a company's ability to service and incur debt.
EBITDA should not be considered as an alternative to, or more meaningful
than, net income, cash flows from operating activities or other consolidated
income or cash flow statement data prepared in accordance with generally
accepted accounting principles or as a measure of profitability or
liquidity. EBITDA may not be comparable to similarly titled measures
reported by other companies.

(3) Included in operating expenses and excluded from EBITDA is a restructuring
charge of $9.0 million recognized in the historical financial statements of
Triad related to the write-off of capitalized software development costs,
provisions for product returns and costs associated with reductions in
aftermarket sales and support personnel.

(4) EBITDA margin is defined as EBITDA divided by revenue expressed as a
percentage.

(5) Includes investments in property, plant and equipment, expenditures for
service parts and investments in software and databases.

(6) For purposes of calculating the ratio of earnings to fixed charges, earnings
represent income before the provision for income taxes plus fixed charges.
Fixed charges consist of interest expense, amortization of financing costs
and the portion of rental expense on operating leases which the Company
estimates to be representative of the interest factor attributable to rental
expense. Where earnings were inadequate to cover fixed charges, the
deficiency is shown.

23
<PAGE> 28

UNAUDITED PRO FORMA FINANCIAL INFORMATION

The following unaudited pro forma financial information of the Company is
based on the audited and unaudited financial statements of the Company, Old CCI
and Triad, included elsewhere herein. The unaudited pro forma adjustments are
based upon available information and certain assumptions that the Company
believes are reasonable. The Unaudited Pro Forma Financial Information and
accompanying notes should be read in conjunction with the historical financial
statements of the Company, Old CCI, Triad and the respective notes thereto and
"Management's Discussion and Analysis of Results of Operations and Financial
Condition" appearing elsewhere herein.

The Unaudited Pro Forma Balance Sheet has been prepared to give effect to
the Transaction as though it had occurred on the balance sheet date. The
Unaudited Pro Forma Statement of Operations for the twelve months ended
September 30, 1997 has been prepared to give effect to both, the Transaction and
the Triad Acquisition as though they had occurred at the beginning of the
period. The Unaudited Pro Forma Statement of Operations for the twelve months
ended September 30, 1997 combines the historical consolidated statement of
operations of CCI for the ten months ended September 30, 1997, the historical
consolidated statement of operations of Triad for the five months prior to its
acquisition on February 27, 1997 and the unaudited historical consolidated
statement of operations of Old CCI for the two months ended November 30, 1996.
The Triad Acquisition is accounted for under the purchase method of accounting.
The aggregate purchase price for the Triad Acquisition has been allocated to the
tangible and identifiable intangible assets of the acquired business based upon
an independent appraisal of their fair value. The Unaudited Pro Forma Statement
of Operations for the three months ended December 31, 1997 has been prepared to
give effect to the Transaction as if it had occurred at the beginning of the
period.

The Unaudited Pro Forma Financial Information does not purport to be
indicative of the results that would have been obtained had such transactions
been completed as of the assumed dates and for the periods presented or that may
be obtained in the future. Among the reasons for such possible differences are
factors resulting from the fact that prior to the Triad Acquisition Old CCI and
Triad were not operating under the same management, they did not have the same
or overlapping sales forces and products, nor did they have the same cost
structures. As a result, their revenues, expenses and costs of debt and equity
capital would have been different if such businesses had been operating as one
entity. Such Unaudited Pro Forma Financial Information is included herein for
informational purposes, and while management believes that it may be helpful in
understanding the combined operations of the Company for the periods indicated,
undue reliance should not be placed thereon.

24
<PAGE> 29

COOPERATIVE COMPUTING, INC.

UNAUDITED PRO FORMA BALANCE SHEET

AS OF DECEMBER 31, 1997

<TABLE>
<CAPTION>
PRO FORMA
CCI ADJUSTMENTS CCI PRO FORMA
-------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
ASSETS:

Current assets:
Cash and cash equivalents.......................... $ 1,514 $ -- $ 1,514
Trade accounts receivable, net..................... 24,594 -- 24,594
Inventories........................................ 5,925 -- 5,925
Investment in leases............................... 2,209 -- 2,209
Deferred income taxes.............................. 7,871 -- 7,871
Prepaid expenses and other current
assets.......................................... 7,656 -- 7,656
-------- ------- --------
Total current assets....................... 49,769 -- 49,769

Service parts...................................... 3,721 -- 3,721
Property and equipment............................. 10,110 -- 10,110
Long term investment in leases..................... 13,844 -- 13,844
Capitalized computer software costs................ 29,841 -- 29,841
Databases.......................................... 20,039 -- 20,039
Deferred financing costs........................... 5,722 (722)(1) 5,000
Other intangibles.................................. 32,877 -- 32,877
Other assets....................................... 11,420 -- 11,420
Goodwill........................................... 125,057 -- 125,057
-------- ------- --------
Total assets............................... $302,400 $ (722) $301,678
======== ======= ========

LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Accounts payable................................... $ 12,040 $ -- $ 12,040
Income taxes payable............................... 1,803 -- 1,803
Payroll related accruals........................... 11,680 -- 11,680
Deferred revenue................................... 3,648 -- 3,648
Current portion of long-term debt.................. 231 -- 231
Accrued expenses and other current liabilities..... 11,089 -- 11,089
-------- ------- --------
Total current liabilities.................. 40,491 -- 40,491

Long-term debt..................................... 150,179 4,429(2) 154,608
Deferred income taxes.............................. 50,342 -- 50,342
Other liabilities.................................. 14,490 -- 14,490
-------- ------- --------
Total liabilities.......................... 255,502 4,429 259,931
Stockholders' equity:
Common stock....................................... 4 -- 4
Additional paid-in capital......................... 88,994 -- 88,994
Retained earnings (deficit)........................ (42,100) (5,151)(1) (47,251)
-------- ------- --------
Total stockholders' equity................. 46,898 (5,151) 41,747
-------- ------- --------
Total liabilities and stockholders'
equity................................... $302,400 $ (722) $301,678
======== ======= ========
</TABLE>

See Notes to Unaudited Pro Forma Balance Sheet.
25
<PAGE> 30

COOPERATIVE COMPUTING, INC.

NOTES TO UNAUDITED PRO FORMA BALANCE SHEET

(DOLLARS IN THOUSANDS)

The accompanying Unaudited Pro Forma Balance Sheet at December 31, 1997 has
been prepared as if the Transaction had occurred on that date and reflects the
following adjustments:

(1) Represents the elimination of existing deferred financing costs and the
addition of deferred financing costs associated with the Transaction. The
net effect on deferred financing costs is presented in the Unaudited Pro
Forma Balance Sheet as follows:

<TABLE>
<S> <C>
Elimination of existing deferred financing costs............ $ (5,151)
Addition of deferred financing costs associated with the
Transaction(a)............................................ 4,429
---------
Net effect on deferred financing costs...................... $ (722)
=========
</TABLE>

--------------------

(a) Net of deferred financing costs of $571 which had been capitalized by
the Company as of December 31, 1997.

(2) Represents the effect on the Company's total debt of the Transaction, as
follows:

<TABLE>
<S> <C>
Issuance of Old Notes....................................... $ 100,000
Restated Senior Credit Facilities........................... 54,079
Repayment of Old Senior Credit Facilities................... (149,650)
---------
Net effect on debt................................. $ 4,429
=========
</TABLE>

This net effect on debt is presented in the Unaudited Pro Forma Balance
Sheet as follows:

<TABLE>
<S> <C>
Increase in long-term debt.................................. $ 4,429
=========
</TABLE>

26
<PAGE> 31

COOPERATIVE COMPUTING, INC.

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE YEAR ENDED SEPTEMBER 30, 1997

<TABLE>
<CAPTION>
TRIAD CCI
CCI FIVE TWO
TEN MONTHS MONTHS MONTHS CCI PRO FORMA
ENDED ENDED ENDED TWELVE MONTHS
SEPTEMBER 30, FEBRUARY 27, NOVEMBER 30, PRO FORMA ENDED
1997 1997 1996 ADJUSTMENTS SEPTEMBER 30, 1997
------------- ------------ ------------ ----------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Revenues................. $140,316 $66,432 $6,765 $ -- $213,513
Cost of revenues......... 84,464 38,316 2,512 6,009(1) 131,301
-------- ------- ------ -------- --------
Gross profit............. 55,852 28,116 4,253 (6,009) 82,212
Operating expenses....... 83,080 27,690 2,489 5,314(1) 118,573
-------- ------- ------ -------- --------
Operating income (loss).. (27,228) 426 1,764 (11,323) (36,361)
Interest and other
expenses
(income)............... 7,960 2,311 (948) 3,355(2) 12,678
-------- ------- ------ -------- --------
Income (loss) before
income taxes........... (35,188) (1,885) 2,712 (14,678) (49,039)
Income tax benefit....... 1,001 290 -- 4,972(3) 6,263
-------- ------- ------ -------- --------
Net income (loss)........ $(34,187) $(1,595) $2,712 $ (9,706) $(42,776)
======== ======= ====== ======== ========
</TABLE>

See Notes to Unaudited Pro Forma Statements of Operations.

27
<PAGE> 32

COOPERATIVE COMPUTING, INC.

UNAUDITED PRO FORMA STATEMENT OF OPERATIONS

FOR THE THREE MONTHS ENDED DECEMBER 31, 1997

<TABLE>
<CAPTION>
CCI PRO
CCI FORMA
THREE MONTHS THREE MONTHS
ENDED ENDED
DECEMBER 31, PRO FORMA DECEMBER 31,
1997 ADJUSTMENTS 1997
------------ ----------- ------------
(DOLLARS IN THOUSANDS)

<S> <C> <C> <C>
Revenues............................................... $51,915 $ -- $51,915
Cost of revenues....................................... 31,615 -- 31,615
------- ----- -------
Gross profit........................................... 20,300 -- 20,300
Operating expenses..................................... 26,363 -- 26,363
------- ----- -------
Operating loss......................................... (6,063) -- (6,063)
Interest and other expenses (income)................... 3,625 154(2) 3,779
------- ----- -------
Loss before income taxes............................... (9,688) (154) (9,842)
Income tax benefit..................................... 2,898 61(3) 2,959
------- ----- -------
Net loss............................................... $(6,790) $ (93) $(6,883)
======= ===== =======
</TABLE>

See Notes to Unaudited Pro Forma Statements of Operations.

28
<PAGE> 33

COOPERATIVE COMPUTING, INC.

NOTES TO UNAUDITED PRO FORMA
STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS)

The accompanying Unaudited Pro Forma Statements of Operations for the year
ended September 30, 1997 and for the three months ended December 31, 1997
reflect the pro forma adjustments described below as if the Transaction and the
Triad Acquisition occurred at the beginning of each of the periods presented.
The statements reflect the following adjustments:

(1) Represents certain pro forma adjustments to amortization and operating
expenses in connection with the Triad Acquisition. The purchase price of the
Triad Acquisition has been allocated based on an independent appraisal. The
amortization expense of intangible assets acquired, net of the elimination
of amortization expense on historical intangible assets, is as follows:

<TABLE>
<S> <C>
Amortization expense of intangible assets
acquired......................................... $32,751
Elimination of historical amortization expense.... (21,428)
-------
Total adjustment to depreciation and
amortization........................... $11,323
=======
</TABLE>

The net effect on cost of revenues and operating expenses is presented on
the Unaudited Pro Forma Statements of Operations as follows:

<TABLE>
<S> <C>
Increase to cost of revenues...................... $ 6,009
Increase to operating expenses.................... 5,314
-------
Total increase to cost of revenues and
operating expenses..................... $11,323
=======
</TABLE>

The intangible assets acquired in connection with the Triad Acquisition are
noted below:

<TABLE>
<CAPTION>
AMORTIZATION
PERIOD
(YEARS)
------------
<S> <C> <C>
Capitalized software.............................. $ 38,700 3
Databases......................................... 15,900 3
Goodwill.......................................... 132,093 15
Trademarks and tradenames......................... 22,100 15
Assembled work force.............................. 11,700 5
Favorable lease................................... 3,864 2
--------
Total intangible assets................. $224,357
========
</TABLE>

(2) Represents the (i) interest expense on the Notes at 9.0% per annum, (ii)
interest expense on the Restated Senior Credit Facilities at 8.5% per annum,
(iii) amortization expense of deferred financing fees related to the
Transaction and (iv) interest expense eliminated from the

29
<PAGE> 34
COOPERATIVE COMPUTING, INC.

NOTES TO UNAUDITED PRO FORMA
STATEMENTS OF OPERATIONS -- (CONTINUED)
(DOLLARS IN THOUSANDS)

repayment of the Old Senior Credit Facilities with proceeds from the
Transaction and elimination of the related amortization of deferred
financing costs, as follows:

<TABLE>
<CAPTION>
TWELVE THREE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1997
------------- ------------
<S> <C> <C>
Interest expense on the Notes and Restated
Senior Credit Facilities................... $ 13,250 $ 3,313
Amortization expense of deferred financing
fees related to the Transaction............ 616 154
Elimination of historical interest expense on
the Old Senior Credit Facilities and
related amortization of deferred financing
costs...................................... (10,511) (3,313)
-------- -------
Total adjustment to interest
expense.......................... $ 3,355 $ 154
======== =======
</TABLE>

(3) Represents the (i) elimination of a nonrecurring charge for termination of
Subchapter S status, (ii) provision for taxes on CCI income for the periods
in which CCI was a Subchapter S corporation as if CCI had been subject to
corporate income tax for these periods and (iii) tax effect of pro forma
adjustments (at an assumed effective tax rate of 39.5%), excluding the
amortization of goodwill which is not deductible for tax purposes, as
follows:

<TABLE>
<CAPTION>
TWELVE THREE
MONTHS ENDED MONTHS ENDED
SEPTEMBER 30, DECEMBER 31,
1997 1997
------------- ------------
<S> <C> <C>
Elimination of the nonrecurring charge for
termination of Subchapter S status......... $ 2,382 $--
Provision for taxes on Subchapter S status
periods.................................... (2,020) --
Tax effect of pro forma adjustments.......... 4,610 61
------- ---
Total adjustment to income tax
benefit.......................... $ 4,972 $61
======= ===
</TABLE>

30
<PAGE> 35

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
RESULTS OF OPERATIONS AND FINANCIAL CONDITION

The following discussion of the results of operations and financial
condition of the Company, Old CCI and Triad should be read in conjunction with
the audited historical consolidated financial statements and notes thereto of
each, which are included elsewhere herein.

On February 27, 1997 the Company consummated the Triad Acquisition. The
Triad Acquisition has been accounted for as a purchase and, accordingly, the
results of operations of Triad are included from the date of the Triad
Acquisition. In accounting for the Triad Acquisition, certain intangible assets
were assigned values greater than historic book values, and the amortization of
these assets impact the financial statements since the date of the Triad
Acquisition. See Note 1 to the Unaudited Pro Forma Statements of Operations. As
a result of the significant impact on operations of the Triad Acquisition and
the Company changing its fiscal year end from November 30 to September 30 in
1997, resulting in a ten month fiscal year for 1997, the results of operations
for fiscal 1997 and the three months ended December 31, 1997 are not directly
comparable to corresponding prior periods.

GENERAL

The Company is the largest designer, provider and servicer of management
information systems and solutions for the automotive parts aftermarket industry
and is a leading designer, provider and servicer of management information
systems and solutions for the hardlines and lumber industry. The automotive
parts aftermarket industry consists of the production, sale and installation of
both new and remanufactured parts used in the maintenance and repair of
automobiles and light trucks. The hardlines and lumber industry consists of the
sale of products for residential and commercial building construction,
maintenance and repair and agribusiness. The Company's system offerings are
enhanced by extensive information services featuring highly specialized database
products and customer support and maintenance services. These products and
services are designed to significantly improve the profitability of the
Company's customers and, in turn, provide the Company with a stable customer
base as well as a receptive market for new products. The revenues associated
with customer support and information services are of a recurring nature and
represented approximately 55% of total revenues in fiscal 1997 on a pro forma
basis. The Company's pro forma revenues and EBITDA for the twelve months ended
September 30, 1997 were $213.5 million and $33.3 million, respectively.

See Notes 1 and 7 to the Notes to the audited consolidated financial
statements of the Company included elsewhere herein for a description of certain
accounting policies of the Company, including its investments in, and sales of,
leases and the capitalization of certain computer software and database costs.

HISTORICAL RESULTS OF OPERATIONS -- CCI AND OLD CCI

Three Months Ended December 31, 1997 Compared to Three Months Ended December
31, 1996

Revenues for the three months ended December 31, 1997 were $51.9 million,
$42.5 million greater than the three month period ended December 31, 1996. The
majority of this increase was due to the effects of the Triad Acquisition, which
had total revenues of $41.7 million for the three month period ended December
31, 1996. The Company experienced a small decline in automotive systems revenues
due to factors arising from the Company's change in fiscal years. The Company
closed a substantial amount of automotive warehouse systems sales in October and
November 1996 during a year-end push in what historically was the Company's
fiscal fourth quarter which, during 1996, also followed the completion of
negotiations on the Triad Acquisition. Due to the change in fiscal years, these
fourth quarter systems sales are now in the first quarter of 1997 and the
corresponding year-end push took place in August and September 1997. The decline
in systems

31
<PAGE> 36

revenue was offset by increases in customer support services and information
services revenue, both due to growth in the automotive and hardlines installed
base of customers.

Cost of revenues increased $27.5 million from $4.1 million in the three
month period ended December 31, 1996 to $31.6 million in the three month period
ended December 31, 1997. The majority of this increase was due to the Triad
Acquisition. Triad had cost of revenues of $22.8 million for the period ended
December 31, 1996. Additionally, cost of revenues at December 31, 1997 includes
$2.6 million related to the amortization of certain intangible assets acquired
in the Triad Acquisition and revalued through purchase accounting adjustments.
See Note 1 to Unaudited Pro Forma Statements of Operations. In addition to
increases related to the Triad Acquisition, the Company experienced an increase
in cost of revenues as a percentage of revenue for automotive systems due to
product mix. During the three month period ended December 31, 1996, the Company
sold an unusually high amount of automotive warehouse systems which carry a
higher margin than other system products. Customer support services cost of
revenues increased due to increases in the customer base, increased headcount in
the hardlines customer support area, and the under-utilization of implementation
and installation resources due to the low systems sales during the three month
period. Cost of revenues from information services increased due to the
increases in the customer base and increased amortization of information service
products, including the amortization of the RepairSource license which was not
present in the three month period ended December 31, 1996.

Operating expenses for the three month period ended December 31, 1997 were
$26.4 million, a $22.8 million increase over the same period in 1996. The
majority of this increase was due to the Triad Acquisition. Triad had operating
expenses of $16.3 million for the period ended December 31, 1996. Purchase
accounting for the Triad Acquisition established or increased the valuation of
certain intangible assets which increased the depreciation expense in general
and administrative expenses by approximately $4.7 million. See Note 1 to the
Unaudited Pro Forma Statements of Operations.

The Company's operating loss for the three month period ended December 31,
1997 was $6.1 million, compared to operating income of $1.8 million during the
three month period ended December 31, 1996.

Net interest and other expenses for the three month period ended December
31, 1997 was $3.6 million, an increase of $4.6 million from net interest and
other income of $1.0 million over the same period in 1996. This increase was the
result of interest expense on the debt incurred as a result of the Triad
Acquisition.

The Company recorded an income tax benefit for the quarter ended December
31, 1997 at an effective rate of 30% for a benefit of $2.9 million. The
effective rate used to record the income tax benefit in the three month period
ended December 31, 1997 is based on the Company's anticipated results for the
year and differs from the pro forma effective rate for the ten month period
ended September 30, 1997 of 7% due primarily to the impact of the write-off of
in-process research and development associated with the Triad Acquisition.
Additionally, the Company's effective rate for the three month period ended
December 31, 1997 differs from the amount computed by applying the statutory
rate to income (loss) before taxes primarily because of permanent differences,
state taxes and research and development tax credits. For the three month period
ended December 31, 1996, the Company elected to be treated as an S Corporation
and therefore had no income tax liability.

As a result of the above factors, the Company experienced a net loss of
$6.8 million in the three month period ended December 31, 1997 compared to net
income of $2.8 million for the three month period ended December 31, 1996.

32
<PAGE> 37

Ten Months Ended September 30, 1997 Compared to Year Ended November 30, 1996

Revenues for the ten months ended September 30, 1997 were $140.3 million
compared to $36.7 million for the year ended November 30, 1996, an increase of
$103.6 million or 282%. The Triad Acquisition accounted for essentially all of
the increase. Excluding the Triad Acquisition, CCI's revenues decreased $0.7
million to $36.0 million in the ten months ended September 30, 1997. The Company
minimized the effect of the shorter period through an increase in system sales
to national accounts and in information services revenue.

Cost of revenues for the ten months ended September 30, 1997 were $84.5
million (or 60% of revenues) compared to $21.9 million (or 60% of revenues) for
the year ended November 30, 1996. The effects of the Triad Acquisition accounted
for $66.7 million, essentially all of the increase. Excluding the effects of the
Triad Acquisition, cost of revenues decreased from $21.9 million (or 60% of
revenues) for the year ended November 30, 1996 to $17.8 million (or 50% of
revenues) for the ten months ended September 30, 1997. The decrease in the
absolute dollar amount is due primarily to the shorter comparison period. The
decrease in the cost of revenues as a percentage of revenue is due to a
combination of an increase in sales of products serving warehouse distributors
which carry a lower percentage cost of revenues and the additional information
services revenues which carry low incremental costs.

Operating expenses (excluding the effects of the non-recurring charge) for
the ten months ended September 30, 1997 were $60.0 million compared to $13.4
million for the year ended November 30, 1996, an increase of $46.6 million or
348% due primarily to the effects of the Triad Acquisition. Operating expenses
excluding the Triad Acquisition decreased $0.5 million to $12.9 million
primarily due to the shorter period.

The $23.1 million charge for purchased in-process research and development
was a charge to expense resulting from the value assigned to certain software
development activities in process at Triad which did not qualify for
capitalization in the purchase price allocation.

Interest expense of $8.4 million for the ten months ended September 30,
1997 is due to interest expenses related to debt incurred in order to effect the
Triad Acquisition. Interest expense for the year ended November 30, 1996 was
zero.

Other income for the ten months ended September 30, 1997 was $0.4 million
compared to $4.2 million for the year ended November 30, 1996, a decrease of
$3.8 million due primarily to the favorable settlement of two breach of contract
lawsuits in 1996.

The pro forma income tax (provision) benefit reflects the estimated
corporate income taxes as if CCI and Old CCI had not elected S Corporation
status. See Note 13 to the audited consolidated financial statements of the
Company included elsewhere herein.

CCI's net loss was $34.2 million for the ten months ended September 30,
1997, compared to net income of $5.7 million for the year ended November 30,
1996. Excluding the Triad Acquisition, net income was $2.2 million, a decrease
of $3.5 million from the previous period, primarily due to a provision for
income taxes resulting from the termination of the Company's S Corporation
status concurrent with the Triad Acquisition.

Year Ended November 30, 1996 Compared to Year Ended November 30, 1995

Revenues for the year ended November 30, 1996 were $36.7 million compared
to $29.2 million for the year ended November 30, 1995, an increase of $7.5
million or 26%. Approximately 15% of the increase was due to system sales to new
customers and the sale of system upgrades to the Company's installed base. The
remaining 11% of the increase primarily resulted from customer support and
information services provided to the incremental automotive systems customers.

Cost of revenues for the year ended November 30, 1996 was $21.9 million (or
60% of revenues) compared to $16.7 million (or 57% of revenues) for the year
ended November 30, 1995.
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The increase in cost of revenues as a percentage of revenues is attributable to
an increase in the amortization of capitalized software development costs
related to Old CCI's information service products.

Operating expenses for the year ended November 30, 1996 were $13.4 million
(or 36% of revenues) compared to $12.2 million (or 42% of revenues) for the year
ended November 30, 1995, an increase of $1.2 million or 10%. Operating expenses
as a percentage of revenues improved 5.4% as Old CCI managed to maintain sales
and marketing and general and administrative expenses at a relatively constant
level, while revenues increased.

Other income for the year ended November 30, 1996 increased to $4.2 million
from $0.4 million for the year ended November 30, 1995 or $3.8 million due
primarily to the favorable settlement of two breach of contract lawsuits in
1996.

Based on the items discussed above, net income for the year ended 1996
increased to $5.7 million from $0.7 million for the year ended 1995.

HISTORICAL RESULTS OF OPERATIONS -- TRIAD

References herein to years refer to the fiscal years ended September 30,
1996 and 1995 of Triad.

Year Ended September 30, 1996 Compared to Year Ended September 30, 1995

Revenues for fiscal 1996 of $175.7 million increased slightly over 1995
revenues of $175.1 million. Gross profit of $81.9 million declined 5% or $4.7
million from 1995.

A restructuring charge of $9.0 million, related to an automotive product
issue and realignment of automotive aftermarket operations, was included in the
1996 operating profit of $5.5 million compared to operating income of $20.5
million in 1995.

Net income was $1.2 million in 1996 compared with $8.0 million in 1995. Net
income in 1996 reflected the $9.0 million restructuring charge, proceeds from
the sale of Triad's investment in AllData Corporation of $1.8 million, the sale
of four parcels of land in Triad Park for $1.1 million and a net charge of $0.4
million after taxes related to the refinancing of debt. Net income in 1995 also
reflected a net charge of $0.4 million after taxes, also related to the early
retirement of debt.

Automotive Aftermarket Revenues

Revenues are primarily derived from the sale and financing of systems and
information and support services related to automotive aftermarket systems.
Automotive aftermarket revenues of $101.2 million were 10% below 1995 revenues
of $112.2 million. Systems sales in 1996 decreased 22% to $31.6 million from
$40.7 million in 1995. In 1995, Triad's PSO system sales were affected by the
implementation of a controlled rollout of the second phase of the Triad Prism
product due to certain software-related problems. In the third quarter of 1996,
recognizing slower than anticipated aftermarket acceptance of the Triad Prism
system and its product performance issues, management: (i) reduced and
repositioned the automotive product line to more closely match the configuration
of the aftermarket while decreasing the complexity and costs associated with a
broader product line; (ii) resized the automotive sales force and management
structure to reflect aftermarket changes and current sales; and (iii) initiated
a review of the research and development spending process to ensure that ongoing
spending is a profitable investment for Triad stockholders. As a result, a
restructuring charge of $9.0 million was recorded for the third quarter of 1996.
As part

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of the restructuring, there was an increased focus on the large account segment
that resulted in record systems revenue of $9.5 million, an increase of 34% from
$7.1 million in 1995.

Customer support revenues decreased by $2.5 million to $34.2 million in
1996 from $36.7 million in 1995. The 1996 decline was related to lower than
planned new automotive systems sales and a reduction of the customer base due to
continuing consolidation within the aftermarket.

Information services revenue grew 10% to $29.5 million in 1996. Customers
utilizing Triad's information products increased in 1996 and 1995. Triad Systems
Financial Corporation ("Triad Financial") revenues were $5.9 million in 1996,
down 27% or $2.1 million from 1995. The decline in 1996 was due mainly to a
lower-earning portfolio and lower discounting yields related to rising interest
rates.

Hardlines and Lumber Market Revenues

Revenues in the hardlines and lumber division increased by 24% or $13.5
million to $69.8 million from 1995 to 1996. Contributing to the overall increase
in revenues was Triad's acquisition of Computer System Dynamics, Inc. ("CSD") in
June 1996.

Systems revenues increased $7.2 million to $36.4 million for 1996. Triad
endeavored to become more closely affiliated with major cooperatives and
wholesale distributors and this activity is reflected in the revenue growth from
1995 to 1996.

Customer support revenues increased 21% to $27.3 million in 1996 and 11% to
$22.6 million in 1995. This growth is a direct result of increases in the
customer base.

Information services revenues increased to $2.3 million in 1996 compared to
$1.3 million in 1995. Triad's VISTA point-of-sale services continue to
contribute to this growth as its customer base expands.

Triad Financial revenues related to hardlines and lumber market products
were fairly consistent from 1995 to 1996.

Gross Margin

Gross margins for the automotive aftermarket division of 46% declined 5%
from 1995. The 1996 decline was due primarily to higher Triad Prism system
returns and the cost of shifting customers to lower margin products. In
addition, a change in the product mix, along with a higher percentage of fixed
costs, contributed to the decrease. Gross margins for the hardlines and lumber
division have remained relatively consistent at 49% in 1996 and 51% in 1995.

Consolidated Expenses and Other Income

Marketing expense of $48.7 million increased slightly as a percentage of
revenue over the prior year due to an increase in lease loss reserves in the
automotive aftermarket division.

Product development expenses, after capitalization of software development,
were $8.4 million in 1996 and $8.1 million in 1995. As a percentage of revenue,
product development expense remained consistent at 5% over the two years.

General, administrative and other operating expenses decreased 6.7% to
$10.2 million in 1996. The 1996 cost reflects reduced litigation expenses,
initiated by Triad to protect its intellectual property rights, along with
containment of operating costs.

The restructuring charge of $9.0 million included a $7.5 million write-off
relating to the Triad Prism system software Triad had previously capitalized,
along with $1.0 million in reserves for related product issues. Also included
was $0.5 million in costs associated with the realignment of aftermarket sales
and support personnel to address increasing aftermarket consolidation.

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Interest and other expense decreased by $1.0 million to $5.9 million in
1996. In the fourth quarter of 1995, Triad retired $3.8 million and refinanced
$11.8 million in floating rate notes at a lower interest cost, which is
reflected in the interest decrease in 1996.

Other income of $2.9 million in 1996 consisted of the sale of marketable
securities and land held for resale. Triad realized $1.8 million in income
related to the sale of its investment in AllData Corporation, an automotive
database marketer that was purchased by AutoZone in March 1996. In September
1996, Triad recognized a gain of $1.1 million in the sale of 25 acres of land
held for resale.

In July of 1996, $10.1 million of senior fixed-rate notes were retired
early. This generated an extraordinary charge of $377,000 that included a
premium of $379,000, unamortized debt costs of $229,000, less taxes of $231,000.

LIQUIDITY AND CAPITAL RESOURCES

As of December 31, 1997, the Company had $150.4 million of indebtedness
outstanding under the Old Senior Credit Facilities, an increase of $5.4 million
from September 30, 1997. Net cash used in operating activities was $0.2 million
for the three months ended December 31, 1997. For the ten months ended September
30, 1997, net cash provided by operating activities was $25.0 million. This
reduction in cash flow from operations was due to lower operating income typical
of the first fiscal quarter and an increase in inventory acquired during the
Company's consolidation of manufacturing operations, which was completed in
January 1998. For the three months ended December 31, 1997, the Company had
capital expenditures of $4.8 million.

On February 10, 1998, the Company refinanced the Old Senior Credit
Facilities through the issuance of the Old Notes and through the proceeds of the
Restated Senior Credit Facilities. In addition, on March 1, 1998, the Company
acquired certain assets of the ADP Claims Solution Group, Inc. for approximately
$9.3 million, including the assumption of certain liabilities, which was funded
through the New Revolving Credit Facility. The Notes require annual interest
payments of $9.0 million, and the Company estimates the Restated Senior Credit
Facilities will require annual interest payments of $5.3 million.

In addition to servicing its debt obligations, the Company requires
substantial liquidity for capital expenditures and working capital needs. The
Company requires working capital as it funds its customer leasing operations and
then periodically liquidates its lease portfolio through discounting
arrangements with banks and lending institutions.

Pursuant to discounting agreements with banks and lending institutions, the
Company is contingently liable for losses in the event of lessee nonpayment up
to stated recourse limits. The Company estimated its exposure under these
recourse provisions to be approximately $9.3 million and has recorded this
amount in its consolidated financial statements for the three months ended
December 31, 1997. See "Risk Factors -- Customer Leasing" and Note 7 to the
audited consolidated financial statements of the Company included elsewhere
herein.

The Notes and the Restated Senior Credit Facilities impose certain
restrictions on the Company's ability to incur additional indebtedness. These
restrictions may limit the Company's ability to respond to changes in economic
conditions or unanticipated capital investment requirements. The covenants
contained in the Notes and Restated Senior Credit Facilities also, among other
things, limit the ability of the Company to dispose of assets, repay
indebtedness or amend debt instruments, create liens on assets, enter into sale
and leaseback transactions, make investments, loans or advances and make
acquisitions.

The Company believes that the cash flow from its operations, together with
the amounts available under the New Revolving Credit Facility, will be
sufficient to fund its working capital requirements. The New Revolving Credit
Facility allows the Company to borrow up to $50.0 million,

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of which as of March 31, 1998, $21.7 million had been borrowed thereunder. The
Company's ability to service its debt obligations is subject to future economic
conditions and to financial, business and other factors, many of which are
beyond the Company's control. See "Risk Factors."

IMPACT OF YEAR 2000

The Year 2000 Issue is the result of computer programs being written using
two digits rather than four to define the applicable year. Any of the Company's
computer programs that have time-sensitive software may recognize a date using
"00" as the year 1900 rather than the year 2000. This could result in a system
failure or miscalculations causing disruptions of operations, including, among
other things, a temporary inability to process transactions, send invoices, or
engage in similar normal business activities.

Based on a recent assessment, the Company determined that it will be
required to modify or replace significant portions of its software so that its
computer systems will function properly with respect to dates in the year 2000
and thereafter. The Company presently believes that with modifications to
existing software and conversions to new software, the Year 2000 Issue will not
pose significant operational problems for its computer systems. However, if such
modifications and conversions are not made, or are not completed timely, the
Year 2000 Issue could have a material impact on the operations of the Company.

The Company has initiated formal communications with all of its significant
suppliers and large customers to determine the extent to which the Company's
interface systems are vulnerable to those third parties' failure to remediate
their own Year 2000 Issues. However, there can be no guarantee that the systems
of other companies on which the Company's systems rely will be timely converted
and would not have an adverse effect on the Company's systems. The Company has
determined it has minimal exposure to contingencies related to the Year 2000
Issue for the products it has sold.

The Company plans to utilize internal resources to reprogram or replace and
test the software for Year 2000 modifications. The Company anticipates
completing the Year 2000 project by December 31, 1998, which is prior to any
anticipated impact on its operating systems. The Company has not established a
separate budget for making its internal systems Year 2000 ready, as many of its
internal systems have been recently replaced with an enterprise-wide information
system believed to be Year 2000 ready and the Company's own products are
scheduled to be made ready as part of its ordinary update cycle in a version of
products scheduled for release prior to the year 2000.

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BUSINESS

OVERVIEW

The Company is the largest designer, provider and servicer of management
information systems and solutions for the automotive parts aftermarket industry
and is a leading designer, provider and servicer of management information
systems and solutions for the hardlines and lumber industry. The automotive
parts aftermarket industry consists of the production, sale and installation of
both new and remanufactured parts used in the maintenance and repair of
automobiles and light trucks. The hardlines and lumber industry consists of the
sale of products for residential and commercial building construction,
maintenance and repair, lawn and garden and agribusiness. The Company's system
products are designed to significantly improve the profitability of the
Company's customers and, in turn, provide the Company with a stable customer
base as well as a receptive market for new products. The system offerings are
enhanced by extensive information services featuring highly specialized database
products and by customer support and maintenance services. The revenues
associated with these services are of a recurring nature and represented
approximately 55% of total revenues in fiscal 1997 on a pro forma basis. The
Company's pro forma revenues and EBITDA for the twelve months ended September
30, 1997 were $213.5 million and $33.3 million, respectively.

Management believes that the Company's extensive databases represent the
most sophisticated and extensive industry-specific management information
systems offerings available to the automotive parts aftermarket industry. The
Company is the only provider of industry-specific management information systems
and solutions to every level of the wholesale distribution channel in the
automotive parts aftermarket, which includes manufacturers, warehouse
distributors, PSOs and service dealers. By servicing all of these levels, the
Company has acquired substantial industry knowledge to improve and support the
information products and services that are made available to its customers.
Management believes that it would be extremely difficult and costly for others
to match the quality, size, coverage and frequency of updates of the Company's
databases due to the extensive quantity of data available, the variety of
sources and the frequency with which relevant information changes.

The automotive parts aftermarket industry is estimated to have generated
approximately $196 billion in revenues for goods and services delivered to the
United States motoring public in 1996. Industry revenues are divided between the
sale of auto parts (approximately 51%) and labor (approximately 49%). Management
believes that growth in the automotive parts aftermarket industry will continue
to be driven by several favorable trends, including (i) growth in the aggregate
number of vehicles in use, (ii) an increase in the average age of vehicles in
operation and (iii) growth in the number of total miles driven per vehicle each
year. Management believes that these factors, when combined with competitive
pressures to decrease costs and increase operating efficiencies and the
historically low profit margin nature of the automotive parts aftermarket
industry, will increase demand for the Company's management information systems
and solutions.

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(ii) favorable demographic trends, such as an increase in dual income families
and (iii) continued expansion of new home construction and sales and remodeling
of existing homes.

COMPETITIVE STRENGTHS

The Company attributes its market leadership and its attractive
opportunities for continued growth and increased profitability to the following
competitive strengths:

- EXTENSIVE DATABASES. Management believes that the Company maintains
the most extensive databases in the automotive parts aftermarket industry,
which, when used with the Company's systems, are designed to increase
efficiency and accuracy in the selection, pricing and sale of parts. With
over two million different auto parts available to consumers, up to nine
manufacturers for each product line, approximately 100,000 new parts
introduced each year, and over 75,000 parts discontinued each year, the
Company's electronic catalog databases are the most cost effective and
efficient way to access both historical and current parts information. To
duplicate the parts information contained in the Company's databases, a
customer or competitor would require over 1,700 separate parts catalogs and
the ability to periodically update such information. In addition to the
Company's electronic catalogs, the Company provides parts interchange and
parts locator databases which facilitate the identification, location and
selection of automotive parts. The Company also collects product sales
information and sells this information to manufacturers, distributors and
operators in the automotive parts aftermarket and hardlines and lumber
industries. On a pro forma basis, the Company spent approximately $23
million for the year ended September 30, 1997 to develop and maintain its
extensive information products.

- MARKET LEADER IN THE GROWING HARDLINES AND LUMBER INDUSTRY. The
hardlines and lumber industry has been slower to invest in management
information systems than the automotive parts aftermarket industry. Of the
estimated 60,000 stores in this industry that are potential users of a
management information system, management estimates that approximately 40%
are not computerized. The Company has successfully developed a strong
presence in the hardlines and lumber industry and has achieved a compound
annual growth rate of revenue of approximately 13.5% between 1992 and 1997.
The Company intends to capitalize on its existing base of approximately
7,800 customer locations, including its accounts with three major hardlines
cooperatives, Hardware Wholesalers Inc., Ace Hardware and TruServ, and two
major wholesale marketing groups, PRO Group and Distribution America, to
market its products and services to the noncomputerized retail stores.
Currently, the Company commands the leading market share of sales of
management information systems and solutions in the independent hardware
and home center businesses within the hardlines and lumber industry. In
fiscal 1997,

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on a pro forma basis, the hardlines and lumber business represented
approximately 37% of the Company's total revenues.

- BREADTH OF PRODUCT OFFERINGS. Management believes that the Company
possesses the broadest selection of management information systems and
solutions offered in the industries it serves. In the automotive parts
aftermarket industry, the Company currently markets three warehouse
distributor systems, three PSO systems and six service dealer systems, each
targeting a specific level of the distribution channel. The Company's
service dealer solutions, which are integrated with the Company's parts and
repair databases and can be connected to the Company's extensive network of
warehouse distributor and PSO systems, position the Company to capture a
significant share of the emerging service dealer market. In the hardlines
and lumber industry, the Company offers specialized point-of-sale systems
through four product lines, which are marketed to (i) hardware stores and
smaller lumber and building materials dealers, many of which are presently
not computerized, (ii) larger lumber and building materials dealers
currently using outdated systems and (iii) agribusiness retailers. With
custom configuration capability within each system, the Company can target
the appropriate solution to the needs of each customer.

BUSINESS STRATEGY

The Company's ongoing business strategy focuses on strengthening its
leadership position in the automotive parts aftermarket and hardlines and lumber
industries. The Company has retained existing customers and developed new
customers by continually offering system enhancements, new product offerings,
and the most comprehensive and sophisticated information tools available in the
marketplace. The Company capitalizes on its relationships with its customer
base, allowing it to adapt to changes within the industries it serves, provide
both quality and value in its products and integrate enabling technologies. In
addition to this core strategy, the Company is pursuing the following key
initiatives:

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investment in computerization, (iii) consumer expectations for a more
professional and efficient repair experience and (iv) service dealers'
desire to automate the estimate and repair process. Management believes
that the Company's service dealer product offerings are the most
comprehensive in the industry. With integrated parts, labor and repair
databases, and the ability to connect to approximately 12,000 PSOs,
management believes that the Company's service dealer systems are uniquely
positioned to meet the needs of the professional service dealer. The
Company has dedicated over 60 sales and marketing professionals to further
penetrate the service dealer market.

- CAPITALIZE ON SYNERGIES TO ENHANCE OPERATING EFFICIENCIES. Following
the Triad Acquisition, the Company has focused on four major sources of
synergies. First, the Company benefits from a well-balanced corporate
platform with Old CCI's strength in research and development and Triad's
strength in sales and marketing. Second, the Company strengthened its
presence in the wholesale and retail distribution channels of the
automotive parts aftermarket industry. Old CCI's established relationships
with national warehouse distributors and those PSOs in their distribution
channel, together with Triad's strength in the independent warehouse
distributors and independent PSOs, created an enhanced market position
thereby strengthening the Company's ability to further penetrate the
service dealer market. Third, the integration of Old CCI's well developed
systems with Triad's extensive information services creates the opportunity
for improved product offerings. Lastly, since the Triad Acquisition,
management estimates that the Company has achieved annualized cost savings
of approximately $4.6 million, principally from the elimination of
redundant personnel and expenses, such as data entry, manufacturing, sales
and marketing and general and administrative overhead, and will generate
additional cost savings of approximately $1.8 million over the next year.

INDUSTRY OVERVIEW

Automotive Parts Aftermarket Industry

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these factors, when combined with competitive pressures to decrease costs and
increase operating efficiencies and the historically low profit margin nature of
the automotive parts aftermarket industry, will increase demand for the
Company's management information systems and solutions.

The total number of vehicles in use in the United States between 1987 and
1997 increased at a compound annual growth rate of 1.9%, from 169.3 million to
203.9 million. The average age of passenger cars and light trucks on the road in
1994 was 9.0 years and 8.8 years, respectively, up from 7.5 years for cars and
8.0 years for trucks in 1987. Of the entire population of registered vehicles in
the United States today, 72.0% are five years or older. Older vehicles are
generally serviced by independent service dealers while younger vehicles are
generally serviced by new car dealerships. Over the last ten years, the total
number of miles driven on United States roads has increased at an annualized
rate of approximately 2.9% due to an average increased usage of each vehicle and
an increase in the number of vehicles in operation.

Distribution Channels. There are three distinct vertical distribution
channels through which auto parts distribution occurs: the traditional wholesale
channel, the retail channel and the new car manufacturer channel. Additionally,
within each of these three channels there are varying levels of distribution. In
the wholesale channel there are generally four primary levels of distribution:
manufacturers, warehouse distributors, PSOs (wholesale PSOs, retailers and new
car dealers) and service dealers. Manufacturers supply automotive parts to
warehouse distributors which distribute automotive parts to PSOs, which stock
and sell the automobile parts used by service dealers and "do-it-yourself"
purchasers. Management estimates that on average, each warehouse distributor and
PSO carries 110,000 and 18,000 parts in inventory, respectively. The retail
channel is similarly structured, but with fewer intermediaries. In the retail
channel, parts flow directly from the manufacturer to the retailer. In turn, the
retailer sells directly to the "do-it-yourself" market, as well as to many
service dealers. Parts in the new car manufacturer channel are distributed
directly from the manufacturer to new car dealers, often through a feeder
warehouse. Additionally, new car dealers sell parts to independent service
dealers.

The traditional distribution levels for the wholesale, retail and new car
manufacturer channels of the automotive parts aftermarket industry (and the
number of providers within each level in the United States) are as follows:

[FLOWCHART]

- Wholesale Channel. The wholesale channel is the predominant distribution
channel in the automotive parts aftermarket industry, generating approximately
$55.1 billion in parts and accessories revenue in 1996. Warehouse distributors
sell to service dealers through PSOs. PSOs, which are
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smaller than warehouse distributors and positioned geographically near the
service dealers it serves, are utilized due to the time-critical nature of the
repair business and the inability of the service dealer to afford to stock an
extensive part selection.

Historically, the wholesale channel has involved the four distribution
levels described above in a three-step process. However, this channel has
recently undergone changes, moving toward a two-step distribution process. The
two-step process consolidates the warehouse distributor and PSO into an
operation that sells directly to service dealers.

Apart from the shift toward a two-step distribution process, many warehouse
distributors have also begun purchasing PSOs. This consolidation improves
warehouse distributors' buying power with manufacturers and, therefore,
strengthens their competitive position in the market. The Company, as the
largest provider of systems and services to the warehouse distributor market,
has benefited from the industry consolidation as many warehouse distributors
have replaced acquired PSOs' existing systems with the Company's systems.

Service dealers consist of independent professional dealer/installers and
specialized shops affiliated with national chains, such as Midas and Aamco. The
service dealer segment has experienced slow consolidation over the last 10 to 15
years. Throughout the 1970s, full service stations providing gasoline,
automotive accessories and repairs, and independent repair garages had the
largest share of the service dealer market. During the early 1980s, service
stations lost market share to general repair national chainstores and
specialized shops. However, since the late 1980s, the market share of service
stations and independent garages has remained relatively stable.

- Retail Channel. Management estimates that the retail channel generated
approximately $15.1 billion in automotive parts aftermarket industry revenue in
1996. With over 13,000 retail establishments, the retail channel is highly
fragmented. This market has traditionally consisted of "mom and pop" stores and
small regional chains that sell to "do-it-yourself" customers. Recently,
however, consolidation has begun to alter the retail distribution channel. The
larger specialty retailers, such as AutoZone, Discount Auto Parts and Pep Boys,
carry a greater number of parts and accessories at more attractive prices than
traditional retail outlets and are gaining market share. The management
information systems used to communicate between levels in this channel are
generally developed internally by the specialty retailers.

- New Car Manufacturer Channel. Management estimates the new car
manufacturer channel generated approximately $22.9 billion in automotive parts
aftermarket industry revenue in 1996. The new car manufacturer channel in the
United States is dominated by General Motors, Chrysler, Ford, Toyota, Nissan and
Honda. New car manufacturers distribute parts through a feeder warehouse to new
car dealers. New car dealers purchase information systems from a variety of
third party system providers including Reynolds and Reynolds Company, Automatic
Data Processing, Inc. and several car manufacturers themselves.

Drivers of Computerization. There are a variety of factors that drive the
need for computerization within the automotive parts aftermarket industry.
First, participants in the automotive parts aftermarket industry are required to
manage large quantities of data. There are on average nine manufacturers for
every type of auto part, over two million different parts available to
consumers, approximately 100,000 new parts introduced each year, and over 75,000
parts discontinued each year. The number of parts in the automotive parts
aftermarket industry rose by 21% between 1985 and 1990, and by an additional 30%
during the succeeding five years. Additionally, it is projected that by the year
2000 the number of available parts will increase by 35%. As a result, most
automotive parts aftermarket participants require a comprehensive inventory
management system to track this proliferation of new parts. Moreover,
manufacturers update catalogs and part prices frequently and service dealers
return many of the parts ordered, furthering the need for strong inventory
management.

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Second, distributors generally sell large volumes of products which have
thin margins due to the competitive and commodity nature of the business. As a
result, optimizing inventory management can translate into significant cost
savings. This need to decrease costs is particularly important at the PSO level,
where there is increased competition between the traditional wholesale and
retail channels to sell to the service dealer market.

Third, consumer demand for same day repair service and the service dealers'
incentive to turn repair bays encourage service dealers to require delivery of
specific parts from PSOs usually within 30 minutes or less. Therefore, the
ability of a warehouse distributor or PSO to access information about parts
availability and promptly supply the required product is critical to its success
as the preferred provider to the service dealers it serves. As a result, nearly
all warehouse distributors and PSOs are computerized to compete in the industry.
However, there is still a significant need for computerization at the service
dealer level, which has remained a largely unpenetrated market to date. The
integration of service dealers into the overall distribution channel is
necessary to ensure a smooth, continuous flow of parts and repair information
which will enable the wholesale distribution channel to remain competitive.

Hardlines and Lumber Industry

The hardlines and lumber industry, comprised primarily of hardware
retailers, home centers, lumber and building materials suppliers and
manufacturers, agribusiness retailers, lawn and garden retailers and paint
retailers, generated approximately $142 billion in revenues in 1996. Management
believes that revenue growth in the hardlines and lumber industry will continue
to be driven by several favorable trends, including (i) the expansion of the
industry's top 500 retailers, (ii) favorable demographic trends, such as an
increase in dual income families and (iii) continued expansion of new home
construction and sales and remodeling of existing homes.

- Top 10 Market. The ten largest retailers in the hardlines and lumber
industry (the "Top 10") represent approximately 2,300 stores and accounted for
approximately $44 billion of sales in 1996. The Top 10 include mass
merchandisers such as Home Depot, Lowe's and Sears. As a result of their size,
it is cost effective for the Top 10 to develop and update their own systems,
and, therefore, the Top 10 generally do not purchase systems from the Company.
The Company believes that the Top 10 have generally driven the need to reduce
costs and pursue consolidation strategies throughout the industry. The Top 10
have been able to reduce costs and improve merchandising efficiency through
economies of scale and the implementation of automated retail systems. In order
to remain competitive, companies outside the Top 10 need to match the
merchandising efficiencies of the Top 10 and increase productivity.

- Top 500 Market. The 500 largest retailers in the hardlines and lumber
industry, excluding the Top 10 (the "Top 500"), generated $28 billion of sales
in 1996. There are approximately 4,300 stores in this market, of which a
majority are lumber and home center businesses. The Top 500 market is fragmented
and has experienced consolidation as firms try to compete with the Top 10. In
addition, this market has been a significant source of revenues as firms upgrade
existing systems and shift from in-house systems to turnkey systems produced by
the Company. The Company believes that retailers will continue to upgrade
systems as the industry continues to respond to competition and innovation by
the Top 10.

- Top 500+ Market. The hardlines and lumber retailers which do not rank in
the Top 500 (the "Top 500+") are typically smaller, independent stores with a
niche focus. Management believes that there are approximately 35,000 stores in
this market, which accounted for approximately $70 billion in sales in 1996.
This market is extremely fragmented and has experienced limited consolidation.
The Company believes that approximately 78% of this market is affiliated with
cooperatives which encourage its members to install computerized point-of-sale
systems to more effectively compete with the rest of the industry. The Company
believes this segment will continue to

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represent a large portion of the Company's revenue base as firms computerize in
order to protect their niche market positions.

Drivers of Computerization. Computerization within the hardlines and lumber
industry has been predominantly driven by the Top 10 which have expanded
throughout the United States by providing products and services by using a mass
merchandising format. As a result of this strategy, hardlines and lumber
consumers have been able to purchase products and services cheaper from the Top
10 than was traditionally available. This has driven the Top 500 and the Top
500+ to computerize to reduce costs and improve service in order to maintain
their market positions. As a result, management believes that the Top 500 and
Top 500+ will become more computerized in order to effectively compete with the
Top 10.

PRODUCTS AND SERVICES

The Company's software and systems, together with its database products,
provide comprehensive business solutions targeted to its two key markets. The
Company provides a different set of standard application programs for each
market that includes user options allowing the selective structuring of
applications files and reports to meet customers' specific requirements. These
software products also allow the Company's customers to access its proprietary
databases. Hardware components include central processing units ("CPUs"), disk
drives, video display terminals, CD-ROM storage devices, point-of-sale
terminals, communication devices, printers and other peripherals. The Company's
systems also have communication capabilities allowing users to exchange purchase
orders and pricing and inventory information with suppliers and, in some cases,
customers.

Automotive Parts Aftermarket Systems (21% of 1997 Pro Forma Revenues)

The Company's automotive parts aftermarket products have been designed to
provide interconnectivity to all levels of the wholesale distribution channel.
This electronic network, which the Company calls the "Automotive Aftermarket
Information Highway," enables the automotive parts aftermarket industry to
efficiently market parts throughout the distribution channel.

Principal Products

The Company's principal automotive parts aftermarket industry products,
based on the level of the distribution channel for which such products are
targeted, are as follows:

- Manufacturer. The Company has one product, CCI AutoBahn, devoted to the
needs of manufacturers. CCI AutoBahn is designed to provide connectivity
between manufacturers of auto parts and warehouse distributors and
enables warehouse distributors and manufacturers to place and confirm
orders electronically.

- Warehouse Distributor. The Company has three products available to meet
the needs of warehouse distributors. One of these products, A-DIS,
provides applications for the management of large warehouse
distributors, handling complex inventory management issues, parts
purchasing, product pricing, parts returns management, sales history and
complete financial management services. A-DIS is fully connected to CCI
AutoBahn, as well as to J-CON, a PSO product, and to ServiceExpert EZ, a
service dealer product. A second product, Ultimate, is designed and
targeted at regional and local warehouse distributors or at national
distributors that primarily service stores in a compact geographic area
that are looking to manage multiple locations and inventories on a
single system. For independent warehouse distributors that have
specialty products and services, the Company's Eclipse product offers
the additional flexibility needed for these customers.

- Parts Sales Outlet. The Company currently markets three products to
PSOs: J-CON, Eclipse and Prism. These solutions all operate on platforms
that are assembled and integrated by

45
<PAGE> 50

the Company. J-CON was developed for the management of PSOs that are
members of a national account program, trade principally with a single
warehouse and are connected to that warehouse by an A-DIS system. J-CON
also allows the PSO to connect with service dealers through
ServiceExpert EZ. Much like A-DIS, J-CON serves as an inventory
management and electronic purchasing tool. Eclipse tracks inventory,
performs accounting functions and executes point-of-sale operations such
as invoicing and billing. Prism, the newest generation of PSO
applications, is designed to meet the needs of both national and
independent PSOs as well as PSOs in a two-step distribution process. In
addition to its existing product lines, the Company maintains and
supports three products that it no longer sells, the Series 11, 12 and
14 products, which account for a significant portion of the Company's
installed base of customers.

- Service Dealer. The Company has a number of products that it markets to
service dealers, including ServiceExpert EZ, ServiceExpert On-Line,
Triad Service Writer, PACE, Telepart and Service Cat, which are all
focused to specific segments of the service dealer market. The
ServiceExpert EZ family of products is the Company's platform of the
future in the service dealer market. These products offer a complete
shop management solution which blends the Company's databases, software
applications, detailed labor estimates and recommended vehicle service
intervals with the latest in workstation technology, incorporating
easy-to-use pull-down windows. ServiceExpert EZ creates printed repair
estimates, automated work orders and maintains individual vehicle
records and histories, enabling users to notify customers of required
preventive maintenance and create other special promotions tailored to
the service dealers' individual customer base. ServiceExpert EZ can be
connected to the Company's PSO and warehouse distributor products to
allow parts inquiry and ordering functions in the service dealer's parts
supplier network. ServiceExpert EZ can be expanded to include inventory
management and can be integrated with general accounting applications.

Hardlines and Lumber Systems (17% of 1997 Pro Forma Revenues)

The Company offers systems to a diverse group of approximately 60,000
retail stores in the hardlines and lumber industries, with annual revenues
ranging from approximately $0.5 million to approximately $1.0 billion. As of
September 30, 1997, the Company serviced approximately 5,700 hardlines and
lumber customers with over 7,800 store locations.

Within the hardlines and lumber industry, there is a lower level of
computerization compared to the automotive parts aftermarket industry. The
Company believes that independent hardlines and lumber retailers are
increasingly recognizing the advantages of computerization as they face
increased competition. Hardlines and lumber trade journals have strongly favored
computerization, and major hardlines wholesalers and cooperatives strongly
endorse computerization to their member dealers. Five of the seven leading
lumber and building materials groups and approximately 50% of the top 60
hardware distributors endorse the Company's products and services. In addition,
the Company has developed and currently maintains strong relationships with
three of the major hardlines cooperatives, Hardware Wholesalers Inc., Ace
Hardware and TruServ, and two of the major wholesale marketing groups, PRO Group
and Distribution America.

Principal Products

The Company's hardlines and lumber systems automate inventory control,
point-of-sale functions (such as invoicing and billing), payroll, accounting and
purchase orders. The Company's principal hardlines and lumber industry products
are as follows:

- Triad Eagle. Triad Eagle blends the power and flexibility of the
Company's management information systems with applications and features
created to meet the unique needs of lumber and building materials
operations. The Triad Eagle system manages the flow of a typical
transaction, including estimating, ordering, inventory management,
shipping, invoicing and tracking accounts receivable.

46
<PAGE> 51

- Triad CSD. The Triad CSD series of systems is designed for mid- to
large-sized hardlines and lumber dealers due to its greater power and
functionality. Existing Triad Eagle customers are able to upgrade to a
Triad CSD system and utilize its newly incorporated technological
advancements. Triad CSD allows for product offerings suitable for
hardlines and building materials chains with up to 20 stores and $150
million in annual sales.

- Triad Falcon. Triad Falcon is the Company's recently introduced, next
generation product targeted at larger lumber and building material and
home center retailers. Triad Falcon provides unparalleled flexibility in
tailoring the system to meet the needs required of individuals, groups,
departments and single or multiple store locations.

- LaserStation. The Company's LaserStation product incorporates the
TruServ database product. It is designed as a stand-alone unit but may
also be integrated as part of a hardlines system for TruServ members.

Customer Support Services (38% of 1997 Pro Forma Revenues)

The Company's customer support services organization provides service,
training and support to the Company's customers. The Company's system owners are
principally small business proprietors without the internal staffing or
expertise to train users or to maintain computer systems on a consistent basis.
These customers require a high level of service, training and support.

The Company typically provides a limited warranty on its systems ranging
from 30 to 90 days. The Company also sells a variety of post-sale support
programs through its system support agreements, including on-site preventive and
remedial maintenance, hardware engineering modifications, depot repair services
and daily system operating support by phone. The Company's customers can call
the Company's AdviceLine service which gives them access to trained personnel
able to perform on-line diagnostics or to field engineers if on-site service is
necessary. Virtually all new system customers enter into system support
agreements, and most retain such service agreements as long as they own the
system. Monthly fees vary with the system size and configuration.

The Company offers training for new and existing customers at the
facilities of both the Company and its customers. In addition to training in
system operations and software enhancements, the Company offers seminars and
workshops to assist customers in understanding the capabilities of their
systems.

For many of the Company's large automotive warehouse distributor customers,
the Company provides information facilities management services. Many of these
are facilitated through a limited partnership arrangement. Through these
arrangements the Company provides customers with on-site managers and employees
experienced in warehouse and store applications to operate the customers'
computer facilities.

Information Services (20% of 1997 Pro Forma Revenues)

The Company licenses its proprietary databases to its customers in return
for a license fee and monthly subscription fees entitling customers to periodic
updates. These database products generate recurring revenues through monthly
subscription fees and differentiate the Company's products from those of its
competitors. The Company currently offers large, sophisticated databases to its
automotive parts aftermarket industry customers as well as point-of-sale data
and analysis to manufacturers in both the automotive parts aftermarket and
hardlines and lumber industries.

- Electronic Catalog. The Company's electronic catalog product provides
information relating to over 17 million automobile application parts.
This database virtually eliminates the time consuming and cumbersome use
of printed catalogs and is designed to increase productivity and
accuracy in parts selection and handling. Proprietary software on the
Company's

47
<PAGE> 52

warehouse distributor, PSO and service dealer systems enables the user
to access the electronic catalog database. Customers use the catalog
feature within their warehouse distributor, PSO or service dealer system
to identify parts associated with a specific vehicle. The Company
charges a monthly subscription fee for its electronic catalog database
and provides customers with periodic updates. At September 30, 1997,
approximately 10,000 customers had licensed the Company's electronic
catalog.

- Interchange. Interchange is a database product that allows the cross
reference of original equipment manufacturers part numbers to
aftermarket manufacturers part numbers and from one aftermarket supplier
to another for the same part. This product, which is sold on a monthly
subscription basis enables the warehouse distributor, PSO or service
dealer to identify a suitable replacement part when only the part number
of the old part is known. Interchange replaces a cumbersome paper-based
process that can involve many different catalogs to identify the correct
part.

- Telepricing. The Telepricing service provides electronic price updates
directly to the warehouse distributor, PSO or service dealer system for
automotive parts following a manufacturer's price change, eliminating a
customer's need to input this data manually. Telepricing service
customers pay an initial license fee and a monthly subscription fee for
this updating service. LaborGuide had more than 2,700 subscribers at
September 30, 1997.

- LaborGuide Database. The Company has licensed from Mitchell the
LaborGuide database which provides authorized guidance of labor hours
for car repairs. This database, which can be integrated with the
Company's PSO systems and the ServiceExpert EZ family of products, is
targeted to the approximately 340,000 service dealers in the United
States and had more than 3,000 subscribers at September 30, 1997.
LaborGuide permits users to comply more easily with regulations in many
states that require written estimates of repair costs. The repair
functions within LaborGuide have been mapped to the appropriate parts in
the electronic parts catalog database, providing for a seamless,
efficient process of gathering of parts and labor information by the
service dealer in preparing a repair estimate.

- RepairSource. The Company has a license for the integration and
distribution of Mitchell's "Mitchell on Demand" electronic automobile
repair information product. The Company has integrated this product into
its ServiceExpert EZ system and markets it under the name RepairSource.
RepairSource is an electronic database which includes original equipment
manufacturers' technical service bulletins, repair information and
wiring diagrams specific to each automobile model. This information,
coupled with the Company's parts and labor databases, enables a service
dealer to easily and quickly prepare a service estimate and associated
technical repair instructions for each job.

- Databases for Manufacturers. The Company markets database services to
auto parts manufacturers. In addition to the full Telepricing database,
manufacturers may select only certain categories of parts, or may choose
the Competitive Analysis service, which compares price levels and number
of applications to a competitor's product line. The Company's
transaction analysis services, MarketPACE for the automotive parts
aftermarket and VISTA for the hardlines and lumber industry, report
product movement information based on point-of-sale data collected at
the independent retail levels in the respective markets. MarketPACE
services supply comprehensive point-of-sale information and inventory
analysis providing the decision support tools required to increase
sales, boost productivity, improve distribution and enhance customer
service for warehouse distributors and PSOs. VISTA information services
provide product manufacturers with ongoing measurement of brand and item
movement with major product classifications using point-of-sale business
analysis data from independent hardware stores, home centers and lumber
and building materials outlets. Information provided by the MarketPACE
and VISTA services give

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<PAGE> 53

manufacturers insight into how a specific product or brand performs against its
competitors and the market in general.

Customer Financing (4% of 1997 Pro Forma Revenues)

The Company believes that the ability to offer lease financing to its
customers shortens the sales cycle by eliminating the need for third party
financing and provides a competitive advantage in marketing and promoting the
Company's products. The Company offers such financing through its wholly owned
subsidiary, Triad Financial. These financing leases are noncancellable with
terms from one to six years. At December 31, 1997, Triad Financial had a
portfolio of outstanding leases to over 6,500 customers with a balance of
approximately $170 million.

Periodically, lease receivables are sold pursuant to discounting agreements
with banks and lending institutions under which available lines were
approximately $65.6 million at December 31, 1997. At the time of sale, the
Company records the newly-created servicing liabilities (lease servicing
obligation and recourse obligation) at their estimated fair value. Gains
resulting from the sale of lease receivables are reflected in finance revenue.

The discounting agreements contain restrictive covenants which allow the
Company to discount only while in compliance with such covenants. In the event
of non-compliance, the banks and lending institutions could assume
administrative control (servicing) of the lease portfolio and could prohibit
further sales under the available credit facilities. During the period ended
September 30, 1997, the Company failed to meet a profitability covenant of these
agreements. Such agreements were subsequently amended to, among other
provisions, eliminate the profitability covenant. The Company is in compliance
with the remaining covenants, and management believes that it will maintain
compliance with such covenants in the foreseeable future.

Pursuant to the discounting agreements, the Company is contingently liable
for losses in the event of lessee nonpayment up to stated recourse limits (up to
10% of the aggregate initial proceeds adjusted for certain expenses and payments
remitted on the leases) and full recourse on lease receivables discounted that
did not meet the bank or lending institutions credit worthiness test. At
December 31, 1997, the Company had an immaterial amount of lease receivables
discounted that are subject to full recourse.

At December 31, 1997, the contingent liability for leases sold was
approximately $25.8 million. The Company provides for the fair value of the
recourse obligation based upon an analysis that considers among other things,
the credit worthiness of the lease receivable, the recourse provision the lease
receivable is subject to and the Company's historical experience, which includes
loss recoveries through resale of repossessed systems.

SALES AND MARKETING

The Company markets its products to the automotive parts aftermarket
industry through a geographically-based direct sales force of 109 employees and
a telesales/telemarketing organization of 28 employees. Incentive pay is a
significant portion of the total compensation package for all sales
representatives and sales managers. Additionally, the Company leverages its
relationships with large warehouse distributors through its National Account
Program, in which these accounts resell PSO systems to either company owned
stores or to other customers that are closely associated to the warehouse
distributor.

Similarly, the Company markets its products and services to the hardlines
and lumber industry through a geographically-based direct sales force of 107
employees and 37 telesales/telemarketing employees. As in the automotive parts
sales organization, incentive pay is a significant portion of the total
compensation package for all sales personnel.

The Company's marketing approach in the hardlines and lumber industry has
been to develop close relationships with key market influencers. This strategy
includes obtaining endorsements and
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<PAGE> 54

developing exclusive relationships, distributor partnerships and other
alliances. Currently, the Company enjoys over 40 such relationships in the
industry. The goal of this relationship program is to enhance the productivity
of the field sales team and create leveraged selling opportunities for system
sales, information services and support revenues.

In 1997, the Company entered into a seven year alliance with TruServ that
gives the Company an endorsement and computerization responsibility for many of
TruServ's approximately 5,800 TruServ stores. Management believes that this
approach will make computerization benefits more visible to noncomputerized
stores while improving the utilization of previously computerized stores. Ace
Hardware and Hardware Wholesalers Inc. also work closely with the Company
through a small team of national account managers.

Distribution America and twenty of its twenty-eight member distributors
also endorse the Company's products. Additionally, PRO Group exclusively
endorses the Company's Eagle systems solutions to its 84 member distributors.
All six of the lumber-only cooperatives and buying groups endorse the Company.
Several of the paint and paint sundry marketing groups including Mid-South, All
Pro and Five Star endorse the Company's products. Benjamin Moore & Company, a
paint manufacturer, entered into a strategic partnership to exclusively endorse
the Company as its system provider for dealer point-of-sale store management
systems in May 1995.

SYSTEM INTEGRATION AND ASSEMBLY

The Company does not manufacture any of the hardware components of its
systems; but does assemble and integrate its products with hardware components
and software products of third party vendors. As of September 30, 1997, the
Company employed 90 employees in its system integration operation.

The Company utilizes a just-in-time inventory system to help ensure that
efficient cost controls are in place. The commodity nature of the component
business ensures a consistent supply of required components. In addition to the
external customer base, the Company's manufacturing facility also produces
engineering workstations and personal computers for internal use.

SOFTWARE DEVELOPMENT AND TECHNOLOGY

The Company has approximately 179 copyrights and approximately 121
registered trademarks. The Company attempts to protect its proprietary
information in a number of ways. First, the Company distributes its software
through licensing agreements, which require licensees to acknowledge the
Company's ownership of the software and the confidential nature of the Company's
proprietary information. Secondly, all Company personnel are required to assign
all rights of such personnel to inventions, patents and confidential information
to the Company and to agree to keep confidential and not disclose to third
parties the Company's proprietary information. Finally, the Company requires
that all other third parties receiving proprietary information of the Company
execute a non-disclosure agreement.

CUSTOMERS AND SUPPLIERS

No single customer accounted for more than 10% of the Company's total sales
in fiscal 1997. The Company has a significant number of suppliers predominantly
associated with its assembly operations. The Company does not obtain more than
10% of its components from a single supplier.

PROPERTIES

Other than its Newton, New Jersey facility, the Company does not own any
real property. The Company's properties include assembly, software development
and data entry facilities and administrative, executive and sales offices. The
Company's principal executive offices are located at 6207 Bee Cave Road, Austin,
Texas. The Company considers its properties to be modern and well

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<PAGE> 55

maintained and suitable for their present and intended purposes and adequate for
the Company's current level of operations.

Listed below are the principal properties operated by the Company as of
March 31, 1998.

<TABLE>
<CAPTION>
APPROX.
SIZE
LOCATION (SQ. FT.) DESCRIPTION OF USE LEASE TERMINATION
-------- --------- ------------------ -----------------
<S> <C> <C> <C>
Owned:
Newton, New Jersey................. 28,000 Administrative; software development NA
Leased:
Livermore, California.............. 220,000 Secondary executive offices; software 2002
development; data entry;
administrative
Austin, Texas...................... 50,000 Systems integration and assembly 2001
Austin, Texas...................... 36,000 Principal executive offices; software 2002
development
Longford, Ireland.................. 21,000 Data entry 2027
Austin, Texas...................... 20,000 Secondary executive offices; finance 1999
and accounting
Pleasanton, California............. 20,000 Administrative; sales 1999
Austin, Texas...................... 17,000 Data entry 2000
Denver, Colorado................... 17,400 Administrative; software development 1999
Plymouth, Minnesota................ 13,000 Administrative; sales and customer 1999
support
Austin, Texas...................... 10,000 Administrative 1999
Toronto, Canada.................... 8,600 Sales 2002
</TABLE>

In addition, the Company has short term leases on over 100 offices and
field service locations in the United States, Canada, the United Kingdom, France
and Puerto Rico. As of March 1998, the Company was in the process of negotiating
a lease for an additional 57,000 square feet of office space. The lease is
expected to have a lease term of seven years, commencing January 1, 1999.

LEGAL PROCEEDINGS

The Company is a party to various legal proceedings and administrative
actions, all of which are of an ordinary or routine nature incidental to the
operation of the Company. In the opinion of the Company's management, such
proceedings and actions should not, individually or in the aggregate, have a
material adverse effect on the Company's results of operations, financial
condition or cash flows.

EMPLOYEES

As of September 30, 1997, the Company had approximately 1,900 employees,
none of which were represented by unions. The Company has not experienced any
labor problems resulting in a work stoppage and believes it has good relations
with its employees.

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<PAGE> 56

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

Set forth below are the names, ages and positions of the respective
directors and executive officers of the Company, Holding and certain
subsidiaries of the Company as of March 31, 1998. All directors hold office
until the next annual meeting of stockholders of the Company, Holding or the
applicable subsidiary of the Company, as the case may be, and until their
successors are duly elected and qualified.

<TABLE>
<CAPTION>
NAME AGE POSITION
---- ---- --------
<S> <C> <C>
Glenn E. Staats................ 54 President and Chief Executive Officer and Director
of Holding and the Company
Preston W. Staats.............. 55 Executive Vice President, Chief Operating Officer
and Director of Holding and the Company
Thomas O. Hicks................ 52 Director of Holding and the Company
Jack D. Furst.................. 39 Director of Holding and the Company
A. Laurence Jones.............. 45 Director of Holding and the Company
James R. Porter................ 62 Chairman of the Board and Director of the Company
Daniel F. Dent................. 50 Vice President of Customer Services of the Company
Charles Fischer................ 40 Vice President of Information Services of the
Company
Matthew Hale................... 45 Vice President of Finance and Chief Financial
Officer of Holding and the Company
John Patterson................. 57 Vice President of System Integration and Assembly of
the Company
Phillip L. Waters.............. 51 Vice President of Administration of the Company
Chad A. Schneller.............. 56 President of Hardlines and Lumber Division of the
Company
William Allen, III............. 50 President of Triad Systems Financial Corporation
</TABLE>

Glenn E. Staats founded Old CCI in 1976 and is the President and Chief
Executive Officer and Director of Holding and the Company. Mr. Staats has a
Ph.D. in Engineering from the University of Texas at Austin. Prior to founding
Old CCI, Mr. Staats was a Director of Graduate Studies in the College of
Engineering at the University of Missouri -- Columbia. Mr. Staats is the brother
of Preston W. Staats.

Preston W. Staats joined the Company in 1977 and serves as Executive Vice
President, Chief Operating Officer and Director of Holding and the Company. Mr.
Staats has a Ph.D. in Electrical Engineering from Rice University in Houston,
Texas. Prior to joining the Company, Mr. Staats was a Nuclear Submarine Officer
in the U.S. Navy and a private sector business consultant. Mr. Staats is the
brother of Glenn E. Staats.

Thomas O. Hicks is a director of Holding and the Company and has held such
positions since February 1997. Mr. Hicks is Chairman of the Board and Chief
Executive Officer of Hicks Muse. From 1984 to May 1989, Mr. Hicks was
Co-Chairman of the Board and Co-Chief Executive Officer of Hicks & Haas
Incorporated, a Dallas-based private investment firm. Mr. Hicks also serves as a
director of Berg Electronics Corp., Chancellor Media Corporation, International
Home Foods, Inc., D.A.C. Vision, Inc., Capstar Broadcasting Partners, Inc., and
Sybron International Corporation.

Jack D. Furst is a director of Holding and the Company and has held such
positions since February 1997. Mr. Furst is a Managing Director and Principal of
Hicks Muse. From 1987 to May 1989, Mr. Furst was a vice president and
subsequently a partner of Hicks & Haas Incorporated. From 1984 to 1986, Mr.
Furst was a merger and acquisition/corporate finance specialist for The

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<PAGE> 57

First Boston Corporation in New York. Before joining First Boston, Mr. Furst was
a financial consultant at Price Waterhouse. Mr. Furst serves on the board of
directors of Viasystems, Inc., International Wire Holding Company, Hedstrom
Holdings, Inc., and Omni/Specialty Teleconductors.

A. Laurence Jones is a director of Holding and the Company and has held
such positions since 1997. From August 1993 to August 1997, Mr. Jones served as
the Chief Executive Officer of Neodata Services Inc., a provider of marketing
services. Prior to his employment by Neodata Services Inc., Mr. Jones served as
Chief Executive Officer of GovPX, a provider of U.S. Treasury data and pricing
services from 1991 to August 1993. Mr. Jones has a M.B.A. from Boston College.

James R. Porter has served as Chairman of the Board and Director of the
Company since the Triad Acquisition in February 1997. In February 1998, Mr.
Porter retired as an employee of the Company and is no longer involved in the
day-to-day management of the Company. Prior to the Triad Acquisition, Mr. Porter
served as President and Chief Executive Officer of Triad from September 1985 to
February 1997 and as a director of Triad from 1985 until February 1997. Mr.
Porter also serves as a director of Silicon Valley Bank, FirstWave Technologies,
Inc., Cellular Technical Services and Triad Park, LLC.

Daniel F. Dent serves as Vice President of Customer Services of the Company
and has held such position since September 1997. From 1993 to September 1997,
Mr. Dent served in various positions with the Company.

Charles Fischer is the Vice President of Information Services of the
Company. From December 1992 to February 1997, Mr. Fischer served as Vice
President of Global Sourcing for Federal Mogul Corp., a manufacturer and
distributor of auto parts. Before joining Federal Mogul Corp., Mr. Fischer
served as the Vice President of Purchasing and MIS for Hi/Lo Auto Supply from
1986 to February 1992.

Matthew Hale joined the Company in April 1995 and is currently serving as
Vice President of Finance and Chief Financial Officer of Holding and the
Company. Prior to joining the Company, Mr. Hale was employed by Arrowsmith
Technologies, Inc. where he was Vice President of Finance and Chief Financial
Officer from April 1993 to March 1995. From August 1991 to March 1993, Mr. Hale
served as Controller of MasPar Computer Corporation, a company engaged in the
development and sale of massively parallel computer systems. Mr. Hale has a
Bachelors Degree in Accounting and is a Certified Public Accountant.

John Patterson serves as the Vice President of System Integration and
Assembly of the Company and has held such position since February 1994. From
1978 to June 1993, Mr. Patterson was the Senior Vice President of Worldwide
Engineering and Manufacturing for the Tandy Corporation. Mr. Patterson has a
Ph.D. and M.S. in Electrical Engineering from the University of Texas at Austin.

Phillip L. Waters serves as the Vice President of Administration of the
Company and has held such position since 1990. From 1987 to 1990, Mr. Waters was
employed by Dell Computer Corporation as Director of Human Resources. Mr. Waters
has a Masters Degree from Southwest Texas State University.

Chad A. Schneller was elected President of the Hardlines and Lumber
Division of the Company in connection with the Triad Acquisition in February
1997. Prior to that time, Mr. Schneller served as Vice President and General
Manager, Hardlines and Lumber Division from July 1994. For the three years prior
to joining Triad, Mr. Schneller was the President and Chief Executive Officer of
Harvest Software, a software company.

William Allen, III has served as President of Triad Systems Financial
Corporation, a wholly owned subsidiary of the Company, and site manager of the
Livermore finance and accounting group since October 1997. Most recently Mr.
Allen served as Chief Financial Officer and Executive Vice President of Health
Care Revenue Management, Inc., a healthcare management firm based in San

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<PAGE> 58

Francisco, California. Mr. Allen has also served in various financial and
controller positions including a information storage management company.

COMPENSATION OF DIRECTORS

Directors who are officers, employees or otherwise an affiliate of Holding
or the Company receive no compensation for their services as directors. Each
director of Holding and the Company who is not also an officer, employee or an
affiliate of Holding or the Company receives a fee of $3,000 for each meeting of
the Board of Directors at which the director is present. Directors of Holding
and the Company are entitled to reimbursement of their reasonable out-of-pocket
expenses in connection with their travel to and attendance at meetings of the
Board of Directors or committees thereof. Additionally, in consideration for his
services as a director, Holding issued to Mr. A. Laurence Jones a warrant to
purchase 20,000 shares of Holding Common Stock at an exercise price of $5.00 per
share.

COMPENSATION OF EXECUTIVE OFFICERS

The following table sets forth the cash and noncash compensation earned by
the Chief Executive Officer of the Company and the four other most highly
compensated executive officers of the Company and Holding, or their
predecessors, during the fiscal years ended September 30, 1997, November 30,
1996 and November 30, 1995. The Chief Executive Officer and such executive
officers are collectively referred to as the "Named Executive Officers." As of
the date hereof, the Company has not granted any stock options or stock
appreciation rights.

SUMMARY COMPENSATION TABLE

<TABLE>
<CAPTION>
ANNUAL
COMPENSATION
FISCAL -------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR(1) SALARY($) BONUS($) COMPENSATION($)(2)
--------------------------- ------- --------- -------- ------------------
<S> <C> <C> <C> <C>
Glenn E. Staats..................................... 1997 172,820 4,666(3) 5,330,929(4)
President and Chief Executive Officer 1996 199,944 4,750(3) 4,813,974(4)
of Holding and the Company 1995 192,096 3,665(3) 463,283(4)
Preston W. Staats................................... 1997 138,240 4,750(3) 877,697(4)
Executive Vice President and Chief 1996 159,938 4,750(3) 963,026(4)
Operating Officer of Holding and 1995 153,658 3,857(3) 92,678(4)
and the Company
Chad A. Schneller................................... 1997 183,336 61,478(5) --(6)
President of the Hardlines and Lumber 1996 180,000 176,690(5) --
Division of the Company 1995 180,000 93,732(5) --
James R. Porter..................................... 1997 250,000 22,805(7) --(6)
Chairman of the Board of Directors of the 1996 298,864 73,819(7) --
Company 1995 300,000 258,274(7)(8) --
Matthew Hale........................................ 1997 129,520 38,562(9) --
Vice President of Finance and Chief 1996 129,604 92,495(9) --
Financial Officer of Holding and the 1995 88,922 -- --
Company
</TABLE>

- ---------------

(1) Compensation for fiscal 1997 only includes compensation for the ten month
period ended September 30, 1997.

(2) For each of the periods reported, the aggregate amount of perquisites and
other personal benefits did not exceed the lesser of $50,000 or 10% of the
salary and bonus of each of the Named Executive Officers.

(3) Represents 401(k) matching contributions.

(4) Represents corporate distributions of Subchapter S Corporation taxable
income received by Messrs. Glenn and Preston Staats.

(5) Includes 401(k) matching contributions of $3,000, $3,000 and $3,750 for
fiscal years 1997, 1996 and 1995, respectively.

(6) Excludes cash consideration received in connection with the Triad
Acquisition for cancellation of options to acquire Triad common stock.

(7) Includes 401(k) matching contributions of $1,711, $2,850 and $2,984 for
fiscal years 1997, 1996 and 1995, respectively.

(8) Includes a bonus of $100,074 paid with the exercise of stock options granted
before 1987. The bonuses paid were based on 30% of the excess of $2.50 per
share over the option price per share.

(9) Includes 401(k) matching contribution of $3,562 and $4,725 for fiscal years
1997 and 1996.

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<PAGE> 59

EMPLOYMENT AGREEMENTS; CHANGE OF CONTROL ARRANGEMENTS

The Stockholders Agreement (as defined) provides that Messrs. Glenn and
Preston Staats, for a period of five years after the date of the Triad
Acquisition, shall diligently devote substantially all of their working time,
attention and knowledge and skills solely to the business and interest of
Holding and shall discharge the duties and assume the responsibilities assigned
to each of them from time to time by the Chief Executive Officer and Board of
Directors of Holding. No other terms of their employment with Holding or the
Company is set forth in the Stockholders Agreement. Other than as described
above, the Company does not currently have employment agreements or other
binding employment arrangements with any Named Executive Officer.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

Compensation decisions are made by the Board of Directors of the Company.
Messrs. Glenn Staats and Preston Staats and Mr. Porter served both as officers
and directors of the Company during 1997. Messrs. Glenn and Preston Staats are
expected to continue to serve in such capacities in 1998. Mr. Porter retired as
an employee of the Company in February 1998 and no longer participates in the
day-to-day management of the Company.

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<PAGE> 60

STOCK OWNERSHIP AND CERTAIN TRANSACTIONS

STOCK OWNERSHIP

All of the issued and outstanding shares of capital stock of the Company
are held by Holding. The following table sets forth as of December 31, 1997,
certain information regarding the beneficial ownership of the voting securities
of Holding by each person who beneficially owns more than 5% of Holding Common
Stock, and by the directors and certain executive officers of Holding and the
Company, individually, and by the directors and executive officers of Holding
and the Company as a group.

<TABLE>
<CAPTION>
SHARES OF
HOLDING COMMON STOCK
------------------------
NUMBER OF PERCENT OF
SHARES CLASS
---------- ----------
<S> <C> <C>
5% STOCKHOLDERS:
Hicks Muse Parties(1)..................................... 19,200,000 54.5%
c/o Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Glenn E. Staats........................................... 13,333,334 37.9%
Preston W. Staats......................................... 2,666,666 7.6%
OFFICERS AND DIRECTORS:
Glenn E. Staats........................................... 13,333,334 37.9%
Preston W. Staats......................................... 2,666,666 7.6%
Thomas O. Hicks(1)........................................ 19,200,000 54.5%
Jack D. Furst(1).......................................... 19,200,000 54.5%
A. Laurence Jones(2)...................................... 40,000 *
James R. Porter........................................... -- --
Daniel F. Dent............................................ -- --
Charles Fischer........................................... -- --
Matthew Hale.............................................. -- --
John Patterson............................................ -- --
Phillip L. Waters......................................... -- --
Chad A. Schneller......................................... -- --
William Allen, III........................................ -- --
All executive officers and directors...................... -- --
as a group (13 persons)................................ 35,240,000(1) 100%
</TABLE>

- ---------------
* Represents less than 1%.
(1) Includes (i) shares owned of record by Hicks, Muse, Tate & Furst Equity Fund
III, L.P. ("Fund III"), of which the ultimate general partner is Hicks, Muse
Fund III Incorporated, an affiliate of Hicks Muse, and (ii) shares owned of
record by HM3 Coinvestors, L.P., a limited partnership of which the ultimate
general partner is Hicks, Muse Fund III Incorporated. Thomas O. Hicks is a
controlling stockholder of Hicks Muse and serves as Chairman of the Board,
President, Chief Executive Officer and Secretary of Hicks Muse. Accordingly,
Mr. Hicks may be deemed to be the beneficial owner of Holding Common Stock
held by Fund III and HM3 Coinvestors, L.P. John R. Muse, Charles W. Tate,
Jack D. Furst, Lawrence D. Stuart, Jr., Michael J. Levitt, Alan B. Menkes,
David B. Deniger and Dan H. Blanks are officers, directors and minority
stockholders of Hicks Muse and as such may be deemed to share with Mr. Hicks
the power to vote or dispose of Holding Common Stock held by Fund III and
HM3 Coinvestors, L.P. Each of Messrs. Hicks, Muse, Tate, Furst, Stuart,
Levitt, Menkes, Deniger and Blanks disclaims the existence of a group and
disclaims beneficial ownership of Holding Common Stock not respectively
owned of record by him.

(2) Includes 20,000 shares of Holding Common Stock issuable to Mr. Jones upon
exercise of a currently exercisable warrant to purchase shares of Holding
Common Stock at an exercise price of $5.00 per share.

CERTAIN TRANSACTIONS

The Triad Acquisition

On February 27, 1997, affiliates of Hicks Muse invested $96 million in Old
CCI for 54.5% of Old CCI's capital stock in connection with a tender offer (the
"Tender Offer") by Old CCI and CCI Acquisition Corp., a subsidiary of Old CCI
("Acquisition Co."), for all of the issued and outstanding
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<PAGE> 61

shares of Triad. On February 27, 1997, Old CCI acquired approximately 98% of the
outstanding shares of Triad in the Tender Offer. Pursuant to a Merger Agreement
dated October 17, 1996, as amended on January 15, 1997 and February 19, 1997,
among Old CCI, Acquisition Co. and Triad, all shares not acquired by Acquisition
Co. in the Tender Offer were acquired on February 27, 1997, pursuant to a merger
of Acquisition Co. with and into Triad, with the surviving entity in the merger
renamed as "Cooperative Computing, Inc."

In connection with the consummation of the Tender Offer, all Triad
shareholders received spun-off shares of an entity formed to hold real estate
and related assets of Triad. Immediately following the merger, Old CCI
contributed all of its operating assets to the Company and changed its name to
"Cooperative Computing Holding Company, Inc."

Monitoring and Oversight Agreement

Holding and the Company have entered into a ten-year agreement (the
"Monitoring and Oversight Agreement") with Hicks, Muse & Co. Partners, L.P., an
affiliate of Hicks Muse ("Hicks Muse Partners"), pursuant to which Holding and
the Company will pay Hicks Muse Partners an annual fee payable quarterly for
oversight and monitoring services to Holding and the Company. The annual fee is
adjustable on January 1 of each calendar year to an amount equal to the (i) sum
of (A) the fee in effect at the beginning of the immediately preceding calendar
year plus (B) the aggregate amount of all Acquisition Increments (as defined)
with respect to such immediately preceding calendar year, multiplied by (ii) the
percentage increase in the Consumer Price Index during the immediately preceding
calendar year, but in no event less than $350,000. Upon the acquisition by the
Company or any of its subsidiaries of another entity or business, the fee shall
be increased by an amount equal to 0.2% of the consolidated annual net sales of
the acquired entity or business and its subsidiaries for the trailing
twelve-month period (an "Acquisition Increment"). Thomas O. Hicks and Jack D.
Furst, directors of Holding and the Company, are each principals of Hicks Muse
Partners. Hicks Muse Partners is also entitled to reimbursement for any expenses
incurred by it in connection with rendering services allocable to Holding or the
Company under the Monitoring and Oversight Agreement. In addition, Holding and
the Company have agreed to indemnify Hicks Muse Partners, its affiliates and
their respective directors, officers, controlling persons, agents and employees
from and against all claims, liabilities, losses, damages expenses, and fees and
disbursement of counsel related to or arising out of or in connection with the
services rendered by Hicks Muse Partners under the Monitoring and Oversight
Agreement and not resulting primarily from the bad faith, gross negligence or
willful misconduct of Hicks Muse Partners. The Monitoring and Oversight
Agreement makes available the resources of Hicks Muse Partners concerning a
variety of financial and operational matters. The Company does not believe that
the services that have been and will continue to be provided to Holding and the
Company pursuant to the Monitoring and Oversight Agreement could otherwise be
obtained by Holding and the Company without the addition of personnel or the
engagement of outside professional advisors. In the Company's opinion, the fees
provided for under the Monitoring and Oversight Agreement reasonably reflect the
benefits received and to be received by Holding, the Company and their
respective subsidiaries.

Financial Advisory Agreement

In connection with the investment by affiliates of Hicks Muse in Holding,
Holding and the Company entered into a ten-year agreement (the "Financial
Advisory Agreement") pursuant to which Hicks Muse Partners received a financial
advisory fee of $4.9 million as compensation for its services as financial
advisor to the Company. Hicks Muse Partners also is entitled to receive a fee
equal to 1.5% of the "Transaction Value" (as defined) for each "Add-on
Transaction" (as defined) in which Holding or the Company is involved. The term
"Transaction Value" means the total value of the Add-on Transaction, including,
without limitation, the aggregate amount of the funds required to complete the
Add-on Transaction, including the amount of any indebtedness, preferred stock or
similar items assumed (or remaining outstanding). The term "Add-on Transaction"
means any

57
<PAGE> 62

respective subsidiaries, and any other person or entity, excluding, however, any
acquisition which does not involve the use of (or any waiver or consent under)
any debt equity financing and in which neither Hicks Muse Partners nor any other
person or entity provides financial advisory investment on banking or similar
services. In addition, Holding and the Company, jointly and severally, have
agreed to indemnify Hicks Muse Partners, its affiliates, and their respective
directors, officers, controlling persons, agents and employees from and against
all claims, liabilities, losses, damages, expenses and fees related to or
arising out of or in connection with the services rendered by Hicks Muse
Partners under the Financial Advisory Agreement and not resulting primarily from
the bad faith, gross negligence, or willful misconduct of Hicks Muse Partners.
The Financial Advisory Agreement makes available the resources of Hicks Muse
Partners concerning a variety of financial and operational matters. The Company
does not believe that the services that have been and will continue to be
provided by Hicks Muse Partners pursuant to the Financial Advisory Agreement
could otherwise be obtained by Holding and the Company without the addition of
personnel or the engagement of outside professional advisors. In the Company's
opinion, the fees provided for under the Financial Advisory Agreement reasonably
reflect the benefits received and to be received by Holding and the Company.

Stockholders Agreement

Each holder of Holding Common Stock has entered into a stockholders
agreement (the "Stockholders Agreement"). The Stockholders Agreement, among
other things, grants preemptive rights and certain registration rights to the
parties thereto and contains provisions requiring the parties thereto to sell
their shares of Holding Common Stock in connection with certain sales of Holding
Common Stock by the HMC Group (as defined therein) ("drag-along rights") and
granting the parties thereto the right to include a portion of their shares of
Holding Common Stock in certain sales in which other holders may engage
("tag-along rights"). All parties to the Stockholders Agreement agree that the
HMC Group is entitled to designate two individuals to the Board of Directors of
Holding and the Company so long as the HMC Group owns at least 10% of the voting
capital stock of Holding or one individual so long as the HMC Group owns at
least 5% but less than 10% of the voting capital stock of Holding; Messrs. Glenn
and Preston Staats are entitled to designate two individuals to the Board of
Directors of Holding and the Company so long as Messrs. Glenn and Preston Staats
together own at least 10% of the voting capital stock of Holding or one
individual so long as Messrs. Glenn and Preston Staats together own at least 5%
but less than 10% of the voting capital stock of Holding; and any remaining
positions on the Board of Directors of Holding and the Company will be
independent directors mutually acceptable to Hicks, Muse, Tate & Furst
Incorporated, an affiliate of Hicks Muse and the HMC Group, and Messrs. Glenn
and Preston Staats. In addition, all parties to the Stockholders Agreement agree
to vote any shares which it may vote on any particular matter which comes before
the Company's stockholders as a separate classes or series, on such matter as
holders of a majority of the outstanding shares of Holding Common Stock voted
thereon.

Lease of Corporate Offices

The Company's principal executive offices are leased from a corporation
which is wholly owned by Messrs. Glenn and Preston Staats. In fiscal 1997, the
rental payments for such facility were $450,000.

The Company's Livermore, California offices are leased from Triad Park,
LLC. James R. Porter, Chairman of the Board of Directors of the Company, is an
officer, director and stockholder of the sole manager of Triad Park, LLC. The
rental payment for 1998 under the lease will be approximately $2.5 million.

58
<PAGE> 63

Lease of Corporate Aircraft

The Company leases an airplane for general corporate use from a corporation
which is wholly owned by Mr. Glenn Staats. Lease payments, which the Company
believes reasonably reflect the benefits thereof, totaled $466,000 in fiscal
1997.

Related Officers

Sharon W. Staats, the wife of Mr. Preston Staats, served as Vice President
of Special Projects during 1997 and earned compensation of $93,900, in fiscal
1997.

THE EXCHANGE OFFER

PURPOSE AND EFFECT

The Old Notes were sold by the Company on February 10, 1998, in the
Offering. In connection with that placement, the Company entered into the
Registration Rights Agreement, which requires that the Company file the
Registration Statement under the Securities Act with respect to the New Notes
and, upon the effectiveness of that Registration Statement, offer to the holders
of the Old Notes the opportunity to exchange their Old Notes for a like
principal amount of New Notes, which will be issued without a restrictive legend
and which generally may be reoffered and resold by the holder without
registration under the Securities Act. The Registration Rights Agreement further
provides that the Company must use its best efforts to (i) cause the
Registration Statement with respect to the Exchange Offer to be declared
effective on or before August 7, 1998 and (ii) consummate the Exchange Offer on
or before October 23, 1998. Except as provided below, upon the completion of the
Exchange Offer, the Company's obligations with respect to the registration of
the Old Notes and the New Notes will terminate. A copy of the Registration
Rights Agreement has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part and the summary herein of certain provisions
thereof does not purport to be complete and is qualified in its entirety by
reference thereto. As a result of the filing and the effectiveness of the
Registration Statement, certain liquidated damages provided for in the
Registration Rights Agreement will not become payable by the Company. Following
the completion of the Exchange Offer (except as set forth in the paragraph
immediately below), holders of Old Notes not tendered will not have any further
registration rights and those Old Notes will continue to be subject to certain
restrictions on transfer. Accordingly, the liquidity of the market for the Old
Notes could be adversely affected upon completion of the Exchange Offer.

In order to participate in the Exchange Offer, a holder must represent to
the Company, among other things, that (i) the New Notes acquired pursuant to the
Exchange Offer are being obtained in the ordinary course of business of the
person receiving the New Notes, (ii) neither the holder nor any such other
person is engaging in or intends to engage in a distribution of the New Notes,
(iii) neither the holder nor any such other person has an arrangement or
understanding with any person to participate in the distribution of the New
Notes and (iv) neither the holder nor any such other person is an "affiliate,"
as defined under Rule 405 promulgated under the Securities Act, of the Company.
Pursuant to the Registration Rights Agreement, the Company is required to file a
"shelf" registration statement for a continuous offering pursuant to Rule 415
under the Securities Act in respect of the Old Notes if (i) because of any
change in law or applicable interpretations of the staff of the Commission, the
Company is not permitted to effect the Exchange Offer, (ii) the Exchange Offer
is not consummated within 225 days of the Offering, (iii) any holder of Private
Exchange Securities (as defined) requests within 60 days after the Exchange
Offer, (iv) any applicable law or interpretations do not permit any holder of
Old Notes to participate in the Exchange Offer, (v) any holder of Old Notes
participates in the Exchange Offer and does not receive freely transferrable New
Notes in exchange for Old Notes or (vi) the Company so elects. In the event that
the Company is obligated to file a "shelf" registration statement, it will be
required to

59
<PAGE> 64

keep such "shelf" registration statement effective for at least three years.
Other than as set forth in this paragraph, no holder will have the right to
participate in the "shelf" registration statement nor otherwise to require that
the Company register such holder's shares of Old Notes under the Securities Act.
See "-- Procedures for Tendering."

Based on an interpretation by the Commission's staff set forth in no-action
letters issued to third-parties unrelated to the Company, the Company believes
that, with the exceptions set forth below, New Notes issued pursuant to the
Exchange Offer in exchange for Old Notes may be offered for resale, resold and
otherwise transferred by any person receiving such New Notes, whether or not
such person is the registered holder (other than any such holder or such other
person which is an "affiliate" of the Company within the meaning of Rule 405
under the Securities Act) without compliance with the registration and
prospectus delivery provisions of the Securities Act, provided that the New
Notes are acquired in the ordinary course of business of the holder or such
other person and neither the holder nor such other person has an arrangement or
understanding with any person to participate in the distribution of such New
Notes. Any holder who tenders in the Exchange Offer for the purpose of
participating in a distribution of the New Notes cannot rely on this
interpretation by the Commission's staff and must comply with the registration
and prospectus delivery requirements of the Securities Act in connection with a
secondary resale transaction. Each broker-dealer that receives New Notes for its
own account in exchange for Old Notes, where the Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. See "Plan of Distribution."

CONSEQUENCES OF FAILURE TO EXCHANGE

Following the completion of the Exchange Offer (except as set forth in the
second paragraph under "-- Purpose and Effect" above), holders of Old Notes not
tendered will not have any further registration rights and those Old Notes will
continue to be subject to certain restrictions on transfer. Accordingly, the
liquidity of the market for a holder's Old Notes could be adversely affected
upon completion of the Exchange Offer if the holder does not participate in the
Exchange Offer.

TERMS OF THE EXCHANGE OFFER

Upon the terms and subject to the conditions set forth in this Prospectus
and in the Letter of Transmittal, the Company will accept any and all Old Notes
validly tendered and not withdrawn prior to 5:00 p.m., New York City time, on
the Expiration Date. The Company will issue $1,000 principal amount of New Notes
in exchange for each $1,000 principal amount of outstanding Old Notes accepted
in the Exchange Offer. Holders may tender some or all of their Old Notes
pursuant to the Exchange Offer. However, Old Notes may be tendered only in
integral multiples of $1,000 in principal amount.

The form and terms of the New Notes are substantially the same as the form
and terms of the Old Notes except that the New Notes have been registered under
the Securities Act and will not bear legends restricting their transfer. The New
Notes will evidence the same debt as the Old Notes and will be issued pursuant
to, and entitled to the benefits of, the Indenture pursuant to which the Old
Notes were issued.

As of March 31, 1998, Old Notes representing $100,000,000 aggregate
principal amount were outstanding and there was one registered holder, a nominee
of DTC. This Prospectus, together with the Letter of Transmittal, is being sent
to such registered Holder and to others believed to have beneficial interests in
the Old Notes. The Company intends to conduct the Exchange Offer in accordance
with the applicable requirements of the Exchange Act and the rules and
regulations of the Commission promulgated thereunder.

The Company shall be deemed to have accepted validly tendered Old Notes
when, as, and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will
60
<PAGE> 65

act as agent for the tendering holders for the purpose of receiving the New
Notes from the Company. If any tendered Old Notes are not accepted for exchange
because of an invalid tender, the occurrence of certain other events set forth
herein or otherwise, certificates for any such unaccepted Old Notes will be
returned, without expense, to the tendering holder thereof as promptly as
practicable after the Expiration Date.

Holders who tender Old Notes in the Exchange Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Old Notes
pursuant to the Exchange Offer. The Company will pay all charges and expenses,
other than certain applicable taxes, in connection with the Exchange Offer. See
"The Exchange Offer -- Fees and Expenses."

EXPIRATION DATE; EXTENSIONS; AMENDMENTS

The term "Expiration Date" shall mean 5:00 p.m., New York City time, on
, 1998, unless the Company, in its sole discretion, extends the
Exchange Offer, in which case the term "Expiration Date" shall mean the latest
date and time to which the Exchange Offer is extended. In order to extend the
Exchange Offer, the Company will issue a notice of any extension by press
release or other public announcement prior to 9:00 a.m., New York City time, on
the next business day after the previously scheduled Expiration Date. The
Company reserves the right, in its sole discretion, (i) to delay accepting any
Old Notes, to extend the Exchange Offer or, if any of the conditions set forth
under "The Exchange Offer -- Certain Conditions to Exchange Offer" shall not
have been satisfied, to terminate the Exchange Offer, by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, or (ii) to
amend the terms of the Exchange Offer in any manner.

PROCEDURES FOR TENDERING

Only a holder of Old Notes may tender the Old Notes in the Exchange Offer.
Except as set forth under "The Exchange Offer -- Book Entry Transfer," to tender
in the Exchange Offer a holder must complete, sign, and date the Letter of
Transmittal, or a copy thereof, have the signatures thereon guaranteed if
required by the Letter of Transmittal, and mail or otherwise deliver the Letter
of Transmittal or copy to the Exchange Agent prior to the Expiration Date. In
addition, either (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, prior to the Expiration
Date or (ii) a timely confirmation of a book-entry transfer (a "Book-Entry
Confirmation") of such Old Notes, if that procedure is available, into the
Exchange Agent's account at DTC (the "Book-Entry Transfer Facility") pursuant to
the procedure for book-entry transfer described below, must be received by the
Exchange Agent prior to the Expiration Date, or (iii) the holder must comply
with the guaranteed delivery procedures described below. To be tendered
effectively, the Letter of Transmittal and other required documents must be
received by the Exchange Agent at the address set forth under "The Exchange
Offer -- Exchange Agent" prior to the Expiration Date.

The tender by a holder that is not withdrawn before the Expiration Date
will constitute an agreement between that holder and the Company in accordance
with the terms and subject to the conditions set forth herein and in the Letter
of Transmittal.

THE METHOD OF DELIVERY OF OLD NOTES AND THE LETTER OF TRANSMITTAL AND ALL
OTHER REQUIRED DOCUMENTS TO THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF
THE HOLDER. INSTEAD OF DELIVERY BY MAIL, IT IS RECOMMENDED THAT HOLDERS USE AN
OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE DELIVERY TO THE EXCHANGE AGENT BEFORE THE EXPIRATION DATE. NO
LETTER OF TRANSMITTAL OR OLD NOTES SHOULD BE SENT TO THE COMPANY. HOLDERS MAY
REQUEST THEIR RESPECTIVE BROKERS, DEALERS, COMMERCIAL BANKS,

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<PAGE> 66

TRUST COMPANIES, OR NOMINEES TO EFFECT THESE TRANSACTIONS FOR SUCH HOLDERS.

Any beneficial owner whose Old Notes are registered in the name of a
broker, dealer, commercial bank, trust company, or other nominee and who wishes
to tender should contact the registered holder promptly and instruct the
registered holder to tender on the beneficial owner's behalf. If the beneficial
owner wishes to tender on the owner's own behalf, the owner must, prior to
completing and executing the Letter of Transmittal and delivering the owner's
Old Notes, either make appropriate arrangements to register ownership of the Old
Notes in the beneficial owner's name or obtain a properly completed bond power
from the registered holder. The transfer of registered ownership may take
considerable time.

Signatures on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed by an Eligible Institution (as defined below)
unless Old Notes tendered pursuant thereto are tendered (i) by a registered
holder who has not completed the box entitled "Special Registration Instruction"
or "Special Delivery Instructions" on the Letter of Transmittal or (ii) for the
account of an Eligible Institution. If signatures on a Letter of Transmittal or
a notice of withdrawal, as the case may be, are required to be guaranteed, the
guarantee must be by any eligible guarantor institution that is a member of or
participant in the Securities Transfer Agents Medallion Program, the New York
Stock Exchange Medallion Signature Program, the Stock Exchange Medallion
Program, or an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (an "Eligible Institution").

If the Letter of Transmittal is signed by a person other than the
registered holder of any Old Notes listed therein, the Old Notes must be
endorsed or accompanied by a properly completed bond power, signed by the
registered holder as that registered holder's name appears on the Old Notes.

If the Letter of Transmittal or any Old Notes or bond powers are signed by
trustees, executors, administrators, guardians, attorneys-in-fact, officers of
corporations, or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and evidence satisfactory to the
Company of their authority to so act must be submitted with the Letter of
Transmittal unless waived by the Company.

All questions as to the validity, form, eligibility (including time of
receipt), acceptance, and withdrawal of tendered Old Notes will be determined by
the Company in its sole discretion, which determination will be final and
binding. The Company reserves the absolute right to reject any and all Old Notes
not properly tendered or any Old Notes the Company's acceptance of which would,
in the opinion of counsel for the Company, be unlawful. The Company also
reserves the right to waive any defects, irregularities, or conditions of tender
as to particular Old Notes. The Company's interpretation of the terms and
conditions of the Exchange Offer (including the instructions in the Letter of
Transmittal) will be final and binding on all parties. Unless waived, any
defects or irregularities in connection with tenders of Old Notes must be cured
within such time as the Company shall determine. Although the Company intends to
notify holders of defects or irregularities with respect to tenders of Old
Notes, neither the Company, the Exchange Agent, nor any other person shall incur
any liability for failure to give such notification. Tenders of Old Notes will
not be deemed to have been made until such defects or irregularities have been
cured or waived. Any Old Notes received by the Exchange Agent that are not
properly tendered and as to which the defects or irregularities have not been
cured or waived will be returned by the Exchange Agent to the tendering holders,
unless otherwise provided in the Letter of Transmittal, as soon as practicable
following the Expiration Date.

In addition, the Company reserves the right in its sole discretion to
purchase or make offers for any Old Notes that remain outstanding after the
Expiration Date or, as set forth under "The Exchange Offer -- Conditions," to
terminate the Exchange Offer and, to the extent permitted by applicable law,
purchase Old Notes in the open market, in privately negotiated transactions, or
otherwise. The terms of any such purchases or offers could differ from the terms
of the Exchange Offer.
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<PAGE> 67

By tendering, each holder will represent to the Company that, among other
things, (i) the New Notes acquired pursuant to the Exchange Offer are being
obtained in the ordinary course of business of the person receiving such New
Notes, whether or not such person is the registered holder, (ii) neither the
holder nor any such other person is engaging in or intends to engage in a
distribution of such New Notes, (iii) neither the holder nor any such other
person has an arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) neither the holder nor any such other
person is an "affiliate," as defined under Rule 405 of the Securities Act, of
the Company.

In all cases, issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal (or, with respect to the DTC and its participants, electronic
instructions in which the tendering holder acknowledges its receipt of and
agreement to be bound by the Letter of Transmittal), and all other required
documents. If any tendered Old Notes are not accepted for any reason set forth
in the terms and conditions of the Exchange Offer or if Old Notes are submitted
for a greater principal amount than the holder desires to exchange, such
unaccepted or non-exchanged Old Notes will be returned without expense to the
tendering Holder thereof (or, in the case of Old Notes tendered by book-entry
transfer into the Exchange Agent's account at the Book-Entry Transfer Facility
pursuant to the book-entry transfer procedures described below, such
nonexchanged Old Notes will be credited to an account maintained with such
Book-Entry Transfer Facility) as promptly as practicable after the expiration or
termination of the Exchange Offer.

Each broker-dealer that receives New Notes for its own account in exchange
for Old Notes, where the Old Notes were acquired by such broker-dealer as a
result of market-making activities or other trading activities, must acknowledge
that it will deliver a prospectus in connection with any resale of such New
Notes. See "Plan of Distribution."

BOOK-ENTRY TRANSFER

The Exchange Agent will make a request to establish an account with respect
to the Old Notes at the Book-Entry Transfer Facility for purposes of the
Exchange Offer within two business days after the date of this Prospectus, and
any financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes being tendered by
causing the Book-Entry Transfer Facility to transfer such Old Notes into the
Exchange Agent's account at the Book-Entry Transfer Facility in accordance with
such Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the
Book-Entry Transfer Facility, the Letter of Transmittal or copy thereof, with
any required signature guarantees and any other required documents, must, in any
case other than as set forth in the following paragraph, be transmitted to and
received by the Exchange Agent at the address set forth under "The Exchange
Offer -- Exchange Agent" on or prior to the Expiration Date or the guaranteed
delivery procedures described below must be complied with.

DTC's Automated Tender Offer Program ("ATOP") is the only method of
processing exchange offers through DTC. To accept the Exchange Offer through
ATOP, participants in DTC must send electronic instructions to DTC through DTC's
communication system in lieu of sending a signed, hard copy Letter of
Transmittal. DTC is obligated to communicate those electronic instructions to
the Exchange Agent. To tender Old Notes through ATOP, the electronic
instructions sent to DTC and transmitted by DTC to the Exchange Agent must
contain the character by which the participant acknowledges its receipt of and
agrees to be bound by the Letter of Transmittal.

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<PAGE> 68

GUARANTEED DELIVERY PROCEDURES

If a registered holder of the Old Notes desires to tender such Old Notes
and the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of Old Notes and the amount of Old Notes tendered, stating
that the tender is being made thereby and guaranteeing that within three New
York Stock Exchange ("NYSE") trading days after the date of execution of the
Notice of Guaranteed Delivery, the certificates for all physically tendered Old
Notes, in proper form for transfer, or a Book-Entry Confirmation, as the case
may be, and any other documents required by the Letter of Transmittal will be
deposited by the Eligible Institution with the Exchange Agent, and (iii) the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and all other documents
required by the Letter of Transmittal, are received by the Exchange Agent within
three NYSE trading days after the date of execution of the Notice of Guaranteed
Delivery.

WITHDRAWAL RIGHTS

Tenders of Old Notes may be withdrawn at any time prior to 5:00 pm., New
York City time, on the Expiration Date.

For a withdrawal of a tender of Old Notes to be effective, a written or
(for DTC participants) electronic ATOP transmission notice of withdrawal must be
received by the Exchange Agent at its address set forth on the back cover page
of this Prospectus prior to 5:00 pm., New York City time, on the Expiration
Date. Any such notice of withdrawal must (i) specify the name of the person
having deposited the Old Notes to be withdrawn (the "Depositor"), (ii) identify
the Old Notes to be withdrawn (including the certificate number or numbers and
principal amount of such Old Notes), (iii) be signed by the holder in the same
manner as the original signature on the Letter of Transmittal by which such Old
Notes were tendered (including any required signature guarantees) or be
accompanied by documents of transfer sufficient to have the Trustee register the
transfer of such Old Notes into the name of the person withdrawing the tender,
and (iv) specify the name in which any such Old Notes are to be registered, if
different from that of the Depositor. All questions as to the validity, form,
and eligibility (including time of receipt) of such notices will be determined
by the Company, whose determination shall be final and binding on all parties.
Any Old Notes so withdrawn will be deemed not to have been validly tendered for
exchange for purposes of the Exchange Offer. Any Old Notes which have been
tendered for exchange but which are not exchanged for any reason will be
returned to the holder thereof without cost to such holder as soon as
practicable after withdrawal, rejection of tender, or termination of the
Exchange Offer. Properly withdrawn Old Notes may be retendered by following one
of the procedures under "The Exchange Offer -- Procedures for Tendering" at any
time on or prior to the Expiration Date.

CONDITIONS TO THE EXCHANGE OFFER

Notwithstanding any other provision of the Exchange Offer, the Company
shall not be required to accept for exchange, or to issue New Notes in exchange
for, any Old Notes and may terminate or amend the Exchange Offer if at any time
before the acceptance of such Old Notes for exchange or the exchange of the New
Notes for such Old Notes, the Company determines that the Exchange Offer
violates applicable law, any applicable interpretation of the staff of the
Commission or any order of any governmental agency or court of competent
jurisdiction.

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<PAGE> 69

The foregoing conditions are for the sole benefit of the Company and may be
asserted by the Company regardless of the circumstances giving rise to any such
condition or may be waived by the Company in whole or in part at any time and
from time to time in its sole discretion. The failure by the Company at any time
to exercise any of the foregoing rights shall not be deemed a waiver of any such
right and each such right shall be deemed an ongoing right which may be asserted
at any time and from time to time.

In addition, the Company will not accept for exchange any Old Notes
tendered, and no New Notes will be issued in exchange for any such Old Notes, if
at such time any stop order shall be threatened or in effect with respect to the
Registration Statement of which this Prospectus constitutes a part or the
qualification of the Indenture under the Trust Indenture Act of 1939, as amended
(the "TIA"). In any such event the Company is required to use every reasonable
effort to obtain the withdrawal of any stop order at the earliest possible time.

EXCHANGE AGENT

All executed Letters of Transmittal should be directed to the Exchange
Agent. U.S. Trust Company of Texas, N.A. has been appointed as Exchange Agent
for the Exchange Offer. Questions, requests for assistance and requests for
additional copies of this Prospectus or of the Letter of Transmittal should be
directed to the Exchange Agent addressed as follows:

Deliver to:
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, EXCHANGE AGENT

<TABLE>
<S> <C> <C>
By Registered or Certified
Mail: By Overnight Courier: By Hand Delivery:

Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A. Norwest Bank Minnesota, N.A.
Corporate Trust Operations Corporate Trust Services Northstar East Building
P.O. Box 1517 Sixth and Marquette Avenue 608 Second Avenue South,
Minneapolis, MN 55480-1517 Minneapolis, MN 55479-0113 12th Floor
Corporate Trust Services
Minneapolis, MN

Facsimile Transmission Number:
(For Eligible Institutions
Only)
(612) 667-4927
Confirm Receipt of Facsimile
by Telephone:
(612) 667-9764
</TABLE>

(Originals of all documents sent by facsimile should be sent promptly by
registered or certified mail, by hand, or by overnight delivery service.)

FEES AND EXPENSES

The Company will not make any payments to brokers, dealers, or others
soliciting acceptances of the Exchange Offer. The principal solicitation is
being made by mail; however, additional solicitations may be made in person or
by telephone by officers and employees of the Company.

The estimated cash expenses to be incurred in connection with the Exchange
Offer will be paid by the Company and are estimated in the aggregate to be
$235,000, which includes fees and expenses of the Exchange Agent, accounting,
legal, printing, and related fees and expenses.

TRANSFER TAXES

Holders who tender their Old Notes for exchange will not be obligated to
pay any transfer taxes in connection therewith, except that holders who instruct
the Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
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<PAGE> 70

DESCRIPTION OF THE RESTATED SENIOR CREDIT FACILITIES

The description set forth below does not purport to be complete and is
qualified in its entirety by reference to the definitive agreements setting
forth the principal terms and conditions of the Restated Senior Credit
Facilities. Capitalized terms used in this "Description of the Restated Senior
Credit Facilities" but not otherwise defined in this Prospectus have the
meanings ascribed to them in the Restated Senior Credit Facilities.

General. The Restated Senior Credit Facilities is provided by a syndicate
of banks and other financial institutions (the "Lenders") for which The Chase
Manhattan Bank acts as administrative agent (the "Administrative Agent"), and
Chase Securities Inc. acts as arranger. The Restated Senior Credit Facilities
provides for a borrowing of $50.0 million (the "New Term Loan") under a term
loan facility (the "New Term Loan Facility") and for borrowings of up to $50.0
million under a revolving credit facility (the "New Revolving Credit Facility"
and together with the Term Loan Facility, the "Restated Senior Credit
Facilities"). The Restated Senior Credit Facilities may be amended at any time
in accordance with the terms thereof.

New Term Loan. The New Term Loan is repayable in 17 consecutive quarterly
installments, commencing on March 31, 1999 and ending on March 31, 2003. For the
period March 31, 1999 through September 30, 1999, the principal amount repayable
per quarter will be $2,000,000; for the period December 31, 1999 through
September 30, 2000, $2,500,000; for the period December 31, 2000 through
September 30, 2001, $3,000,000; for the period December 31, 2001 through
September 30, 2002, $3,500,000; and for the period December 31, 2002 through
March 31, 2003, $4,000,000.

New Revolving Credit Loans. The New Revolving Credit Facility provides for
borrowings of up to $50.0 million (the "New Revolving Credit Loans" and together
with the New Term Loan, the "New Loans"), of which $21.7 million has been drawn,
as of March 31, 1998. In addition, the New Revolving Credit Loans are available
for use in the form of Letters of Credit in an amount not to exceed $15.0
million and Swing Line Loans in an amount not to exceed $10.0 million. The New
Revolving Credit Facility is available on a revolving basis ending on the
earlier of (i) March 31, 2003 and (ii) the date on which the New Term Loan
matures or is repaid in full. The proceeds of the undrawn portion of the New
Revolving Credit Loans will be used for working capital purposes and other
general corporate purposes of the Borrower and its subsidiaries, including
funding capital expenditures, investments and acquisitions.

Interest. For purposes of calculating interest, the Borrower may elect that
all or a portion of the New Loans bear interest at the Alternate Base Rate
("ABR") plus the Applicable Margin ("ABR Loans") or at the Eurodollar Rate plus
the Applicable Margin ("Eurodollar Loans"). Prior to February 10, 1999, the
Applicable Margin for ABR Loans and Eurodollar Loans will be 1.25% and 2.25%,
respectively. Thereafter, if the ratio of Total Debt to Consolidated EBITDA is
greater than or equal to (i) 3.75x, the Applicable Margin will be 1.25% for ABR
Loans and 2.25% for Eurodollar Loans; (ii) 3.25x, the Applicable Margin will be
1.00% for ABR Loans and 2.00% for Eurodollar Loans; and (iii) 2.75x, the
Applicable Margin will be 0.75% for ABR Loans and 1.75% for Eurodollar Loans. If
the ratio of Total Debt to Consolidated EBITDA is less than 2.75x, the
Applicable Margin will be 0.50% for ABR Loans and 1.50% for Eurodollar Loans.

Repayment and Prepayment. The New Loans may be prepaid and commitments may
be reduced by the Company in certain minimum amounts set forth in the Restated
Senior Credit Facilities. Optional prepayments of the New Term Loan will be
applied to installments thereof ratably in accordance with the then remaining
number of installments, provided that the first $10.0 million of optional
prepayments of the New Term Loans may be applied in the order directed by the
Company. The New Revolving Credit Loans will be required to be repaid to the
extent New Revolving Credit Loans and Letters of Credit extensions of credit
exceed the amount of the New Revolving Credit Facility. The Company must
mandatorily repay the New Loans, in the amounts, at the times and subject to
certain restrictions set forth in the Restated Senior Credit Facilities, from
Excess Cash
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<PAGE> 71

Flow if Total Debt to Consolidated EBITDA ratios exceed certain levels or if
Holding, the Company or any of the Company's subsidiaries makes certain
dispositions of material assets, or takes certain other actions.

Fees. The Company will pay a commitment fee calculated at a rate equal to
0.50% on the unused commitments under the Restated Senior Credit Facilities
prior to February 10, 1999. After such date, the commitment fee will be
determined and adjusted in increments based upon the ratio of Total Debt to
Consolidated EBITDA.

Security. Borrowings and other extensions of credit under the Restated
Senior Credit Facilities and guarantees thereof are secured by a first priority
perfected security interest in substantially all of the assets of the Company
and its subsidiaries, including after-acquired property.

Guarantees. The Company's payment obligations under the Restated Senior
Credit Facilities will be jointly and severally guaranteed, on a senior secured
basis, by Holding and each of its direct and indirect subsidiaries, other than
the Company, certain foreign subsidiaries and CCI/Triad Financial Holding
Corporation (the "Guarantors").

Covenants. The Restated Senior Credit Facilities contain financial
covenants pursuant to which the Company and its direct and indirect subsidiaries
must, on a consolidated basis, maintain minimum Consolidated EBITDA, maximum
Consolidated Total Debt to Consolidated EBITDA, maximum Consolidated Senior Debt
to Consolidated EBITDA, and minimum Consolidated EBITDA to Consolidated Cash
Interest Expense.

In addition, the Restated Senior Credit Facilities contain covenants
pertaining to the management and operation of the Company and its subsidiaries.
These covenants include, among others, requirements that each of the Company and
its subsidiaries (i) preserve its corporate existence and not amend its charter
or bylaws; (ii) maintain adequate insurance coverage; (iii) maintain its
properties and all necessary licenses, permits and intellectual property; (iv)
perform its obligations under leases, related documents, material contracts and
other agreements; and (v) comply with applicable laws and regulations, including
those related to tax, employee, pension and environmental matters.

The Restated Senior Credit Facilities also subject the Company and its
subsidiaries to significant limitations on indebtedness, guarantees, capital
expenditures, liens or encumbrances, mergers, consolidations, divestitures,
acquisitions, investments, capital contributions, joint ventures, partnerships,
changes of business, loans and advances, dividends and other stock payments,
repurchases or redemptions of equity, asset sales or transfers, leases, sales
and leasebacks, voluntary prepayments or repurchases or redemptions of debt,
transactions with affiliates and changes in accounting treatment.

Events of Default. The Restated Senior Credit Facilities provide for events
of default customarily found in facilities of this type, including: (i) failure
to pay principal or interest or fees when due; (ii) any representation or
warranty proving to have been materially incorrect when made; (iii) failure to
perform or observe covenants after any applicable grace period; (iv)
cross-defaults to other material indebtedness; (v) bankruptcy defaults; (vi)
material judgment defaults; (vii) change of control; (viii) ERISA defaults; (ix)
any loan document ceasing to be in full force and effect; (x) any interest
created by the related security documents ceasing to be enforceable and of the
same effect and priority purported to be created thereby; and (xi) failure of
the Notes to be validly subordinated to the Restated Senior Credit Facilities.

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<PAGE> 72

DESCRIPTION OF NEW NOTES

GENERAL

The New Notes are to be issued under an Indenture, dated as of February 10,
1998 (the "Indenture"), between the Company and Norwest Bank Minnesota, N.A., as
trustee (the "Trustee"). The following summary of certain provisions of the
Indenture and the New Notes does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, all the provisions of the
Indenture (including the definitions of certain terms therein and those terms
made a part thereof by the Trust Indenture Act of 1939, as amended) and the New
Notes.

Principal of, premium, if any, and interest on the New Notes will be
payable, and the New Notes may be exchanged or transferred, at the office or
agency of the Company in the Borough of Manhattan, The City of New York (which
initially shall be the corporate trust office of the Trustee in New York, New
York), except that, at the option of the Company, payment of interest may be
made by check mailed to the address of the holders as such address appears in
the note register.

The New Notes will be issued in fully registered form only, without
coupons, in denominations of $1,000 and integral multiples thereof. Initially,
the Trustee will act as Paying Agent and Registrar for the New Notes. The New
Notes may be presented for registration of transfer and exchange at the offices
of the Registrar, which initially will be the Trustee's corporate trust office.
The Company may change any Paying Agent and Registrar without notice to holders
of the Notes.

PRINCIPAL, MATURITY AND INTEREST

The New Notes will be unsecured, senior subordinated obligations of the
Company and will be limited to $100,000,000 aggregate principal amount, and will
mature on February 1, 2008. Interest on the New Notes will accrue at the rate
per annum equal to 9% and will be payable in cash semi-annually on February 1
and August 1 commencing on August 1, 1998, to holders of record on the
immediately preceding January 15 and July 15. Interest on the New Notes will
accrue from the most recent date to which interest has been paid or, if no
interest has been paid, from February 6, 1998. Interest will be computed on the
basis of a 360-day year comprised of twelve 30-day months.

OPTIONAL REDEMPTION

The New Notes may be redeemed at any time on or after February 1, 2003, in
whole or in part, at the option of the Company, at the redemption prices
(expressed as a percentage of the principal amount thereof on the applicable
redemption date) set forth below, plus accrued and unpaid interest, if any, to
the redemption date, if redeemed during the 12-month period beginning on of each
of the years set forth below:

<TABLE>
<CAPTION>
YEAR PERCENTAGE
---- ----------
<S> <C>
2003........................................................ 104.500%
2004........................................................ 103.000%
2005........................................................ 101.500%
2006 and thereafter......................................... 100.000%
</TABLE>

In addition, prior to February 1, 2002, the Company may, at its option, use
the net cash proceeds of one or more Equity Offerings to redeem up to 35% of the
principal amount of the Notes at a redemption price equal to 109% of the
principal amount thereof plus accrued and unpaid interest to the redemption
date; provided, however, that after any such redemption, at least 65% of the
aggregate principal amount of the Notes would remain outstanding immediately
after giving effect to such redemption. Any such redemption will be required to
occur on or prior to the date that

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<PAGE> 73

is one year after the receipt by the Company of the proceeds of an Equity
Offering. The Company shall effect such redemption on a pro rata basis.

In addition, prior to February 1, 2003, the Company may, at its option,
redeem the New Notes upon a Change of Control. See "-- Change of Control."

SELECTION AND NOTICE

If less than all of the New Notes are to be redeemed at any time, selection
of New Notes for redemption will be made by the Trustee in compliance with the
requirements of the principal national securities exchange, if any, on which the
New Notes are listed or, in the absence of such requirements or if the New Notes
are not so listed, on a pro rata basis, provided that no New Notes of $1,000 or
less shall be redeemed in part. Notice of redemption shall be mailed by first
class mail at least 30 but not more than 60 days before the redemption date to
each holder of New Notes to be redeemed at its registered address. If any New
Note is to be redeemed in part only, the notice of redemption that relates to
such New Note shall state the portion of the principal amount thereof to be
redeemed. A new New Note in principal amount equal to the unredeemed portion
thereof will be issued in the name of the holder thereof upon cancellation of
the original New Note. On and after the redemption date, interest ceases to
accrue on New Notes or portions of them called for redemption.

CHANGE OF CONTROL

The Indenture provides that, upon the occurrence of a Change of Control,
each holder will have the right to require that the Company purchase all or a
portion of such holder's New Notes in cash pursuant to the offer described below
(the "Change of Control Offer"), at a purchase price equal to 101% of the
principal amount thereof plus accrued and unpaid interest, if any, to the date
of purchase.

The Indenture provides that, prior to the mailing of the notice referred to
below, but in any event within 30 days following the date on which the Company
becomes aware that a Change of Control has occurred, if the purchase of the New
Notes would violate or constitute a default under any other Indebtedness of the
Company, then the Company shall, to the extent needed to permit such purchase of
New Notes, either (i) repay all such Indebtedness and terminate all commitments
outstanding thereunder or (ii) obtain the requisite consents, if any, under any
such Indebtedness required to permit the purchase of the New Notes as provided
below. The Company will first comply with the covenant in the preceding sentence
before it will be required to make the Change of Control Offer or purchase the
New Notes pursuant to the provisions described below.

Within 30 days following the date on which the Company becomes aware that a
Change of Control has occurred, the Company must send, by first-class mail
postage prepaid, a notice to each holder of New Notes, which notice shall govern
the terms of the Change of Control Offer. Such notice shall state, among other
things, the purchase date, which must be no earlier than 30 days nor later than
45 days from the date such notice is mailed, other than as may be required by
law (the "Change of Control Payment Date"). Holders electing to have any New
Notes purchased pursuant to a Change of Control Offer will be required to
surrender such New Notes to the paying agent and registrar for the New Notes at
the address specified in the notice prior to the close of business on the
business day prior to the Change of Control Payment Date.

In addition, the Indenture provides that, prior to February 1, 2003, upon
the occurrence of a Change of Control, the Company will have the option to
redeem the New Notes in whole but not in part (a "Change of Control Redemption")
at a redemption price equal to 100% of the principal amount thereof, plus
accrued and unpaid interest to the redemption date plus the Applicable Premium.
In order to effect a Change of Control Redemption, the Company must send a
notice to each holder of New Notes, which notice shall govern the terms of the
Change of Control Redemption. Such notice must be mailed to holders of the New
Notes within 30 days following the

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<PAGE> 74

date the Change of Control occurred (the "Change of Control Redemption Date")
and state that the Company is effecting a Change of Control Redemption in lieu
of a Change of Control Offer.

"Applicable Premium" means, with respect to a New Note at any Change of
Control Redemption Date, the greater of (i) 1.0% of the principal amount of such
New Note and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Note at February 1, 2003 (such redemption price being
described under "-- Optional Redemption") plus (2) all semi-annual payments of
interest through February 1, 2003, computed using a discount rate equal to the
Treasury Rate plus 75 basis points over (B) the principal amount of such New
Note.

"Treasury Rate" means the yield to maturity at the time of computation of
United States Treasury securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) that
has become publicly available at least two business days prior to the Change of
Control Redemption Date (or, if such Statistical Release is no longer published,
any publicly available source or similar market data)) most nearly equal to the
period from the Change of Control Redemption Date to February 1, 2003; provided,
however, that if the period from the Change of Control Redemption Date to
February 1, 2003 is not equal to the constant maturity of a United States
Treasury security for which a weekly average yield is given, the Treasury Rate
shall be obtained by linear interpolation (calculated to the nearest one-twelfth
of a year) from the weekly average yields of United States Treasury securities
for which such yields are given except that if the period from the Change of
Control Redemption Date to February 1, 2003 is less than one year, the weekly
average yield on actually traded United States Treasury securities adjusted to a
constant maturity of one year shall be used.

The Company will comply with the requirements of Rule 14e-1 under the
Securities Exchange Act of 1934, as amended, to the extent applicable in
connection with the purchase of New Notes pursuant to a Change of Control Offer.

This "Change of Control" covenant will not apply in the event of (a)
changes in a majority of the board of directors of the Company so long as a
majority of the board of directors continues to consist of Continuing Directors
and (b) certain transactions with Permitted Holders. In addition, this covenant
is not intended to afford holders of New Notes protection in the event of
certain highly leveraged transactions, reorganizations, restructurings, mergers
and other similar transactions that might adversely affect the holders of New
Notes, but would not constitute a Change of Control. The Company could, in the
future, enter into certain transactions including certain recapitalizations of
the Company, that would not constitute a Change of Control with respect to the
Change of Control purchase feature of the New Notes, but would increase the
amount of Indebtedness outstanding at such time. However, the Indenture will
contain limitations on the ability of the Company to incur additional
Indebtedness and to engage in certain mergers, consolidations and sales of
assets, whether or not a Change of Control is involved, subject, in each case,
to limitations and qualifications. See "-- Certain Covenants -- Limitation on
Incurrence of Additional Indebtedness and Issuance of Disqualified Capital
Stock" and "-- Certain Covenants -- Merger, Consolidation and Sale of Assets"
below.

With respect to the sale of "all or substantially all" the assets of the
Company, which would constitute a Change of Control for purposes of the
Indenture, the meaning of the phrase "all or substantially all" varies according
to the facts and circumstances of the subject transaction, has no clearly
established meaning under relevant law and is subject to judicial
interpretation. Accordingly, in certain circumstances there may be a degree of
uncertainty in ascertaining whether a particular transaction would involve a
disposition of "all or substantially all" of the assets of the Company and,
therefore, it may be unclear whether a Change of Control has occurred and
whether the New Notes should be subject to a Change of Control Offer.

The occurrence of certain of the events that would constitute a Change of
Control would constitute a default under the Credit Agreement. Future Senior
Indebtedness of the Company and its Subsidiaries may also contain prohibitions
of certain events that would constitute a Change of
70
<PAGE> 75

Control or require such Senior Indebtedness to be repurchased upon a Change of
Control. Moreover, the exercise by the holders of their right to require the
Company to repurchase the New Notes could cause a default under such Senior
Indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the Company. Finally, the Company's
ability to pay cash to the holders upon a repurchase may be limited by the
Company's then existing financial resources. There can be no assurance that
sufficient funds will be available when necessary to make any required
repurchases. Even if sufficient funds were otherwise available, the terms of the
Credit Agreement may prohibit the Company's prepayment of New Notes prior to
their scheduled maturity. Consequently, if the Company is not able to prepay the
Indebtedness under the Credit Agreement and any other Senior Indebtedness
containing similar restrictions or obtain requisite consents, as described
above, the Company will be unable to fulfill its repurchase obligations if
holders of New Notes exercise their repurchase rights following a Change of
Control, thereby resulting in a default under the Indenture.

None of the provisions in the Indenture relating to a purchase of New Notes
upon a Change of Control is waivable by the board of directors of the Company.
Without the consent of each holder of New Notes affected thereby, after the
mailing of the notice of a Change of Control Offer, no amendment to the
Indenture may, directly or indirectly, affect the Company's obligation to
purchase the outstanding New Notes or amend, modify or change the obligation of
the Company to consummate a Change of Control Offer or waive any default in the
performance thereof or modify any of the provisions of the definitions with
respect to any such offer.

RANKING AND SUBORDINATION

The payment of the principal of, premium (if any), and interest on and
other Obligations with respect to, the New Notes is subordinated in right of
payment, to the extent set forth in the Indenture, to the payment when due in
cash or Cash Equivalents of all Senior Indebtedness of the Company. However,
payment from the money, or the proceeds of U.S. Government Obligations, held in
any defeasance trust described under "Defeasance" below is not subordinate to
any Senior Indebtedness or subject to the restrictions described herein. As of
December 31, 1997, on a pro forma basis after giving effect to the Transaction,
the Company would have had $54.8 million of Senior Indebtedness outstanding
(excluding unused commitments). Although the Indenture contains limitations on
the amount of additional Indebtedness that the Company and its Subsidiaries may
incur, under certain circumstances the amount of such additional Indebtedness
could be substantial and, in any case, all or a portion of such Indebtedness may
be Senior Indebtedness and may be secured. See "Certain Covenants -- Limitation
on Indebtedness" below.

"Senior Indebtedness" is defined, whether outstanding on the Issue Date or
thereafter issued, as (x) all obligations under the Credit Agreement (including,
with respect to Designated Senior Indebtedness, any interest accruing after the
commencement of any such proceeding at the rate specified in the applicable
Designated Senior Indebtedness whether or not such interest is an allowed claim
enforceable against the Company in any such proceeding) and (y) all other
Indebtedness of the Company, including interest (including, with respect to
Designated Senior Indebtedness, any interest accruing after the commencement of
any such proceeding at the rate specified in the applicable Designated Senior
Indebtedness whether or not such interest is an allowed claim enforceable
against the Company in any such proceeding) and premium, if any, thereon,
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that the obligations in respect of such
Indebtedness are not superior in right of payment to the Notes; provided,
however, that Senior Indebtedness will not include (1) any obligation of the
Company to any Subsidiary, (2) any liability for federal, state, foreign, local
or other taxes owed or owing by the Company, (3) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities) or (4)
any Indebtedness, guarantee or obligation of the Company that is expressly

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subordinate or junior in right of payment to any other Indebtedness, guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness.

Only Indebtedness of the Company that is Senior Indebtedness will rank
senior to the New Notes in accordance with the provisions of the Indenture. The
New Notes will in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company. The Company has agreed in the
Indenture that it will not incur, directly or indirectly, any Indebtedness that
is subordinate or junior in ranking in any respect to Senior Indebtedness unless
such Indebtedness is Senior Subordinated Indebtedness or is contractually
subordinated in right of payment to Senior Subordinated Indebtedness. Unsecured
Indebtedness is not deemed to be subordinate or junior to Secured Indebtedness
merely because it is unsecured, nor is any Indebtedness deemed to be subordinate
or junior to other Indebtedness merely because it matures after such other
Indebtedness. Secured Indebtedness is not deemed to be Senior Indebtedness
merely because it is secured.

The Company may not pay principal of, premium (if any), or interest on, and
other Obligations with respect to, the New Notes or make any deposit pursuant to
the provisions described under "Satisfaction and Discharge or Indenture;
Defeasance" below and may not otherwise purchase or retire any New Notes
(collectively, "pay the New Notes") if (i) any Senior Indebtedness is not paid
in cash or Cash Equivalents when due or (ii) any other default on Senior
Indebtedness occurs and the maturity of such Senior Indebtedness is accelerated
in accordance with its terms unless, in either case, the default has been cured
or waived and/or any such acceleration has been rescinded or such Senior
Indebtedness has been paid; provided, however,that the Company may pay the New
Notes without regard to the foregoing if the Company and the Trustee receive
written notice approving such payment from the Representatives of the Designated
Senior Indebtedness with respect to which either of the events set forth in
clause (i) or (ii) of the immediately preceding sentence has occurred and is
continuing. During the continuance of any default (other than a default
described in clause (i) or (ii) of the preceding sentence) with respect to any
Designated Senior Indebtedness pursuant to which the maturity thereof may be
accelerated immediately without further notice (except such notice as may be
required to effect such acceleration) or the expiration of any applicable grace
periods, the Company may not pay the New Notes (except (i) in Qualified Capital
Stock issued by the Company to pay interest on the New Notes or issued in
exchange for the New Notes, (ii) in securities substantially identical to the
New Notes issued by the Company in payment of interest accrued thereon or (iii)
in securities issued by the Company which are subordinated to the Senior
Indebtedness at least to the same extent as the New Notes and having a Weighted
Average Life to Maturity at least equal to the remaining Weighted Average Life
to Maturity of the New Notes, as long as the court, in approving any payment or
distribution of stock or securities of the type described in the preceding
clauses (i)-(iii), gives effect to the subordination provisions set forth in the
Indenture) for a period (a "Payment Blockage Period") commencing upon the
receipt by the Trustee (with a copy to the Company) of written notice (a
"Blockage Notice") of such default from the Representative of the holders of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice has been cured or waived or is
no longer continuing or (iii) because such Designated Senior Indebtedness has
been repaid in full). Notwithstanding the provisions described in the
immediately preceding sentence, but subject to the provisions of the first
sentence of this paragraph and the provisions of the immediately succeeding
paragraph, the Company may resume payments on the New Notes after the end of
such Payment Blockage Period. Not more than one Blockage Notice may be given,
and not more than one payment Blockage Period may occur, in any consecutive
360-day period, irrespective of the number of defaults with respect to
Designated Senior Indebtedness during such period.

Upon any payment or distribution of the assets of the Company upon a total
or partial liquidation or dissolution or reorganization or bankruptcy of or
similar proceeding relating to the

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Company or its property, the holders of Senior Indebtedness will be entitled to
receive payment in full in cash or Cash Equivalents of the Senior Indebtedness
before the holders of the New Notes are entitled to receive any payment, and
until the Senior Indebtedness is paid in full, any payment or distribution to
which holders of the New Notes would be entitled but for the subordination
provisions of the Indenture will be made to holders of the Senior Indebtedness
as their interests may appear. If a distribution is made to the Trustee or to
holders of the New Notes that, due to the subordination provisions, should not
have been made to them, such Trustee or holders are required to hold it in trust
for the holders of Senior Indebtedness and pay it over to them as their
interests may appear.

If payment of the New Notes is accelerated because of an Event of Default,
the Company or the Trustee shall promptly notify the Representative (if any) of
any issue of Designated Senior Indebtedness which is then outstanding; provided,
however, that the Company and the Trustee shall be obligated to notify such a
Representative only if such Representative has delivered or caused to be
delivered an address for the service of such a notice to the Company and the
Trustee (and the Company and the Trustee shall only be obligated to deliver the
notice to the address so specified). If a notice is required pursuant to the
immediately preceding sentence, the Company may not pay the New Notes (except
payment (i) in Qualified Capital Stock issued by the Company to pay interest on
the New Notes or issued in exchange for the New Notes, (ii) in securities
substantially identical to the New Notes issued by the Company in payment of
interest accrued thereon or (iii) securities issued by the Company which are
subordinated to the Senior Indebtedness at least to the same extent as the New
Notes and have a Weighted Average Life to Maturity at least equal to the
remaining Weighted Average Life to Maturity of the New Notes, as long as the
court, in approving any payment or distribution of stock or securities of the
type described in the preceding clauses (i)-(iii), gives effect to the
subordination provisions set forth in the Indenture), until five business days
after the respective Representative of the Designated Senior Indebtedness
receives notice (at the address specified in the preceding sentence) of such
acceleration and, thereafter, may pay the New Notes only if the subordination
provisions of the Indenture otherwise permit payment at that time.

By reason of such subordination provisions contained in the Indenture, in
the event of insolvency, creditors of the Company who are holders of Senior
Indebtedness may recover more, ratably, than the holders of the New Notes, and
creditors of the Company who are not holders of Senior Indebtedness (including
holders of the New Notes) may recover less, ratably, than holders of Senior
Indebtedness.

CERTAIN COVENANTS

Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock. (a) The Company will not, and will not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume, guarantee or
otherwise become directly or indirectly liable, contingently or otherwise, with
respect to (collectively, "incur") any Indebtedness (other than Permitted
Indebtedness) and the Company will not issue any Disqualified Capital Stock and
will not permit its Subsidiaries to issue any Preferred Stock except Preferred
Stock of a Subsidiary issued to (and as long as it is held by) the Company or a
Wholly-Owned Subsidiary of the Company; provided, however, that the Company and
its Subsidiaries may incur Indebtedness or issue shares of such Capital Stock
if, in either case, at the time of and immediately after giving pro forma effect
to such incurrence of Indebtedness or the issuance of such Capital Stock, as the
case may be, and the use of proceeds therefrom, the Company's Consolidated
Coverage Ratio is greater than 2.00 to 1.00.

(b) In addition, the Company will not incur any Secured Indebtedness (other
than Senior Indebtedness) unless contemporaneously therewith effective provision
is made to secure the New Notes equally and ratably with such Secured
Indebtedness for so long as such Secured Indebtedness is secured by a Lien.

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(c) The Company will not incur or suffer to exist, or permit any of its
Subsidiaries to incur or suffer to exist, any Obligations with respect to an
Unrestricted Subsidiary that would violate the provisions set forth in the
definition of Unrestricted Subsidiary.

Limitation on Layering. The Company will not incur any Indebtedness if such
Indebtedness is subordinate or junior in ranking in any respect to any Senior
Indebtedness unless such Indebtedness is Senior Subordinated Indebtedness or is
contractually subordinated in right of payment to all Senior Subordinated
Indebtedness (including the New Notes).

Limitation on Restricted Payments. (a) The Indenture provides that neither
the Company nor any of its Subsidiaries will, directly or indirectly, make any
Restricted Payment if at the time of such Restricted Payment and immediately
after giving effect thereto:

(i) a Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Restricted
Payment; or

(ii) the Company is not able to incur $1.00 of additional Indebtedness
(other than Permitted Indebtedness) in compliance with the "Limitation on
Incurrence of Additional Indebtedness and Issuance of Disqualified Capital
Stock" covenant; or

(iii) the aggregate amount of Restricted Payments made subsequent to
the Issue Date (the amount expended for such purposes, if other than in
cash, being the fair market value of such property as determined by the
board of directors of the Company in good faith) exceeds the sum of (a) 50%
of Consolidated Net Income (or, in the case such Consolidated Net Income
shall be a deficit, minus 100% of such deficit) accruing during the period
(treated as one accounting period) from the Issue Date to the end of the
most recent fiscal quarter ending prior to the date of such Restricted
Payment as to which financial results are available plus (b) 100% of the
aggregate net proceeds, including the fair market value of property other
than cash as determined by the board of directors of the Company in good
faith, received subsequent to the Issue Date by the Company from any Person
(other than a Subsidiary of the Company) from the issuance and sale
subsequent to the Issue Date of Qualified Capital Stock of the Company
(excluding (i) any net proceeds from issuances and sales financed directly
or indirectly using funds borrowed from the Company or any Subsidiary of
the Company, until and to the extent such borrowing is repaid, but
including the proceeds from the issuance and sale of any securities
convertible into or exchangeable for Qualified Capital Stock to the extent
such securities are so converted or exchanged and including any additional
proceeds received by the Company upon such conversion or exchange and (ii)
any net proceeds received from issuances and sales that are used to
consummate a transaction described in clauses (2) and (3) of paragraph (b)
below), plus (c) without duplication of any amount included in clause
(iii)(b) above, 100% of the aggregate net proceeds, including the fair
market value of property other than cash (valued as provided in clause
(iii)(b) above), received by the Company as a capital contribution after
the Issue Date, plus (d) the amount equal to the net reduction in
Investments (other than Permitted Investments) made by the Company or any
of its Subsidiaries in any Person resulting from (i) repurchases or
redemptions of such Investments by such Person, proceeds realized upon the
sale of such Investment to an unaffiliated purchaser and repayments of
loans or advances or other transfers of assets by such Person to the
Company or any Subsidiary of the Company or (ii) the redesignation of
Unrestricted Subsidiaries as Subsidiaries (valued in each case as provided
in the definition of "Investment") not to exceed, in the case of any
Subsidiary, the amount of Investments previously made by the Company or any
Subsidiary in such Unrestricted Subsidiary, which amount was included in
the calculation of Restricted Payments; provided, however, that no amount
shall be included under this clause (d) to the extent it is already
included in Consolidated Net Income, plus (e) the aggregate net cash
proceeds received by a Person in consideration for the issuance of such
Person's Capital Stock (other than Disqualified Capital Stock) that are
held by such Person at the time such Person is merged with and into the
Company in accordance with the "Merger, Consolidation

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and Sale of Assets" covenant on or subsequent to the Issue Date; provided,
however, that concurrently with or immediately following such merger the
Company uses an amount equal to such net cash proceeds to redeem or
repurchase the Company's Capital Stock, plus (f) $5,000,000.

(b) Notwithstanding the foregoing, these provisions will not prohibit: (1)
the payment of any dividend or the making of any distribution within 60 days
after the date of its declaration if such dividend or distribution would have
been permitted on the date of declaration; (2) the purchase, redemption or other
acquisition or retirement of any Capital Stock of the Company or any warrants,
options or other rights to acquire shares of any class of such Capital Stock
either (x) solely in exchange for shares of Qualified Capital Stock or other
rights to acquire Qualified Capital Stock or (y) through the application of the
net proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of shares of Qualified Capital Stock or warrants,
options or other rights to acquire Qualified Capital Stock or (z) in the case of
Disqualified Capital Stock, solely in exchange for, or through the application
of the net proceeds of a substantially concurrent sale for cash (other than to a
Subsidiary of the Company) of, Disqualified Capital Stock that has a redemption
date no earlier than, and requires the payment of current dividends or
distributions in cash no earlier than, in each case, the Disqualified Capital
Stock being purchased, redeemed or otherwise acquired or retired; (3) the
acquisition of Indebtedness of the Company that is subordinate or junior in
right of payment to the Notes either (x) solely in exchange for shares of
Qualified Capital Stock (or warrants, options or other rights to acquire
Qualified Capital Stock), for shares of Disqualified Capital Stock that have a
redemption date no earlier than, and require the payment of current dividends or
distributions in cash no earlier than, in each case, the maturity date and
interest payments dates, respectively, of the Indebtedness being acquired, or
for Indebtedness of the Company that is subordinate or junior in right of
payment to the New Notes, at least to the extent that the Indebtedness being
acquired is subordinated to the New Notes and has a Weighted Average Life to
Maturity no less than that of the Indebtedness being acquired or (y) through the
application of the net proceeds of a substantially concurrent sale for cash
(other than to a Subsidiary of the Company) of shares of Qualified Capital Stock
(or warrants, options or other rights to acquire Qualified Capital Stock),
shares of Disqualified Capital Stock that have a redemption date no earlier
than, and require the payment of current dividends or distributions in cash no
earlier than, in each case, the maturity date and interest payments dates,
respectively, of the Indebtedness being refinanced, or Indebtedness of the
Company that is subordinate or junior in right of payment to the New Notes at
least to the extent that the Indebtedness being acquired is subordinated to the
New Notes and has a Weighted Average Life to Maturity no less than that of the
Indebtedness being refinanced; (4) payments by the Company to repurchase or to
enable Holding (including for the purpose of this clause (4) and for the
purposes of clauses (5) and (6) below, any corporation that, directly or
indirectly, owns all of the Common Stock of Holding) to repurchase, Capital
Stock of Holding from employees of Holding or its Subsidiaries or such other
Corporation in an aggregate amount not to exceed $5,000,000; (5) payments to
enable Holding to redeem or repurchase stock purchase or similar rights granted
by Holding with respect to its Capital Stock in an aggregate amount not to
exceed $1,000,000; (6) payments, not to exceed $200,000 in the aggregate, to
enable Holding to make cash payments to holders of its Capital Stock in lieu of
the issuance of fractional shares of its Capital Stock; (7) payments made
pursuant to any merger, consolidation or sale of assets effected in accordance
with the "Merger, Consolidation and Sale of Assets" covenant; provided, however,
that no such payment may be made pursuant to this clause (7) unless, after
giving effect to such transaction (and the incurrence of any Indebtedness in
connection therewith and the use of the proceeds thereof), the Company would be
able to incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with the "Limitation on Incurrence of Additional
Indebtedness and Issuance of Disqualified Capital Stock" covenant such that
after incurring that $1.00 of additional Indebtedness, the Consolidated Coverage
Ratio would be greater than 2.00 to 1.00; (8) payments to enable Holding or the
Company to pay dividends on its Capital Stock (other than Disqualified Capital
Stock) after the first Equity Offering in
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an annual amount not to exceed 6.00% of the gross proceeds (before deducting
underwriting discounts and commissions and other fees and expenses of the
offering) received from shares of Capital Stock (other than Disqualified Stock)
sold for the account of the issuer thereof (and not for the account of any
stockholder) in such initial Equity Offering and contributed to the Company, (9)
payments by the Company to fund the payment by any direct or indirect holding
company thereof of audit, accounting, legal or other similar expenses, to pay
franchise or other similar taxes and to pay other corporate overhead expenses,
so long as such dividends are paid as and when needed by its respective direct
or indirect holding company and so long as the aggregate amount of payments
pursuant to this clause (9) does not exceed $1,000,000 in any calendar year;
(10) payments by the Company to fund taxes of Holding for a given taxable year
in an amount equal to the Company's "separate return liability," as if the
Company were the parent of a consolidated group (for purposes of this clause
(iv) "separate return liability" for a given taxable year shall mean the
hypothetical United States tax liability of the Company defined as if the
Company had filed its own United States federal tax return for such taxable
year) and (11) payments by the Company under the Financial Monitoring and
Oversight Agreements or the Corporate Leases; provided, however, that in the
case of clauses (3), (4), (5), (6), (7) and (8), no Event of Default shall have
occurred or be continuing at the time of such payment or as a result thereof. In
determining the aggregate amount of Restricted Payments made subsequent to the
Issue Date, amounts expended pursuant to clauses (1), (4), (5), (6), (7) and (8)
shall be included in such calculation.

Merger, Consolidation and Sale of Assets. The Indenture provides that the
Company may not, in a single transaction or a series of related transactions,
consolidate with or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, another
Person or adopt a plan of liquidation unless (i) either (1) the Company is the
surviving or continuing Person or (2) the Person (if other than the Company)
formed by such consolidation or into which the Company is merged or the person
that acquires by conveyance, transfer or lease the properties and assets of the
Company substantially as an entirety or in the case of a plan of liquidation,
the Person to which assets of the Company have been transferred, shall be a
corporation, partnership or trust organized and existing under the laws of the
United States or any State thereof or the District of Columbia; (ii) such
surviving person shall assume all of the obligations of the Company under the
Notes and the Indenture pursuant to a supplemental indenture in a form
reasonably satisfactory to the Trustee; (iii) immediately after giving effect to
such transaction and the use of the proceeds therefrom (on a pro forma basis,
including giving effect to any Indebtedness incurred or anticipated to be
incurred in connection with such transaction), the Company (in the case of
clause (1) of the foregoing clause (i)) or such Person (in the case of clause
(2) of the foregoing clause (i)) shall be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with the
"Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock" covenant; (iv) immediately after giving effect to
such transactions, no Default or Event of Default shall have occurred or be
continuing; and (v) the Company has delivered to the Trustee prior to the
consummation of the proposed transaction an Officers' Certificate and an Opinion
of Counsel, each stating that such consolidation, merger or transfer complies
with the Indenture and that all conditions precedent in the Indenture relating
to such transaction have been satisfied. For purposes of the foregoing, the
transfer (by lease, assignment, sale or otherwise, in a single transaction or
series of related transactions) of all or substantially all of the properties
and assets of one or more Subsidiaries, the Capital Stock of which constitutes
all or substantially all of the properties or assets of the Company, will be
deemed to be the transfer of all or substantially all of the properties and
assets of the Company. Notwithstanding the foregoing clauses (ii) and (iii), (1)
any Subsidiary of the Company may consolidate with, merge into or transfer all
or part of its properties and assets to the Company and (2) the Company may
merge with a corporate Affiliate thereof incorporated solely for the purpose of
reincorporating the Company in another jurisdiction in the U.S. to realize tax
or other benefits.

Limitation on Asset Sales. The Indenture provides that neither the Company
nor any of its Subsidiaries will consummate an Asset Sale unless (i) the Company
or the applicable Subsidiary,
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as the case may be, receives consideration at the time of such Asset Sale at
least equal to the fair market value of the assets sold or otherwise disposed of
(as determined in good faith by management of the Company or, if such Asset Sale
involves consideration in excess of $5,000,000, by the board of directors of the
Company, as evidenced by a board resolution), (ii) at least 75% of the
consideration received by the Company or such Subsidiary, as the case may be,
from such Asset Sale is in the form of cash or Cash Equivalents and is received
at the time of such disposition and (iii) upon the consummation of an Asset
Sale, the Company applies, or causes such Subsidiary to apply, such Net Cash
Proceeds within 180 days of receipt thereof either (A) to repay any Senior
Indebtedness of the Company or any Indebtedness of a Subsidiary of the Company
(and, to the extent such Senior Indebtedness relates to principal under a
revolving credit or similar facility, to obtain a corresponding reduction in the
commitments thereunder, except that the Company may temporarily repay Senior
Indebtedness using the consideration from such Asset Sale and thereafter use
such funds to reinvest pursuant to clause (B) below within the period set forth
therein without having to obtain a corresponding reduction in the commitments
under such revolving credit or similar facility), (B) to reinvest, or to be
contractually committed to reinvest pursuant to a binding agreement, in
Productive Assets and, in the latter case, to have so reinvested within 360 days
of the date of receipt of such Net Cash Proceeds or (C) to purchase New Notes
and other Senior Subordinated Indebtedness, pro rata tendered to the Company for
purchase at a price equal to 100% of the principal amount thereof (or the
accreted value of such other Senior Subordinated Indebtedness, if such other
Senior Subordinated Indebtedness is issued at a discount) plus accrued interest
thereon, if any, to the date of purchase pursuant to an offer to purchase made
by the Company as set forth below (a "Net Proceeds Offer"); provided, however,
that the Company may defer making a Net Proceeds Offer until the aggregate Net
Cash Proceeds from Asset Sales not otherwise applied in accordance with this
covenant equal or exceed $5,000,000.

Subject to the deferral right set forth in the final proviso of the
preceding paragraph, each notice of a Net Proceeds Offer will be mailed, by
first-class mail, to holders of New Notes not more than 180 days after the
relevant Asset Sale or, in the event the Company or a Subsidiary has entered
into a binding agreement as provided in (B) above, within 180 days following the
termination of such agreement but in no event later than 360 days after the
relevant Asset Sale. Such notice will specify, among other things, the purchase
date (which will be no earlier than 30 days nor later than 45 days from the date
such notice is mailed, except as otherwise required by law) and will otherwise
comply with the procedures set forth in the Indenture. Upon receiving notice of
the Net Proceeds Offer, holders of New Notes may elect to tender their New Notes
in whole or in part in integral multiples of $1,000. To the extent holders
properly tender New Notes in an amount which, together with all other Senior
Subordinated Indebtedness so tendered, exceeds the Net Proceeds Offer, New Notes
and other Senior Subordinated Indebtedness of tendering holders will be
repurchased on a pro rata basis (based upon the aggregate principal amount
tendered). To the extent that the aggregate principal amount of New Notes
tendered pursuant to any Net Proceeds Offer, which, together with the aggregate
principal amount or aggregate accreted value, as the case may be, of all other
Senior Subordinated Indebtedness so tendered, is less than the amount of Net
Cash Proceeds subject to such Net Proceeds Offer, the Company may use any
remaining portion of such Net Cash Proceeds not required to fund the repurchase
of tendered Notes and other Senior Subordinated Indebtedness for any purposes
otherwise permitted by the Indenture. Upon the consummation of any Net Proceeds
Offer, the amount of Net Cash Proceeds subject to any future Net Proceeds Offer
from the Asset Sales giving rise to such Net Cash Proceeds shall be deemed to be
zero.

The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act to the extent applicable in connection with the repurchase of New
Notes pursuant to a Net Proceeds Offer.

Limitation on Asset Swaps. The Indenture provides that the Company will
not, and will not permit any Subsidiary to, engage in any Asset Swaps, unless:
(i) at the time of entering into such Asset Swap, and immediately after giving
effect to such Asset Swap, no Default or Event of Default shall have occurred
and be continuing or would occur as a consequence thereof; (ii) in the event

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such Asset Swap involves an aggregate amount in excess of $2.0 million, the
terms of such Asset Swap have been approved by a majority of the members of the
board of directors of the Company which determination shall include a
determination that the fair market value of the assets being received in such
swap are at least equal to the fair market value of the assets being swapped and
(iii) in the event such Asset Swap involves an aggregate amount in excess of
$10.0 million, the Company has also received a written opinion from an
independent investment banking firm of nationally recognized standing that such
Asset Swap is fair to the Company or such Subsidiary, as the case may be, from a
financial point of view.

Limitation on Dividend and Other Payment Restrictions Affecting
Subsidiaries. The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create or otherwise cause to permit to exist or
become effective, by operation of the charter of such Subsidiary or by reason of
any agreement, instrument, judgment, decree, rule, order, statute or
governmental regulation, any encumbrance or restriction on the ability of any
Subsidiary to (a) pay dividends or make any other distributions on its Capital
Stock; (b) make loans or advances or pay any Indebtedness or other obligation
owed to the Company or any of its Subsidiaries; or (c) transfer any of its
property or assets to the Company, except for such encumbrances or restrictions
existing under or by reason of: (1) applicable law; (2) the Indenture; (3)
customary non-assignment provisions of any lease governing a leasehold interest
of the Company or any Subsidiary; (4) any instrument governing Acquired
Indebtedness or Acquired Preferred Stock, which encumbrance or restriction is
not applicable to any Person, or the properties or assets of any Person, other
than the Person, or the property or assets of the Person, so acquired; (5)
agreements existing on the Issue Date (including the Credit Agreement) as such
agreements are from time to time in effect; provided, however, that any
amendments or modifications of such agreements that affect the encumbrances or
restrictions of the types subject to this covenant shall not result in such
encumbrances or restrictions being less favorable to the Company in any material
respect, as determined in good faith by the board of directors of the Company,
than the provisions as in effect before giving effect to the respective
amendment or modification; (6) any restriction with respect to such a Subsidiary
imposed pursuant to an agreement entered into for the sale or disposition of all
or substantially all the Capital Stock or assets of such Subsidiary pending the
closing of such sale or disposition; (7) an agreement effecting a refinancing,
replacement or substitution of Indebtedness issued, assumed or incurred pursuant
to an agreement referred to in clause (2), (4) or (5) above or any other
agreement evidencing Indebtedness permitted under the Indenture; provided,
however, that the provisions relating to such encumbrance or restriction
contained in any such refinancing, replacement or substitution agreement or any
such other agreement are no less favorable to the Company in any material
respect as determined in good faith by the board of directors of the Company
than the provisions relating to such encumbrance or restriction contained in
agreements referred to in such clause (2), (4) or (5); (8) restrictions on the
transfer of the assets subject to any Lien imposed by the holder of such Lien;
(9) a licensing agreement to the extent such restrictions or encumbrances limit
the transfer of property subject to such licensing agreement; (10) restrictions
relating to Subsidiary preferred stock that require that due and payable
dividends thereon to be paid in full prior to dividends on such Subsidiary's
common stock or (11) any agreement or charter provision evidencing Indebtedness
or Capital Stock permitted under the Indenture; provided, however, that the
provisions relating to such encumbrance or restriction contained in such
agreement or charter provision are not less favorable to the Company in any
material respect as determined in good faith by the board of directors of the
Company than the provisions relating to such encumbrance or restriction
contained in the Indenture.

Limitations on Transactions with Affiliates. The Indenture provides that
neither the Company nor any of its Subsidiaries will, directly or indirectly,
enter into or permit to exist any transaction (including, without limitation,
the purchase, sale, lease or exchange of any property or the rendering of any
service) with or for the benefit of any of its Affiliates (other than
transactions between the Company and a Wholly Owned Subsidiary of the Company or
among Wholly Owned Subsidiaries of the Company) (an "Affiliate Transaction"),
other than Affiliate Transactions on terms that are no
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less favorable than those that might reasonably have been obtained in a
comparable transaction on an arm's-length basis from a person that is not an
Affiliate; provided, however, that for a transaction or series of related
transactions involving value of $5,000,000 or more, such determination will be
made in good faith by a majority of members of the board of directors of the
Company and by a majority of the disinterested members of the board of directors
of the Company, if any; provided, further, that for a transaction or series of
related transactions involving value of $15,000,000 or more, the board of
directors of the Company has received an opinion from a nationally recognized
investment banking firm that such Affiliate Transaction is fair, from a
financial point of view, to the Company or such Subsidiary. The foregoing
restrictions will not apply to (1) reasonable and customary directors' fees,
indemnification and similar arrangements and payments thereunder, (2) any
obligations of the Company under the Financial Monitoring and Oversight
Agreements, the Corporate Leases or any employment agreement, noncompetition or
confidentiality agreement with any officer of the Company (provided that each
amendment of any of the foregoing agreements shall be subject to the limitations
of this covenant), (3) reasonable and customary investment banking, financial
advisory, commercial banking and similar fees and expenses paid to any of the
Initial Purchasers and their Affiliates, (4) any Restricted Payment permitted to
be made pursuant to the covenant described under "Limitation on Restricted
Payments," (5) any issuance of securities, or other payments, awards or grants
in cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the board of
directors of the Company, (6) loans or advances to employees in the ordinary
course of business of the Company or any of its Subsidiaries consistent with
past practices, and (7) the issuance of Capital Stock of the Company (other than
Disqualified Stock).

Restriction on Transfer of Assets to Subsidiaries. The Indenture provides
that if, at any time, (x) more than 20% of the Company's consolidated total
assets are owned by Subsidiaries of the Company or (y) more than 20% of the
Company's Consolidated EBITDA is derived from Subsidiaries of the Company, the
Company shall cause such Subsidiaries to (i) execute and deliver to the Trustee
a supplemental indenture in form reasonably satisfactory to the Trustee pursuant
to which such Subsidiaries shall unconditionally guarantee, on a senior
subordinated basis, all the Company's obligations under the New Notes and (ii)
deliver to the Trustee an Opinion of Counsel that such supplemental indenture
has been duly executed and delivered by such Subsidiaries; provided that if no
Default or Event of Default shall have occurred or be continuing, and neither
condition (x) or (y) is then met, such guarantees will automatically, with no
action required on behalf of the Company or its Subsidiaries, be released;
provided, however, that the provisions contained herein shall not apply to
Subsidiaries of the Company organized outside of the United States.

Reports. The Indenture provides that so long as any of the New Notes are
outstanding, the Company will provide to the holders of New Notes and file with
the Commission, to the extent such submissions are accepted for filing by the
Commission, copies of the annual reports and of the information, documents and
other reports that the Company would have been required to file with the
Commission pursuant to Sections 13 or 15(d) of the Exchange Act regardless of
whether the Company is then obligated to file such reports, commencing for the
period ended March 31, 1998.

EVENTS OF DEFAULT

The following events are defined in the Indenture as "Events of Default":
(i) the failure to pay interest on the New Notes when the same becomes due and
payable and the Default continues for a period of 30 days (whether or not such
payment is prohibited by the provisions described under "-- Ranking and
Subordination" above); (ii) the failure to pay principal of or premium, if any,
on any New Notes when such principal or premium, if any, becomes due and
payable, at maturity, upon redemption or otherwise (whether or not such payment
is prohibited by the provisions described under "-- Ranking and Subordination"
above); (iii) a default in the observance or performance of any other covenant
or agreement contained in the New Notes or the Indenture, which default
continues for a period of 30 days after the Company receives written notice
thereof specifying the

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default from the Trustee or holders of at least 25% in aggregate principal
amount of outstanding New Notes; (iv) the failure to pay at the final stated
maturity (giving effect to any extensions thereof) the principal amount of any
Indebtedness of the Company or any Subsidiary of the Company, or the
acceleration of the final stated maturity of any such Indebtedness, if the
aggregate principal amount of such Indebtedness, together with the aggregate
principal amount of any other such Indebtedness in default for failure to pay
principal at the final stated maturity (giving effect to any extensions thereof)
or which has been accelerated, aggregates $10,000,000 or more at any time in
each case after a 10-day period during which such default shall not have been
cured or such acceleration rescinded; (v) one or more judgments in an aggregate
amount in excess of $10,000,000 (which are not covered by insurance as to which
the insurer has not disclaimed coverage) being rendered against the Company or
any of its Significant Subsidiaries and such judgment or judgments remain
undischarged or unstayed for a period of 60 days after such judgment or
judgments become final and nonappealable; and (vi) certain events of bankruptcy,
insolvency or reorganization affecting the Company or any of its Significant
Subsidiaries.

Upon the happening of any Event of Default specified in the Indenture, the
Trustee may, and the Trustee upon the request of holders of 25% in principal
amount of the outstanding New Notes shall, or the holders of at least 25% in
principal amount of outstanding New Notes may, declare the principal of all the
New Notes, together with all accrued and unpaid interest and premium, if any, to
be due and payable by notice in writing to the Company and the Trustee
specifying the respective Event of Default and that it is a "notice of
acceleration" (the "Acceleration Notice"), and the same shall become immediately
due and payable, except that if there are any amounts outstanding under the
Credit Agreement, the same will become due and payable upon the first to occur
of an acceleration under the Credit Agreement or five business days after
receipt by the Company and the agent under the Credit Agreement of such
Acceleration Notice (unless all Events of Default specified in such Acceleration
Notice have been cured or waived). If an Event of Default with respect to
bankruptcy proceedings relating to the Company occurs and is continuing, then
such amount will ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any holder of the New
Notes.

The Indenture provides that, at any time after a declaration of
acceleration with respect to the New Notes as described in the preceding
paragraph, the holders of a majority in principal amount of the New Notes then
outstanding (by notice to the Trustee) may rescind and cancel such declaration
and its consequences if (i) the rescission would not conflict with any judgment
or decree of a court of competent jurisdiction, (ii) all existing Events of
Default have been cured or waived except nonpayment of principal of or interest
on the New Notes that has become due solely by such declaration of acceleration,
(iii) to the extent the payment of such interest is lawful, interest (at the
same rate specified in the New Notes) on overdue installments of interest and
overdue payments of principal, which has become due otherwise than by such
declaration of acceleration, has been paid, (iv) the Company has paid the
Trustee its reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of a
Default or Event of Default of the type described in clause (vi) of the
description of Events of Default in the first paragraph above, the Trustee has
received an Officers' Certificate and Opinion of Counsel that such Default or
Event of Default has been cured or waived. The holders of a majority in
principal amount of the New Notes may waive any existing Default or Event of
Default under the Indenture, and its consequences, except a default in the
payment of the principal of or interest on any New Notes.

The Company is required to deliver to the Trustee, within 120 days after
the end of the Company's fiscal year, a certificate indicating whether the
signing officers know of any Default or Event of Default that occurred during
the previous year and whether the Company has complied with its obligations
under the Indenture. In addition, the Company will be required to notify the
Trustee of the occurrence and continuation of any Default or Event of Default
promptly after the Company becomes aware of the same.

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Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default thereunder should occur and be continuing,
the Trustee will be under no obligation to exercise any of the rights or powers
under the Indenture at the request or direction of any of the holders of the New
Notes unless such holders have offered to the Trustee reasonable indemnity or
security against any loss, liability or expense. Subject to such provision for
security or indemnification and certain limitations contained in the Indenture,
the holders of a majority in principal amount of the outstanding New Notes have
the right to direct the time, method and place of conducting any proceeding for
any remedy available to the Trustee or exercising any trust or power conferred
on the Trustee.

SATISFACTION AND DISCHARGE OF INDENTURE; DEFEASANCE

The Company may terminate its obligations under the Indenture at any time
by delivering all outstanding Notes to the Trustee for cancellation and paying
all sums payable by it thereunder. The Company, at its option, (i) will be
discharged from any and all obligations with respect to the Notes (except for
certain obligations of the Company to register the transfer or exchange of such
Notes, replace stolen, lost or mutilated Notes, maintain paying agencies and
hold moneys for payment in trust) or (ii) need not comply with certain of the
restrictive covenants with respect to the Indenture, if the Company deposits
with the Trustee, in trust, U.S. legal tender or U.S. Government Obligations or
a combination thereof that, through the payment of interest and premium thereon
and principal in respect thereof in accordance with their terms, will be
sufficient to pay all the principal of and interest and premium on the Notes on
the dates such payments are due in accordance with the terms of such Notes as
well as the Trustee's fees and expenses. To exercise either such option, the
Company is required to deliver to the Trustee (A) an Opinion of Counsel or a
private letter ruling issued to the Company by the Internal Revenue Service (the
"IRS") to the effect that the holders of the Notes will not recognize income,
gain or loss for federal income tax purposes as a result of the deposit and
related defeasance and will be subject to federal income tax on the same amount
and in the same manner and at the same times as would have been the case if such
option had not been exercised and, in the case of an Opinion of Counsel
furnished in connection with a discharge pursuant to clause (i) above,
accompanied by a private letter ruling issued to the Company by the IRS to such
effect, (B) subject to certain qualifications, an opinion of counsel to the
effect that funds so deposited will not be subject to avoidance under applicable
bankruptcy law and (C) an officers' certificate and an opinion of counsel to the
effect that the Company has complied with all conditions precedent to the
defeasance which opinion shall also state that the exercise of such option does
not violate any loan agreement of the Company known to such counsel.
Notwithstanding the foregoing, the opinion of counsel required by clause (A)
above need not be delivered if all Notes not theretofore delivered to the
Trustee for cancellation (i) have become due and payable, (ii) will become due
and payable on the maturity date within one year or (iii) are to be called for
redemption within one year under arrangements satisfactory to the Trustee for
the giving of notice of redemption by the Trustee in the name, and at the
expense, of the Company.

MODIFICATION OF THE INDENTURE

From time to time, the Company and the Trustee, together, without the
consent of the holders of the New Notes, may amend or supplement the Indenture
for certain specified purposes, including curing ambiguities, defects or
inconsistencies. Other modifications and amendments of the Indenture may be made
with the consent of the holders of a majority in principal amount of the then
outstanding Notes, except that, without the consent of each holder of the Notes
affected thereby, no amendment may, directly or indirectly: (i) reduce the
amount of Notes whose holders must consent to an amendment; (ii) reduce the rate
of or change the time for payment of interest, including defaulted interest, on
any Notes; (iii) reduce the principal of or change the fixed maturity of any
Notes, or change the date on which any Notes may be subject to redemption or
repurchase, or reduce the redemption or repurchase price therefor; (iv) make any
Notes payable in money other than that stated in the Notes and the Indenture;
(v) make any change in provisions of the Indenture
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protecting the right of each holder of a Note to receive payment of principal
of, premium on and interest on such Note on or after the due date thereof or to
bring suit to enforce such payment or permitting holders of a majority in
principal amount of the Notes to waive Default or Event of Default; or (vi)
after the Company's obligation to purchase the Notes arises under the Indenture,
amend, modify or change the obligation of the Company to make or consummate a
Change of Control Offer or a Net Proceeds Offer or waive any default in the
performance thereof or modify any of the provisions or definitions with respect
to any such offers. Any amendment or modification of the subordination
provisions of the Notes or the Indenture, including related definitions, shall
also require the consent of the Representative under the Credit Agreement.

CONCERNING THE TRUSTEE

The Indenture contains certain limitations on the rights of the Trustee,
should it become a creditor of the Company, to obtain payment of claims in
certain cases, or to realize on certain property received in respect of any such
claim as security or otherwise. The Trustee will be permitted to engage in other
transactions; however, if it acquires any conflicting interest, it must
eliminate such conflict within 90 days, apply to the Commission for permission
to continue or resign.

The Holders of a majority in principal amount of the then outstanding Notes
will have the right to direct the time, method and place of conducting any
proceeding for exercising any remedy available to the Trustee, subject to
certain exceptions. The Indenture provides that in case an Event of Default
shall occur (which shall not be cured), the Trustee will be required, in the
exercise of its power, to use the degree of care of a prudent person in the
conduct of such person's own affairs. Subject to such provisions, the Trustee
will be under no obligation to exercise any of its rights or powers under the
Indenture at the request of any holder of New Notes, unless such holder shall
have offered to the Trustee security and indemnity satisfactory to it against
any loss, liability or expense.

GOVERNING LAW

The Indenture provides that it and the New Notes will be governed by, and
construed in accordance with, the laws of the State of New York without giving
effect to applicable principles of conflicts of law to the extent that the
application of the laws of another jurisdiction would be required thereby.

CERTAIN DEFINITIONS

Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.

"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and not incurred by such Person in connection with, or in anticipation or
contemplation of, such Person becoming a Subsidiary of the Company or such
acquisition, merger or consolidation.

"Affiliate" means, as to any Person, any other Person who, directly or
indirectly, through one or more intermediaries, controls, or is controlled by,
or is under common control with, the first referred to Person. The term
"control" means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.

"Acquired Preferred Stock" means Preferred Stock of any Person at the time
such Person becomes a Subsidiary of the Company or at the time it merges or
consolidates with the Company or

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any of its Subsidiaries and not issued by such person in connection with, or in
anticipation or contemplation of, such acquisition, merger or consolidation.

"Asset Acquisition" means (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated or merged with
the Company or any Subsidiary of the Company or (ii) the acquisition by the
Company or any Subsidiary of the Company of assets of any Person comprising a
division or line of business of such Person.

"Asset Sale" means any direct or indirect sale, issuance, conveyance,
transfer, lease (other than operating leases entered into in the ordinary course
of business), assignment or other transfer for value by the Company or any of
its Subsidiaries (excluding any Sale and Leaseback Transaction or any pledge of
assets or stock by the Company or any of its Subsidiaries) to any Person other
than the Company or a Wholly Owned Subsidiary of the Company of (i) any Capital
Stock of any Subsidiary of the Company or (ii) any other property or assets of
the Company or any Subsidiary of the Company other than in the ordinary course
of business; provided, however, that for purposes of the "Limitation on Asset
Sales" covenant, Asset Sales shall not include (a) a transaction or series of
related transactions in which the Company or its Subsidiaries receive aggregate
consideration of less than $1,000,000, (b) transactions covered by the "Merger,
Consolidation and Sale of Assets" covenant or permitted by the "Limitation on
Asset Swaps" covenant, (c) a Restricted Payment that otherwise qualifies under
the "Limitation on Restricted Payments" covenant, (d) any disposition of
obsolete or worn out equipment or equipment that is no longer useful in the
conduct of the business of the Company and its Subsidiaries and that is disposed
of, in each case, in the ordinary course of business or (e) sales of receivables
and leases in connection with the lease financing activities described in clause
(xii) of the definition of Permitted Indebtedness.

"Asset Swap" means the execution of a definitive agreement, subject only to
approval of the United States Federal Trade Commission, if applicable, and other
customary closing conditions, that the Company in good faith believes will be
satisfied, for a substantially concurrent purchase and sale, or exchange, of
Productive Assets between the Company or any of its Subsidiaries and another
Person or group of affiliated Persons; provided that any amendment to or waiver
of any closing condition that individually or in the aggregate is material to
the Asset Swap shall be deemed to be a new Asset Swap; it being understood that
an Asset Swap may include a cash equalization payment made in connection
therewith provided that such cash payment, if received by the Company or its
Subsidiaries, shall be deemed to be proceeds received from an Asset Sale and
applied in accordance with "Certain Covenants -- Limitation on Asset Sales."

"Capital Stock" means (i) with respect to any Person that is a corporation,
any and all shares, interests, participations or other equivalents (however
designated) of capital stock of such Person and (ii) with respect to any Person
that is not a corporation, any and all partnership or other equity interests of
such Person.

"Capitalized Lease Obligation" means, as to any Person, the obligation of
such Person to pay rent or other amounts under a lease to which such Person is a
party that is required to be classified and accounted for as a capital lease
obligation under GAAP, and for purposes of this definition, the amount of such
obligation at any date shall be the capitalized amount of such obligation at
such date, determined in accordance with GAAP.

thereof and, at the time of acquisition, having a rating of at least A-1 from
Standard & Poor's Corporation or at least P-1 from Moody's Investors Service,
Inc.; (iv) certificates of deposit or bankers' acceptances maturing within one
year from the date of acquisition thereof issued by any commercial bank
organized under the laws of the United States of America or any state thereof or
the District of Columbia or any U.S. branch of a foreign bank having at the date
of acquisition thereof combined capital and surplus of not less than
$200,000,000; (v) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (i) above entered
into with any bank meeting the qualifications specified in clause (iv) above;
and (vi) investments in money market funds that invest substantially all their
assets in securities of the types described in clauses (i) through (v) above.

"Change of Control" means the occurrence of one or more of the following
events: (i) any sale, lease, exchange or other transfer (in one transaction or a
series of related transactions) of all or substantially all of the assets of the
Company to any Person or group of related Persons for purposes of Section 13(d)
of the Exchange Act (a "Group") (whether or not otherwise in compliance with the
provisions of the Indenture), other than to Hicks Muse, any of its Affiliates,
officers and directors, Glenn E. Staats or any of his Affiliates or Preston W.
Staats or any of his Affiliates (collectively, the "Permitted Holders"); or (ii)
a majority of the board of directors of the Company or Holding shall consist of
Persons who are not Continuing Directors; or (iii) the acquisition by any Person
or Group (other than the Permitted Holders or any direct or indirect Subsidiary
of any Permitted Holder, including without limitation, Holding) of the power,
directly or indirectly, to vote or direct the voting of securities having more
than 50% of the ordinary voting power for the election of directors of the
Company or Holding.

"Commodity Agreement" means any commodity futures contract, commodity
option or other similar agreement or arrangement entered into by the Company or
any of its Subsidiaries designed to protect the Company or any of its
Subsidiaries against fluctuations in the price of commodities actually used in
the ordinary course of business of the Company and its Subsidiaries.

"Consolidated Coverage Ratio" as of any date of determination means the
ratio of (i) the aggregate amount of Consolidated EBITDA for the four quarter
period of the most recent four consecutive fiscal quarters ending prior to the
date of such determination (the "Four Quarter Period") to (ii) Consolidated
Fixed Charges for such Four Quarter Period; provided, however, that (1) if the
Company or any Subsidiary of the Company has incurred any Indebtedness or issued
any preferred stock since the beginning of such Four Quarter Period that remains
outstanding on such date of determination or if the transaction giving rise to
the need to calculate the Consolidated Coverage Ratio is an incurrence of
Indebtedness or issuance of preferred stock, Consolidated EBITDA and
Consolidated Fixed Charges for such Four Quarter Period shall be calculated
after giving effect on a pro forma basis to such Indebtedness or issuance of
preferred stock as if such Indebtedness had been incurred or such preferred
stock had been issued on the first day of such Four Quarter Period and the
discharge of any other Indebtedness or preferred stock repaid, repurchased,
defeased or otherwise discharged with the proceeds of such new Indebtedness or
preferred stock as if such discharge had occurred on the first day of such Four
Quarter Period, (2) if since the beginning of such Four Quarter Period the
Company or any Subsidiary of the Company shall have made any Asset Sale, the
Consolidated EBITDA for such Four Quarter Period shall be reduced by an amount
equal to the Consolidated EBITDA (if positive) directly attributable to the
assets that are the subject of such Asset Sale for such Four Quarter Period or
increased by an amount equal to the Consolidated EBITDA (if negative) directly
attributable thereto for such Four Quarter Period and Consolidated Fixed Charges
for such Four Quarter Period shall be reduced by an amount equal to the
Consolidated Fixed Charges directly attributable to any Indebtedness or
preferred stock of the Company or any Subsidiary of the Company repaid,
repurchased, defeased or otherwise discharged with respect to the Company and
its continuing Subsidiaries in connection with such Asset Sale for such Four
Quarter Period (or, if the Capital Stock of any Subsidiary of the Company are
sold, the Consolidated Fixed Charges for such Four Quarter Period directly
attributa-

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ble to the Indebtedness of such Subsidiary to the extent the Company and its
continuing Subsidiaries are no longer liable for such Indebtedness after such
sale), (3) if since the beginning of such Four Quarter Period the Company or any
Subsidiary of the Company (by merger or otherwise) shall have made an Investment
in any Subsidiary of the Company (or any Person that becomes a Subsidiary of the
Company) or an acquisition of assets, including any acquisition of assets
occurring in connection with a transaction causing a calculation to be made
hereunder, which constitutes all or substantially all of an operating unit of a
business, Consolidated EBITDA and Consolidated Fixed Charges for such Four
Quarter Period shall be calculated after giving pro forma effect thereto
(including the Incurrence of any Indebtedness or the issuance of any preferred
stock) as if such Investment or acquisition occurred on the first day of such
Four Quarter Period and (4) if since the beginning of such Four Quarter Period
any Person (that subsequently became a Subsidiary or was merged with or into the
Company or any Subsidiary of the Company since the beginning of such Four
Quarter Period) shall have made any Asset Sale or any Investment or acquisition
of assets that would have required an adjustment pursuant to clause (2) or (3)
above if made by the Company or a Subsidiary of the Company during such Four
Quarter Period, Consolidated EBITDA and Consolidated Fixed Charges for such Four
Quarter Period shall be calculated after giving pro forma effect thereto as if
such Asset Sale, Investment or acquisition of assets occurred on, with respect
to any Investment or acquisition, the first day of such Four Quarter Period and,
with respect to any Asset Sale, the day prior to the first day of such Four
Quarter Period. For purposes of this definition, whenever pro forma effect is to
be given to an acquisition of assets, the amount of income or earnings relating
thereto and the amount of Consolidated Fixed Charges associated with any
Indebtedness incurred or the issuance of any preferred stock in connection
therewith, the pro forma calculations shall be determined reasonably and in good
faith by a responsible financial or accounting officer of the Company. If any
Indebtedness bears a floating rate of interest and is being given pro forma
effect, the interest expense on such Indebtedness shall be calculated as if the
rate in effect on the date of determination had been the applicable rate for the
entire period (taking into account any agreement under which Interest Rate
Protection Obligations are outstanding applicable to such Indebtedness if such
agreement under which such Interest Rate Protection Obligations are outstanding
has a remaining term as at the date of determination in excess of 12 months);
provided, however, that the Consolidated Interest Expense of the Company
attributable to interest on any Indebtedness incurred under a revolving credit
facility computed on a pro forma basis shall be computed based upon the average
daily balance of such Indebtedness during the Four Quarter Period.

"Consolidated EBITDA" means, for any period, the Consolidated Net Income
for such period, plus the following to the extent deducted in calculating such
Consolidated Net Income: (i) Consolidated Income Tax Expense for such period;
(ii) Consolidated Fixed Charges for such period; and (iii) Consolidated Non-cash
Charges for such period less all non-cash items increasing Consolidated Net
Income for such period.

"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the amount of all cash dividend payments or payments in Disqualified
Capital Stock on Preferred Stock of Subsidiaries of such Person or on
Disqualified Capital Stock of such Person held by Persons other than the Company
or any Wholly Owned Subsidiaries paid, accrued or scheduled to be paid or
accrued during such period.

"Consolidated Income Tax Expense" means, with respect to the Company for
any period, the provision for Federal, state, local and foreign income taxes
payable by the Company and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.

commissions, discounts and other fees and charges owed with respect to letters
of credit, bankers' acceptance financing or similar facilities, and (e) all
accrued or capitalized interest and (ii) the interest component of Capitalized
Lease Obligations paid or accrued by such Person and its Subsidiaries during
such period as determined on a consolidated basis in accordance with GAAP.

"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided,
however, that there shall be excluded therefrom, without duplication, (a) gains
and losses from Asset Sales (without regard to the $1,000,000 limitation set
forth in the definition thereof) or abandonments or reserves relating thereto
and the related tax effects, (b) items classified as extraordinary or
nonrecurring gains and losses, and the related tax effects according to GAAP,
(c) the net income (or loss) of any Person acquired in a pooling of interests
transaction accrued prior to the date it becomes a Subsidiary of such first
referred to Person or is merged or consolidated with it or any of its
Subsidiaries, (d) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is restricted by contract, operation of law or otherwise, (e) the net
income of any Person, other than the Company or a Subsidiary or other than an
Unrestricted Subsidiary, except to the extent of the lesser of (x) dividends or
distributions paid to such first referred to Person or its Subsidiary by such
Person and (y) the net income of such Person (but in no event less than zero),
and the net loss of such Person shall be included only to the extent of the
aggregate Investment of the first referred to Person or a consolidated
Subsidiary of such Person and any non-cash expenses attributable to grants or
exercises of employee stock options, (f) charges relating to the amortization or
write-off of intangibles or other goodwill arising from the ARISB Acquisition or
the Triad Acquisition and (g) the cumulative effect of changes in accounting
principles.

"Consolidated Non-Cash Charges" means, with respect to any Person for any
period, the aggregate depreciation, amortization and other non-cash expenses of
such Person and its Subsidiaries (excluding any such charges constituting an
extraordinary or nonrecurring item) reducing Consolidated Net Income of such
Person and its Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP.

"Continuing Director" means, as of the date of determination, any Person
who (i) was a member of the board of directors of the Company or Holdings on the
Issue Date, (ii) was nominated for election or elected to the board of directors
of the Company or Holdings, as the case may be, with the affirmative vote of a
majority of the Continuing Directors who were members of such board of directors
at the time of such nomination or election or (iii) is a representative of a
Permitted Holder.

"Corporate Leases" mean the lease agreements with respect to the Company's
offices and facilities in Austin, Texas, leased by the Company from a
corporation owned by Messrs. Glenn and Preston Staats and offices and facilities
in Livermore, California, leased from Triad Park LLC, each as in effect on the
Issue Date or as may be subsequently amended in a way not materially adverse to
holders of the Notes or the Company.

"Credit Agreement" means (i) the Credit Agreement, dated as of February 27,
1997, as amended and restated as of February 6, 1998, among the Company,
Holding, The Chase Manhattan Bank, as administrative agent, NationsBank of
Texas, N.A., as Lender, and any other financial institutions from time to time
party thereto, together with the related documents thereto (including, without
limitation, any guarantee agreements and security documents) as the same may be
amended, supplemented, restated, restored or otherwise modified from time to
time, including amendments, supplements or modifications relating to the
addition or elimination of Subsidiaries of the Company as borrowers or
guarantors or other credit parties thereunder, and (ii) any renewal, extension,
refunding, restructuring, restatements, replacement or refinancing thereof
(whether with the original administrative agent, and lenders or another
administrative agent or agents or one or more other lenders and whether provided
under the original Credit Agreement or one or more other credit or other
agreements).

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"Currency Agreement" means any foreign exchange contract, currency swap
agreement or other similar agreement or arrangement designed to protect the
Company or any of its Subsidiaries against fluctuations in currency values.

"Default" means an event or condition the occurrence of which is, or with
the lapse of time or the giving of notice or both would be, an Event of Default.

"Designated Senior Indebtedness" means (i) all obligations under the Credit
Agreement and (ii) any other Senior Indebtedness of the Company which, at the
date of determination, has an aggregate principal amount outstanding of, or
under which, at the date of determination, the holders thereof are committed to
lend up to, at least $10,000,000 and is specifically designated by the Company
in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of the Indenture.

"Disqualified Capital Stock" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures (excluding any
maturity as the result of an optional redemption by the issuer thereof) or is
mandatorily redeemable on or before February 1, 2008, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the sole option of the holder
thereof (except, in each case, upon the occurrence of a Change of Control), in
whole or in part, on or prior to February 1, 2008; provided that only the
portion of Capital Stock which so matures or is mandatorily redeemable or is so
redeemable at the sole option of the holder thereof prior to February 1, 2008
shall be deemed to be Disqualified Capital Stock.

"Equity Offering" means a private sale or an underwritten public offering
of Capital Stock (other than Disqualified Capital Stock) of the Company or
Holdings (to the extent, in the case of Holdings, that the net cash proceeds
thereof are contributed to the common or non-redeemable preferred equity capital
of the Company).

"Financial Monitoring and Oversight Agreements" means the Monitoring and
Oversight Agreement among the Company, Holdings and Hicks Muse Partners, as in
effect on the Issue Date and the Financial Advisory Agreement among the Company,
Holdings and Hicks Muse Partners, each as in effect on the Issue Date or as may
be subsequently amended in a way not materially adverse to holders of the Notes
or the Company.

"GAAP," unless otherwise indicated, means generally accepted accounting
principles in the United States of America as in effect as of the date of the
Indenture, including those set forth in the opinions and pronouncements of the
Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board or the Commission or in such other statements by such other
entity as approved by a significant segment of the accounting profession. All
ratios and computations based on GAAP contained in the Indenture shall be
computed in conformity with GAAP.

"Indebtedness" means with respect to any Person, without duplication, any
liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting Capitalized
Lease Obligations, (iv) incurred or assumed as the deferred purchase price of
property, or pursuant to conditional sale obligations and title retention
agreements (but excluding trade accounts payable arising in the ordinary course
of business), (v) for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) for Indebtedness of
others guaranteed by such Person, (vii) for Interest Swap Obligations, Commodity
Agreements and Currency Agreements and (viii) for Indebtedness of any other
Person of the type referred to in clauses (i) through (vii) which is secured by
any Lien on any property or asset of such first referred to Person, the amount
of such Indebtedness being deemed to be the lesser of the value of such property
or asset or the amount of the Indebtedness so secured. The amount of
Indebtedness of any Person at any date shall be the outstanding principal amount
of all unconditional obligations described above, as such amount would be
reflected on a balance sheet prepared in accordance with GAAP, and the maximum
liability at such date of such Person for any contingent obligations described
above.

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"Interest Swap Obligations" means the obligations of any Person under any
interest rate protection agreement, interest rate future, interest rate option,
interest rate swap, interest rate cap or other interest rate hedge or
arrangement.

"Investment" in any Person means any direct or indirect advance, loan or
other extension of credit (in each case, including by way of Guarantee or
similar arrangement) or capital contribution to any Person, but excluding any
debt or extension of credit represented by a bank deposit other than a time
deposit. For purposes of the "Limitation on Restricted Payments" covenant, (A)
"Investment" shall include the portion (proportionate to the Company's equity
interest in a Subsidiary to be designated as an Unrestricted Subsidiary) of the
fair market value of the net assets of such Subsidiary of the Company at the
time that such Subsidiary is designated an Unrestricted Subsidiary; provided,
however, that upon a redesignation of such Unrestricted Subsidiary as a
Subsidiary, the Company shall be deemed to continue to have a permanent
"Investment" in an Unrestricted Subsidiary in an amount (if positive) equal to
(1) the Company's "Investment" in such Subsidiary at the time of such
redesignation less (2) the portion (proportionate to the Company's equity
interest in such Subsidiary) of the fair market value of the net assets of such
Subsidiary at the time that such Subsidiary is so redesignated from an
Unrestricted Subsidiary to a Subsidiary; and (B) any property transferred to or
from an Unrestricted Subsidiary shall be valued at its fair market value at the
time of such transfer, in each case as determined in good faith by the board of
directors.

"Issue Date" means the date on which the Notes are originally issued.

"Lien" means any lien, mortgage, deed of trust, pledge, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof and any agreement to give
any security interest).

"Net Cash Proceeds" means, with respect to any Asset Sale, the proceeds in
the form of cash or Cash Equivalents (including payments in respect of deferred
payment obligations when received in the form of cash or Cash Equivalents)
received by the Company or any of its Subsidiaries from such Asset Sale net of
(i) reasonable out-of-pocket expenses and fees relating to such Asset Sale
(including, without limitation, legal, accounting and investment banking fees
and sales commissions, recording fees, relocation costs, title insurance
premiums, appraisers, fees and costs reasonably incurred in preparation of any
asset or property for sale), (ii) taxes paid or reasonably estimated to be
payable (calculated based on the combined state, federal and foreign statutory
tax rates applicable to the Company or the Subsidiary engaged in such Asset
Sale), (iii) all distributions and other payments required to be made to any
Person owning a beneficial interest in the assets subject to sale or minority
interest holders in Subsidiaries or joint ventures as a result of such Asset
Sale, (iv) any reserves established in accordance with GAAP for adjustment in
respect of the sales price of such asset or assets or for any liabilities
associated with such Asset Sale, and (v) repayment of Indebtedness secured by
assets subject to such Asset Sale; provided, however, that if the instrument or
agreement governing such Asset Sale requires the transferor to maintain a
portion of the purchase price in escrow (whether as a reserve for adjustment of
the purchase price or otherwise) or to indemnify the transferee for specified
liabilities in a maximum specified amount, the portion of the cash or Cash
Equivalents that is actually placed in escrow or segregated and set aside by the
transferor for such indemnification obligation shall not be deemed to be Net
Cash Proceeds until the escrow terminates or the transferor ceases to segregate
and set aside such funds, in whole or in part, and then only to the extent of
the proceeds released from escrow to the transferor or that are no longer
segregated and set aside by the transferor.

"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other liabilities
payable under the documentation governing, or otherwise relating to, any
Indebtedness.

"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.

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"Permitted Indebtedness" means, without duplication, (i) Indebtedness
outstanding on the Issue Date; (ii) Indebtedness of the Company or a Subsidiary
incurred pursuant to the Credit Agreement (including guarantees thereof) in an
aggregate principal amount at any time outstanding not to exceed $100,000,000;
(iii) Indebtedness evidenced by or arising under the Notes and the Indenture;
(iv) Interest Swap Obligations; provided, however, that such Interest Swap
Obligations are entered into to protect the Company from fluctuations in
interest rates of its Indebtedness; (v) additional Indebtedness of the Company
or any of its Subsidiaries not to exceed $20,000,000 in principal amount
outstanding at any time (which amount may, but need not, be incurred under the
Credit Agreement); (vi) Refinancing Indebtedness; (vii) Indebtedness owed by the
Company to any Wholly Owned Subsidiary of the Company or by any Subsidiary of
the Company to the Company or any Wholly Owned Subsidiary of the Company; (viii)
guarantees by the Company or Subsidiaries of any Indebtedness permitted to be
incurred pursuant to the Indenture; (ix) Indebtedness in respect of performance
bonds, bankers' acceptances and surety or appeal bonds provided by the Company
or any of its Subsidiaries to their customers in the ordinary course of their
business; (x) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations, or from
guarantees or letters of credit, surety bonds or performance bonds securing any
obligations of the Company or any of its Subsidiaries pursuant to such
agreements, in each case incurred in connection with the disposition of any
business assets or Subsidiaries of the Company (other than guarantees of
Indebtedness or other obligations incurred by any Person acquiring all or any
portion of such business assets or Subsidiaries of the Company for the purpose
of financing such acquisition) in a principal amount not to exceed the gross
proceeds actually received by the Company or any of its Subsidiaries in
connection with such disposition; provided, however, that the principal amount
of any Indebtedness incurred pursuant to this clause (x), when taken together
with all Indebtedness incurred pursuant to this clause (x) and then outstanding,
shall not exceed $15,000,000; (xi) Indebtedness represented by Capitalized Lease
Obligations, mortgage financings or purchase money obligations, in each case
incurred for the purpose of financing all or any part of the purchase price or
cost of construction or improvement of property used in a related business or
incurred to refinance any such purchase price or cost of construction or
improvement, in each case incurred no later than 365 days after the date of such
acquisition or the date of completion of such construction or improvement;
provided, however, that the principal amount of any Indebtedness incurred
pursuant to this clause (xi) shall not exceed $3,000,000 at any time
outstanding; and (xii) Indebtedness and other Obligations of the Company and its
Subsidiaries related to lease financing activities which are not required to be
treated as indebtedness on a balance sheet, as determined in accordance with
generally accepted accounting principles as in effect on the date such
Indebtedness or other Obligation is incurred.

"Permitted Investments" means (i) Investments by the Company or any
Subsidiary of the Company to acquire the stock or assets of any Person (or
Acquired Indebtedness or Acquired Preferred Stock acquired in connection with a
transaction in which such Person becomes a Subsidiary of the Company); provided,
however, that the primary business of such person is in the good faith judgment
of management of the Company a business reasonably related, ancillary or
complementary to the business of the Company; provided, further, however, that
if any such Investment or series of related Investments involves an Investment
by the Company in excess of $3,000,000, the Company is able, at the time of such
investment and immediately after giving effect thereto, to incur at least $1.00
of additional Indebtedness (other than Permitted Indebtedness) in compliance
with the "Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock" covenant, (ii) Investments received by the Company
or its Subsidiaries as consideration for a sale of assets, (iii) Investments by
the Company or any Wholly Owned Subsidiary of the Company in any Wholly Owned
Subsidiary of the Company (whether existing on the Issue Date or created
thereafter) or any Person that after such Investments, and as a result thereof,
becomes a Wholly Owned Subsidiary of the Company and Investments in the Company
by any Wholly Owned Subsidiary of the Company, (iv) Investments in cash and Cash
Equivalents, (v) Investments in securities of trade creditors, wholesalers or
customers received pursuant to any

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plan of reorganization or similar arrangement, (vi) loans or advances to
employees of the Company or any Subsidiary thereof for purposes of purchasing
the Company's Capital Stock and other loans and advances to employees made in
the ordinary course of business consistent with past practices of the Company or
such Subsidiary, and (vii) additional Investments in an aggregate amount not to
exceed $1,000,000 at any time outstanding.

"Person" means an individual, partnership, corporation, limited liability
company, unincorporated organization, trust or joint venture, or a governmental
agency or political subdivision thereof.

"Preferred Stock" of any Person means any Capital Stock of such Person that
has preferential rights to any other Capital Stock of such Person with respect
to dividends or redemptions or upon liquidation.

"Productive Assets" means assets of a kind used or usable by the Company
and its Subsidiaries in its business; provided, however, that productive assets
to be acquired by the Company shall be, in the good faith judgment of management
of the Company, assets which are reasonably related, ancillary or complementary
to the business of the Company as conducted on the Issue Date.

"Qualified Capital Stock" means any Capital Stock that is not Disqualified
Capital Stock.

"Refinancing Indebtedness" means any refinancing of Indebtedness of the
Company or any of its Subsidiaries existing as of the Issue Date or incurred in
accordance with the "Limitation on Incurrence of Additional Indebtedness and
Issuance of Disqualified Capital Stock" covenant (other than pursuant to clause
(iii) or (iv) of the definition of Permitted Indebtedness) that does not (i)
result in an increase in the aggregate principal amount of Indebtedness (such
principal amount to include, for purposes of this definition, any premiums,
penalties or accrued interest paid with the proceeds of the Refinancing
Indebtedness) of such Person or (ii) create Indebtedness with (A) a Weighted
Average Life to Maturity that is less than the Weighted Average Life to Maturity
of the Indebtedness being refinanced or (B) a final maturity earlier than the
final maturity of the Indebtedness being refinanced.

"Representative" means the indenture trustee or other trustee, agent or
representative in respect of any Senior Indebtedness; provided, however, that
if, and for so long as, any issue of Senior Indebtedness lacks such a
representative, then the Representative for such issue of Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding principal
amount of such issue of Senior Indebtedness.

"Restricted Payment" means (i) the declaration or payment of any dividend
or the making of any other distribution (other than dividends or distributions
payable in Qualified Capital Stock or in options, rights or warrants to acquire
Qualified Capital Stock) on shares of the Company's Capital Stock, (ii) the
purchase, redemption, retirement or other acquisition for value of any Capital
Stock of the Company, or any warrants, rights or options to acquire shares of
Capital Stock of the Company, other than through the exchange of such Capital
Stock or any warrants, rights or options to acquire shares of any class of such
Capital Stock for Qualified Capital Stock or warrants, rights or options to
acquire Qualified Capital Stock, (iii) the making of any principal payment on,
or the purchase, defeasance, redemption, prepayment, decrease or other
acquisition or retirement for value, prior to any scheduled final maturity,
scheduled repayment or scheduled sinking fund payment, of, any Indebtedness of
the Company or its Subsidiaries that is subordinated or junior in right of
payment to the Notes or (iv) the making of any Investment (other than a
Permitted Investment).

"Sale/Leaseback Transaction" means an arrangement relating to property now
owned or hereafter acquired whereby the Company or a Subsidiary transfers such
property to a Person and the Company or a Subsidiary leases it from such Person.

"Secured Indebtedness" means any Indebtedness of the Company secured by a
Lien.

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"Senior Subordinated Indebtedness" means the Notes and any other
Indebtedness of the Company that specifically provides that such Indebtedness is
to rank pari passu with the Notes in right of payment and is not subordinated by
its terms in right of payment to any Indebtedness or other obligation of the
Company which is not Senior Indebtedness.

"Significant Subsidiary" means any Subsidiary that would be a "significant
subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X, promulgated
pursuant to the Securities Act, as such Regulation is in effect on the date of
the Indenture.

"Subsidiary," with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly through one or more
intermediaries, by such Person or (ii) any other Person of which at least a
majority of the voting interest under ordinary circumstances is at the time,
directly or indirectly, through one or more intermediaries, owned by such
Person. Notwithstanding anything in the Indenture to the contrary, all
references to the Company and its consolidated Subsidiaries or to financial
information prepared on a consolidated basis in accordance with GAAP shall be
deemed to include the Company and its Subsidiaries as to which financial
statements are prepared on a combined basis in accordance with GAAP and to
financial information prepared on such a combined basis. Notwithstanding
anything in the Indenture to the contrary, an Unrestricted Subsidiary shall not
be deemed to be a Subsidiary for purposes of the Indenture.

"Unrestricted Subsidiary" means a Subsidiary of the Company created after
the Issue Date and so designated (together with its Subsidiaries) by a
resolution adopted by the board of directors of the Company; provided, however,
that (a) neither the Company nor any of its other Subsidiaries (other than
Unrestricted Subsidiaries) (1) provides any credit support for any Indebtedness
of such Subsidiary or its Subsidiaries (including any undertaking, agreement or
instrument evidencing such Indebtedness) or (2) is directly or indirectly liable
for any Indebtedness of such Subsidiary or its Subsidiaries and (b) except with
respect to the designation described in the last sentence of this definition at
the time of designation of such Subsidiary, such Subsidiary and its Subsidiaries
has no property or assets (other than de minimis assets resulting from the
initial capitalization of such Subsidiary). The board of directors may designate
any Unrestricted Subsidiary to be a Subsidiary; provided, however, that
immediately after giving effect to such designation (x) the Company could incur
$1.00 of additional Indebtedness (other than Permitted Indebtedness) in
compliance with the "Limitation on Incurrence of Additional Indebtedness and
Issuance of Disqualified Capital Stock" covenant and (y) no Default or Event of
Default shall have occurred or be continuing. Any designation pursuant to this
definition by the board of directors of the Company shall be evidenced to the
Trustee by the filing with the Trustee of a certified copy of the resolution of
the Company's board of directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.

"U.S. Government Obligations" means direct obligations (or certificates
representing an ownership interest in such obligations) of the United States of
America (including any agency or instrumentality thereof) for the payment of
which the full faith and credit of the United States of America is pledged and
which are not callable or redeemable at the issuer's option.

"Weighted Average Life to Maturity" means, when applied to any Indebtedness
at any date, the number of years obtained by dividing (a) the then outstanding
aggregate principal amount of such Indebtedness into (b) the total of the
product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.

"Wholly Owned Subsidiary" of any Person means any Subsidiary of such Person
of which all the outstanding voting securities (other than directors' qualifying
shares) which normally have the right to vote in the election of directors are
owned by such Person or any Wholly-Owned Subsidiary of such Person.

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BOOK-ENTRY; DELIVERY AND FORM

Except as described in the next paragraph, the New Notes initially will be
represented by one or more permanent global certificates in definitive, duly
registered form (the "Global Notes"). The Global Notes will be deposited on the
Issue Date with, or on behalf of, The Depository Trust Company, New York, New
York ("DTC") and registered in the name of a nominee of DTC.

The Global Notes. The Company expects that pursuant to procedures
established by DTC (i) upon the issuance of the Global Notes, DTC or its
custodian will credit, on its internal system, the principal amount of New Notes
of the individual beneficial interests represented by such Global Notes to the
respective accounts of persons who have accounts with such depositary and (ii)
ownership of beneficial interests in the Global Notes will be shown on, and the
transfer of such ownership will be effected only through, records maintained by
DTC or its nominee (with respect to interests of participants) and the records
of participants (with respect to interests of persons other than participants).
Such accounts initially will be designated by or on behalf of the Initial
Purchasers and ownership of beneficial interests in the Global Notes will be
limited to persons who have accounts with DTC ("participants") or persons who
hold interests through participants. QIBs and institutional Accredited Investors
who are not QIB's may hold their interests in the Global Notes directly through
DTC if they are participants in such system, or indirectly through organizations
which are participants in such system.

So long as DTC, or its nominee, is the registered owner or holder of the
New Notes, DTC or such nominee, as the case may be, will be considered the sole
owner or holder of the New Notes represented by such Global Notes for all
purposes under the Indenture. No beneficial owner of an interest in the Global
Notes will be able to transfer that interest except in accordance with DTC's
procedures.

Payments of the principal of, premium (if any) and interest on, the Global
Notes will be made to DTC or its nominee, as the case may be, as the registered
owner thereof. None of the Company, the Trustee or any Paying Agent will have
any responsibility or liability for any aspect of the records relating to or
payments made on account of beneficial ownership interests in the Global Notes
or for maintaining, supervising or reviewing any records relating to such
beneficial ownership interest.

The Company expects that DTC or its nominee, upon receipt of any payment of
principal, premium, if any and interest on the Global Notes, will credit
participants' accounts with payments in amount proportionate to their respective
beneficial interests in the principal amount of the Global Notes as shown on the
records of DTC or its nominee. The Company also expects that payments by
participants to owners of beneficial interests in the Global Notes held through
such participants will be governed by standing instructions and customary
practice, as is now the case with securities held for the accounts of customers
registered in the names of nominees for such customers. Such payments will be
the responsibility of such participants.

Transfers between participants in DTC will be effected in the ordinary way
through DTC's same-day funds system in accordance with DTC rules and will be
settled in same day funds. If a holder requires physical delivery of a
Certificated Security for any reason, including to sell New Notes to persons in
states which require physical delivery of the New Notes, or to pledge such
securities, such holder must transfer its interest in a Global Note, in
accordance with the normal procedures of DTC.

DTC has advised the Company that it will take any action permitted to be
taken by a holder of New Notes (including the presentation of New Notes for
exchange as described below) only at the direction of one or more participants
to whose account the DTC interests in the Global Notes are credited and only in
respect of such portion of the aggregate principal amount of New Notes as to
which such participant or participants has or have given such direction.

DTC has advised the Company as follows: DTC is a limited purpose trust
company organized under the laws of the State of New York, a member of the
Federal Reserve System, a "clearing
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<PAGE> 97

corporation" within the meaning of the Uniform Commercial Code and a "Clearing
Agency" registered pursuant to the provisions of Section 17A of the Securities
Exchange Act of 1934, as amended. DTC was created to hold securities for its
participants and facilitate the clearance and settlement of securities
transactions between participants through electronic book-entry changes in
accounts of its participants, thereby eliminating the need for physical movement
of certificates. Participants include securities brokers and dealers, banks,
trust companies and clearing corporations and certain other organizations.
Indirect access to the DTC system is available to others such as banks, brokers,
dealers and trust companies that clear through or maintain a custodial
relationship with a participant, either directly or indirectly ("indirect
participants").

Although DTC has agreed to the foregoing procedures in order to facilitate
transfers of interests in the Global Note among participants of DTC, it is under
no obligation to perform such procedures, and such procedures may be
discontinued at any time. Neither the Company nor the Trustee will have any
responsibility for the performance by DTC or its participants or indirect
participants of their respective obligations under the rules and procedures
governing their operations.

Certificated Securities. If DTC is at any time unwilling or unable to
continue as a depositary for the Global Note and a successor depositary is not
appointed by the Issuer within 90 days, Certificated Securities will be issued
in exchange for the Global Notes.

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CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following discussion is a summary of certain federal income tax
considerations relevant to the exchange of Old Notes for New Notes, but does not
purport to be a complete analysis of all potential tax effects. The discussion
is based upon the Internal Revenue Code of 1986, as amended, Treasury
regulations, Internal Revenue Service rulings and pronouncements, and judicial
decisions now in effect, all of which are subject to change at any time by
legislative, judicial or administrative action. Any such changes may be applied
retroactively in a manner that could adversely affect a holder of the New Notes.
The description does not consider the effect of any applicable foreign, state,
local or other tax laws or estate or gift tax considerations.

EACH HOLDER SHOULD CONSULT HIS OWN TAX ADVISOR AS TO THE PARTICULAR TAX
CONSEQUENCES TO IT OF EXCHANGING OLD NOTES FOR NEW NOTES, INCLUDING THE
APPLICABILITY AND EFFECT OF ANY STATE, LOCAL OR FOREIGN TAX LAWS.

EXCHANGE OF OLD NOTES FOR NEW NOTES

The exchange of Old Notes for New Notes pursuant to the Exchange Offer
should not constitute a sale or exchange for federal income tax purposes.
Accordingly, such exchange should have no federal income tax consequences to
holders of Old Notes.

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PLAN OF DISTRIBUTION

Each broker-dealer that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. This Prospectus, as it may be
amended or supplemented from time to time, may be used by a broker-dealer in
connection with resales of New Notes received in exchange for Old Notes where
such Old Notes were acquired as a result of market-making activities or other
trading activities. The Company has agreed that, for a period of 90 days after
the Expiration Date, it will make this Prospectus, as amended or supplemented,
available to any broker-dealer for use in connection with any such resale. In
addition, until , 1998, all dealers effecting transactions in the New
Notes may be required to deliver a Prospectus.

The Company will not receive any proceeds from any sale of New Notes by
broker-dealers. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer or the purchasers of any such New Notes. Any broker-dealer that
resells New Notes that were received by it for its own account pursuant to the
Exchange Offer and any broker or dealer that participates in a distribution of
such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act, and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

For a period of 90 days after the Expiration Date, the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Notes) other than commissions or concessions of any
broker-dealers and will indemnify holders of the Old Notes (including any
broker-dealers) against certain liabilities, including certain liabilities under
the Securities Act.

LEGAL MATTERS

The validity of the New Notes offered hereby will be passed upon for the
Company by Weil, Gotshal & Manges LLP, Dallas, Texas and New York, New York.

95
<PAGE> 100

EXPERTS

The consolidated financial statements and schedule of Cooperative Computing
Holding Company, Inc. at September 30, 1997 and November 30, 1996, and for each
of the two years in the period ended November 30, 1996 and for the ten-month
period ended September 30, 1997 and the consolidated statement of operations and
cash flows of Triad for the five months ended February 28, 1997 appearing in
this Prospectus and Registration Statement have been audited by Ernst & Young
LLP, independent auditors, as set forth in their report thereon appearing
elsewhere herein, and are included in reliance upon such report given upon the
authority of such firm as experts in accounting and auditing. The consolidated
financial statements of Triad for each of the two years in the period ended
September 30, 1996 have been included herein in reliance on the report of
Coopers & Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.

96
<PAGE> 101

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
COOPERATIVE COMPUTING HOLDING COMPANY, INC.
Unaudited Interim Consolidated Financial Statements
Consolidated Balance Sheet as of December 31, 1997..... F-2
Consolidated Statements of Operations for the three
month periods ended December 31, 1996 and 1997........ F-3
Consolidated Statements of Cash Flows for the three
month periods ended December 31, 1996 and 1997........ F-4
Notes to the Unaudited Interim Consolidated Financial
Statements............................................ F-5

Audited Consolidated Financial Statements
Report of Independent Auditors......................... F-7
Consolidated Balance Sheets as of November 30, 1996 and
September 30, 1997.................................... F-8
Consolidated Statements of Operations for the years
ended November 30, 1995 and 1996 and the ten-month
period ended September 30, 1997....................... F-9
Consolidated Statements of Stockholders' Equity for the
years ended November 30, 1995 and 1996 and the
ten-month period ended September 30, 1997............. F-10
Consolidated Statements of Cash Flows for the years
ended November 30, 1995 and 1996 and the ten-month
period ended September 30, 1997....................... F-11
Notes to Consolidated Financial Statements............. F-12

TRIAD SYSTEMS CORPORATION
Audited Consolidated Financial Statements
Report of Independent Auditors......................... F-28
Report of Independent Accountants...................... F-29
Consolidated Balance Sheets as of September 30, 1995
and 1996.............................................. F-30
Consolidated Statements of Operations for the years
ended September 30, 1995 and 1996 and the five-month
period ended February 27, 1997........................ F-31
Consolidated Statements of Stockholders' Equity for the
years ended September 30, 1995 and 1996............... F-32
Consolidated Statements of Cash Flows for the years
ended September 30, 1995 and 1996 and the five-month
period ended February 27, 1997........................ F-33
Notes to Consolidated Financial Statements............. F-34
</TABLE>

F-1
<PAGE> 102

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

UNAUDITED CONSOLIDATED BALANCE SHEET
AS OF DECEMBER 31, 1997
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<S> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 1,514
Trade accounts receivable, net............................ 24,594
Inventories............................................... 5,925
Investment in leases...................................... 2,209
Deferred income taxes..................................... 7,871
Prepaid expenses and other current assets................. 7,656
--------
Total current assets.............................. 49,769
Service parts............................................... 3,721
Property and equipment...................................... 10,110
Long-term investment in leases.............................. 13,844
Capitalized computer software costs......................... 29,841
Databases................................................... 20,039
Deferred financing costs.................................... 5,722
Other intangibles........................................... 32,877
Other assets................................................ 11,420
Goodwill.................................................... 125,057
--------
Total Assets...................................... $302,400
========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 12,040
Income taxes payable...................................... 1,803
Payroll related accruals.................................. 11,680
Deferred revenue.......................................... 3,648
Current portion of long-term debt......................... 231
Accrued expenses and other current liabilities............ 11,089
--------
Total current liabilities......................... 40,491
Long-term debt.............................................. 150,179
Deferred income taxes....................................... 50,342
Other liabilities........................................... 14,490
--------
Total liabilities................................. 255,502
Stockholders' equity:
Common Stock, par value $.000125, authorized 50,000,000
shares, issued and outstanding 35,220,000.............. 4
Additional paid-in capital................................ 88,994
Retained deficit.......................................... (42,100)
--------
Total stockholders' equity:................................. 46,898
--------
Total liabilities and stockholders' equity.................. $302,400
========
</TABLE>

See accompanying notes

F-2
<PAGE> 103

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
-------------------
1996 1997
------- --------
<S> <C> <C>
Revenues:
Systems................................................... $5,640 $17,486
Customer support and information services................. 3,813 32,383
Finance................................................... -- 2,046
------ -------
Total revenues.............................................. 9,453 51,915
Cost of revenues:
Systems................................................... 2,074 11,132
Services and finance...................................... 2,005 20,483
------ -------
Total cost of revenues...................................... 4,079 31,615
------ -------
Gross margin................................................ 5,374 20,300
Operating expenses:
Sales and marketing....................................... 626 11,809
Product development....................................... 1,944 4,231
General and administrative................................ 1,000 10,323
------ -------
Total operating expenses.................................... 3,570 26,363
Operating income(loss)...................................... 1,804 (6,063)
Interest expense............................................ -- (3,547)
Other income (expense), net................................. 967 (78)
------ -------
Income (loss) before income taxes........................... 2,771 (9,688)
Income tax benefit.......................................... -- 2,898
------ -------
Net income(loss)............................................ $2,771 $(6,790)
====== =======
Pro Forma information:
Historical income before provision for income taxes....... $2,771
Pro Forma provision for income taxes...................... (934)
------
Pro Forma net income...................................... $1,837
======
</TABLE>

See accompanying notes.

F-3
<PAGE> 104

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
THREE MONTHS ENDED
DECEMBER 31,
-------------------
1996 1997
------- --------
<S> <C> <C>
OPERATING ACTIVITIES
Net income (loss)........................................... $ 2,771 $ (6,790)
Adjustments to reconcile net loss to net cash provided by
operating activities:
Depreciation.............................................. 488 1,386
Amortization.............................................. 1,081 10,728
Other, net................................................ 5 (10)
Changes in assets and liabilities, net of effects of
business acquired:
Trade accounts receivable.............................. 1,290 1,225
Inventories............................................ (63) (1,894)
Investment in leases................................... -- 60
Deferred income taxes.................................. -- (2,898)
Prepaid expenses and other assets...................... (530) (699)
Accounts payable....................................... 1,045 2,158
Deferred revenue....................................... 97 (575)
Accrued expenses and other current liabilities......... 122 (2,867)
------- --------
Net cash provided by (used in) operating activities......... 6,306 (176)
INVESTING ACTIVITIES
Purchase of property and equipment.......................... (653) (1,141)
Capitalized computer software costs and databases........... (4,580) (2,811)
Purchase of service parts................................... 131 (503)
Other....................................................... (47) (325)
------- --------
Net cash used in investing activities....................... (5,149) (4,780)
FINANCING ACTIVITIES
Proceeds from debt facility................................. -- 69,350
Payments on long-term debt.................................. -- (63,850)
Advances from stockholders.................................. 500 --
Debt issuance costs......................................... (337) (571)
Shareholder distributions................................... (3,401) --
Other....................................................... -- (92)
------- --------
Net cash provided by (used in) investing activities......... (3,238) 4,837
Net decrease in cash and cash equivalents................... (2,081) (119)
Cash and cash equivalents, beginning of period.............. 2,388 1,633
------- --------
Cash and cash equivalents, end of period.................... $ 307 $ 1,514
======= ========
</TABLE>

See accompanying notes.

F-4
<PAGE> 105

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997

1. BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the information
and notes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (consisting
of normal recurring accruals) considered necessary for a fair presentation have
been included. Operating results for the three months ended December 31, 1997
may not be indicative of the results for the year ended September 30, 1998.

2. DISCOUNTING OF LEASE RECEIVABLES

Activity in the following servicing liability account (recorded in other
liabilities in the Company's balance sheet) is as follows:

<TABLE>
<CAPTION>
RECOURSE
OBLIGATION
----------
<S> <C>
Balance at September 30, 1997............................... $ 9,662
Newly-created liabilities................................... 906
Charges and lease write-offs................................ (1,243)
-------
Balance at December 31, 1997................................ $ 9,325
=======
</TABLE>

3. INCOME TAXES

Through February 27, 1997, the Company and its affiliates had elected to be
treated as S Corporations under Subchapter S of the Internal Revenue Code of
1986, as amended. As such, federal income taxes were the responsibility of the
individual stockholders.

The pro forma disclosures on the statements of operations reflect
adjustments to record provisions for income taxes as if the Company had not been
an S Corporation. The pro forma provision for income taxes attributable to
continuing operations is $934,000 for the quarter ended December 31, 1996.

The Company recorded an income tax benefit for the quarter ended December
31, 1997 at an effective rate of 30%. The effective rate used to record the
income tax benefit in the December 1997 quarter is based on the Company's
anticipated results for the year and differs from the pro forma effective rate
for the ten-month period ended September 30, 1997 of 7% due primarily to the
impact of the write-off of in-process research and development associated with
the Triad acquisition. The Company's (provision) benefit for income taxes
differs from the amount computed by applying the statutory rate to income before
taxes primarily because of permanent differences, state taxes and research and
development tax credits.

4. COMMITMENTS AND CONTINGENCIES

Licensing Agreement

The Company has a license which allows it to sublicense a software product
that provides quick access to auto repair information. The Company is obligated
to a non-refundable Minimum Annual Commitment of $1,000,000 through 2011.

F-5
<PAGE> 106

Operating Leases

The Company leases an airplane on a month-to-month basis from a company
owned by one of the stockholders of the Company. Rental payments are $33,500 per
month plus associated expenses. Rent expense under this lease during the three
months ended December 31, 1997 was approximately $119,000.

5. SUBSEQUENT EVENTS

Refinancing of Debt

On February 10, 1998, the Company consummated the sale of $100 million
Senior Subordinated Notes (the "Offering"). Concurrently with the consummation
of the Offering, the Company (i) amended and restated its $170 million credit
facility (the "Old Credit Facilities") by entering into a new $50 million term
loan facility and a new $50 million revolving credit facility and (ii) used the
net proceeds from the Offering and the new facilities to repay the Old Credit
Facilities. Accordingly, in the December 31, 1997 consolidated balance sheet all
such debt has been classified as long-term. The refinancing of debt resulted in
an extraordinary loss of approximately $3,029,000, net of tax, as a result of
the write-off of existing deferred financing costs.

Acquisitions

On March 1, 1998, the Company acquired certain assets of ADP Claims
Solutions Group, Inc. for total consideration (including the assumption of
certain liabilities) of approximately $9.3 million. These assets provide
products and services to the automotive recycling industry. The consummation of
this acquisition is subject to certain conditions, including approval by the
United States Federal Trade Commission. The operating results of the acquired
company are immaterial to the Company's financial statements.

Stock Option Plan

In February 1998, the Board of Directors of the Company gave tentative
approval for the implementation of a stock option plan and have reserved 4.8
million shares of the Company's Common Stock for issuance under the plan.

F-6
<PAGE> 107

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Cooperative Computing Holding Company, Inc.

We have audited the accompanying consolidated balance sheets of Cooperative
Computing Holding Company, Inc. as of November 30, 1996 and September 30, 1997,
and the related consolidated statements of operations, stockholders' equity and
cash flows for each of the two years in the period ended November 30, 1996 and
for the ten-month period ended September 30, 1997. Our audits also include the
financial statement schedule listed in Item 16(b) of this Registration
Statement. These financial statements and schedule are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Cooperative
Computing Holding Company, Inc. at November 30, 1996 and September 30, 1997, and
the consolidated results of its operations and its cash flows for each of the
two years in the period ended November 30, 1996 and for the ten-month period
ended September 30, 1997, in conformity with generally accepted accounting
principles. Also, in our opinion, the related financial statement schedule
referred to above, when considered in relation to the basic financial statements
taken as a whole, presents fairly in all material respects the information set
forth therein.

/s/ ERNST & YOUNG LLP

Austin, Texas
January 16, 1998, except for Note 19,
as to which the date is February 10, 1998.

F-7
<PAGE> 108

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA AND PER SHARE DATA)

<TABLE>
<CAPTION>
NOVEMBER 30, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents................................. $ 4,004 $ 1,633
Trade accounts receivable, net............................ 4,091 25,819
Inventories............................................... 1,164 4,031
Investment in leases...................................... -- 1,735
Deferred income taxes..................................... -- 7,871
Prepaid expenses and other current assets................. 787 7,245
------- --------
Total current assets.............................. 10,046 48,334
Service parts............................................... 611 3,801
Property and equipment...................................... 2,160 10,355
Long-term investment in leases.............................. -- 14,378
Capitalized computer software costs......................... -- 32,569
Databases................................................... 5,048 20,688
Deferred financing costs.................................... -- 5,436
Other intangibles........................................... -- 161,247
Other assets................................................ 898 11,132
------- --------
Total assets................................................ $18,763 $307,940
======= ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable.......................................... $ 2,452 $ 9,882
Income taxes payable...................................... -- 1,803
Payroll related accruals.................................. 949 13,129
Deferred revenue.......................................... 1,196 4,223
Advances from stockholders................................ 5,089 --
Current portion of long-term debt......................... -- 6,436
Accrued expenses and other current liabilities............ 3,850 12,258
------- --------
Total current liabilities......................... 13,536 47,731
Long-term debt.............................................. -- 138,531
Deferred income taxes....................................... -- 53,240
Other liabilities........................................... -- 14,739
------- --------
Total liabilities................................. 13,536 254,241
Stockholders' equity:
Common Stock:
Cooperative Computing Holding Company, Inc. Common
Stock, par value $1 in 1996 and $0.000125 in 1997;
authorized 2,000 shares in 1996 and 50,000,000 in
1997; issued and outstanding 2,225 in 1996 and
35,220,000 in 1997.................................... 2 4
Applied Data Specialties, Inc., par value $1;
authorized, issued and outstanding -- 1,000 in 1996
and none in 1997...................................... 1 --
Canadian Aftermarket Network, Inc., par value $1;
authorized, issued and outstanding -- 1,000 in 1996
and none in 1997...................................... 1 --
Additional paid-in capital................................ 249 88,994
Retained earnings (deficit)............................... 4,974 (35,299)
------- --------
Total stockholders' equity........................ 5,227 53,699
------- --------
Total liabilities and stockholders' equity........ $18,763 $307,940
======= ========
</TABLE>

See accompanying notes.

F-8
<PAGE> 109

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS
(AMOUNTS IN THOUSANDS)

<TABLE>
<CAPTION>
YEAR ENDED TEN-MONTH
NOVEMBER 30, PERIOD ENDED
----------------- SEPTEMBER 30,
1995 1996 1997
------- ------- -------------
<S> <C> <C> <C>
Revenues:
Systems.................................................. $14,111 $18,544 $ 55,085
Customer support and information services................ 15,134 18,190 79,654
Finance.................................................. -- -- 5,577
------- ------- --------
Total revenues............................................. 29,245 36,734 140,316
Cost of revenues:
Systems.................................................. 9,492 11,172 35,169
Services and finance..................................... 7,241 10,685 49,295
------- ------- --------
Total cost of revenues..................................... 16,733 21,857 84,464
------- ------- --------
Gross margin............................................... 12,512 14,877 55,852
Operating expenses:
Sales and marketing...................................... 2,061 2,038 28,161
Product development...................................... 7,485 8,347 11,890
General and administrative............................... 2,675 2,992 19,929
Write off of purchased in-process research and
development........................................... -- -- 23,100
------- ------- --------
Total operating expenses................................... 12,221 13,377 83,080
------- ------- --------
Operating income (loss).................................... 291 1,500 (27,228)
Interest expense........................................... -- -- (8,403)
Other income (expense), net................................ 414 4,231 443
------- ------- --------
Income (loss) before income taxes.......................... 705 5,731 (35,188)
Income tax benefit:
Nonrecurring charge for termination of Subchapter S
election.............................................. -- -- (2,382)
C Corporation benefit.................................... -- -- 3,383
------- ------- --------
Total income tax benefit................................... -- -- 1,001
------- ------- --------
Net income (loss).......................................... $ 705 $ 5,731 $(34,187)
======= ======= ========
Unaudited pro forma information:
Historical income before provision for income taxes...... $ 705 $ 5,731 $(35,188)
Pro forma (provision) benefit for income taxes........... (157) (1,931) 2,392
------- ------- --------
Pro forma net income..................................... $ 548 $ 3,800 $(32,796)
======= ======= ========
</TABLE>

See accompanying notes.

F-9
<PAGE> 110

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(AMOUNTS IN THOUSANDS, EXCEPT SHARE DATA)

<TABLE>
<CAPTION>
COMMON STOCK
-----------------------------------------------------------
COOPERATIVE CANADIAN
COMPUTING APPLIED DATA AFTERMARKET
HOLDING COMPANY, INC. SPECIALTIES, INC. NETWORK, INC. ADDITIONAL RETAINED TOTAL
--------------------- ----------------- --------------- PAID-IN EARNINGS STOCKHOLDERS'
SHARES AMOUNT SHARES AMOUNT SHARES AMOUNT CAPITAL (DEFICIT) EQUITY
----------- ------- ------- ------- ------ ------ ---------- --------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, November 30,
1994.................... 2,225 $ 2 1,000 $ 1 1,000 $ 1 $ 249 $ 4,871 $ 5,124
Net income.............. -- -- -- -- -- -- -- 705 705
Shareholder
distributions......... -- -- -- -- -- -- -- (556) (556)
---------- ---- ------ --- ------ --- ------- -------- --------
Balance, November 30,
1995.................... 2,225 2 1,000 1 1,000 1 249 5,020 5,273
Net income.............. -- -- -- -- -- -- -- 5,731 5,731
Shareholder
distributions......... -- -- -- -- -- -- -- (5,777) (5,777)
---------- ---- ------ --- ------ --- ------- -------- --------
Balance, November 30,
1996.................... 2,225 2 1,000 1 1,000 1 249 4,974 5,227
Shareholder
distributions......... -- -- -- -- -- -- -- (6,209) (6,209)
Merger of Applied Data
Specialties, Inc. and
Canadian Aftermarket
Network, Inc. into
Cooperative Computing
Holding Company....... -- -- (1,000) (1) (1,000) (1) 2 -- --
Issuance of Common
Stock................. 9,610,000 96 -- -- -- -- 96,004 -- 96,100
Common Stock issuance
costs................. -- -- -- -- -- -- (7,355) -- (7,355)
Foreign currency
translation
adjustments........... -- -- -- -- -- -- -- 123 123
Net loss................ -- -- -- -- -- -- -- (34,187) (34,187)
Effect of stock
splits................ 25,607,775 (94) -- -- -- -- 94 -- --
---------- ---- ------ --- ------ --- ------- -------- --------
Balance, September 30,
1997.................... 35,220,000 $ 4 -- $-- -- $-- $88,994 $(35,299) $ 53,699
========== ==== ====== === ====== === ======= ======== ========
</TABLE>

See accompanying notes.

F-10
<PAGE> 111

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED TEN-MONTH
NOVEMBER 30, PERIOD ENDED
------------------ SEPTEMBER 30,
1995 1996 1997
------- ------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
OPERATING ACTIVITIES
Net income (loss)...................................... $ 705 $ 5,731 $ (34,187)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation......................................... 1,708 1,711 4,585
Amortization......................................... 3,700 4,683 24,758
Write-off of in-process research and development..... -- -- 23,100
Other, net........................................... (218) (272) 118
Changes in assets and liabilities, net of effects of
business acquired:
Trade accounts receivable......................... (1,879) 1,014 (11,231)
Inventories....................................... (434) 482 2,547
Investment in leases.............................. -- -- 7,401
Deferred income taxes............................. -- -- (4,710)
Prepaid expenses and other assets................. (164) (385) 10,697
Accounts payable.................................. (382) 753 (1,102)
Taxes payable..................................... -- -- 1,803
Deferred revenues................................. 206 350 3,027
Accrued expenses and other liabilities............ 1,635 1,184 (1,773)
------- ------- ---------
Net cash provided by operating activities.............. 4,877 15,251 25,033
INVESTING ACTIVITIES
Acquisition of Triad, net of cash acquired............. -- -- (179,893)
Purchase of property and equipment..................... (1,551) (1,617) (3,347)
Capitalized computer software costs and databases...... (4,841) (5,118) (11,879)
Purchase of service parts.............................. (135) (406) (754)
Distributions received from partnerships............... 205 256 221
------- ------- ---------
Net cash used in investing activities.................. (6,322) (6,885) (195,652)
FINANCING ACTIVITIES
Issuance of common stock............................... -- -- 96,100
Stock issuance costs................................... -- -- (7,355)
Proceeds from debt facility............................ -- -- 201,087
Payments on long-term debt............................. -- -- (103,844)
Debt issuance costs.................................... -- -- (6,442)
Shareholder distributions.............................. (556) (5,777) (6,209)
Advances from stockholders............................. 700 -- 2,496
Repayments of advances from stockholders............... -- -- (7,585)
------- ------- ---------
Net cash provided by (used in) financing activities.... 144 (5,777) 168,248
Increase (decrease) in cash and cash equivalents....... (1,301) 2,589 (2,371)
Cash and cash equivalents, beginning of period......... 2,716 1,415 4,004
------- ------- ---------
Cash and cash equivalents, end of period............... $ 1,415 $ 4,004 $ 1,633
======= ======= =========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest.......................................... $ -- $ -- $ 6,792
Income taxes...................................... $ -- $ -- $ 139
</TABLE>

See accompanying notes.

F-11
<PAGE> 112

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1997

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

The consolidated financial statements include the accounts of Cooperative
Computing Holding Company, Inc. ("Holdings" or the "Company"), and its wholly
owned subsidiary, Cooperative Computing, Inc. ("CCI"). Holdings has no assets or
liabilities other than its investment in its wholly owned subsidiary CCI;
accordingly these consolidated financial statements represent the operations of
CCI and its subsidiaries. CCI is a leading provider of business and information
management services to the automotive aftermarket and the hardlines and lumber
industry. CCI produces and markets complex databases and software products, and
designs, develops, manufactures, markets, services and leases computer systems.
Development and assembly facilities are located in Austin, Texas; Livermore,
California; Denver, Colorado; and Newton, New Jersey. Principal markets are
located in the United States, Canada, United Kingdom, Ireland, France and Puerto
Rico.

Basis of Presentation

Prior to February 27, 1997, the operations reflected in these financial
statements are those of Cooperative Computing, Inc., Canadian Aftermarket
Network, Inc. and Applied Data Specialty, Inc., all of which were owned by the
same individuals and are therefore presented on a combined basis. All
intercompany accounts and transactions between these entities have been
eliminated. Effective February 27, 1997, Canadian Aftermarket, Inc. and Applied
Data Specialty, Inc. merged into Cooperative Computing, Inc. ("Old CCI").
Subsequent to February 27, 1997, these financial statements reflect the
consolidated operations and accounts of these entities after elimination of
intercompany accounts and transactions. For purposes of presentation,
"consolidated" refers to both consolidated and combined periods.

Also on February 27, 1997 Old CCI acquired substantially all of the
outstanding shares of Triad Systems Corporation ("Triad") (see Note 2).
Concurrently, CCI Acquisition Corporation, a wholly owned subsidiary of Old CCI,
merged into Triad, Old CCI contributed its operating assets and liabilities to
Triad, and the resulting company was renamed Cooperative Computing, Inc. and Old
CCI was renamed Cooperative Computing Holding Company.

The consolidated financial statements for the period ended September 30,
1997 include the accounts of Holdings, Holdings' wholly owned subsidiary,
Cooperative Computing, Inc. and its wholly owned subsidiaries, which include
Triad Systems Financial Corporation, after elimination of intercompany accounts
and transactions.

Cash Equivalents

The Company considers all investments with maturities of ninety days or
less when purchased to be cash equivalents.

Inventories

Inventories primarily consist of purchased parts and finished goods.
Inventories are stated at the lower of cost (first-in, first-out method) or
market and include amounts which ultimately may be transferred to equipment or
service parts.

Service Parts

Parts used for servicing installed equipment are stated at cost and are
depreciated over a period not exceeding five years using the straight-line
method.

F-12
<PAGE> 113
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Property and Equipment

Property and equipment are stated at cost. Depreciation is computed using
the straight-line method over the estimated useful lives of the related assets
(two to ten years). Leasehold improvements are amortized using the straight-line
method over the life of the lease or the estimated useful life, whichever is
shorter.

Investment in Leases

At the inception of a lease, the gross lease receivable, the reserve for
potential losses, the estimated residual value of the leased equipment and the
unearned lease income are recorded. The unearned lease income represents the
excess of the gross lease receivable plus the estimated residual value over the
cost of the equipment leased. Certain initial direct costs incurred in
consummating the leases, included in the investment in leases, are amortized
over the life of the lease. Lease receivables sold pursuant to discounting
agreements with banks or lending institutions that meet the sales criteria of
FASB Statement No. 125, Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities ("FAS 125") are removed from the
balance sheet and the gains are reflected in operations.

During 1997, the Company adopted the requirements of FAS 125, which applies
to all transactions occurring subsequent to December 31, 1996. Accordingly, the
Company has modified several agreements to meet the new requirements to enable
it to continue recognizing transfers of certain receivables to special-purpose
entities as sales. As a result, the impact of adoption on net income in 1997 was
immaterial.

Capitalized Computer Software Costs

Costs relating to the conceptual formulation and design of software
products are expensed as product development. Costs incurred subsequent to
establishing the technological feasibility of software products are capitalized.
Amortization of capitalized software costs begins when the products are
available for general release to customers. Costs are amortized over the
expected product lives and are calculated using the greater of the straight-line
method, generally over a period of two to five years, or a cost per unit sold
basis.

Databases

The Company capitalizes certain costs associated with updating and
maintaining its databases of auto parts. Costs are amortized using the
straight-line method over the approximate life cycle of the data (two to five
years). Management assesses the recoverability of its database costs
periodically based principally upon comparison of the net book value of the
asset to the expected future revenue stream to be generated by the asset over
its life cycle. If management concludes that the asset is impaired, its net book
value is adjusted to its fair value.

Deferred Financing Costs

Financing costs are deferred and amortized to interest expense using the
interest method over the terms of the related debt. Amortization of such costs
for the ten-month period ended September 30, 1997 totaled approximately
$1,000,000.

Other Intangibles

Other intangibles consist of goodwill, trademarks and tradenames, assembled
work force and favorable lease. Goodwill represents the excess of cost over the
fair value of assets acquired and is
F-13
<PAGE> 114
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

amortized using the straight-line method over 15 years. Trademarks and
tradenames are amortized over fifteen years, assembled workforce is amortized
over five years and favorable lease is amortized over two years. The carrying
value of intangible assets is periodically reviewed by the Company based on the
expected future undiscounted operating cash flows of the related business unit.
Based upon its most recent analysis, the Company believes that no material
impairment of intangible assets exists at September 30, 1997.

Amortization

Amortization of databases is included in services and finance cost of
revenues and amortization of capitalized software is included in systems cost of
revenues. Amortization of other intangibles is included in general and
administrative expense.

Long-Lived Assets

In accordance with FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, the Company
records impairment losses on long-lived assets used in operations when events
and circumstances indicate that the assets might be impaired and undiscounted
cash flows estimated to be generated by those assets are less than the carrying
amounts of those assets. As of September 30, 1997 there were no events or
circumstances which indicated that long-lived assets of the Company might be
impaired.

Revenue Recognition

Services revenue is recognized over the period that the services are
performed. Systems revenue is recognized upon product shipment provided there
are no remaining significant obligations and collection is probable. Finance
revenue is recognized ratably over the lease term, except gains on sales of
lease receivables, which are recognized at the time of the sale.

Income Taxes

Prior to February 27, 1997, Cooperative Computing, Inc., Applied Data
Specialty, Inc. and Canadian Aftermarket Network, Inc., elected to be treated as
Subchapter S Corporations, under the Internal Revenue Code of 1986 as amended,
whereby federal income taxes are the responsibility of the individual
stockholders. Accordingly, these companies did not provide for federal income
taxes. Effective February 27, 1997, Canadian Aftermarket Network and Applied
Data Specialty merged with Old CCI, the surviving entity. Old CCI was renamed
Cooperative Computing Holding Company, Inc. and its Subchapter S status was
terminated thus becoming subject to corporate income taxes.

In accordance with Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes, deferred income taxes were provided for all
temporary differences existing at the date of the Company's termination of its
Subchapter S status. Deferred taxes are determined based on differences between
financial reporting and tax bases of assets and liabilities and are measured
using the enacted tax rates and laws that will be in effect when the differences
are expected to reverse. Income taxes are provided on the undistributed earnings
of foreign subsidiaries that are not considered to be permanently reinvested.

Fair Value of Financial Instruments

The carrying amounts of certain of the Company's financial instruments
including cash and cash equivalents, accounts receivable, accounts payable, and
other accrued liabilities approximate fair value because of their short
maturities. Lease receivables are stated at the present value using

F-14
<PAGE> 115
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

the internal rate of return which approximates fair value. All significant debt
obligations carry variable interest rates and their carrying value is considered
to approximate fair value.

The Company utilizes interest rate cap agreements and foreign exchange
contracts to manage interest rate and foreign currency exposures. The principal
objective of such contracts is to minimize the risks and/or costs associated
with financial and global operating activities. The Company does not utilize
financial instruments for trading or other speculative purposes. The
counterparties to these contractual arrangements are major financial
institutions with which the Company also has other financial relationships. The
Company is exposed to credit loss in the event of nonperformance by these
counterparties. However, the Company does not anticipate nonperformance by the
other parties, and no material loss would be expected from their nonperformance.
Unrealized gains and losses on foreign exchange contracts are recognized
currently in the statement of operations.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

Certain Risks and Concentrations

The Company performs ongoing credit evaluations of its customers and
generally does not require collateral from its customers. Most of the Company's
customers are in the automotive aftermarket or the hardlines and lumber
industry.

The Company had one customer in 1995 and 1996 whose sales represented more
than 10% of the Company's total revenues. Sales to this customer were
approximately $8,250,000 and $6,184,000 in 1995 and 1996, respectively. No
customers accounted for more than 10% of the Company's revenues during the
ten-month period ended September 30, 1997.

Off Balance Sheet Risk

The Company conducts business on a global basis in several international
currencies. As such, it is exposed to adverse movements in foreign currency
exchange rates. The Company enters into foreign exchange forward contracts to
reduce currency exposures. These contracts hedge exposures associated with
intercompany product sales denominated in United Kingdom currencies. The Company
does not enter into foreign exchange contracts for trading purposes. See also
Note 7 "Discounting of Lease Receivables" and Note 17 "Commitments and
Contingencies".

Foreign Currency Translation

Assets and liabilities of subsidiary operations denominated in foreign
currencies are translated at the year-end rates of exchange and the income
statements have been translated at the average rates of exchange for the year.
Local currencies are considered to be the functional currencies.

Recently Issued Accounting Standards

In October 1997, the AICPA issued SOP 97-2, Software Revenue Recognition,
which changes the requirements for revenue recognition effective for
transactions that the Company will enter into beginning January 1, 1998. In
March 1998, the AICPA also issued SOP 98-4, "Deferral of the

F-15
<PAGE> 116
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Effective Date of a Provision of SOP 97-2, Software Revenue Recognition. The
Company has not yet assessed the potential impact these two SOPs will have on
its 1998 financial statements.

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 131 ("SFAS 131"), Disclosures about Segments of an Enterprise and Related
Information. This statement establishes standards for the way companies report
information about operating segments in annual financial statements. It also
establishes standards for related disclosures about products and services,
geographic areas, and major customers. The Company has not yet determined the
impact, if any, of adopting this standard. The disclosures prescribed by SFAS
131 are effective in 1998.

In June 1997, the FASB issued Statement of Financial Accounting Standards
No. 130 ("SFAS 130"), Reporting Comprehensive Income. This standard establishes
standards for reporting comprehensive income and its components in a financial
statement. Comprehensive income as defined includes all changes in equity during
a period from non-owner sources. Examples of items to be included in
comprehensive income, which are excluded from net income, include foreign
currency translation adjustment and unrealized gain/loss on available for sale
securities. The disclosure prescribed by SFAS 130 must be made beginning with
the first quarter of 1998 and is not anticipated to have a material impact on
the Company's financial position or results of operations.

2. ACQUISITION

On February 27, 1997, the Company completed the acquisition of the
outstanding stock of Triad Systems Corporation ("Triad"). The total purchase
price was $182,715,000 including a cash payment of $182,140,000 and related
acquisition costs of $575,000. The transaction was accounted for as a purchase
and, accordingly, the operating results of Triad have been included in the
Company's consolidated financial statements since the date of acquisition.

In conjunction with the acquisition of Triad, the Company issued 9,600,000
new shares of common stock to an investor for approximately $96,100,000,
excluding related issuance costs, and the Company entered into a $170,000,000
credit facility consisting of a $135,000,000 term loan facility and a
$35,000,000 revolving credit facility with a consortium of financial
institutions. The proceeds from the issuance of common stock and the new credit
facility were utilized to fund the acquisition of Triad and refinance portions
of Triad's existing debt.

The purchase price, including related acquisition costs, was allocated
based on an independent valuation obtained by the Company to the tangible and
intangible assets acquired and liabilities assumed based upon their respective
fair values on the date of acquisition as follows (in thousands):

<TABLE>
<S> <C>
Tangible assets............................................. $ 77,855
Favorable lease............................................. 3,864
Computer software costs..................................... 38,700
Databases................................................... 15,900
Trademark and tradenames.................................... 22,100
Assembled workforce......................................... 11,700
In-process research and development......................... 23,100
Goodwill.................................................... 132,093
--------
Total assets................................................ 325,312
Liabilities assumed......................................... 142,597
--------
Net assets acquired......................................... $182,715
========
</TABLE>

F-16
<PAGE> 117
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Liabilities assumed include approximately $5,200,000 of costs to be
incurred in connection with the consolidation of Triad's management
administration, manufacturing and finance operations with the Company's. Such
costs include severance costs for the involuntary termination of certain Triad
employees ($4,100,000) and costs associated with a leased building to be vacated
as a result of the consolidation ($1,120,000). The consolidation of the
manufacturing and finance operations, which commenced after September 30, 1997,
is expected to be completed by June 30, 1998.

In-process research and development includes the value of products in the
development stage and not considered to have reached technological feasibility.
The $23,100,000 allocated to in-process research and development was determined
based on an independent valuation and was expensed at the time of the
acquisition.

Other intangible assets will be amortized on a straight-line basis over
estimated useful lives ranging from two to fifteen years.

The following summarized unaudited pro forma financial information assumes
the acquisition of Triad had occurred on December 1, 1995 and 1996,
respectively. Included in the amounts for the year ended November 30, 1996 are
the operations of Triad for the year ended September 30, 1996. Included in the
amounts for the ten months ended September 30, 1997 are the operations of Triad
for the five months ended February 27, 1997. The following pro forma information
is not necessarily indicative of the results that would have occurred had the
transaction been completed at the beginning of the period indicated, nor is it
indicative of future operating results (in thousands):

<TABLE>
<CAPTION>
TEN-MONTH
YEAR ENDED PERIOD ENDED
NOVEMBER 30, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Revenues................................................ $212,410 $206,748
Net loss................................................ $(22,675) $(41,201)
</TABLE>

3. TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable at November 30, 1996 and September 30, 1997
include allowances for doubtful accounts of $1,949,000 and $5,468,000,
respectively.

4. SERVICE PARTS

Service parts consist of the following (in thousands):

<TABLE>
<CAPTION>
NOVEMBER 30, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Service parts........................................... $ 955 $12,404
Less accumulated depreciation........................... (344) (8,603)
----- -------
Total service parts..................................... $ 611 $ 3,801
===== =======
</TABLE>

F-17
<PAGE> 118
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

5. PROPERTY AND EQUIPMENT

Property and equipment consist of the following (in thousands):

<TABLE>
<CAPTION>
NOVEMBER 30, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Land.................................................... $ -- $ 138
Furniture and equipment................................. 3,741 12,532
Field service and demonstration equipment............... 669 1,365
Buildings and leasehold improvements.................... 260 1,569
Less accumulated depreciation and amortization.......... (2,510) (5,249)
------- -------
Total property and equipment............................ $ 2,160 $10,355
======= =======
</TABLE>

6. INVESTMENT IN LEASES

The Company, through its wholly-owned finance subsidiary and special
purpose entity, leases its hardware and software products to customers under
direct financing leases. Lease receivables are generally due in monthly
installments over a period of five years.

Investment in leases is calculated as follows (in thousands):

<TABLE>
<CAPTION>
NOVEMBER 30, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Total minimum lease payments receivable................. $ -- $18,535
Allowance for doubtful accounts......................... -- (730)
Initial direct costs.................................... -- 335
Estimated unguaranteed residual value................... -- 1,114
------- -------
Gross investment in leases.............................. -- 19,254
Unearned income......................................... -- (5,605)
Leases pending acceptance............................... -- 2,464
------- -------
Total investment in leases.............................. -- 16,113
Short-term investment in leases......................... -- 1,735
------- -------
Long-term investment in leases.......................... $ -- $14,378
======= =======
</TABLE>

A substantial portion of the lease receivables are discounted prior to
maturity. Accordingly, a schedule of maturities for the next five years is not
indicative of future cash collections. Most of the Company's customers are in
the automotive aftermarket and the hardlines and lumber industry.

7. DISCOUNTING OF LEASE RECEIVABLES

Periodically, lease receivables are sold pursuant to discounting agreements
with banks and lending institutions under which available lines were $65,642,000
at September 30, 1997. At the time of sale, the Company records the
newly-created servicing liabilities (lease servicing obligation and recourse
obligation) at their estimated fair value. Gains resulting from the sale of
lease receivables are reflected in finance revenue. The fair value of the lease
servicing liability is based upon the present value of the costs required to
continue to service the leases sold for the remainder of the lease term.

F-18
<PAGE> 119
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

prohibit further sales under the available credit facilities. During the period
ended September 30, 1997, the Company failed to meet a profitability covenant of
these agreements. Such agreements were subsequently amended to, among other
provisions, eliminate the profitability covenant. The Company is in compliance
with the remaining covenants, and management believes that it will maintain
compliance with such covenants in the foreseeable future.

Pursuant to the discounting agreements, the Company is contingently liable
for losses in the event of lessee nonpayment up to stated recourse limits (up to
10% of the aggregate initial proceeds adjusted for certain expenses and payments
remitted on the leases) and full recourse on lease receivables discounted that
did not meet the bank or lending institutions credit worthiness test. At
September 30, 1997, the Company has an immaterial amount of lease receivables
discounted that are subject to the full recourse provision.

At September 30, 1997, the contingent liability for leases sold was
$25,990,000. The Company provides for the fair value of the recourse obligation
based upon an analysis that considers among other things: the credit worthiness
of the lease receivable, the recourse provision the lease receivable is subject
to, the Company's historical experience which includes loss recoveries through
resell of repossessed systems.

Activity in the servicing liability accounts (recorded in other liabilities
in the Company's balance sheet) is as follows (amounts in thousands):

<TABLE>
<CAPTION>
LEASE
SERVICING RECOURSE
OBLIGATION OBLIGATION
---------- ----------
<S> <C> <C>
Balance at November 30, 1996................................ $ -- $ --
Liabilities assumed in acquisition of Triad................. 2,246 11,271
Newly-created liabilities................................... 663 2,838
Recoveries.................................................. -- 527
Charges and lease write-offs................................ (703) (4,974)
------ -------
Balance at September 30, 1997............................... $2,206 $ 9,662
====== =======
</TABLE>

8. CAPITALIZED COMPUTER SOFTWARE COSTS

<TABLE>
<CAPTION>
YEAR ENDED TEN-MONTH
NOVEMBER 30, PERIOD ENDED
------------------ SEPTEMBER 30,
1995 1996 1997
------- ------- -------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Beginning balance............................... $ -- $ -- $ --
Acquisition of assets........................... -- -- 38,700
Capitalized computer software costs............. -- -- 1,427
Amortization of computer software costs......... -- -- (7,558)
------- ------- -------
Ending balance.................................. $ -- $ -- $32,569
======= ======= =======
</TABLE>

F-19
<PAGE> 120
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

9. DATABASES

<TABLE>
<CAPTION>
YEAR ENDED TEN-MONTH
NOVEMBER 30, PERIOD ENDED
----------------- SEPTEMBER 30,
1995 1996 1997
------- ------- -------------
(IN THOUSANDS)
<S> <C> <C> <C>
Beginning balance........................................... $ 3,473 $ 4,613 $ 5,048
Acquisition of assets....................................... -- -- 15,900
Capitalized database costs.................................. 4,840 5,118 7,052
Amortization of database costs.............................. (3,700) (4,683) (7,312)
------- ------- -------
Ending balance.............................................. $ 4,613 $ 5,048 $20,688
======= ======= =======
</TABLE>

10. OTHER INTANGIBLES

The Company had no other intangibles during the two years ended November
30, 1996. Activity in other intangibles during the ten months ended September
30, 1997 is as follows (in thousands):

<TABLE>
<CAPTION>
TRADEMARKS
AND ASSEMBLED FAVORABLE
GOODWILL TRADENAMES WORK FORCE LEASE TOTAL
-------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C>
Beginning cost......................... $ -- $ -- $ -- $ -- $ --
Acquisition of assets.................. 132,093 22,100 11,700 3,864 169,757
-------- ------- ------- ------- --------
Ending cost............................ 132,093 22,100 11,700 3,864 169,757
Beginning accumulated amortization..... -- -- -- -- --
Amortization........................... (5,159) (859) (1,365) (1,127) (8,510)
-------- ------- ------- ------- --------
Ending accumulated amortization........ (5,159) (859) (1,365) (1,127) (8,510)
-------- ------- ------- ------- --------
Net balance at September 30, 1997...... $126,934 $21,241 $10,335 $ 2,737 $161,247
======== ======= ======= ======= ========
</TABLE>

11. DEBT

<TABLE>
<CAPTION>
NOVEMBER 30, SEPTEMBER 30,
1996 1997
----------------- ------------------
(IN THOUSANDS)
<S> <C> <C>
Term Loan Facility...................................... $ -- $135,000
Revolving Credit Facility............................... -- 9,150
Other................................................... -- 817
------- --------
-- 144,967
Current portion......................................... -- 6,436
------- --------
Long-term debt.......................................... $ -- $138,531
======= ========
</TABLE>

Concurrent with the acquisition of Triad (see Note 2), and in order to
refinance certain of Triad's indebtedness assumed in the acquisition, the
Company entered into a credit agreement dated as of February 27, 1997 with a
syndicate of various banks, insurance companies and other lenders (the Credit
Agreement). The Credit Agreement includes a Term Loan Facility and a Revolving
Credit Facility.

Substantially all of the assets of the Company are pledged as collateral on
the Credit Agreement.

The terms of the Credit Agreement restrict certain activities of the
Company, the most significant of which include limitations on additional
indebtedness, liens, guarantees, payment or declaration of dividends, sale of
assets, investments, capital expenditures, and transactions with

F-20
<PAGE> 121
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

affiliates. The Company must also meet certain tests relating to financial
amounts and ratios defined in the agreement.

The Credit Agreement requires prepayment of amounts under the Credit
Agreement in the event of issuances of common stock, cash proceeds from asset
sales, and the attainment of certain cash flow measures as defined in the Credit
Agreement.

Borrowings under the Credit Agreement bear interest at rates which, at the
Company's option, vary with the prime rate or LIBOR rates plus a markup. Such
rates ranged from 8.16% to 10.00% at September 30, 1997. Interest is generally
due and payable quarterly (up to twelve months in some limited circumstances).

The Term Loan Facility, in the amount of $135,000,000, is payable in
quarterly installments beginning June 30, 1998 as follows (in thousands):

<TABLE>
<CAPTION>
QUARTERLY
PRINCIPAL
QUARTERS ENDING PAYABLE
--------------- ---------
<S> <C>
June 1998 through March 1999................................ $ 3,125
June 1999 through March 2000................................ 5,625
June 2000 through March 2001................................ 7,500
June 2001 through March 2002................................ 7,500
June 2002 through February 2003............................. 10,000
</TABLE>

Prepayments on the Term Loan Facility are allowed in $100,000 increments with a
$500,000 minimum and may not be reborrowed.

The Revolving Credit Facility, which includes Revolving Credit Notes, Swing
Line Notes (maximum of $10,000,000), and Letters of Credit (maximum of
$15,000,000), provides for maximum aggregate borrowings of $35 million through
advances in amounts of at least $500,000. All principal under the Revolving
Credit Facility is due on February 27, 2003.

In connection with the Revolving Credit Agreements, the Company is required
to pay a quarterly commitment fee equal to 1/2% per annum of the unused portion
of the Revolving Credit Facility.

In connection with the Letters of Credit, the Company is required to pay a
letter of credit commission fee equal to 2.0% or 2.5% (depending on certain
financial tests) per annum on the amount of the Letter of Credit.

The Term Loan and Revolving Credit Facility contain restrictive covenants
which are measured quarterly. At September 30, 1997, the Company did not meet
certain of the financial covenants and received an appropriate waiver. The
Company anticipates that it will not meet certain of the financial covenants for
the quarter ended December 31, 1997 but anticipates curing these violations
through the refinancing described in Note 18, accordingly $137,900,000 is
classified as long term.

Contractual maturities of debt, exclusive of interest, are as follows (in
thousands):

<TABLE>
<S> <C>
1998........................................................ $ 6,436
1999........................................................ 17,788
2000........................................................ 26,487
2001........................................................ 30,106
2002........................................................ 35,000
Thereafter.................................................. 29,150
</TABLE>

F-21
<PAGE> 122
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company utilizes interest rate cap agreements to limit the impact of
increases in interest rates on its floating rate debt. The interest rate cap
agreements require premium payments to counterparties based upon a notional
principal amount, which was $67.5 million at September 30, 1997. Interest rate
cap agreements entitle the Company to receive from the counterparties the
amounts, if any, by which the selected market interest rates exceed the strike
rates stated in the agreements. The fair value of the interest rate cap
agreements is estimated by obtaining quotes from brokers and represents the cash
requirement if the existing contracts had been settled at year end. The carrying
amount and fair value of these contracts are not significant. At September 30,
1997, the Company interest rate cap was 8% and was scheduled to expire June 16,
1999. The premium paid for the cap is amortized to interest expense over the
life of the cap. The Company had no interest rate caps at November 30, 1996.

12. FINANCIAL INSTRUMENTS

The Company utilizes foreign currency forward contracts to reduce exposure
to exchange rate risks associated with intercompany payables to and receivables
from its foreign subsidiaries. The forward contracts establish the exchange
rates at which the Company will purchase or sell the contracted amount of local
currencies for specified foreign currencies at a future date. The Company
utilizes forward contracts which are short-term in duration (generally three
months) and receives or pays the difference between the contracted forward rate
and the exchange rate at the settlement date. The Company marks these contracts
to market, reflecting unrealized gains and losses in statement of operations
currently. The currency exposures hedged by the Company include the Canadian
dollar, Irish punt and British pound. The contract amount of foreign currency
forwards at September 30, 1997 is $1.4 million. The carrying amount and fair
value of these contracts are not significant.

13. INCOME TAXES

From commencement through February 27, 1997, the Company and its affiliates
had elected to be treated as S Corporations under Subchapter S of the Internal
Revenue Code of 1986, as amended. As such, federal income taxes were the
responsibility of the individual stockholders.

Concurrent with the Triad Systems Corporation acquisition on February 27,
1997, (see Note 2) the Company's Subchapter S status was terminated and the
Company became subject to corporate income taxes. Additionally, the Company was
required to change its method of accounting from the cash basis to the accrual
basis for income tax reporting purposes.

The estimated tax effect of recording deferred taxes upon the termination
of the Company's Subchapter S status was $2,382,000.

The pro forma disclosures on the statements of operations reflect
adjustments to record provisions for income taxes as if the Company had not been
an S Corporation. The pro forma (provisions) benefits for income taxes
attributable to continuing operations are $(157,000) and $(1,931,000) for the
years ended November 30, 1995 and 1996, respectively, and $2,392,000 for the ten
month period ended September 30, 1997.

F-22
<PAGE> 123
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Significant components of the income tax benefit attributable to continuing
operations are as follows (in thousands):

<TABLE>
<CAPTION>
1997
-------
<S> <C>
Current:
Federal................................................... $(1,531)
State..................................................... (374)
Foreign................................................... (247)
-------
Total current............................................... (2,152)
Deferred:
Federal................................................... 2,765
State..................................................... 344
Foreign................................................... 44
-------
Total deferred.............................................. 3,153
-------
Income tax benefit.......................................... $ 1,001
=======
</TABLE>

The Company's (provision) benefit for income taxes differs from the amount
computed by applying the statutory rate to income before taxes as follows (in
thousands):

<TABLE>
<CAPTION>
PRO FORMA PRO FORMA HISTORICAL PRO FORMA
1995 1996 1997 1997
--------- --------- ---------- ---------
<S> <C> <C> <C> <C>
Income tax at U.S. statutory rate.............. $(247) $(2,006) $12,191 $ 12,191
State taxes, net of federal income tax
benefit...................................... (35) (266) 375 265
Foreign income taxes........................... -- -- (134) (134)
Permanent differences, primarily goodwill...... (28) (61) (2,008) (2,043)
Write off in-process research and
development.................................. -- -- (8,085) (8,085)
Nonrecurring charge due to subchapter S
termination.................................. -- -- (2,382) --
S-Corp. income not subject to tax.............. -- -- 844 --
Tax credits and other.......................... 153 402 200 198
----- ------- ------- ---------
Income tax (provision) benefit................. $(157) $(1,931) $ 1,001 $ 2,392
===== ======= ======= =========
</TABLE>

F-23
<PAGE> 124
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. Significant components of
the Company's deferred taxes as of September 30, 1997 are as follows (in
thousands):

<TABLE>
<S> <C>
Deferred tax assets:
Inventory and sales return reserves....................... $ 3,066
Accrued expenses.......................................... 11,552
Deferred income........................................... 1,308
Federal tax carryforwards................................. 8,196
Depreciation.............................................. 5,387
Other..................................................... 1,105
--------
Total deferred tax assets................................... 30,614
Less valuation allowance.................................. --
--------
Deferred tax assets......................................... 30,614
Deferred tax liabilities:
Direct financing leases................................... (38,836)
Fixed and intangible assets............................... (34,316)
Accrual to cash adjustment................................ (1,310)
Other..................................................... (1,521)
--------
Total deferred tax liabilities.............................. (75,983)
--------
Net deferred tax liabilities................................ $(45,369)
========
</TABLE>

Deferred taxes are included in the balance sheets of the Company as follows
(in thousands):

<TABLE>
<CAPTION>
NOVEMBER 30, SEPTEMBER 30,
1996 1997
------------ -------------
<S> <C> <C>
Net current deferred tax asset........................... $ -- $ 7,871
Net noncurrent deferred tax liability.................... -- (53,240)
------- --------
Net deferred tax liability............................... $ -- $(45,369)
======= ========
</TABLE>

Upon the acquisition of Triad Systems Corporation on February 27, 1997, the
Company recorded a net deferred tax liability of approximately $48,350,000 due
to differences between book and tax basis of acquired assets and assumed
liabilities.

As of September 30, 1997, the Company had federal net operating loss
carryforwards of approximately $3,708,000 which resulted from the Company's
acquisition of Triad Systems Corporation. The net operating loss carryforwards
will expire in 2012 if not utilized. At September 30, 1997, the Company had
business tax credit carryforwards of $2,075,000, and alternative minimum tax
credit carryforwards of approximately $4,042,000, which resulted from the
Company's acquisition of Triad Systems Corporation. The business tax credit
carryforwards expire from 1999 through 2010 if not utilized and the alternative
minimum tax credits carryforward indefinitely. Utilization of the net operating
losses and tax credit carryforwards may be subject to an annual limitation due
to the "change in ownership" provisions of the Internal Revenue Code of 1986 as
amended. The annual limitation may result in the expiration of net operating
loss and tax credit carryforward before utilization.

Substantially all of the Company's operating income was generated from
domestic operations during 1997. The Company has not provided for United States
income taxes on the earnings of

F-24
<PAGE> 125
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

certain foreign subsidiaries that are considered invested indefinitely outside
the United States. The cumulative earnings of the foreign subsidiaries that are
considered permanently invested outside the United States amounted to $1,892,000
at September 30, 1997.

14. STOCKHOLDERS' EQUITY

Stock Warrant

On September 10, 1997, the Company sold 20,000 shares of Common Stock for
total proceeds of $100,000 and issued a warrant to purchase 20,000 shares of
Common Stock, at the then-fair value of the Common Stock of $5.00 per share. The
warrant is immediately exercisable and will expire seven years from the date of
issuance.

Stock Split

On February 24 and September 15, 1997, the Board of Directors declared
Common Stock splits of 4,000-for-one and two-for-one, respectively. An amount
equal to the par value of the aggregate common shares issued was transferred
from the common stock account to additional paid-in capital. Share amounts
presented in the Consolidated Balance Sheets and Consolidated Statements of
Stockholders' Equity reflect the actual share amounts outstanding for each
period presented.

15. SAVINGS AND INVESTMENT PLANS

The Company sponsors two 401(k) savings and investment plans: the
Cooperative Computing, Inc. 401(k) Plan and Trust and the Triad Systems
Corporation Savings and Investment Plan (collectively the "Plans"). The Plans
have generally the same terms and provisions and are open to all employees of
each respective Company meeting applicable age and service requirements. Under
the Plans, the Company matches 50% of the first 6% and 4%, respectively, of
participant contributions subject to certain restrictions. Certain of the Plans
also allow participant loans against their accounts. Contributions to the 401(k)
Plans are allocated among individual participants in the proportion of their
salaries relative to the total salaries of all participants. The Company's total
contributions to the 401(k) Plans amounted to $179,000 in 1995, $260,000 in 1996
and $772,000 in 1997.

16. OTHER INCOME

Other income in 1996 includes lawsuit settlements of $3,000,000 and
$710,000, net of related legal expenses of $360,000.

17. COMMITMENTS AND CONTINGENCIES

Guarantees

The Company has guaranteed various debt obligations held by limited
partnerships in which the Company owns a minority interest. These obligations
total approximately $2,100,000 at September 30, 1997. No material loss is
anticipated by reason of such agreements and guarantees. The Company's earnings
from these minority interests are not material.

Operating Leases

The Company rents office facilities and certain office equipment under
noncancelable operating lease agreements. Certain lease agreements contain
renewal options and rate adjustments. The Company has leased office space from a
company owned by two of the stockholders. Rental payments are $45,000 per month
and this lease expires in May 2002. Rental expense related to all
F-25
<PAGE> 126
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

operating leases was $842,000 in 1995, $873,000 in 1996, and $3,779,000 in 1997.
The Company's Livermore, California offices are leased from a company whose
director is an affiliate of the Company. Rent expensed under this lease during
fiscal 1997 was $1,462,000 and rental payments for 1998 under the lease will be
$2,505,720. Future minimum rental commitments under all noncancelable operating
leases are as follows (in thousands):

Legal Matters

The Company is involved in litigation arising in the ordinary course of
business. In the opinion of management, after consultation with legal counsel,
these matters will be resolved without material adverse effect on the Company's
results of operations or financial position.

18. RELATED PARTY TRANSACTIONS (Also see Note 17)

On February 27, 1997, the Company entered into a Financial Advisory
Agreement with an affiliate, the majority shareholder of the Company. The
Company paid to the affiliate approximately $4.9 million during fiscal 1997 for
services rendered in connection with the sale of the Company's Common Stock. The
Financial Advisory Agreement requires that the Company pay the affiliate
additional fees equal to 1.5% of the Transaction Value, as defined, whenever the
Company participates in an Add-on Transaction, as defined.

Additionally, the Company entered into a ten-year Monitoring and Oversight
Agreement with the affiliate, pursuant to which the Company will pay the
affiliate an annual fee of no less than $350,000 for services provided to the
Company. The fee is due in quarterly installments, and upon the acquisition of
another business by the Company, the minimum fee is increased by an amount equal
to 0.2% of the consolidated annual net sales of the acquired entity for the
trailing twelve-month period. During fiscal 1997 the Company prepaid the annual
fee and is amortizing the amount over the service period.

19. SUBSEQUENT EVENTS

Acquisitions

In November 1997, the Company entered into an asset purchase agreement with
ADP Claims Solution Group, Inc. ("ADP") in which the Company agreed to purchase
certain assets and assume certain liabilities of ADP's ARISB Business for
$9,300,000 cash. The acquired company is engaged in providing inventory and
business management systems for the automotive recycling industry. The
transaction is subject to regulatory approval and is expected to close in March
1998. The operating results of the acquired company are immaterial to the
Company's financial statements.

F-26
<PAGE> 127
COOPERATIVE COMPUTING HOLDING COMPANY, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Refinancing of Debt

On February 10, 1998, the Company consummated the sale of $100 million
Senior Subordinated Notes (the "Offering"). Concurrently with the consummation
of the Offering, the Company (i) amended and restated its $170 million credit
facility (the "Old Credit Facilities") by entering into a new $50 million term
loan facility and a new $50 million revolving credit facility and (ii) used the
net proceeds from the Offering and the new facilities to repay the Old Credit
Facilities. The refinancing of debt resulted in an extraordinary loss of
approximately $3,029,000, net of tax, as a result of the write-off of existing
deferred financing costs.

F-27
<PAGE> 128

REPORT OF INDEPENDENT AUDITORS

Board of Directors
Cooperative Computing Holding Company, Inc.

We have audited the consolidated statement of operations and cash flows of
Triad Systems Corporation for the five months ended February 27, 1997. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audit.

We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the 1997 financial statements referred to above present
fairly, in all material respects, the consolidated results of operations and
cash flows of Triad Systems Corporation for the five months ended February 27,
1997, in conformity with generally accepted accounting principles.

/s/ ERNST & YOUNG LLP

Austin, Texas
January 16, 1998

F-28
<PAGE> 129

REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors and Stockholders
Triad Systems Corporation
Livermore, California

We have audited the consolidated balance sheets of Triad Systems
Corporation and Subsidiaries as of September 30, 1995 and 1996 and the related
consolidated statements of operations, stockholders' equity, and cash flows for
each of the two years in the period ended September 30, 1996. These financial
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Triad Systems
Corporation and Subsidiaries as of September 30, 1996 and 1995, and the
consolidated results of their operations and their cash flows for the years
ended September 30, 1996 and 1995, in conformity with generally accepted
accounting principles.

COOPERS & LYBRAND L.L.P.
San Jose, California
October 23, 1996

F-29
<PAGE> 130

TRIAD SYSTEMS CORPORATION

CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1995 1996
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
ASSETS

Current assets:
Cash and equivalents...................................... $ 7,263 $ 7,652
Trade accounts receivable................................. 13,175 17,746
Investment in leases...................................... 2,001 1,635
Inventories............................................... 5,636 5,799
Prepaid expenses and other current assets................. 6,702 8,551
-------- --------
Current assets.............................................. 34,777 41,383
Service parts............................................... 3,316 3,273
Property, plant and equipment............................... 27,017 26,887
Long-term investment in leases.............................. 16,540 14,380
Land for resale............................................. 25,250 22,850
Capitalized software and intangible assets 16,222.. 21,312
Other assets................................................ 9,587 9,668
-------- --------
Total assets...................................... $132,709 $139,753
======== ========

LIABILITIES

Current liabilities:
Notes payable and current portion of long-term debt....... $ 3,032 $ 25,990
Accounts payable.......................................... 9,373 10,590
Accrued employee compensation............................. 7,908 8,275
Deferred income taxes 3,338... 2,701
Other current liabilities and accrued expenses............ 9,695 10,968
-------- --------
Current liabilities......................................... 33,346 58,524
Long-term debt.............................................. 52,577 29,923
Deferred income taxes....................................... 26,176 27,656
Other liabilities........................................... 6,389 6,863
-------- --------
Total liabilities........................................... 118,488 122,966
Commitments and contingencies
Stockholders' equity:
Common stock
$.001 par value; authorized 50,000,000 shares; issued
17,969,000 shares and 18,394,000 shares at September
30, 1995 and 1996, respectively........................ 18 18
Treasury stock
599,000 shares and 645,000 shares at September 30, 1995
and 1996, respectively................................. (3,204) (3,478)
Capital in excess of par value............................ 28,201 29,954
Accumulated deficit....................................... (10,794) (9,707)
-------- --------
Total stockholders' equity.................................. 14,221 16,787
-------- --------
Total liabilities and stockholders' equity.................. $132,709 $139,753
======== ========
</TABLE>

See accompanying notes.

F-30
<PAGE> 131

TRIAD SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
FIVE MONTHS
YEAR ENDED SEPTEMBER 30, ENDED
------------------------ FEBRUARY 27,
1995 1996 1997
---------- ---------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Revenues:
Systems.............................................. $ 73,312 $ 70,090 $21,065
Customer support services............................ 62,429 64,148 29,227
Information services................................. 28,092 31,792 13,860
Finance.............................................. 11,244 9,646 2,280
-------- -------- -------
Total revenues......................................... 175,077 175,676 66,432

Cost of sales:
Systems.............................................. 35,606 37,544 11,954
Services and finance................................. 52,903 56,264 26,362
-------- -------- -------
Total cost of sales.................................... 88,509 93,808 38,316
-------- -------- -------

Gross margin........................................... 86,568 81,868 28,116

Marketing............................................ 46,929 48,688 18,779
Product development.................................. 8,136 8,414 4,119
General and administrative........................... 10,971 10,233 4,792
Restructuring charge................................. -- 9,000 --
-------- -------- -------
Operating expenses..................................... 66,036 76,335 27,690
-------- -------- -------
Operating income....................................... 20,532 5,533 426
Interest and other expense............................. 6,941 5,944 2,405
Other income........................................... -- 2,926 94
-------- -------- -------
Income before income taxes and extraordinary charge.... 13,591 2,515 (1,885)
(Provision) benefit for income taxes................... (5,165) (956) 290
-------- -------- -------
Income (loss) before extraordinary charge.............. 8,426 1,559 (1,595)
Extraordinary charge on repurchase of debt, net of
taxes................................................ 396 377 --
-------- -------- -------
Net income (loss)...................................... $ 8,030 $ 1,182 $(1,595)
======== ======== =======
</TABLE>

See accompanying notes.

F-31
<PAGE> 132

TRIAD SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
YEAR ENDED SEPTEMBER 30

<TABLE>
<CAPTION>
NUMBER OF SHARES
----------------
1995 1996 1995 1996
-------- -------- ------ ------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C> <C>
Cumulative convertible preferred stock:
Beginning balance.............................. $ 10 $ -- 1,000 --
Repurchase and conversion...................... (10) -- (1,000) --
-------- -------- ------ ------
Ending balance................................... -- -- -- --
====== ======
Common stock
Beginning balance.............................. 14 18 13,896 17,969
Common stock issuance.......................... 4 -- 4,073 425
-------- -------- ------ ------
Ending balance................................... 18 18 17,969 18,394
====== ======
Treasury stock
Beginning balance.............................. (1,326) (3,204) 270 599
Treasury stock purchase........................ (1,878) (274) 329 46
-------- -------- ------ ------
Ending balance................................... (3,204) (3,478) 599 645
====== ======
Capital in excess of par:
Beginning balance.............................. 31,680 28,201
Preferred stock repurchase/conversion.......... (10,079) --
Preferred stock conversion dividend............ (151) --
Common stock issuance.......................... 4,083 1,662
Market rate adjustment on dividend............. 435 --
Tax benefit of options exercised............... 2,233 91
-------- --------
Ending balance................................... 28,201 29,954
Accumulated deficit:
Beginning balance.............................. (18,237) (10,794)
Net income..................................... 8,030 1,182
Translation gain (loss)........................ 97 (95)
Preferred stock conversion dividend............ 151 --
Dividends declared on cumulative convertible
preferred stock................................ (400) --
Market rate adjustment on dividends............ (435) --
-------- --------
Ending balance................................... (10,794) (9,707)
-------- --------
Stockholders' equity............................. $ 14,221 $ 16,787
======== ========
</TABLE>

See accompanying notes.
F-32
<PAGE> 133

TRIAD SYSTEMS CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
YEAR ENDED FIVE MONTHS
SEPTEMBER 30, ENDED
-------------------- FEBRUARY 27,
1995 1996 1997
-------- -------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Income (loss) before extraordinary charge................... $ 8,426 $ 1,559 $ (1,595)
Adjustments to reconcile income (loss) before extraordinary
charge to net cash provided by operating activities:
Extraordinary charge on repurchase of debt, net of taxes.... (396) (377) --
Depreciation and amortization............................... 8,793 8,704 4,361
Receivable and inventory loss provisions.................... 8,271 10,956 4,925
Restructuring charge........................................ -- 9,000 --
Gains from lease discounting................................ (7,585) (6,981) (1,228)
Gain on sale of marketable security......................... -- (1,779) --
Gain from sale of land -- (1,194) (124)
Other....................................................... 876 (3,395) (2,498)
Changes in assets and liabilities:
Trade accounts receivable................................... (2,138) (6,525) 532
Investment in leases........................................ 13,607 6,637 (7,950)
Inventories................................................. (207) (49) (1,630)
Deferred income taxes....................................... 1,349 559 (103)
Prepaid expenses and other current assets................... (634) (1,277) (7,425)
Accounts payable............................................ 433 448 (2,058)
Accrued employee compensation............................... (182) 127 (927)
Other current liabilities and accrued expenses.............. (494) (969) (2,762)
-------- -------- --------
Net cash provided (used) by operating activities............ 30,119 15,444 (18,482)
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in property, plant and equipment................. (2,819) (2,931) (1,107)
Capitalized software and databases.......................... (7,043) (8,452) (3,046)
Investment in service parts................................. (1,887) (1,041) (520)
Proceeds from the sale of land.............................. -- 3,523 576
Acquisition of businesses................................... -- (4,054) --
Sale of marketable securities............................... -- 2,321 --
Other....................................................... (1,116) (1,065) (274)
-------- -------- --------
Net cash used in investing activities....................... (12,865) (11,699) (4,371)
CASH FLOWS FROM FINANCING ACTIVITIES
Issuance of debt............................................ 53,391 53,924 17,882
Repayment of debt........................................... (62,718) (58,668) (7,471)
Redemption of preferred stock............................... (10,000) -- --
Proceeds from sale of common stock.......................... 3,998 1,662 7,612
Dividends paid.............................................. (400) -- --
Purchase of treasury stock.................................. (1,878) (274) --
Other....................................................... (347) -- --
-------- -------- --------
Net cash provided (used) in financing activities............ (17,954) (3,356) 18,023
-------- -------- --------
Net increase (decrease) in cash and equivalents............. (700) 389 (4,830)
Beginning cash and equivalents.............................. 7,963 7,263 7,652
-------- -------- --------
Ending cash and equivalents................................. $ 7,263 $ 7,652 $ 2,822
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest.................................................... $ 6,644 $ 6,058 $ 2,397
Income taxes................................................ 557 1,279 99
Noncash investing and financing activities:
Conversion of preferred stock............................... 11,195 -- --
Leases capitalized.......................................... 913 -- --
Assessment district refinancing............................. -- 5,300 --
</TABLE>

See accompanying notes.

F-33
<PAGE> 134

TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Description of Business

Triad Systems Corporation ("Triad" or the "Company") is a leading provider
of business and information management services to the automotive aftermarket
and the hardlines and lumber industry. The Company produces and markets
proprietary databases and software products, and designs, develops, assembles,
markets, services and leases computer systems. Development and assembly
facilities are located in Livermore, California, Denver, Colorado and Newton,
New Jersey. Principal markets are located in the United States and Canada,
Puerto Rico, Ireland and the United Kingdom.

Financial Statement Presentation

The Consolidated Financial Statements include the accounts of Triad and its
wholly-owned subsidiaries, including Triad Systems Financial Corporation ("Triad
Financial"), after elimination of intercompany accounts and transactions.

Cash and Equivalents

Cash equivalents are short-term interest bearing instruments with maturity
dates of ninety days or less at the time of purchase.

Inventories

Inventories are stated at the lower of cost (first-in, first-out method) or
market and include amounts which ultimately may be capitalized as equipment or
service parts.

Service Parts

Service parts used for servicing installed equipment are stated at cost and
are depreciated over a period not exceeding five years using the straight-line
method.

Property, Plant and Equipment

Property, plant and equipment are stated at cost. Depreciation is computed
using the straight-line method over the estimated useful lives of the related
assets. Leasehold improvements are amortized using the straight-line method over
their estimated useful lives or the lease term, whichever is less. As property,
plant and equipment are disposed of, the asset cost and related accumulated
depreciation or amortization are removed from the accounts, and the resulting
gains or losses are reflected in operations.

Investment in Leases

At the inception of a lease, the gross lease receivable, the reserve for
potential losses, the estimated residual value of the leased equipment and the
unearned lease income are recorded. The unearned lease income represents the
excess of the gross lease receivable plus the estimated residual value over the
cost of the equipment leased. Certain initial direct costs incurred in
consummating the leases, included in the investment in leases, are amortized
over the life of the lease. Leases discounted under the agreements with banks or
lending institutions are removed from the balance sheet and the gains are
reflected in operations.

During 1997, the Company adopted the requirements of FASB Statement No.
125, Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities. Accordingly, the

F-34
<PAGE> 135
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Company has modified several agreements to meet the new requirements to enable
it to continue recognizing transfers of certain receivables to special purpose
entities as sales. As a result, the impact of adoption on net income in 1997 was
immaterial. Additionally, no leases were discounted during the period from
January 1, 1996 to February 27, 1997.

Capitalized Software

Costs relating to the conceptual formulation and design of software
products are expensed as product development, and costs incurred subsequent to
establishing the technological feasibility of software products are capitalized.
Amortization of capitalized software costs begins when the products are
available for general release to customers. Costs are amortized over the
expected product lives and are calculated using the greater of the straight line
method, generally over a three, five or seven year period, or a cost per unit
sold basis.

Long-Lived Assets

In accordance with FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to be Disposed Of, the Company
records impairment losses on long-lived assets used in operations when events
and circumstances indicate that the assets might be impaired and undiscounted
cash flows estimated to be generated by those assets are less than the carrying
amounts of those assets. As of February 27, 1997 there were no events or
circumstances which indicated that long-lived assets of the Company might be
impaired.

Debt Costs

The unamortized costs associated with the issuance of debt instruments are
recorded with the associated liability. Amortization is computed according to
the interest and is included in interest expense. Upon retirement of remaining
principal balances, the associated unamortized costs are reflected in
operations.

Income Taxes

The Company adopted Statement of Financial Accounting Standards (SFAS) No.
109, Accounting for Income Taxes. This statement prescribes the use of the
liability method whereby deferred tax asset and liability account balances are
determined based on differences between financial reporting and tax bases of
assets and liabilities and are measured using the enacted tax rates and laws
that will be in effect when the differences are expected to reverse. Income
taxes are provided on the undistributed earnings of foreign subsidiaries that
are not considered to be permanently reinvested.

Treasury Stock

Purchases of the Company's common stock are valued at cost.

Revenue Recognition

Services revenue is recognized over the period that the services are
performed. Systems revenue is recognized upon product shipment provided there
are no remaining significant obligations and collection is probable. Finance
revenue is recognized ratably over the lease term, except discounting gains,
which are recognized at the time of discounting.

F-35
<PAGE> 136
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

Fair Value of Financial Instruments

Carrying amounts of certain of the Company's financial instruments
including cash and cash equivalents, accounts receivable, accounts payable, and
other accrued liabilities approximate fair value because of their short
maturities. Lease receivables are stated at the present value using the internal
rate of return which approximates fair value. All significant debt obligations
either carry variable interest rates and their carrying value is considered to
approximate fair value or for the senior fixed rate notes and the mortgage loan
payable, the settlement rates which when factored into these instruments
approximate fair value.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affects the reported amounts of assets and liabilities. It also
affects the disclosure of contingent assets and liabilities at the dates of the
financial statements along with the reported amounts of revenues and expenses
during the reporting periods. Actual results could differ from those estimates.

Certain Risks and Concentrations

Cash and cash equivalents are, for the most part, maintained with several
major financial institutions in the United States. Deposits held with banks may
exceed the amount of insurance provided on such deposits. Generally these
deposits may be redeemed upon demand and therefore, bear minimal risk. The
Company performs ongoing credit evaluations of its customers and generally does
not require collateral from its customers. Most of the Company's customers are
in the automotive aftermarket or the hardlines and lumber industry.

Off Balance Sheet Risk

The Company conducts business on a global basis in several international
currencies. As such, it is exposed to adverse movements in foreign currency
exchange rates. The Company enters into foreign exchange forward contracts to
reduce currency exposures. These contracts principally hedge exposures
associated with intercompany product sales denominated in United Kingdom
currencies. The Company does not enter into foreign exchange contracts for
trading purposes.

Limited and full recourse agreements are maintained with banks and lending
institutions under which lease receivables are discounted and removed from the
balance sheet. Triad Financial is contingently liable in the event of lessee
nonpayment. See Note 4 "Discounting of Lease Receivables."

Foreign Currency Translation

2. MERGER AGREEMENT

On October 17, 1996, the Company signed a definitive merger agreement (the
"Merger") with Cooperative Computing, Inc. and CCI Acquisition Corp. ("CAC"),
under which CAC would acquire all of the issued and outstanding shares of the
Company at a price of $9.25 per share. On February 27, 1997, the acquisition was
consummated with CAC accepting all validly tendered shares

F-36
<PAGE> 137
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of the Company's common stock. In conjunction with the acquisition by CAC, the
Company's shares were removed from listing for trading on the Nasdaq Stock
Market.

In addition to the cash consideration received by the Company's
shareholders pursuant to the tender offer or the merger transaction, the merger
agreement provided that the Company's shareholders of record immediately prior
to the consummation of the tender offer receive a dividend consisting of their
pro rata share of the equity of a newly formed company whose assets consist of
all the Company's owned real property located in Livermore, California,
including its corporate headquarters buildings and land held for sale in the
Triad Park development in Livermore. The spun-off real estate entity, which the
Company expects to be a public company, assumed all the indebtedness currently
secured by the spun-off real estate and leases the corporate headquarters
buildings to the Company's post merger successor. Over time, the real estate
entity is expected to liquidate its real estate portfolio, with proceeds used to
pay expenses (including taxes), repay secured debt and distribute any remaining
proceeds to its equity holders. The Company's ability to market this property is
dependent upon interest rates, general economic and market conditions, the
prospective purchaser's ability to develop the property and the purchaser's
ability to obtain a variety of governmental approvals, none of which is assured
and all of which are subject to objections from the public.

Financial information for the five month period ended February 27, 1997
includes all transactions of the Company that occurred prior to the acquisition.

3. FINANCE SUBSIDIARY

Triad Financial is a wholly-owned subsidiary that purchases Triad systems
and other products and leases those products to third parties under full-payout
and direct financing leases. Triad Financial's purchases from Triad were
$36,984,000 in 1995, $38,731,000 in 1996 and $8,564,000 in 1997. Summarized
financial information of the Company's combined leasing operations, included in
the Consolidated Financial Statements, is as follows:

<TABLE>
<CAPTION>
CONDENSED COMBINED
BALANCE SHEETS
SEPTEMBER 30
----------------------
1995 1996
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
ASSETS
Cash........................................................ $ 5 $ 10
Net investment in leases.................................... 18,541 16,015
Residual value retained on leases discounted, less unearned
income of $7,476 in 1995 and $7,735 in 1996............... 6,452 7,012
Receivable from parent company.............................. 50,262 55,243
Other assets................................................ 3,652 3,880
------- -------
Total assets................................................ $78,912 $82,160
======= =======
LIABILITIES AND STOCKHOLDER'S EQUITY
Other liabilities and accrued expenses...................... $ 8,367 $ 8,687
Deferred income............................................. 2,337 2,570
Debt........................................................ 13,033 10,059
Stockholder's equity........................................ 55,175 60,844
------- -------
Liabilities and stockholder's equity........................ $78,912 $82,160
======= =======
</TABLE>

F-37
<PAGE> 138
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

<TABLE>
<CAPTION>
CONDENSED COMBINED
STATEMENTS OF INCOME
-------------------------------
YEAR ENDED FIVE MONTHS
SEPTEMBER 30, ENDED
---------------- FEBRUARY 27,
1995 1996 1997
------- ------ ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Revenues............................................... $11,244 $9,646 $2,280
Costs and expenses
Selling and administrative........................... 1,750 1,544 537
Provision for doubtful accounts and revaluation
charges........................................... 3,232 5,897 1,962
------- ------ ------
Operating income (loss)................................ 6,262 2,205 (219)
Interest expense....................................... (132) (925) (326)
Intercompany income.................................... 5,678 7,766 3,358
------- ------ ------
Income before taxes.................................... 11,808 9,046 2,813
Provision for income taxes............................. 4,413 3,413 1,027
------- ------ ------
Net income............................................. $ 7,395 $5,633 $1,786
======= ====== ======
</TABLE>

4. DISCOUNTING OF LEASE RECEIVABLES

Limited and full recourse agreements are maintained with banks and lending
institutions under which available lines were $45,885,000 at September 30, 1996.
As leases are discounted, a sale is recorded and gains, the difference between
proceeds received and the book value of the lease receivables, are reflected in
finance revenue. No leases were discounted or sold during the period from
January 1, 1997 to February 27, 1997. Proceeds from discounting of lease
receivables were $73,216,000 in 1995, $73,624,000 in 1996, and $11,493,000 in
1997. A portion of discounting gains is deferred to offset future administration
costs for discounted leases and is amortized over the remaining lease term.

Under the discounting agreements, Triad Financial is contingently liable
for losses in the event of lessee nonpayment. The agreements provide for limited
recourse of up to 15% or full recourse at 100% of discounting proceeds,
depending on the credit risk associated with specific leases. At September 30,
1996, the contingent liability for discounted leases was $25,855,000. Title to
equipment discounted under the agreements is generally pledged as collateral.

The discounting agreements contain restrictive covenants which allow Triad
Financial to discount only while in compliance with such covenants. In the event
of non-compliance, the banks and lending institutions could assume
administrative control (servicing) of the lease portfolio and could prohibit
further sales under the available credit facilities.

During the period ended February 27, 1997, the Company failed to meet the
profitability covenant and received appropriate waiver. After receipt of the
waiver, the Company is in compliance with the covenants, and management believes
that it will maintain compliance with such covenants in the foreseeable future.

5. TRADE ACCOUNTS RECEIVABLE

Trade accounts receivable at September 30, 1995 and 1996 include allowances
for doubtful accounts of $1,420,000 and $1,980,000, respectively.

F-38
<PAGE> 139
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

6. BUSINESS COMBINATION

On June 27, 1996, the Company acquired Computer System Dynamics, Inc.
(CSD), a supplier of systems and software products to the lumber and building
materials segment of the hardlines and lumber market.

The acquisition was accounted for as a purchase. The purchase price was
$8,500,000 with additional future obligations contingent upon CSD's attainment
of certain performance objectives. The fair market values of the acquired assets
and assumed liabilities were included in the Company's financial statements. The
purchase price was allocated to the acquired assets and assumed liabilities
based on the fair market values. Of the $6,000,000 recorded as intangibles,
$3,700,000 was goodwill and $2,300,000 million was purchased technology and the
customer base. The intangibles will be amortized on a straight-line basis over
seven years. The operating results of CSD have been included in the Company's
consolidated financial statements since the date of acquisition.

7. INVENTORIES

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1995 1996
------- -------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Purchased parts............................................. $2,189 $2,233
Work in process............................................. 391 12
Finished goods.............................................. 3,056 3,554
------ ------
Total inventories........................................... $5,636 $5,799
====== ======
</TABLE>

8. SERVICE PARTS

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1995 1996
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Service parts............................................... $10,980 $10,154
Less accumulated depreciation............................... 7,664 6,881
------- -------
Total service parts......................................... $ 3,316 $ 3,273
======= =======
</TABLE>

9. PROPERTY, PLANT AND EQUIPMENT

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1995 1996
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Furniture and equipment..................................... $21,269 $24,928
Field service and demonstration equipment................... 12,519 12,949
Buildings and leasehold improvements........................ 17,210 17,421
------- -------
50,998 55,298
Less accumulated depreciation and amortization.............. 30,768 35,198
------- -------
20,230 20,100
Land........................................................ 6,787 6,787
------- -------
Total property, plant and equipment......................... $27,017 $26,887
======= =======
</TABLE>

F-39
<PAGE> 140
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

10. INVESTMENT IN LEASES

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1995 1996
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Total minimum lease payments receivable..................... $17,226 $12,469
Allowance for doubtful accounts............................. (233) (222)
Initial direct costs........................................ 287 216
Estimated unguaranteed residual value....................... 1,211 882
------- -------
Gross investment in leases.................................. 18,491 13,345
Unearned income............................................. (5,456) (3,561)
Leases pending acceptance................................... 5,506 6,231
------- -------
Total investment in leases.................................. 18,541 16,015
------- -------
Short-term investment in leases............................. 2,001 1,635
Long-term investment in leases.............................. $16,540 $14,380
======= =======
</TABLE>

Historically, a substantial portion of the lease receivables are discounted
prior to maturity. Accordingly, a schedule of maturities for the next five years
is not indicative of future cash collections. Most of Triad Financial's
customers are in the automotive aftermarket and the hardlines and lumber
industry.

11. CAPITALIZED SOFTWARE

<TABLE>
<CAPTION>
YEAR ENDED FIVE-MONTH
SEPTEMBER 30, PERIOD ENDED
------------------ FEBRUARY 27,
1995 1996 1997
------- ------- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Beginning balance........................................ $ 8,114 $ 9,127 $4,399
Restructuring charge..................................... -- (7,500) --
Acquisition of assets.................................... -- 677 --
Capitalized software costs............................... 2,930 3,465 1,052
Amortization of software costs........................... (1,917) (1,370) (603)
------- ------- ------
Ending balance........................................... $ 9,127 $ 4,399 $4,848
======= ======= ======
</TABLE>

12. LAND FOR RESALE

Prior to February 26, 1997, Triad Park, LLC was a wholly-owned subsidiary
of Triad Systems Corporation. Triad Park, LLC holds over one hundred acres in
Livermore, California.

During February 1997, Triad transferred certain real estate assets and
related liabilities to Triad Park, LLC as a condition precedent to Triad's
merger with Cooperative Computing, Inc.

Effective February 26, 1997, Triad spun-off the Triad Park, LLC as a
dividend to the shareholders.

13. SAVINGS AND INVESTMENT PLAN

The Company has a savings and investment plan known as the Triad Systems
Corporation Savings and Investment Plan (the "Plan") as allowed under Sections
401(k) and 401(a) of the Internal Revenue Code. The Plan provides employees with
tax deferred salary deductions and alternative investment options. Employees are
eligible to participate the first day of the calendar quarter following date of
hire and are able to apply for and secure loans from their account in the Plan.

F-40
<PAGE> 141
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Plan provides for contributions by the Company as determined annually
by the Board of Directors. The Company matches 50% of the first 4% of
compensation contributed by each employee and the deferred amount cannot exceed
15% of the annual aggregate salaries of those employees eligible for
participation. Contributions to the Plan are allocated among eligible
participants in the proportion of their salaries to the total salaries of all
participants and amounted to $985,000 in 1995, $1,005,000 in 1996, and $436,000
in 1997.

14. DEBT

<TABLE>
<CAPTION>
SEPTEMBER 30,
----------------------
1995 1996
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
12.25% senior fixed rate notes, due in 1999................. $19,300 $ 9,200
Line of credit.............................................. -- 15,800
Warehousing credit agreement................................ 11,916 10,000
Mortgage loan payable, bearing interest at 9.9%, and
maturing through 2003..................................... 10,946 10,001
Assessment district improvement bonds, bearing interest at
rates ranging from 4.75% to 7.25% and maturing through
2014:
Land for operations....................................... 2,432 1,453
Land for resale........................................... 8,500 8,153
Other, bearing interest at rates ranging from 7% to 12%, and
maturing through 1998..................................... 3,290 1,612
Unamortized debt issuance costs............................. (775) (306)
------- -------
Total debt.................................................. 55,609 55,913
------- -------
Short-term debt............................................. 3,032 25,990
Long-term debt.............................................. $52,577 $29,923
======= =======
</TABLE>

The Company retired $10,100,000 of the 12.25% senior fixed rate notes
("fixed rate notes") at 103.75% of principal plus accrued interest in July 1996.
The remaining $9,200,000 12.25% fixed rate notes mature in 1999, however,
$8,334,000 of principal plus accrued interest is subject to mandatory redemption
in August 1997. The balance can be redeemed at the option of the Company
beginning in August 1997 at 101% of principal plus accrued interest and at 100%
of principal plus accrued interest after August 1998. Interest is payable
semiannually.

The Company retired $1.9 million on the Warehouse Credit Agreement during
1996. The term of the original 1995 Warehousing Credit Agreement was a one year
revolver with a three year term out option. During October 1996, the revolver
was renegotiated and now requires monthly payments of $333,333 starting in April
1997 with the remaining balance due December 1997. Interest on this revolver is
the LIBOR rate plus 1.85% (7.35% at September 30, 1996). The collateral for this
facility is the non-discounted leases receivables.

The interest rate on the mortgage financing for the Livermore headquarters
facility may be adjusted at the option of the lender in 1998 and could impact
the interest rate from 1999 to its maturity in 2003. Borrowings are
collateralized by the land and buildings, and are payable in monthly
installments.

A portion of the Company's land for resale and the parcels retained for its
facilities are part of assessment districts and are subject to bonded
indebtedness incurred in connection with the development of improvements and
community services. Semiannual principal and interest payments on the bonds are
required to be made by Triad as long as the parcels are owned by the Company. As
the Company sells land, the corresponding obligation will be assumed by the new
owners.

F-41
<PAGE> 142
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's $26,875,000 revolving line of credit with a bank bears
interest at prime rate plus 0.75% (9% at September 30, 1996), and is
collateralized by receivables and inventories. The line of credit commitment
decreases by $1,125,000 each quarter through maturity in 1997. Commitment fees
are 0.5% on the average unused commitment.

The fixed rate notes and the line of credit agreements contain restrictive
covenants regarding payment of dividends, incurrence of additional debt and
maintenance of consolidated tangible net worth and certain financial ratios. In
the event the Company is unable to meet these covenants, accelerated repayments
could be required. At June 30, the Company failed to meet certain credit line
covenants which were waived. At September 30, the Company received a waiver on
the credit line covenants because of its failure to meet the equity requirements
and the current and quick ratios.

In connection with the Merger (see Note 2), a significant portion of the
Company's existing debt was refinanced. As such, future aggregate maturities of
the existing debt are not indicative of future cash payments.

15. EQUITY

Cumulative Convertible Preferred Stock

On March 31, 1995, the Company financed the exchange of 1,000,000 preferred
stock and the associated warrants to purchase 3,500,000 shares of common stock.
The financial consideration given was $10,000,000 cash and 2,222,222 shares of
Triad common stock.

Common Stock

Triad has declared no dividends on its common stock since its incorporation
and anticipates it will continue to retain its earnings for use in its business.
The Company's loan agreements contain restrictions on the payment of dividends
on its common stock. The most restrictive covenant regarding the payment of
common stock cash dividends requires the ability to cover interest expense three
times from operating income.

16. RESTRUCTURING CHARGE

In the third quarter of 1996, the Company recorded a $9,000,000
restructuring charge related to an automotive product issue and realignment of
the automotive aftermarket operations. This charge includes a $7,500,000 write
off of previously capitalized costs for the Triad Prism system software, along
with $1,000,000 in reserves for related product issues. Also included is
$500,000 in costs associated with the realignment of aftermarket sales and
support personnel to address increasing consolidation of the automotive
aftermarket. The Company believes that this event will not adversely affect its
future liquidity or working capital.

17. OTHER INCOME

Other income in 1996 is comprised of a sale of marketable securities,
$1,779,000, net land sales totaling $1,194,000, and other expenses of $47,000.

18. EXTRAORDINARY CHARGES

Extraordinary charges resulted from the retirement of debt in 1995 and
1996. The early retirement of the senior fixed rate notes in 1995 and 1996
generated extraordinary charges of $153,000 and $377,000 that included premiums
of $198,000 and $379,000, unamortized debt costs

F-42
<PAGE> 143
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

of $49,000 and $229,000 less taxes of $94,000 and $231,000, respectively. In
addition, in 1995, the refinancing of floating rate notes resulted in an
extraordinary charge of $243,000, that included unamortized debt costs of
$392,000 less taxes of $149,000.

19. EMPLOYEE STOCK PLANS

Effects of the Merger

As part of the Merger, all outstanding stock options from the Company's
various plans were canceled and the holders were paid the difference between the
Offer Consideration (as defined in the Agreement and Plan of Merger and its
amendments) and the per share exercise price of the options held. All stock
option plans terminated upon the merger.

Stock Options

Prior to their termination, the Company had reserved shares of common stock
for issuance under its employee and outside director stock option plans for
nonqualified or incentive stock options. The option price was not to be less
than the fair market value at the date of grant. Options typically vested
ratably over five years and expired ten years from the date of grant.

Stock Option Activity

<TABLE>
<CAPTION>
OPTION PRICE EXERCISABLE AVAILABLE FOR
SHARES PER SHARE AMOUNT OPTIONS GRANT
------ -------------- ------- ----------- -------------
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
Options outstanding at September
30, 1994...................... 3,656 $1.50 to $6.25 $10,561 3,210 194
Granted....................... 177 5.00 to 6.63 934
Exercised..................... (1,702) 1.50 to 5.50 (3,534)
------ -------------- ------- ----- ---
Options outstanding at September
30, 1995...................... 2,131 1.78 to 6.63 7,961 1,645 17
Granted....................... 31 5.00 to 6.38 189
Exercised..................... (277) 1.90 to 5.50 (886)
Canceled...................... (47) 3.81 to 5.50 (238)
------ -------------- ------- ----- ---
Options outstanding at September
30, 1996...................... 1,838 1.78 to 6.63 7,026 1,491 383
Exercised..................... (113) 1.90 to 6.25 (402)
Canceled...................... (2) 5.81 (12)
------ -------------- ------- ----- ---
Options outstanding at February
27, 1997...................... 1,723 $1.78 to $6.63 $ 6,612 -- --
====== ============== ======= ===== ===
</TABLE>

Stock Purchase Plan

The Company had an Employee Stock Purchase Plan under which shares of
common stock were reserved for issuance to all permanent employees who had met
minimum employment criteria. Employees who did not own 5% or more of the
outstanding shares of the Company were eligible to participate through payroll
deductions in amounts relating to their basic compensation. At the end of an
offering period, shares were purchased by the participants at 85% of the lower
of the fair market value at the beginning or the end of the offering period, to
a maximum of 500 shares per participant.

F-43
<PAGE> 144
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

20. COMMITMENTS AND CONTINGENCIES

The Company rents office facilities and certain office equipment under
noncancelable operating lease agreements for periods of up to five years.
Certain lease agreements contain renewal options and provisions for maintenance,
taxes or insurance. Rental expense under operating leases was $3,445,000 in
1995, $2,773,000 in 1996, and $855,000 in 1997. As discussed in Note 2 -- Merger
Agreement, certain real estate was spun-off into a stand-alone company
concurrent with the Merger. Subsequently, the Company is leasing certain real
estate from this stand-alone company. As such, future minimum lease payments
related to existing lease arrangements are not indicative of future cash
payments.

The Company is involved in litigation arising in the ordinary course of
business and has been named as defendants in legal proceeding wherein
substantial damages are claimed. Such proceedings are not uncommon in the
Company's business and historically, the Company has been successful in
defending such actions or have settled them within insured limits. In the
opinion of management, after consultation with legal counsel, these matters will
be resolved without material adverse effect on the Company's result of
operations or financial position.

21. INCOME TAXES

Significant components of the provision for income taxes attributable to
continuing operations are as follows:

<TABLE>
<CAPTION>
FIVE-MONTH
YEAR ENDED PERIOD ENDED
SEPTEMBER 30, FEBRUARY 27,
---------------- ------------
1995 1996 1997
------ ---- ------------
(AMOUNTS IN THOUSANDS)
<S> <C> <C> <C>
Current:
Federal........................................ $1,433 $ 37 $(342)
State.......................................... 523 387 121
Foreign........................................ 367 136 44
------ ---- -----
Current provision................................ 2,323 560 (177)
Deferred:
Federal........................................ 3,628 104 (84)
State.......................................... (904) 49 (10)
Foreign........................................ (125) 12 (19)
------ ---- -----
Deferred provision............................... 2,599 165 (113)
------ ---- -----
Provision for income taxes....................... $4,922 $725 $(290)
====== ==== =====
</TABLE>

In 1995, 1996, and 1997, taxes of $5,165,000, $956,000, and $(290,000),
respectively, were provided on income from continuing operations. Respective tax
benefits of $243,000 and $231,000 related to extraordinary charges on the
repurchases of debt are included in the 1995 and 1996 total provision for income
taxes.

F-44
<PAGE> 145
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

The Company's effective tax rate from continuing operations differs from
the U.S. statutory income tax rate as set forth below:

<TABLE>
<CAPTION>
FIVE-MONTH
YEAR ENDED PERIOD
SEPTEMBER 30, ENDED
--------------- FEBRUARY 27,
1995 1996 1997
---- ----- ------------
<S> <C> <C> <C>
U.S. statutory income tax rate..................... 35.0% 35.0% 35.0%
State taxes, net of Federal income tax benefit..... (1.8) 14.9 1.9
Foreign income taxes............................... 3.8 5.6 (2.6)
Favorable tax settlements on prior years........... -- (30.2) --
Permanent differences, primarily goodwill.......... -- 12.7 (17.6)
Income tax credits................................. (1.0) -- --
Other.............................................. 2.0 -- (1.3)
---- ----- -----
Effective tax rate................................. 38.0% 38.0% 15.4%
==== ===== =====
</TABLE>

<TABLE>
<CAPTION>
SEPTEMBER 30
----------------------
1995 1996
-------- --------
(AMOUNTS IN THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Current gross deferred tax assets:
Inventory and sales return reserves.................... $ 2,771 $ 3,246
Accrued compensation................................... 700 777
Other.................................................. 1,036 1,374
------- -------
Current gross deferred tax assets......................... 4,507 5,397
Noncurrent gross deferred tax assets:
Federal tax credit..................................... 5,368 5,108
Depreciation........................................... 1,612 1,123
Other.................................................. 1,424 1,134
------- -------
Noncurrent gross deferred tax assets...................... 8,404 7,365
------- -------
Gross deferred tax assets................................... 12,911 12,762
Less valuation allowance.................................. -- --
------- -------
Deferred tax assets......................................... 12,911 12,762
Deferred tax liabilities:
Current gross deferred tax liabilities:
Direct financing leases................................ 7,595 7,694
Other.................................................. 250 390
------- -------
Current gross deferred tax liabilities.................... 7,845 8,084
Noncurrent gross deferred tax liabilities:
Direct financing leases................................ 34,029 34,011
Other.................................................. 551 1,024
------- -------
Noncurrent gross deferred tax liabilities................. 34,580 35,035
------- -------
Gross deferred tax liabilities.............................. 42,425 43,119
------- -------
Net deferred tax liabilities................................ $29,514 $30,357
======= =======
</TABLE>

As of February 27, 1997, the Company had federal net operating loss
carryforwards of approximately $9,565,000. The net operating loss will expire in
2012, if not utilized. Utilization of the

F-45
<PAGE> 146
TRIAD SYSTEMS CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)

net operating losses may be subject to an annual limitation due to the "change
in ownership" provision of the Internal Revenue Code of 1986. The annual
limitation may result in the expiration of net operating losses before
utilization.

At February 27, 1997, the Company had business tax credit carryforwards of
$2,705,000, which may be used to reduce future federal income taxes, if any. The
business tax credit carryforwards expire from 1999 through 2010. Also available
to the Company to reduce future regular federal income taxes are alternative
minimum tax credits of approximately $4,402,000 with no statutory expiration
date.

Substantially all of the Company's operating income was generated from
domestic operations during 1995, 1996 and 1997. The Company has not provided for
United States income taxes on the earnings of certain foreign subsidiaries that
are considered invested indefinitely outside the United States. The cumulative
earnings of the foreign subsidiaries that are considered permanently invested
outside the United States amounted to $2,396,000 and $1,351,000 at September 30,
1996 and February 27, 1997, respectively.

The exercise of certain stock options which have been granted under the
Company's stock option plan gives rise to compensation which is includable in
the taxable income of the applicable option holder and deductible by the Company
for federal and state income tax purposes. Such compensation results from
increases in the fair market value of the Company's common stock subsequent to
the date of grant of the applicable exercised stock options and, in accordance
with APB 25, such compensation is not recognized as an expense for financial
accounting purposes; however, the related tax benefits are recorded as an
addition to Additional Paid-In Capital.

22. SEGMENT INFORMATION

The Company operates in one industry segment; it produces and markets
proprietary databases and software products, and designs, develops, assembles,
markets, services and leases computer systems. The Company markets its products
in the United States, Puerto Rico, the United Kingdom, France, Canada and
Ireland and has no customer which accounts for 10% or more of its revenue.
Revenue, operating income and assets outside the United States were not material
to the consolidated financial statements of the Company.

F-46
<PAGE> 147

NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT
BE RELIED UPON AS HAVING BEEN AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN
OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN
THE SECURITIES TO WHICH IT RELATES OR ANY OFFER TO SELL OR THE SOLICITATION OF
AN OFFER TO BUY SUCH SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY OFFER
OR SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE FACTS SET FORTH IN THIS PROSPECTUS OR IN
THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION
CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.

- ------------------------------------------------------------

TABLE OF CONTENTS

<TABLE>
<S> <C>
Prospectus Summary......................... 1
Risk Factors............................... 15
Use of Proceeds............................ 21
Capitalization............................. 21
Selected Historical and Pro Forma Financial
Data..................................... 22
Selected Historical Financial Data......... 23
Unaudited Pro Forma Financial
Information.............................. 24
Management's Discussion and Analysis of
Results of Operations and Financial
Condition................................ 31
Business................................... 38
Management................................. 52
Stock Ownership and Certain Transactions... 56
The Exchange Offer......................... 59
Description of the Restated Senior Credit
Facilities............................... 66
Description of New Notes................... 68
Certain Federal Income Tax
Considerations........................... 94
Plan of Distribution....................... 95
Legal Matters.............................. 95
Experts.................................... 96
Index to Financial Statements.............. F-1
</TABLE>

OFFER TO EXCHANGE
ALL OUTSTANDING
9% SENIOR SUBORDINATED NOTES
DUE 2008 FOR
9% SENIOR SUBORDINATED NOTES
DUE 2008

COOPERATIVE COMPUTING, INC.

[LOGO]
--------------------
PROSPECTUS
--------------------

, 1998
<PAGE> 148

PART II

INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

Expenses in connection with the issuance and distribution of the securities
being registered are estimated (other than with respect to the SEC registration
fee) to be as follows:

<TABLE>
<S> <C>
SEC Registration Fee........................................ $29,500
Printing and Engraving Expenses............................. 50,000
Accounting Fees and Expenses................................ 75,000
Legal Fees and Expenses..................................... 75,000
Miscellaneous............................................... 5,000
-------
Total............................................. 234,500
=======
</TABLE>

- ---------------

* To be provided by amendment.

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

The Restated Certificate of Incorporation of Cooperative Computing, Inc.
("the Registrant") provides for the mandatory indemnification of the directors
and officers to the fullest extent permitted by the General Corporation Law of
the State of Delaware (the "Delaware Code"). Pursuant to Section 145 of the
Delaware Code, the Registrant has the discretionary power to indemnify its
present and former directors and officers against expenses actually and
reasonably incurred by them in connection with any suit (other than an action by
or in the right of the Registrant) to which such directors and officers were,
are, or are threatened to be made, a party by reason of their serving in such
positions, so long as they acted in good faith and in a manner they reasonably
believed to be in, or not opposed to, the best interest of the corporation for
which they served in such positions, and with respect to any criminal action,
they had no reasonable cause to believe their conduct was unlawful.

Under the Delaware Code, a corporation may also indemnify any person who
was or is a party to an action brought by or in the right of the Registrant by
reason of the fact that the person is or was a director or officer of the
corporation, but only for actual or reasonable defense and settlement expenses
and not for any satisfaction of a judgment or settlement of the claim itself,
and with the further limitation that in such actions no indemnification shall be
made in the event of any adjudication that such director or officer is liable to
the corporation unless the court, upon application, finds that in light of all
the circumstances such person is fairly and reasonably entitled to indemnity for
such expenses. The Delaware Code further provides that the indemnification
authorized thereby shall not be deemed exclusive of any other rights to which
any such officer or director may be entitled under any bylaws, agreements, vote
of stockholders or disinterested directors, or otherwise.

The above discussion of the Restated Certificate of Incorporation of the
Registrant and of Section 145 of the Delaware Code is not intended to be
exhaustive and is qualified in its entirety by such Certificate of Incorporation
and the Delaware Code.

Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the provisions referred to in this Item 14, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Securities Act and is therefore unenforceable. In the event that a claim
for indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer, or controlling
person of the Registrant in the successful defense of any action, suit, or
proceeding) is asserted by such director, officer, or controlling person in
connection with the

II-1
<PAGE> 149

securities being registered, the Registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question of whether such indemnification by it
is against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.

On February 10, 1998, the Registrant sold $100,000,000 aggregate principal
amount of its 9% Senior Subordinated Notes due 2008 (the "Old Notes") in a
private placement in reliance on Section 4(2) under the Securities Act, at a
price equal to 100% of the stated principal amount of such Old Notes.

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

(a) Exhibits:

II-2
<PAGE> 150

<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.4 -- Credit Agreement among Cooperative Computing, Inc.
(formerly named Triad Systems Corporation), as Borrower;
Cooperative Computing Holding Company, Inc. (formerly
named Cooperative Computing, Inc.), as Guarantor; and The
Chase Manhattan Bank, as Administrative Agent, dated as
of February 27, 1997, as amended and restated as of
February 10, 1998.*
10.5 -- Guarantee and Collateral Agreement made by Cooperative
Computing, Inc. (formerly named Triad Systems
Cooperation); Cooperative Computing Holding Company, Inc.
(formerly named Cooperative Computing, Inc.); and certain
of their subsidiaries in favor of the Chase Manhattan
Bank dated as of February 27, 1997, as amended and
restated as of February 6, 1998.*
10.6 -- Loan and Security Agreement dated as of January 1, 1997,
between CCI/Triad Financial Holding Corporation, as
Borrower, and Heller Financial, Inc. as Lender.*
10.7 -- Loan and Security Agreement dated as of January 1, 1997,
between CCI/Triad Financial Holding Corporation, as
Borrower, and Metlife Capital Corporation, as Lender.*
10.8 -- Loan and Security Agreement dated as of March 1, 1997,
between CCI/Triad Financial Holding Corporation, as
Borrower, and Sanwa Business Credit Corporation, as
Lender.*
10.9 -- Agreement between the Industrial Development Authority
and Triad Systems Ireland Limited, Triad Systems
Corporation and Tridex Systems Limited.*
10.10 -- Supplemental Agreement between the Industrial Development
Authority and Triad Systems Ireland Limited, Triad
Systems Corporation and Tridex Systems Limited.*
10.11 -- Real Estate Distribution Agreement dated February 26,
1997, among Triad Systems Corporation (now known as
Cooperative Computing, Inc.), 3055 Triad Dr. Corp., 3055
Management Corp., and Triad Park, LLC.*
10.12 -- Assignment and Assumption Agreement dated February 27,
1997, between Triad Systems Corporation and Triad Park,
LLC.*
10.13 -- Assignment and Assumption Agreement dated February 27,
1997, between Triad Systems Corporation and Triad Park,
LLC.*
10.14 -- Warrant of Cooperative Computing Holding Company, Inc.
dated September 10, 1997 issued to A. Laurence Jones.*
10.15 -- Monitoring and Oversight Agreement dated as of February
27, 1997 between Cooperative Computing Holding Company,
Inc.; Cooperative Computing, Inc. and Hicks, Muse & Co.
Partners, L.P.*
10.16 -- Financial Advisory Agreement dated as of February 27,
1997 between Cooperative Computing Holding Company, Inc.,
Cooperative Computing, Inc., and Hicks, Muse & Co.
Partners, L.P.*
10.17 -- Loan and Security Agreement dated as of September 25,
1997, between CCI/Triad Financial Holding Corporation, as
Borrower, and Mellon U.S. Leasing, a Division of Mellon
Leasing Corporation, as Lender.*
10.18 -- Asset Purchase Agreement between ADP Claims Solutions
Group, Inc., and Cooperative Computing, Inc. dated as of
November 20, 1997.*
10.19 -- Purchase Agreement dated as of February 5, 1998, among
Chase Securities Inc., NationsBanc Montgomery Securities
LLC and Cooperative Computing, Inc.*
</TABLE>

II-3
<PAGE> 151

<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
12.1 -- Computation of Ratio of Earnings to Fixed Charges.*
21.1 -- List of Subsidiaries.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement).
23.2 -- Consent of Ernst & Young LLP.*
23.3 -- Consent of Coopers & Lybrand LLP.*
24.1 -- Powers of Attorney (see page II-5 of this Registration
Statement).
25.1 -- Form T-1 of Norwest Bank Minnesota, National Association,
as Trustee under the Indenture filed as Exhibit 4.1.+
27.1 -- Financial Data Schedule.*
99.1 -- Form of Letter of Transmittal.+
99.2 -- Form of Notice of Guaranteed Delivery.+
</TABLE>

- ---------------

* Filed herewith.

+ To be filed by amendment

(b) Financial Statement Schedules:

The following Financial Statement Schedule is included in this Registration
Statement:

Schedule II -- Valuation and Qualifying Accounts

ITEM 17. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:

(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;

(ii) to reflect in the prospectus any facts or events arising after
the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the
aggregate, represent a fundamental change in the information set forth
in the registration statement; notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was
registered) and any deviation from the low or high end of the estimated
maximum offering range may be reflected in the form of prospectus filed
with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20% change in the
maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement; and

(iii) to include any material information with respect to the plan
of distribution not previously disclosed in the registration statement
or any material change to such information in the registration
statement;

(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at the time shall be deemed to be the
initial bona fide offering thereof.

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

(h) See Item 14.

II-4
<PAGE> 152

SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Austin, State of Texas,
on April 3, 1998.

COOPERATIVE COMPUTING, INC.

By: /s/ MATTHEW HALE
----------------------------------
Matthew Hale,
Chief Financial Officer

Each person whose signature to this Registration Statement appears below
hereby appoints Glenn E. Staats and Matthew Hale, and each of them individually,
any one of whom may act without the joinder of the other, as his agent and
attorney-in-fact to sign on his behalf individually and in the capacity stated
below and to file all pre- and post-effective amendments to this Registration
Statement, which may make such changes and additions to this Registration
Statement as such agent and attorney-in-fact may deem necessary or appropriate.

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<C> <S> <C>

/s/ GLENN E. STAATS President and Chief Executive April 3, 1998
- ----------------------------------------------------- Officer and Director (Principal
Glenn E. Staats Executive Officer)

/s/ PRESTON W. STAATS Executive Vice President, Chief April 3, 1998
- ----------------------------------------------------- Operating Officer and Director
Preston W. Staats

/s/ MATTHEW HALE Vice President of Finance and April 3, 1998
- ----------------------------------------------------- Chief Financial Officer
Matthew Hale (Principal Accounting and
Financial Officer)

/s/ THOMAS O. HICKS Director April 3, 1998
- -----------------------------------------------------
Thomas O. Hicks

/s/ JACK D. FURST Director April 3, 1998
- -----------------------------------------------------
Jack D. Furst

Director April 3, 1998
- -----------------------------------------------------
A. Laurence Jones

/s/ JAMES R. PORTER Director April 3, 1998
- -----------------------------------------------------
James R. Porter
</TABLE>

II-5
<PAGE> 153

COOPERATIVE COMPUTING HOLDING COMPANY, INC.
SCHEDULE II -- VALUATION AND QUALIFYING ACCOUNTS

<TABLE>
<CAPTION>
BALANCE ADDITIONS
AT CHARGED BALANCE
BEGINNING TO COSTS AT END
DESCRIPTION OF PERIOD AND EXPENSES DEDUCTIONS OF PERIOD
----------- --------- ------------ ---------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
YEAR ENDED NOVEMBER 30, 1995:
Allowance for doubtful accounts and system
returns....................................... $1,077 $ 740 $ -- $1,817
Inventory valuation............................. $ 54 $ 14 $ -- $ 68
YEAR ENDED NOVEMBER 30, 1996:
Allowance for doubtful accounts and system
returns....................................... $1,817 $ 132 $ -- $1,949
Inventory valuation............................. $ 68 $ 80 $ -- $ 148
TEN MONTHS ENDED SEPTEMBER 30, 1997:
Allowance for doubtful accounts and system
returns....................................... $1,949 $4,309(A) $ 790 $5,468
Inventory valuation............................. $ 148 $1,970(B) $ 48 $2,070
THREE MONTHS ENDED DECEMBER 31, 1997
(UNAUDITED):
Allowance for doubtful accounts and system
returns....................................... $5,468 $ 952 $1,651 $4,769
Inventory valuation............................. $2,070 $ -- $ 165 $1,905
</TABLE>

- ------------------------------------------------------

(A) Includes $1,875 balance transferred from the acquisition of Triad Systems
Corporation.

(B) Includes $856 balance transferred from the acquisition of Triad Systems
Corporation.

S-1
<PAGE> 154

INDEX TO EXHIBITS

<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
2.1 -- Agreement and Plan of Merger among Cooperative Computing,
Inc., CCI Acquisition Corp. and Triad Systems Corporation
dated October 17, 1996.*
2.2 -- First Amendment to Agreement and Plan of Merger dated as
of January 15, 1997.*
2.3 -- Second Amendment to Agreement and Plan of Merger dated as
of February 19, 1997.*
3.1 -- Restated Certificate of Incorporation of Cooperative
Computing, Inc. (formerly known as Triad Systems
Corporation).*
3.2 -- Certificate of Amendment of Certificate of Incorporation
of Cooperative Computing, Inc. (formerly known as Triad
Systems Corporation).*
3.3 -- Amended and Restated Bylaws of Cooperative Computing,
Inc. (formerly known as Triad Systems Corporation).*
4.1 -- Indenture dated as of February 10, 1998 between
Cooperative Computing, Inc., as Issuer, and Norwest Bank
Minnesota, National Association, as Trustee.*
4.2 -- Form of 9% Note.*
4.3 -- Exchange and Registration Rights Agreement dated February
10, 1998 among Cooperative Computing, Inc., Chase
Securities Inc. and NationsBanc Montgomery Securities
LLC.*
5.1 -- Opinion of Weil, Gotshal & Manges LLP as to the
securities registered hereby.+
10.1 -- Project Lease Agreement between 3055 Triad Dr. Corp. and
Triad Systems Corporation (now known as Cooperative
Computing, Inc.) dated as of August 1, 1988.*
10.2 -- First Amendment to Project Lease Agreement between Triad
Park, LLC, successor in interest to 3055 Triad Dr. Corp.,
and Triad Systems Corporation (now known as Cooperative
Computing, Inc.) effective as of February 26, 1997.*
10.3 -- Lease dated as of January 11, 1992 by and between
Computerized Properties, Inc. and Cooperative Computing,
Inc.*
10.4 -- Credit Agreement among Cooperative Computing, Inc.
(formerly named Triad Systems Corporation), as Borrower;
Cooperative Computing Holding Company, Inc. (formerly
named Cooperative Computing, Inc.), as Guarantor; and The
Chase Manhattan Bank, as Administrative Agent, dated as
of February 27, 1997, as amended and restated as of
February 10, 1998.*
10.5 -- Guarantee and Collateral Agreement made by Cooperative
Computing, Inc. (formerly named Triad Systems
Cooperation); Cooperative Computing Holding Company, Inc.
(formerly named Cooperative Computing, Inc.); and certain
of their subsidiaries in favor of the Chase Manhattan
Bank dated as of February 27, 1997, as amended and
restated as of February 6, 1998.*
10.6 -- Loan and Security Agreement dated as of January 1, 1997,
between CCI/Triad Financial Holding Corporation, as
Borrower, and Heller Financial, Inc. as Lender.*
10.7 -- Loan and Security Agreement dated as of January 1, 1997,
between CCI/Triad Financial Holding Corporation, as
Borrower, and Metlife Capital Corporation, as Lender.*
</TABLE>
<PAGE> 155

<TABLE>
<CAPTION>
EXHIBIT
NO.
-------
<C> <S>
10.8 -- Loan and Security Agreement dated as of March 1, 1997,
between CCI/Triad Financial Holding Corporation, as
Borrower, and Sanwa Business Credit Corporation, as
Lender.*
10.9 -- Agreement between the Industrial Development Authority
and Triad Systems Ireland Limited, Triad Systems
Corporation and Tridex Systems Limited.*
10.10 -- Supplemental Agreement between the Industrial Development
Authority and Triad Systems Ireland Limited, Triad
Systems Corporation and Tridex Systems Limited.*
10.11 -- Real Estate Distribution Agreement dated February 26,
1997, among Triad Systems Corporation (now known as
Cooperative Computing, Inc.), 3055 Triad Dr. Corp., 3055
Management Corp., and Triad Park, LLC.*
10.12 -- Assignment and Assumption Agreement dated February 27,
1997, between Triad Systems Corporation and Triad Park,
LLC.*
10.13 -- Assignment and Assumption Agreement dated February 27,
1997, between Triad Systems Corporation and Triad Park,
LLC.*
10.14 -- Warrant of Cooperative Computing Holding Company, Inc.
dated September 10, 1997 issued to A. Laurence Jones.*
10.15 -- Monitoring and Oversight Agreement dated as of February
27, 1997 between Cooperative Computing Holding Company,
Inc.; Cooperative Computing, Inc. and Hicks, Muse & Co.
Partners, L.P.*
10.16 -- Financial Advisory Agreement dated as of February 27,
1997 between Cooperative Computing Holding Company, Inc.,
Cooperative Computing, Inc., and Hicks, Muse & Co.
Partners, L.P.*
10.17 -- Loan and Security Agreement dated as of September 25,
1997, between CCI/Triad Financial Holding Corporation, as
Borrower, and Mellon U.S. Leasing, a Division of Mellon
Leasing Corporation, as Lender.*
10.18 -- Asset Purchase Agreement between ADP Claims Solutions
Group, Inc., and Cooperative Computing, Inc. dated as of
November 20, 1997.*
10.19 -- Purchase Agreement dated as of February 5, 1998, among
Chase Securities Inc., NationsBanc Montgomery Securities
LLC and Cooperative Computing, Inc.*
12.1 -- Computation of Ratio of Earnings to Fixed Charges.*
21.1 -- List of Subsidiaries.*
23.1 -- Consent of Weil, Gotshal & Manges LLP (included in the
opinion filed as Exhibit 5.1 to this Registration
Statement).
23.2 -- Consent of Ernst & Young LLP.*
23.3 -- Consent of Coopers & Lybrand L.L.P.*
24.1 -- Powers of Attorney (see page II-5 of this Registration
Statement).
25.1 -- Form T-1 of Norwest Bank Minnesota, National Association,
as Trustee under the Indenture filed as Exhibit 4.1.+
27.1 -- Financial Data Schedule.*
99.1 -- Form of Letter of Transmittal.+
99.2 -- Form of Notice of Guaranteed Delivery.+
</TABLE>

- ---------------

* Filed herewith.

+ To be filed by amendment

<PAGE> 1
EXHIBIT 2.1

AGREEMENT AND PLAN OF MERGER

AMONG

COOPERATIVE COMPUTING, INC.,

CCI ACQUISITION CORP.

AND

TRIAD SYSTEMS CORPORATION

dated October 17, 1996
<PAGE> 2
TABLE OF CONTENTS

<TABLE>
<CAPTION>
Section Page
- ------- ----
<S> <C>
ARTICLE I . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
THE OFFER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.1 The Offer. . . . . . . . . . . . . . . . . . . . . . . . 2
1.2 Offer Documents. . . . . . . . . . . . . . . . . . . . . 3
1.3 Company Actions. . . . . . . . . . . . . . . . . . . . . 3
1.4 Directors. . . . . . . . . . . . . . . . . . . . . . . . 5

ARTICLE II . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
THE MERGER . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 The Merger. . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Closing. . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Effective Time of the Merger. . . . . . . . . . . . . . 6
2.4 Effects of the Merger. . . . . . . . . . . . . . . . . . 7

ARTICLE III . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES . . . . . . . . 7
3.1 Effect on Capital Stock. . . . . . . . . . . . . . . . . 7
3.2 Conversion of Securities. . . . . . . . . . . . . . . . 8
3.3 Payment for Shares. . . . . . . . . . . . . . . . . . . 8
3.4 Stock Transfer Books. . . . . . . . . . . . . . . . . . 10
3.5 Company Stock Plans. . . . . . . . . . . . . . . . . . . 11
3.6 Dissenting Shares. . . . . . . . . . . . . . . . . . . . 11

ARTICLE IV . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . 12
4.1 Representations and Warranties of the Company. . . . . . 12
4.2 Representations and Warranties of Parent and Sub. . . . 30

ARTICLE V . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
COVENANTS RELATING TO CONDUCT OF BUSINESS . . . . . . . . . . . . . . . 32
5.1 Covenants of the Company. . . . . . . . . . . . . . . . 32

ARTICLE VI . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . 37
6.1 Preparation of the Proxy Statement; Company
Stockholders Meeting; Merger without a Company
Stockholders Meeting. . . . . . . . . . . . . . . . . . 37
6.2 Access to Information. . . . . . . . . . . . . . . . . . 38
6.3 Settlements. . . . . . . . . . . . . . . . . . . . . . . 38
6.4 Fees and Expenses. . . . . . . . . . . . . . . . . . . . 38
6.5 Brokers or Finders. . . . . . . . . . . . . . . . . . . 39
6.6 Indemnification; Directors' and Officers' Insurance. . . 40
</TABLE>

i
<PAGE> 3
<TABLE>
<S> <C>
6.7 Best Efforts . . . . . . . . . . . . . . . . . . . . . . 41
6.8 Conduct of Business of Sub . . . . . . . . . . . . . . . 42
6.9 Publicity . . . . . . . . . . . . . . . . . . . . . . . . 42
6.10 Spin-Off of Certain Real Estate . . . . . . . . . . . . . 42

ARTICLE VII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1 Conditions to Each Party's Obligation to
Effect the Merger . . . . . . . . . . . . . . . . . . . . 45

ARTICLE VIII . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
TERMINATION AND AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . 46
8.1 Termination . . . . . . . . . . . . . . . . . . . . . . . 46
8.2 Effect of Termination . . . . . . . . . . . . . . . . . . 47
8.3 Amendment . . . . . . . . . . . . . . . . . . . . . . . . 47
8.4 Extension; Waiver . . . . . . . . . . . . . . . . . . . . 47

ARTICLE IX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47
GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.1 Nonsurvival of Representations, Warranties
and Agreements. . . . . . . . . . . . . . . . . . . . . . 47
9.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . 47
9.3 Interpretation . . . . . . . . . . . . . . . . . . . . . 49
9.4 Counterparts . . . . . . . . . . . . . . . . . . . . . . 49
9.5 Entire Agreement; No Third Party Beneficiaries;
Rights of Ownership . . . . . . . . . . . . . . . . . . 49
9.6 Governing Law . . . . . . . . . . . . . . . . . . . . . . 49
9.7 No Remedy in Certain Circumstances . . . . . . . . . . . 49
9.8 Assignment . . . . . . . . . . . . . . . . . . . . . . . 50
</TABLE>

ii
<PAGE> 4
GLOSSARY OF DEFINED TERMS

<TABLE>
<S> <C>
1989 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
1990 ESPP . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Acquisition Proposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Board Percentage . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
CERCLA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Certificate of Merger . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Certificates. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Closing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Closing Date. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Code. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Common Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Company Intangible Property . . . . . . . . . . . . . . . . . . . . . . . . . 25
Company Litigation. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Company Order . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Company Permits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Company Rights Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Company SEC Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Company Stockholder Approval. . . . . . . . . . . . . . . . . . . . . . . . . 16
Company Voting Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Confidentiality Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Constituent Corporations. . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Continuing Directors. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
CSD . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Designated Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Designated Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Designated Person . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
DGCL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Dissenting Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Effective Time. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Employee Arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Environmental Costs and Liabilities . . . . . . . . . . . . . . . . . . . . . 26
Environmental Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Exchange Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Final Purchase Date . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
GAAP. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Gains and Transfer Taxes. . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Governmental Entity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Hazardous Material. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
HSR Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Indemnified Liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Indemnified Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Injunction. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
IRSA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Laws. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Material Adverse Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Merger Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
</TABLE>

iii
<PAGE> 5
<TABLE>
<S> <C>
Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Offer Consideration . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Offer Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Option Consideration. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
OSHA. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Parent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Paying Agent. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Payment Fund. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Permitted Investments . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Preferred Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Proxy Statement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Real Property Leases. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Release . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Remedial Action . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Representatives . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
Rights. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Schedule 14D-1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Schedule 14D-9. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
SEC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Securities Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Shares. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Spin-Off Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Spinco. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Stock Option Plans. . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Stockholders Agreement. . . . . . . . . . . . . . . . . . . . . . . . . . 1
Sub . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Surviving Corporation . . . . . . . . . . . . . . . . . . . . . . . . . . 6
Trigger Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Violation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>

iv
<PAGE> 6
AGREEMENT AND PLAN OF MERGER

THIS AGREEMENT AND PLAN OF MERGER, dated as of October 17, 1996
(the "Agreement"), is made and entered into by Cooperative Computing, Inc., a
Texas corporation ("Parent"), CCI Acquisition Corp., a Delaware corporation
("Sub"), and Triad Systems Corporation, a Delaware corporation (the "Company").

WHEREAS, the respective Boards of Directors of Parent, Sub and
the Company have unanimously approved the acquisition of the Company by Parent,
by means of the merger of Sub with and into the Company, upon the terms and
subject to the conditions set forth in the Agreement;

WHEREAS, to effectuate the acquisition, Parent and the Company
each desire that Sub commence a cash tender offer to purchase all of the
outstanding shares of common stock, par value $.001 per share, of the Company
("Shares" or "Company Common Stock"), upon the terms and subject to the
conditions set forth in this Agreement and the Offer Documents (as defined in
Section 1.2), and the Board of Directors of the Company has unanimously
approved such tender offer and agreed to recommend to its stockholders that
they accept the tender offer and tender their Company Common Stock pursuant
thereto;

WHEREAS, the holders of the issued and outstanding common stock
of Sub will contribute that stock to Parent prior to the consummation of the
Offer, as a result of which, Sub will become a wholly-owned subsidiary of
Parent;

WHEREAS, Parent and Sub are unwilling to enter into this
Agreement (and effect the transactions contemplated hereby) unless,
contemporaneously with the execution and delivery hereof, certain beneficial
and record holders of the Company Common Stock enter into agreements
(collectively, the "Stockholders Agreement") providing for certain matters with
respect to their Shares (including the tender of their Shares and certain other
actions relating to the Offer (as defined in Section 1.1)) and the other
transactions contemplated by this Agreement and in order to induce Parent and
Sub to enter into this Agreement, the Company has approved the execution and
delivery by Parent and such stockholders of the Stockholders Agreement, and
such stockholders have agreed to execute and deliver the Stockholders
Agreement; and

WHEREAS, Parent, Sub and the Company desire to make certain
representations, warranties, covenants and agreements in connection with the
Offer and the Merger and also to prescribe various conditions to consummation
thereof;

NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties, covenants and agreements herein contained, the
parties hereto, intending to be legally bound, hereby agree as follows:

<PAGE> 7

ARTICLE I
THE OFFER

1.1 The Offer. (a) Provided that none of the events set
forth in Exhibit A hereto shall have occurred and be continuing, as promptly as
practicable (but in any event not later than five business days after the
public announcement of the execution and delivery of this Agreement), Sub shall
commence (within the meaning of Rule 14d-2 under the Securities Exchange Act of
1934, as amended (the "Exchange Act")), an offer to purchase (the "Offer") all
outstanding shares of the Company Common Stock (together with the associated
Rights (as hereinafter defined)) at a price of $9.25 per share, net to the
seller in cash (the "Offer Consideration"). As used in this Agreement,
"Rights" shall mean the Common Stock Purchase Rights issued pursuant to the
Company Rights Agreement (as defined below). Except where the context
otherwise requires, all references herein to the shares of Common Stock shall
include the associated Rights. The obligation of Parent and Sub to commence
the Offer, consummate the Offer, accept for payment and to pay for shares of
Company Common Stock validly tendered in the Offer and not withdrawn shall be
subject only to those conditions set forth in Exhibit A hereto.

(b) Parent and Sub expressly reserve the right to amend or
modify the terms of the Offer, except that, without the prior written consent
of the Company, Sub shall not (and Parent shall not cause Sub to) (i) decrease
the Offer Consideration or the form of consideration therefor or decrease the
number of Shares sought pursuant to the Offer, (ii) change, in any material
respect, the conditions to the Offer, (iii) impose additional material
conditions to the Offer, (iv) waive the condition that there shall be validly
tendered and not withdrawn prior to the time the Offer expires a number of
shares of Company Common Stock which constitutes at least 51% of the Shares
outstanding on a fully-diluted basis on the date of purchase ("on a fully-
diluted basis" having the following meaning, as of any date: the number of
shares of Company Common Stock outstanding, together with Shares which the
Company may be required to issue pursuant to obligations outstanding at that
date under employee stock option or similar benefit plans, or otherwise), (v)
extend the expiration date of the Offer (except that Sub may extend the
expiration date of the Offer (a) as required by law, (b) for up to ten (10)
business days after the initial expiration date or for longer periods (not to
exceed 90 calendar days from the date of commencement) in the event that any
condition to the Offer is not satisfied, or (c) for one or more times for an
aggregate period of up to 15 days (not to exceed 90 calendar days from the date
of commencement) for any reason other than those specified in the immediately
preceding clause (a) or clause (b)), or (vi) amend any term of the Offer in any
manner materially adverse to

2
<PAGE> 8
holders of shares of Company Common Stock; provided, however, that, except as
set forth above, Sub may waive any other condition to the Offer in its sole
discretion; and provided further, that the Offer may be extended in connection
with an increase in the consideration to be paid pursuant to the Offer so as to
comply with applicable rules and regulations of the United States Securities
and Exchange Commission (the "SEC"). Assuming the prior satisfaction or waiver
of the conditions to the Offer, Sub shall accept for payment, and pay for, in
accordance with the terms of the Offer, all shares of Company Common Stock
validly tendered and not withdrawn pursuant to the Offer as soon as practicable
after the expiration date thereof.

1.2 Offer Documents. As soon as practicable on the date of
commencement of the Offer, Parent and Sub shall file or cause to be filed with
the SEC a Tender Offer Statement on Schedule 14D-1 (the "Schedule 14D-1") with
respect to the Offer which shall contain the offer to purchase and related
letter of transmittal and other ancillary Offer documents and instruments
pursuant to which the Offer will be made (collectively with any supplements or
amendments thereto, the "Offer Documents") and shall contain (or shall be
amended in a timely manner to contain) all information which is required to be
included therein in accordance with the Exchange Act and the rules and
regulations thereunder and any other applicable law, and shall conform in all
material respects with the requirements of the Exchange Act and any other
applicable law; provided, however, that no agreement or representation hereby
is made or shall be made by Parent or Sub with respect to information supplied
by the Company expressly for inclusion in, or with respect to Company
information derived from the Company's public SEC filings that is included or
incorporated by reference in, the Offer Documents. Parent, Sub and the Company
each agree promptly to correct any information provided by them for use in the
Offer Documents if and to the extent that it shall have become false or
misleading in any material respect and Sub further agrees to take all lawful
action necessary to cause the Offer Documents as so corrected to be filed
promptly with the SEC and to be disseminated to holders of Company Common
Stock, in each case as and to the extent required by applicable law. In
conducting the Offer, Parent and Sub shall comply in all material respects with
the provisions of the Exchange Act and any other applicable law. The Company
and its counsel shall be given the opportunity to review and comment on the
Offer Documents and any amendments thereto prior to the filing thereof with the
SEC.

1.3 Company Actions. The Company hereby consents to the Offer
and represents that (a) its Board of Directors (at a meeting duly called and
held) has unanimously (i) determined that each of this Agreement, the Offer and
the Merger are fair to and in the best interests of the stockholders of the
Company, (ii) approved the execution, delivery and performance of this
Agreement and the Stockholders Agreement and the consummation of the
transactions contemplated hereby and thereby, including the

3
<PAGE> 9
Offer and the Merger, and such approval constitutes approval of the foregoing
for purposes of Section 203 of the Delaware General Corporation Law, as amended
(the "DGCL"), (iii) resolved to recommend acceptance of the Offer, approval and
adoption of this Agreement and the Stockholders Agreement and approval of the
Merger by the holders of Company Common Stock, (iv) taken all action necessary
in respect of the Amended and Restated Rights Agreement, dated as of December
6, 1993, between the Company and Chemical Trust Company of California, as
Rights Agent (the "Company Rights Agreement"), so as to render the Company
Rights Agreement inapplicable to any and all of the execution, delivery and
performance of this Agreement and the Stockholders Agreement and the
consummation of the transactions contemplated hereby and thereby, including the
Offer and the Merger (such necessary action to include, without limitation,
taking action to provide that none of Parent and its affiliates will become an
"Acquiring Person" and that no "Stock Acquisition Date" or "Distribution Date"
(as such terms are defined in the Company Rights Agreement) will occur as a
result of such execution, delivery and performance or such consummation), and
(v) adopted the resolutions described in Section 4.1(i)(xiii) regarding certain
employee severance benefits, and (b) Hambrecht & Quist, LLP has delivered to
the Board of Directors of the Company its written opinion that the Offer
Consideration to be received by the holders of Company Common Stock in the
Offer is fair, from a financial point of view, to such holders. The Board of
Directors of the Company may withdraw, modify or amend its approval or
recommendation of the Offer, this Agreement, the Stockholders Agreement or the
Merger only if the Board of Directors of the Company, in good faith and based
upon the advice of outside counsel, deems it necessary to do so in order to
properly fulfill such Board's fiduciary obligations. The Company hereby
consents to the inclusion in the Offer Documents of the recommendation referred
to in this Section 1.3. The Company hereby agrees to file with the SEC
simultaneously with the filing by Parent and Sub of the Schedule 14D-1, a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with all
amendments and supplements thereto, the "Schedule 14D-9") containing such
recommendations of the Board of Directors of the Company in favor of the Offer
and the Merger and otherwise complying with Rule 14d-9 under the Exchange Act.
The Schedule 14D-9 shall comply in all material respects with the Exchange Act
and any other applicable law and shall contain (or shall be amended in a timely
manner to contain) all information which is required to be included therein in
accordance with the Exchange Act and the rules and regulations thereunder and
any other applicable law. The Company, Parent and Sub each agree promptly to
correct any information provided by them for use in the Schedule 14D-9 if and
to the extent that it shall have become false or misleading in any material
respect and the Company further agrees to take all lawful action necessary to
cause the Schedule 14D-9 as so corrected to be filed promptly with the SEC and
disseminated to the holders of Company Common Stock, in each case as and to the
extent required by applicable

4
<PAGE> 10
law. Parent, Sub and their counsel shall be given an opportunity to review and
comment on the Schedule 14D-9 and any amendments thereto prior to the filing
thereof with the SEC. In connection with the Offer, the Company shall promptly
furnish, or cause its transfer agent to furnish, Parent with mailing labels,
security position listings and all available listings or computer files
containing the names and addresses of the record holders of the Company Common
Stock as of the latest practicable date and shall furnish, or cause its
transfer agent to furnish, Parent with such information and assistance
(including updated lists of stockholders, mailing labels and lists of security
positions) as Parent or its agents may reasonably request in communicating the
Offer to the record and beneficial holders of Company Common Stock. Subject to
the requirements of applicable law, and except for such actions as are
necessary to disseminate the Offer Documents and any other documents necessary
to consummate the Offer and the Merger, Parent and Sub and each of their
affiliates, associates, partners, employees, agents and advisors shall hold in
confidence the information contained in such labels and lists, shall use such
information only in connection with the Offer and the Merger, and, if this
Agreement is terminated, in accordance with its terms, shall deliver promptly
to the Company all copies of such information then in their possession.

1.4 Directors. (a) Promptly upon the purchase by Parent
or any of its subsidiaries of such number of shares of Company Common Stock
which represents at least 51% of the outstanding shares of Company Common Stock
(on a fully diluted basis), and from time to time thereafter, Parent shall be
entitled to designate such number of directors, rounded up to the next whole
number (but in no event more than one less than the total number of directors
on the Board of Directors of the Company) as will give Parent, subject to
compliance with Section 14(f) of the Exchange Act, representation on the Board
of Directors of the Company equal to the product of (x) the number of directors
on the Board of Directors of the Company (giving effect to any increase in the
number of directors pursuant to this Section 1.4) and (y) the percentage that
such number of Shares so purchased bears to the aggregate number of Shares
outstanding (such number being, the "Board Percentage"), and the Company shall,
upon request by Parent, promptly satisfy the Board Percentage by (i) increasing
the size of the Board of Directors of the Company or (ii) using its best
efforts to secure the resignations of such number of directors as is necessary
to enable Parent's designees to be elected to the Board of Directors of the
Company and shall cause Parent's designees promptly to be so elected, provided
that no such action shall be taken which would result in there being, prior to
the consummation of the Merger, less than two directors of the Company that are
not affiliated with Parent. At the request of Parent, the Company shall take,
at the Company's expense, all lawful action necessary to effect any such
election, including, without limitation, mailing to its stockholders the
information required by Section

5
<PAGE> 11
14(f) of the Exchange Act and Rule 14f-1 promulgated thereunder, unless such
information has previously been provided to the Company's stockholders in the
Schedule 14D-9.

(b) Following the election or appointment of Parent's
designees pursuant to this Section 1.4 and prior to the Effective Time of the
Merger, any amendment or termination of this Agreement, extension for the
performance or waiver of the obligations or other acts of Parent or Sub or
waiver of the Company's rights thereunder shall require the concurrence of a
majority of directors of the Company then in office who are "Continuing
Directors". The term "Continuing Director" shall mean (i) each member of the
board of directors on the date hereof who voted to approve this Agreement and
(ii) any successor to any Continuing Director that was recommended to succeed
such Continuing Director by a majority of the Continuing Directors then on the
board of directors.

ARTICLE II
THE MERGER

2.1 The Merger. Upon the terms and subject to the conditions
set forth in this Agreement, and in accordance with the DGCL, Sub shall be
merged with and into the Company at the Effective Time. At the Effective Time,
the separate corporate existence of Sub shall cease, and the Company shall
continue as the surviving corporation and a direct wholly owned subsidiary of
Parent (Sub and the Company are sometimes hereinafter referred to as
"Constituent Corporations" and, as the context requires, the Company is
sometimes hereinafter referred to as the "Surviving Corporation"), and shall
continue under the name "Triad Systems Corporation."

2.2 Closing. Unless this Agreement shall have been terminated
and the transactions herein contemplated shall have been abandoned pursuant to
Section 8.1, and subject to the satisfaction or waiver of the conditions set
forth in Article VII, the closing of the Merger (the "Closing") shall take
place at 10:00 a.m., New York time, on the second business day after
satisfaction of the conditions set forth in Section 7.1 (or as soon as
practicable thereafter following satisfaction or waiver of the conditions set
forth in Sections 7.2 and 7.3) (the "Closing Date"), at the offices of Weil,
Gotshal & Manges LLP, 767 Fifth Avenue, New York, New York 10153, unless
another date, time or place is agreed to in writing by the parties hereto.

2.3 Effective Time of the Merger. Subject to the provisions
of this Agreement, the parties hereto shall cause the Merger to be consummated
by filing a certificate of merger (the "Certificate of Merger") with the
Secretary of State of the State of Delaware, as provided in the DGCL, as soon
as practicable on or after the Closing Date. The Merger shall become effective

6
<PAGE> 12
upon such filing or at such time thereafter as is provided in the Certificate
of Merger (the "Effective Time").

2.4 Effects of the Merger. (a) The Merger shall have
the effects as set forth in the applicable provisions of the DGCL.

(b) The directors of Sub and the officers of the Company
immediately prior to the Effective Time shall, from and after the Effective
Time, be the initial directors and officers of the Surviving Corporation until
their successors have been duly elected or appointed and qualified, or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and Bylaws.

(c) The Certificate of Incorporation of the Company shall be
amended and restated in its entirety as set forth on Exhibit B hereto and, from
and after the Effective Time, such amended and restated Certificate of
Incorporation shall be the Certificate of Incorporation of the Surviving
Corporation, until duly amended in accordance with the terms thereof and the
DGCL.

(d) The Bylaws of the Company shall be amended and restated in
their entirety as set forth on Exhibit C hereto and, from and after the
Effective Time, such amended and restated Bylaws shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by applicable law,
the Certificate of Incorporation or the Bylaws.

ARTICLE III
EFFECT OF THE MERGER ON THE CAPITAL STOCK OF
THE CONSTITUENT CORPORATIONS; EXCHANGE OF CERTIFICATES

3.1 Effect on Capital Stock. At the Effective Time, by virtue
of the Merger and without any action on the part of the holder of any shares of
Company Common Stock or the holder of any capital stock of Sub:

(a) Capital Stock of Sub. Each share of the capital stock of
Sub issued and outstanding immediately prior to the Effective Time shall be
converted into and become one fully paid and nonassessable share of Common
Stock, par value $.01 per share, of the Surviving Corporation.

(b) Cancellation of Treasury Stock and Parent-Owned Stock.
Each share of Company Common Stock and all other shares of capital stock of the
Company that are owned by the Company and all shares of Company Common Stock
and other shares of capital stock of the Company owned by Parent or Sub shall
be canceled and retired and shall cease to exist and no consideration shall be
delivered or deliverable in exchange therefor.

7
<PAGE> 13
3.2 Conversion of Securities. At the Effective Time, by
virtue of the Merger and without any action on the part of Sub, the Company or
the holders of any of the shares thereof:

(a) (i) Subject to the other provisions of this
Section 3.2, each share of Company Common Stock issued and outstanding
immediately prior to the Effective Time (excluding shares owned, directly or
indirectly, by the Company or any Subsidiary (as defined below) of the Company
or by Parent, Sub or any other Subsidiary of Parent and Dissenting Shares (as
defined in Section 3.6)) shall be converted into the right to receive the Offer
Consideration, payable to the holder thereof, without any interest thereon,
less any required withholding taxes (the "Merger Consideration"), upon
surrender and exchange of the Certificates (as defined in Section 3.3). As
used in this Agreement, the word "Subsidiary", with respect to any party, means
any corporation, partnership, joint venture or other organization, whether
incorporated or unincorporated, of which: (i) such party or any other
Subsidiary of such party is a general partner; (ii) voting power to elect a
majority of the Board of Directors or others performing similar functions with
respect to such corporation, partnership, joint venture or other organization
is held by such party or by any one or more of its Subsidiaries, or by such
party and any one or more of its Subsidiaries; or (iii) at least 25% of the
equity, other securities or other interests is, directly or indirectly, owned
or controlled by such party or by any one or more of its Subsidiaries, or by
such party and any one or more of its Subsidiaries.

(ii) All such shares of Company Common Stock,
when converted as provided in Section 3.2(a)(i), no longer shall be outstanding
and shall automatically be canceled and retired and shall cease to exist, and
each Certificate previously evidencing such Shares shall thereafter represent
only the right to receive the Merger Consideration. The holders of
Certificates previously evidencing Shares outstanding immediately prior to the
Effective Time shall cease to have any rights with respect to the Company
Common Stock except as otherwise provided herein or by law and, upon the
surrender of Certificates in accordance with the provisions of Section 3.3,
shall only represent the right to receive for their Shares, the Merger
Consideration, without any interest thereon.

3.3 Payment for Shares. (a) Paying Agent. Prior to the
Effective Time, Sub shall appoint a United States bank or trust company
reasonably acceptable to the Company to act as paying agent (the "Paying
Agent") for the payment of the Merger Consideration, and Sub shall deposit or
shall cause to be deposited with the Paying Agent in a separate fund
established for the benefit of the holders of shares of Company Common Stock,
for payment in accordance with this Article III, through the Paying Agent (the
"Payment Fund"), immediately available funds in

8
<PAGE> 14
amounts necessary to make the payments pursuant to Section 3.2(a)(i) and this
Section 3.3 to holders (other than the Company or any Subsidiary of the Company
or Parent, Sub or any other Subsidiary of Parent, or holders of Dissenting
Shares). The Paying Agent shall, pursuant to irrevocable instructions, pay the
Merger Consideration out of the Payment Fund.

The Paying Agent shall invest portions of the Payment Fund as
Parent directs in obligations of or guaranteed by the United States of America,
in commercial paper obligations receiving the highest investment grade rating
from both Moody's Investors Services, Inc. and Standard & Poor's Corporation,
or in certificates of deposit, bank repurchase agreements or banker's
acceptances of commercial banks with capital exceeding $1,000,000,000
(collectively, "Permitted Investments"); provided, however, that the maturities
of Permitted Investments shall be such as to permit the Paying Agent to make
prompt payment to former holders of Company Common Stock entitled thereto as
contemplated by this Section. The Surviving Corporation shall cause the
Payment Fund to be promptly replenished to the extent of any losses incurred as
a result of Permitted Investments. All earnings on Permitted Investments shall
be paid to the Surviving Corporation. If for any reason (including losses) the
Payment Fund is inadequate to pay the amounts to which holders of shares of
Company Common Stock shall be entitled under this Section 3.3, the Surviving
Corporation shall in any event be liable for payment thereof. The Payment Fund
shall not be used for any purpose except as expressly provided in this
Agreement.

(b) Payment Procedures. As soon as reasonably practicable
after the Effective Time, the Surviving Corporation shall instruct the Paying
Agent to mail to each holder of record (other than the Company or any
Subsidiary of the Company or Parent, Sub or any other Subsidiary of Parent) of
a Certificate or Certificates which, immediately prior to the Effective Time,
evidenced outstanding shares of Company Common Stock (the "Certificates"), (i)
a form of letter of transmittal (which shall specify that delivery shall be
effected, and risk of loss and title to the Certificates shall pass, only upon
proper delivery of the Certificates to the Paying Agent, and shall be in such
form and have such other provisions as the Surviving Corporation reasonably may
specify) and (ii) instructions for use in effecting the surrender of the
Certificates in exchange for payment therefor. Upon surrender of a Certificate
for cancellation to the Paying Agent together with such letter of transmittal,
duly executed, and such other customary documents as may be required pursuant
to such instructions, the holder of such Certificate shall be entitled to
receive in respect thereof cash in an amount equal to the product of (x) the
number of shares of Company Common Stock represented by such Certificate and
(y) the Merger Consideration, and the Certificate so surrendered shall
forthwith be canceled. Absolutely no interest shall be paid or accrued on the
Merger Consideration payable upon the surrender of

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<PAGE> 15
any Certificate. If payment is to be made to a person other than the person in
whose name the surrendered Certificate is registered, it shall be a condition
of payment that the Certificate so surrendered shall be promptly endorsed or
otherwise in proper form for transfer and that the person requesting such
payment shall pay any transfer or other taxes required by reason of the payment
to a person other than the registered holder of the surrendered Certificate or
established to the satisfaction of the Surviving Corporation that such tax has
been paid or is not applicable. Until surrendered in accordance with the
provisions of this Section 3.3(b), each Certificate (other than Certificates
representing Shares owned by Parent or any subsidiary of Parent or held in the
treasury of the Company) shall represent for all purposes only the right to
receive the Merger Consideration.

(c) Termination of Payment Fund; Interest. Any portion of the
Payment Fund which remains undistributed to the holders of Company Common Stock
for 180 days after the Effective Time shall be delivered to the Surviving
Corporation, upon demand, and any holders of Company Common Stock who have not
theretofore complied with this Article III and the instructions set forth in
the letter of transmittal mailed to such holder after the Effective Time shall
thereafter look only to the Surviving Corporation for payment of the Merger
Consideration to which they are entitled. All interest accrued in respect of
the Payment Fund shall inure to the benefit of and be paid to the Surviving
Corporation.

(d) No Liability. Neither Parent nor the Surviving
Corporation shall be liable to any holder of shares of Company Common Stock for
any cash from the Payment Fund delivered to a public official pursuant to any
applicable abandoned property, escheat or similar law.

(e) Withholding Rights. The Surviving Corporation shall be
entitled to deduct and withhold from the consideration otherwise payable
pursuant to this Agreement to any holder of shares of Company Common Stock such
amounts as the Surviving Corporation is required to deduct and withhold with
respect to the making of such payment under the Internal Revenue Code of 1986,
as amended (the "Code"), or any provision of state, local or foreign tax law.
To the extent that amounts are so withheld by the Surviving Corporation, such
withheld amounts shall be treated for all purposes of this Agreement as having
been paid to the holder of the shares of Company Common Stock in respect of
which such deduction and withholding was made by the Surviving Corporation.

3.4 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed and there shall be no further
registration of transfers of shares of Company Common Stock thereafter on the
records of the Company.

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<PAGE> 16
On or after the Effective Time, any certificates presented to the Paying Agent
or Parent for any reason shall be converted into the Merger Consideration.

3.5 Company Stock Plans. (a) At the Effective Time, each
holder of a then outstanding option to purchase Shares under the Company's 1982
Amended and Restated Stock Option Plan, 1990 Stock Option Plan, and Amended and
Restated Outside Directors Stock Option Plan (collectively, the "Stock Option
Plans"), whether or not then exercisable (the "Options"), shall, in settlement
thereof, receive for each Share subject to such Option an amount (subject to
any applicable withholding tax) in cash equal to the difference between the
Offer Consideration and the per Share exercise price of such Option to the
extent such difference is a positive number (such amount being hereinafter
referred to as, the "Option Consideration"); provided, however, that with
respect to any person subject to Section 16(a) of the Exchange Act, any such
amount shall be paid as soon as practicable after the first date payment can be
made without liability to such person under Section 16(b) of the Exchange Act.
Upon receipt of the Option Consideration, the Option shall be canceled. The
surrender of an Option to the Company in exchange for the Option Consideration
shall be deemed a release of any and all rights the holder had or may have had
in respect of such Option. Prior to the Effective Time, the Company shall
obtain all necessary consents or releases from holders of Options under the
Stock Option Plans and take all such other lawful action as may be necessary to
give effect to the transactions contemplated by this Section 3.5. All Stock
Option Plans shall terminate as of the Effective Time and the provisions in any
other plan, program or arrangement providing for the issuance or grant of any
other interest in respect of the capital stock of the Company or any Subsidiary
thereof shall be canceled as of the Effective Time, and the Company shall take
all action necessary to ensure that following the Effective Time no participant
in any Stock Option Plan or other plans, programs or arrangements shall have
any right thereunder to acquire equity securities of the Company, the Surviving
Corporation or any Subsidiary thereof and to terminate all such plans.

(b) The Company shall take all actions reasonably necessary to
cause the last day of the current "Offering Period" (as such term is defined in
the Company's 1990 Employee Stock Purchase Plan (as amended to date, the "1990
ESPP")) to be the date immediately following the last payday occurring prior to
the expiration date of the Offer and apply the funds within the participant's
withholdings account on such expiration date to the purchase of whole Shares in
accordance with the terms of the 1990 ESPP. The Company shall cause the 1990
ESPP to be terminated effective as of the Final Purchase Date.

3.6 Dissenting Shares. Notwithstanding any other

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<PAGE> 17
provisions of this Agreement to the contrary, shares of Company Common Stock
that are outstanding immediately prior to the Effective Time and which are held
by stockholders who shall have not voted in favor of the Merger or consented
thereto in writing and who shall have demanded properly in writing appraisal
for such shares in accordance with Section 262 of the DGCL (collectively, the
"Dissenting Shares") shall not be converted into or represent the right to
receive the Merger Consideration. Such stockholders instead shall be entitled
to receive payment of the appraised value of such shares of Company Common
Stock held by them in accordance with the provisions of such Section 262,
except that all Dissenting Shares held by stockholders who shall have failed to
perfect or who effectively shall have withdrawn or lost their rights to
appraisal of such shares of Company Common Stock under such Section 262 shall
thereupon be deemed to have been converted into and to have become
exchangeable, as of the Effective Time, for the right to receive, without any
interest thereon, the Merger Consideration upon surrender in the manner
provided in Section 3.3, of the Certificate or Certificates that, immediately
prior to the Effective Time, evidenced such shares of Company Common Stock.

ARTICLE IV
REPRESENTATIONS AND WARRANTIES

4.1 Representations and Warranties of the Company. The
Company represents and warrants to Parent and Sub as follows:

(a) Organization, Standing and Power. Each of the Company and
its Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation, has
all requisite power and authority to own, lease and operate its properties and
to carry on its business as now being conducted, and is duly qualified and in
good standing to conduct business in each jurisdiction in which the business it
is conducting, or the operation, ownership or leasing of its properties, makes
such qualification necessary, other than in such jurisdictions where the
failure so to qualify would not have a Material Adverse Effect (as defined
below) with respect to the Company. The Company has heretofore made available
to Parent complete and correct copies of its and its Subsidiaries' respective
Certificates of Incorporation and Bylaws. All Subsidiaries of the Company and
their respective jurisdictions of incorporation or organization are identified
on Schedule 4.1(a). As used in this Agreement: a "Material Adverse Effect"
shall mean, with respect to any party, the result of one or more events,
changes or effects which, individually or in the aggregate, would have a
material adverse effect on the business, operations, assets or condition
(financial or otherwise) of such party and its Subsidiaries, taken as a whole.

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<PAGE> 18
(b) Capital Structure. As of the date hereof, the authorized
capital stock of the Company consists of 50,000,000 Shares and 1,000,000 shares
of Preferred Stock, $.01 par value ("Preferred Stock"). At the close of
business on September 30, 1996: (i) 17,749,158 Shares were issued and
outstanding; (ii) no shares of Preferred Stock were issued and outstanding;
(iii) 1,838,190 Shares were reserved for issuance pursuant options outstanding
under the Stock Option Plans; (iv) 290,219 Shares remain available for issuance
pursuant to the 1990 ESPP, (v) except for the issuance of Shares pursuant to
the exercise of the Options, there are no employment, executive termination or
similar agreements providing for the issuance of Shares; (vi) 645,184 Shares
were held by the Company; and (vii) no bonds, debentures, notes or other
instruments or evidence of indebtedness having the right to vote (or
convertible into, or exercisable or exchangeable for, securities having the
right to vote) on any matters on which the Company stockholders may vote
("Company Voting Debt") were issued or outstanding. Since September 30, 1996,
no additional Shares have been made available for issuance under the 1990 ESPP.
As of September 30, 1996, the total amount of funds on deposit in all
participants' withholdings accounts for the current Offer Period under the 1990
ESPP was $416,000. All outstanding Shares are validly issued, fully paid and
nonassessable and are not subject to preemptive or other similar rights. No
Shares are owned by any Subsidiary of the Company. Except as set forth on
Schedule 4.1(b), all outstanding shares of capital stock of the Subsidiaries of
the Company are owned by the Company or a direct or indirect Subsidiary of the
Company, free and clear of all liens, charges, encumbrances, claims and options
of any nature. Except as set forth in this Section 4.1(b) and except for
changes since September 30, 1996 resulting from the exercise of employee stock
options granted prior to such date pursuant to the Stock Option Plans or from
the issuance of Shares under the 1990 ESPP as contemplated by Section 3.5(b) of
this Agreement and except for the potential issuance of options to purchase up
to 75,000 Shares that may be granted in connection with an offer of employment
outstanding on the date of this Agreement, there are outstanding: (i) no
shares of capital stock, Company Voting Debt or other voting securities of the
Company; (ii) no securities of the Company or any Subsidiary of the Company
convertible into, or exchangeable or exercisable for, shares of capital stock,
Company Voting Debt or other voting securities of the Company or any Subsidiary
of the Company; and (iii) no options, warrants, calls, rights (including
preemptive rights), commitments or agreements to which the Company or any
Subsidiary of the Company is a party or by which it is bound, in any case
obligating the Company or any Subsidiary of the Company to issue, deliver,
sell, purchase, redeem or acquire, or cause to be issued, delivered, sold,
purchased, redeemed or acquired, additional shares of capital stock or any
Company Voting Debt or other voting securities of the Company or of any
Subsidiary of the Company, or obligating the Company or any Subsidiary of the
Company to grant, extend or

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<PAGE> 19
enter into any such option, warrant, call, right, commitment or agreement.
Since September 30, 1996, the Company has not (i) granted any options, warrants
or rights to purchase shares of Company Common Stock (except for the potential
issuance of options to purchase up to 75,000 Shares that may be granted in
connection with an offer of employment outstanding on the date of this
Agreement), or (ii) amended or repriced any Option or Stock Option Plans, and
set forth on Schedule 4.1(b) is a list of all outstanding options, warrants and
rights to purchase shares of Company Common Stock and the exercise prices
relating thereto. Except for the Stockholders Agreement and the Unit Purchase
Agreement, dated as of July 7, 1992, between the Company, Richard C. Blum &
Associates, Inc., and certain investors, as amended by the First Amendment to
Unit Purchase Agreement, dated as of August 3, 1992, and the Exchange Agreement
and Second Amendment to Unit Purchase Agreement, dated as of March 31, 1995,
there are not as of the date hereof and there will not be at the Effective Time
any stockholder agreements, voting trusts or other agreements or understandings
to which the Company is a party or by which it is bound relating to the voting
of any shares of the capital stock of the Company which will limit in any way
the solicitation of proxies by or on behalf of the Company from, or the casting
of votes by, the stockholders of the Company with respect to the Merger. There
are no restrictions on the Company to vote the stock of any of its
Subsidiaries.

(i) The Company has all requisite corporate power and
authority to enter into this Agreement and, subject to the Company Stockholder
Approval (as defined in Section 4.1(c)(iii)), to consummate the transactions
contemplated hereby. The execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of the Company, subject, if
required with respect to consummation of the Merger, to the Company Stockholder
Approval. This Agreement has been duly executed and delivered by the Company
and, subject, if required with respect to consummation of the Merger, to the
Company Stockholder Approval, and assuming that this Agreement constitutes the
valid and binding agreement of Parent and Sub, constitutes a valid and binding
obligation of the Company enforceable in accordance with its terms except that
the enforcement hereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium, fraudulent conveyance or other similar laws now or
hereafter in effect relating to creditors' rights generally and (b) general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).

(ii) Except as set forth on Schedule 4.1(c)(ii), the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby by the Company will not

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<PAGE> 20
conflict with, or result in any violation of, or default (with or without
notice or lapse of time, or both) under, or give rise to a right of
termination, cancellation or acceleration (including pursuant to any put right)
of any obligation or the loss of a material benefit under, or the creation of a
lien, pledge, security interest or other encumbrance on assets or property, or
right of first refusal with respect to any asset or property (any such
conflict, violation, default, right of termination, cancellation or
acceleration, loss, creation or right of first refusal, a "Violation"),
pursuant to (A) any provision of the Certificate of Incorporation or Bylaws of
the Company or any of its Subsidiaries or (B) except as to which requisite
waivers or consents have been obtained and assuming the consents, approvals,
authorizations or permits and filings or notifications referred to in paragraph
(iii) of this Section 4.1(c) are duly and timely obtained or made and, if
required, the Company Stockholder Approval has been obtained, result in any
Violation of (1) any loan or credit agreement, note, mortgage, deed of trust,
indenture, lease, Company Employee Benefit Plan (as defined in Section 4.1(i)),
Company Permit (as defined in Section 4.1(f)), or any other agreement,
obligation, instrument, concession, franchise, or license, except for any
Violations that, individually or in the aggregate, could not reasonably be
expected to have a Material Adverse Effect on the Company and except that each
holder of the Company's 12.25% Senior Notes due 1999 shall have the right, at
such holder's option and in the manner provided in the Indenture, dated August
1, 1992, between the Company and Security Pacific National Trust Company (New
York) to require the Company to redeem all or any portion of such holder's
Senior Notes and except that no representation is made as to that certain
Revolving Credit Loan Agreement, dated as of June 30, 1992, by and between the
Company and Comerica Bank-California, as amended to date, and that certain
First Deed of Trust and Assignment of Rents, Security Agreement and Fixture
Filing, dated August 23, 1988, by 3055 Triad Dr. Corp. and Mason-McDuffie
Financial Corporation, as Trustee, for the benefit of The Variable Annuity Life
Insurance Company, or (2) any judgment, order, decree, statute, law, ordinance,
rule or regulation applicable to the Company or any of its Subsidiaries or
their respective properties or assets (collectively, "Laws"). The Board of
Directors of the Company has taken all actions necessary under the DGCL,
including approving the transactions contemplated by this Agreement and the
Stockholders Agreement, to ensure that Section 203 of the DGCL does not, and
will not, apply to the transactions contemplated in this Agreement or the
Stockholders Agreement.

(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any court,
administrative agency or commission or other governmental authority or
instrumentality, domestic or foreign (a "Governmental Entity"), is required by
or with respect to the Company or any of its domestic Subsidiaries, and to the

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<PAGE> 21
best knowledge of either of the Company's Chief Executive Officer and the
Company's Chief Financial Officer (the "Designated Officers") with respect to
any of the Company's foreign Subsidiaries, in connection with the execution and
delivery of this Agreement by the Company or the consummation by the Company of
the transactions contemplated hereby, except for: (A) the filing of a
premerger notification and report form by the Company under the Hart-Scott-
Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act") and the
expiration or termination of the applicable waiting period thereunder; (B) the
filing with the SEC of (x) a proxy statement (if required by applicable law) in
definitive form relating to a meeting of the holders of Company Common Stock to
approve the Merger (such proxy statement as amended or supplemented from time
to time being hereinafter referred to as the "Proxy Statement"), (y) the
Schedule 14D-9 in connection with the Offer, and (z) such reports under and
such other compliance with the Exchange Act and the rules and regulations
thereunder as may be required in connection with this Agreement and the
transactions contemplated hereby; (C) the filing of the Certificate of Merger
with the Secretary of State of the State of Delaware; (D) such filings and
approvals as may be required by any applicable state securities, "blue sky" or
takeover laws; (E) such filings and approvals as may be required by any foreign
pre-merger notification, securities, corporate or other law, rule or
regulation; (F) such filings in connection with any state or local tax which is
attributable to the beneficial ownership of the Company's or its Subsidiaries'
real property, if any (collectively, the "Gains and Transfer Taxes"); (G) such
other such filings and consents as may be required under any environmental,
health or safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by this Agreement; and (H) the approval of this Agreement and the
Merger by the holders of a majority of the outstanding Shares ("Company
Stockholder Approval") .

(d) SEC Documents. The Company has made available to Parent a
true and complete copy of each report, schedule, registration statement and
definitive proxy statement filed by the Company with the SEC since January 1,
1993 and prior to the date of this Agreement (the "Company SEC Documents"),
which are all the documents (other than preliminary material) that the Company
was required to file with the SEC since such date. As of their respective
dates, the Company SEC Documents complied in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
or the Exchange Act, as the case may be, and the rules and regulations of the
SEC thereunder applicable to such Company SEC Documents, and none of the
Company SEC Documents contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading. The financial statements of the Company included in

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<PAGE> 22
the Company SEC Documents complied as to form in all material respects with the
published rules and regulations of the SEC with respect thereto, were prepared
in accordance with generally accepted accounting principles ("GAAP") applied on
a consistent basis during the periods involved (except as may be indicated in
the notes thereto or, in the case of the unaudited statements, as permitted by
Rule 10-01 of Regulation S-X of the SEC) and fairly present in accordance with
applicable requirements of GAAP (subject, in the case of the unaudited
statements, to normal, recurring adjustments, which will not be material,
either individually or in the aggregate) the consolidated financial position of
the Company and its consolidated Subsidiaries as of their respective dates and
the consolidated results of operations and the consolidated cash flows of the
Company and its consolidated Subsidiaries for the periods presented therein.

(e) Information Supplied. None of the information supplied or
to be supplied by the Company for inclusion or incorporation by reference in
(i) any of the Offer Documents will, at the time the Offer Documents are first
published, sent or given to holders of Company Common Stock, and at any time
they are amended or supplemented, contain any untrue statement of a material
fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, and (ii) the Proxy Statement will, on the
date it is first mailed to the holders of the Company Common Stock or at the
time of the Company's Stockholders Meeting, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior
to the expiration date of the Offer or the Effective Time any event with
respect to the Company or any of its Subsidiaries, or with respect to other
information supplied by the Company for inclusion in the Offer Documents or the
Proxy Statement, shall occur which is required to be described in an amendment
of, or a supplement to, the Offer Documents or the Proxy Statement, as the case
may be, such event shall be so described, and such amendment or supplement
shall be promptly filed with the SEC and, as required by law, disseminated to
the stockholders of the Company. The Proxy Statement, insofar as it relates to
the Company or its Subsidiaries or other information supplied by the Company
for inclusion therein will comply as to form, in all material respects, with
the provisions of the Exchange Act or the rules and regulations thereunder.

(f) Compliance with Applicable Laws. The Company and its
Subsidiaries hold all permits, licenses, variances, exemptions, orders,
franchises and approvals of all Governmental Entities necessary for the lawful
conduct of their respective businesses (the "Company Permits"), except where
the failure to

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<PAGE> 23
hold any such Company Permits could not reasonably be expected, individually or
in the aggregate, to have a Material Adverse Effect on the Company. The
Company and its Subsidiaries are in compliance with the terms of the Company
Permits, except where the failure to be in compliance could not reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect
on the Company. Except as disclosed in the Company SEC Documents, the
businesses of the Company and its Subsidiaries are not being conducted in
violation of any law, ordinance or regulation of any Governmental Entity. As
of the date of this Agreement, no investigation or review by any Governmental
Entity with respect to the Company or any of its Subsidiaries is pending or, to
the knowledge of the Company, threatened.

(g) Litigation. Except as disclosed in the Company SEC
Documents, there is no suit, action or proceeding pending or, to the knowledge
of the Company, threatened against or affecting the Company or any Subsidiary
of the Company ("Company Litigation"), nor is there any material judgment,
decree, injunction, rule or order of any Governmental Entity or arbitrator
outstanding against the Company or any Subsidiary of the Company ("Company
Order"). In addition, except as set forth on Schedule 4.1(g), the aggregate
amount of all claims and judgments pending, or to the knowledge of the Company,
threatened pursuant to all Company Litigation and Company Orders, excluding
individual, unrelated claims or judgments of less than $100,000 each, does not
exceed $2,500,000.

(h) Taxes. Except as set forth on Schedule 4.1(h) hereto:

(i) All Tax Returns required to be filed by or with
respect to the Company and each of its Subsidiaries have been duly and
timely filed, and all such Tax Returns are true, correct and complete in
all material respects. The Company and each of its Subsidiaries has
duly and timely paid (or there has been paid on its behalf) all Taxes
that are due, or claimed or asserted by any taxing authority to be due,
from or with respect to it. With respect to any period for which Taxes
are not yet due with respect to the Company or any Subsidiary, the
Company and each of its Subsidiaries has made due and sufficient current
accruals for such Taxes in accordance with GAAP in the most recent
financial statements contained in the Company SEC Documents. The
Company and each of its Subsidiaries has made (or there has been made on
its behalf) all required estimated Tax payments sufficient to avoid any
material underpayment penalties. The Company and each of its
Subsidiaries has withheld and paid all Taxes required by all applicable
laws to be withheld or paid in connection with any amounts paid or owing
to any employee, creditor, independent contractor or other third party.

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<PAGE> 24
(ii) There are no outstanding agreements, waivers, or
arrangements extending the statutory period of limitation applicable to
any claim for, or the period for the collection or assessment of,
material Taxes due from or with respect to the Company or any of its
Subsidiaries for any taxable period. No audit or other proceeding by
any court, governmental or regulatory authority, or similar person is
pending or threatened in regard to any Taxes due from or with respect to
the Company or any of the Subsidiaries or any Tax Return filed by or
with respect to the Company or any Subsidiary, other than normal and
routine audits by non-federal governmental authorities. No material
assessment of Taxes is proposed against the Company or any of its
Subsidiaries or any of their assets.

(iii) No election under Section 338 of the Code has been
made or filed by or with respect to the Company or any of its
Subsidiaries. No consent to the application of Section 341(f)(2) of the
Code (or any predecessor provision) has been made or filed by or with
respect to the Company or any of its Subsidiaries or any of their
assets. None of the Company or any of its Subsidiaries has agreed to
make any adjustment pursuant to Section 481(a) of the Code (or any
predecessor provision) by reason of any change in any accounting method,
and there is no application pending with any taxing authority requesting
permission for any changes in any accounting method of the Company or
any of its Subsidiaries. None of the assets of the Company or any of
its Subsidiaries is or will be required to be treated as being owned by
any person (other than the Company or its Subsidiaries) pursuant to the
provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately before the enactment of the Tax Reform
Act of 1986.

(iv) None of the Company or any of its Subsidiaries is a
party to, is bound by, or has any obligation under, any Tax sharing
agreement, Tax allocation agreement or similar contract.

(v) There is no contract, agreement, plan or
arrangement covering any person that, individually or collectively,
could give rise to the payment of any amount that would not be
deductible by the Company or any of its Subsidiaries by reason of
Section 280G of the Code.

(vi) Schedule 4.1(h) accurately sets forth (i) the
amount of all deferred intercompany gains for purposes of Treasury
Regulation section 1.1502-13 (including any predecessor regulation) with
respect to the Company and its Subsidiaries; and (ii) the amount of any
excess loss account with respect to the stock of each of the
Subsidiaries for

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purposes of Treasury Regulation section 1.1502-19 (including any
predecessor regulation).

(vii) "Code" shall mean the Internal Revenue Code of
1986, as amended. "Taxes" shall mean all taxes, charges, fees, levies,
or other similar assessments or liabilities, including without
limitation (a) income, gross receipts, ad valorem, premium, excise, real
property, personal property, sales, use, transfer, withholding,
employment, payroll, and franchise taxes imposed by the United States of
America, or by any state, local, or foreign government, or any
subdivision, agency, or other similar person of the United States or any
such government; and (b) any interest, fines, penalties, assessments, or
additions to taxes resulting from, attributable to, or incurred in
connection with any Tax or any contest, dispute, or refund thereof.
"Tax Returns" shall mean any report, return, or statement required to be
supplied to a taxing authority in connection with Taxes.

(i) Pension And Benefit Plans; ERISA.

(i) To the best knowledge of the Designated Officers,
Schedule 4.1(i)(i) sets forth a complete and correct list of:

(A) all "employee benefit plans", as defined in Section
3(3) of ERISA, under which Company or any of its
Subsidiaries has any obligation or liability, contingent
or otherwise ("Benefit Plans"); and

(B) all employment or consulting agreements, bonus or
other incentive compensation, deferred compensation,
salary continuation during any absence from active
employment for disability or other reasons, severance,
sick days, stock award, stock option, stock purchase,
tuition assistance, club membership, employee discount,
employee loan, or vacation pay agreements, policies or
arrangements which Company or any of its Subsidiaries
maintains or has any obligation or liability (contingent
or otherwise) with respect to any current officer,
director or employee of Company or any of its Subsidiaries
which individual arrangement has a cost to the Company or
any of its Subsidiaries in excess of $10,000 per year (the
"Employee Arrangements").

(ii) With respect to each Benefit Plan and Employee
Arrangement, a complete and correct copy of each of the following
documents (if applicable) has been provided to Purchaser: (i) the most
recent plan and related trust

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<PAGE> 26
documents, and all amendments thereto; (ii) the most recent summary plan
description, and all related summaries of material modifications
thereto; (iii) the most recent Form 5500 (including schedules and
attachments); (iv) the most recent IRS determination letter; (v) the
most recent actuarial reports (including for purposes of Financial
Accounting Standards Board report no. 87, 106 and 112).

(iii) Company and its Subsidiaries have not during the
preceding six years had any obligation or liability (contingent or
otherwise) with respect to a Benefit Plan which is described in Section
3(37), 4(b)(4), 4063 or 4064 of ERISA.

(iv) To the best knowledge of the Designated Officers,
the Benefit Plans and their related trusts intended to qualify under
Sections 401 and 501(a) of the Code, respectively, are qualified under
such sections. To the best knowledge of the Designated Officers, any
voluntary employee benefit association which provides benefits to
current or former employees of the Company and its Subsidiaries, or
their beneficiaries, is and has been qualified under Section 501(c)(9)
of the Code.

(v) All contributions or other payments required to
have been made by Company and its Subsidiaries to or under any Benefit
Plan or Employee Arrangement by applicable law or the terms of such
Benefit Plan or Employee Arrangement (or any agreement relating thereto)
have been timely and properly made.

(vi) To the best knowledge of the Designated Officers,
the Benefit Plans and Employee Arrangements have been maintained and
administered in all material respects in accordance with their terms and
applicable laws.

(vii) Except as disclosed in Schedule 4.1(i)(vii), there
are no pending or, to the best knowledge of the Designated Officers,
threatened actions, claims or proceedings against or relating to any
Benefit Plan or Employee Arrangement other than routine benefit claims
by persons entitled to benefits thereunder.

(viii) Except as disclosed in Schedule 4.1(i)(viii),
Company and its Subsidiaries do not maintain or have an obligation to
contribute to retiree life or retiree health plans which provide for
continuing benefits or coverage for current or former officers,
directors or employees of the Company or any of its Subsidiaries except
(i) as may be required under Part 6 of Title I of ERISA) and at the sole
expense of the participant or the participant's beneficiary or (ii) a
medical expense reimbursement account plan pursuant to Section 125 of
the Code.

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(ix) Except as disclosed in Schedule 4.1(i)(ix), none of
the assets of any Benefit Plan is stock of the Company or any of its
affiliates, or property leased to or jointly owned by the Company or any
of its affiliates.

(x) Except as disclosed in Schedule 4.1(i)(x) or in
connection with equity compensation, neither the execution and delivery
of this Agreement nor the consummation of the transactions contemplated
hereby will (i) result in any payment becoming due to any employee
(current, former or retired) of Company and its Subsidiaries, (ii)
increase any benefits under any Benefit Plan or Employee Arrangement or
(iii) result in the acceleration of the time of payment of, vesting of
or other rights with respect to any such benefits.

(xi) Company and its Subsidiaries have no liability
(contingent or otherwise) under Section 4069 of ERISA by reason of a
transfer of an underfunded pension plan.

(xii) The representations and warranties set forth in the
immediately preceding clauses (i) through (xi) shall apply to the
Benefit Plans and Employee Arrangements of Computer System Dynamics,
Inc. ("CSD") that were in existence at the time of the acquisition of
CSD by the Company pursuant to that certain Stock Purchase Agreement,
dated June 14, 1996, subject to the following qualifications: (A) each
such representation and warranty that is not otherwise qualified as
being "to the best knowledge of the Designated Officers" shall be deemed
so qualified and (B) each such representation and warranty shall be
subject to the exceptions disclosed with respect to the particular
representation and warranty on Schedule 4.1(i)(xii) hereto.

(xiii) Schedule 4.1(i)(xiii)(a) sets forth a true, correct
and complete copy of certain resolutions of the board of directors of
the Company duly adopted at the meeting thereof held on January 4, 1989
(the "1989 Resolutions"); prior to the adoption of the resolutions
identified in the next sentence, the 1989 Resolutions had not been
amended, modified or repealed in any respect and were in full force and
effect; neither the Company, any of its Subsidiaries, nor any of their
respective employees, agents or representatives, has made any
representation, warranty, covenant or agreement that the 1989
Resolutions would not, or could not, be amended, modified or repealed
solely by the Company; from and after the adoption of the resolutions
referenced in the next succeeding sentence, the 1989 Resolutions have
ceased to be of any force or effect; and no written or oral agreements
have been entered into pursuant to the authority granted in the 1989
Resolutions or

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<PAGE> 28
otherwise evidencing any of the matters referenced in the 1989
Resolutions. The board of directors of the Company has unanimously
adopted resolutions rescinding the 1989 Resolutions, retroactive to the
date of the adoption of the 1989 Resolutions, and adopting a severance
pay policy the terms of which are to consist of the arrangements
described in the 1989 Resolutions, modified as follows:

(A) Employees (other than executive officers) shall be
eligible for severance benefits in accordance with such policy
only if they are involuntarily terminated without cause by the
Company and its subsidiaries within six (6) months following a
change in control (as defined in the 1989 Resolutions).

(B) Executive officers of the Company shall be eligible
for severance benefits in accordance with such policy only if
they are involuntarily terminated by the Company and its
subsidiaries within twelve (12) months following a change in
control (defined as described above) of the Company.

(C) The Board of Directors of the Company shall have the
right to clarify the terms of such severance policy at any time
and from time to time, including, but not limited to, resolving
any ambiguities or supplying any omission in such severance
policy.

(D) The Board of Directors of the Company shall have the
right to amend or terminate such severance policy in its sole
discretion at any time and from time to time, except no such
amendment or termination which materially and adversely affects
the rights of any employee of the Company or any of its
subsidiaries under the severance policy shall be effective with
respect to: (i) any person whose employment with the Company and
its subsidiaries has terminated prior to the date of such
amendment or termination, (ii) any such employee for a period of
six months beginning on the date of a change in control (defined
as described above) of the Company and (iii) any executive
officer of the Company for a period of twelve months beginning on
the date of a change in control (defined as described above).

(E) For all purposes of the severance policy, the date
of a change in control of the Company involving a person or an
affiliated group of persons shall be the date of the earliest to
occur of any of the events defined in the 1989 Resolutions with
respect to such person or affiliated group of persons.

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<PAGE> 29
(j) Absence of Certain Changes or Events. Except as disclosed
in the Company SEC Documents filed after September 30, 1995, as set forth on
Schedule 4.1(j), or as contemplated by this Agreement, since September 30,
1995, the business of the Company and its Subsidiaries has been carried on only
in the ordinary and usual course and there has not been any material adverse
changes (either individually or in the aggregate) in the business, operations
or financial condition of the Company.

(k) No Undisclosed Material Liabilities. To the best
knowledge of the Designated Officers, except as specifically and individually
set forth on Schedule 4.1(k) or the other schedules hereto (specific reference
to which shall be made on Schedule 4.1(k)), there are no liabilities of the
Company or any Subsidiary of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, that are material to the
Company and its Subsidiaries considered as a whole other than: (i) liabilities
reflected on the Company's Quarterly Report on Form 10-Q for the quarter ended
June 30, 1996; and (ii) liabilities under this Agreement.

(l) Opinion of Financial Advisor. The Company has received
the opinion of Hambrecht & Quist LLP, dated October 16, 1996, to the effect
that, as of the date hereof, the Offer Consideration to be received by the
holders of Company Common Stock in the Offer and the Merger Consideration to be
received by the holders of Company Common Stock in the Merger is fair from a
financial point of view to such holders, a signed, true and complete copy of
which opinion shall be delivered to Parent, and such opinion has not been
withdrawn or modified.

(m) Vote Required. In the event that Section 253 of the DGCL
is inapplicable and unavailable to effectuate the Merger, the affirmative vote
of the holders of a majority of the outstanding shares of Company Common Stock
is the only vote of the holders of any class or series of the Company's capital
stock necessary (under applicable law or otherwise) to approve the Merger and
this Agreement and the transactions contemplated hereby.

(n) Labor Matters.

(i) Neither the Company nor any of its Subsidiaries is
a party to any labor or collective bargaining agreement, and no
employees of Company or any of its Subsidiaries are represented by any
labor organization. Within the preceding three years, there have been
no representation or certification proceedings, or petitions seeking a
representation proceeding, pending or, to the knowledge of the Company,
threatened in writing to be brought or filed with the National Labor
Relations Board or any other labor relations tribunal or authority.
Within the preceding three years, to the knowledge of Company, there

24
<PAGE> 30
have been no organizing activities involving Company and its
Subsidiaries with respect to any group of employees of Company or any of
its Subsidiaries.

(ii) There are no strikes, work stoppages, slowdowns,
lockouts, material arbitrations or material grievances or other material
labor disputes pending or threatened in writing against or involving
Company or any of its Subsidiaries. There are no unfair labor practice
charges, grievances or complaints pending or, to the knowledge of
Company, threatened in writing by or on behalf of any employee or group
of employees of Company or any of its Subsidiaries.

(iii) There are no complaints, charges or claims against
Company or any of its Subsidiaries pending or, to the knowledge of
Company, threatened to be brought or filed with any governmental
authority, arbitrator or court based on, arising out of, in connection
with, or otherwise relating to the employment or termination of
employment of any individual by Company or any of its Subsidiaries.

(iv) Each of the Company and its Subsidiaries is in
material compliance with all laws, regulations and orders relating to
the employment of labor, including all such laws, regulations and orders
relating to wages, hours, WARN, collective bargaining, discrimination,
civil rights, safety and health, workers' compensation and the
collection and payment of withholding and/or social security taxes and
any similar tax except for immaterial non-compliance.

(v) There has been no "mass layoff" or "plant closing"
as defined by the Worker Adjustment Retraining and Notification Act, as
amended, with respect to Company and its Subsidiaries within the six (6)
months prior to Closing.

(o) Intangible Property. To the best knowledge of the
Designated Officers, each of the Company and its Subsidiaries own or have a
right to use each trademark, trade name, patent, service mark, brand mark,
brand name, computer program, database, industrial design and copyright owned,
used or useful in connection with the operation of the businesses of each of
the Company and its Subsidiaries as well as a list of all registrations thereof
and pending applications therefor, and each license or other contract relating
thereto (collectively, the "Company Intangible Property") necessary for the
operation of its respective business, free and clear of any and all liens,
claims or encumbrances, except where the failure to own or have a right to use
such property could not reasonably be expected to have a Material Adverse
Effect on the Company. Except to the extent that such could not reasonably be
expected to have a Material Adverse Effect on the Company, the use of the
Company Intangible Property by the Company or its Subsidiaries does not
conflict

25
<PAGE> 31
with, infringe upon, violate or interfere with or constitute an appropriation
of any right, title, interest or goodwill, including, without limitation, any
intellectual property right, trademark, trade name, patent, service mark, brand
mark, brand name, computer program, database, industrial design, copyright or
any pending application therefor of any other person.

(p) Environmental Matters.

(i) For purposes of this Agreement:

(A) "Environmental Costs and Liabilities" means any and
all losses, liabilities, obligations, damages, fines, penalties,
judgments, actions, claims, costs and expenses (including,
without limitation, fees, disbursements and expenses of legal
counsel, experts, engineers and consultants and the costs of
investigation and feasibility studies and clean up, remove,
treat, or in any other way address any Hazardous Materials)
arising from or under any Environmental Law.

(B) "Environmental Law" means any applicable law
regulating or prohibiting Releases into any part of the natural
environment, or pertaining to the protection of natural
resources, the environment and public and employee health and
safety including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act
("CERCLA") (42 U.S.C. Section 9601 et seq.), the Hazardous
Materials Transportation Act (49 U.S.C. Section 1801 et seq.),
the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et
seq.), the Clean Air Act (33 U.S.C. Section 7401 et seq.), the
Toxic Substances Control Act (15 U.S.C. Section 7401 et seq.),
the Federal Insecticide, Fungicide, and Rodenticide Act (7 U.S.C.
Section 136 et seq.), and the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq.) ("OSHA") and the regulations
promulgated pursuant thereto, and any such applicable state or
local statutes, including, without limitation, the Industrial
Site Recovery Act ("IRSA"), and the regulations promulgated
pursuant thereto, as such laws have been and may be amended or
supplemented through the Closing Date;

(C) "Hazardous Material" means any substance, material
or waste which is regulated by any public or governmental
authority in the jurisdictions in which the applicable party or
its Subsidiaries conducts business, or the United States,
including, without limitation, any material or substance which is
defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste" or

26
<PAGE> 32
"restricted hazardous waste," "contaminant," "toxic waste" or
"toxic substance" under any provision of Environmental Law and
shall also include, without limitation, petroleum, petroleum
products, asbestos, polychlorinated biphenyls and radioactive
materials;

(D) "Release" means any release, spill, effluent,
emission, leaking, pumping, injection, deposit, disposal,
discharge, dispersal, leaching, or migration into the indoor or
outdoor environment, or into or out of any property; and

(E) "Remedial Action" means all actions, including,
without limitation, any capital expenditures, required by a
governmental entity or required under any Environmental Law, or
voluntarily undertaken to (I) clean up, remove, treat, or in any
other way ameliorate or address any Hazardous Materials or other
substance in the indoor or outdoor environment; (II) prevent the
Release or threat of Release, or minimize the further Release of
any Hazardous Material so it does not endanger or threaten to
endanger the public health or welfare of the indoor or outdoor
environment; (III) perform pre-remedial studies and
investigations or post-remedial monitoring and care pertaining or
relating to a Release; or (IV) bring the applicable party into
compliance with any Environmental Law.

(ii) The operations of the Company and its Subsidiaries
have been and, as of the Closing Date, will be, in compliance in all
material respects with all Environmental Laws;

(iii) The Company and its Subsidiaries have obtained and
will, as of the Closing Date, maintain all permits required under
applicable Environmental Laws for the continued operations of their
respective businesses, except such permits the lack of which would not
materially impair the ability of the Company and its Subsidiaries to
continue operations;

(iv) The Company and its Subsidiaries are not subject to
any outstanding written orders or material contracts with any
Governmental Entity or other person respecting (A) Environmental Laws,
(B) Remedial Action or (C) any Release or threatened Release of a
Hazardous Material;

(v) The Company and its Subsidiaries have not received
any written communication alleging, with respect to any such party, the
violation of or liability under any

27
<PAGE> 33
Environmental Law, which violation or liability is outstanding;

(vi) Neither the Company nor any of its Subsidiaries has
any contingent liability in connection with the Release of any Hazardous
Material into the indoor or outdoor environment (whether on-site or off-
site) which would be reasonably likely to result in the Company and its
Subsidiaries incurring Environmental Costs and Liabilities in excess of
$100,000;

(vii) The operations of the Company or its Subsidiaries
do not involve the transportation, treatment, storage or disposal of
hazardous waste, as defined and regulated under 40 C.F.R. Parts 260-270
(in effect as of the date of this Agreement) or any state equivalent;

(viii) There is not now, nor to the knowledge of the
Company has there been in the past, on or in any property of the Company
or its Subsidiaries any of the following: (A) any underground storage
tanks or surface impoundments, (B) any asbestos-containing materials, or
(C) any polychlorinated biphenyls;

(ix) No judicial or administrative proceedings are
pending or, to the knowledge of the Company, threatened against the
Company and its Subsidiaries alleging the violation of or seeking to
impose liability pursuant to any Environmental Law and there are no
investigations pending or, to the knowledge of the Company, threatened
against the Company or any of its Subsidiaries under Environmental Laws;
and

(x) None of the exceptions set forth on Schedule 4.1(p)
are reasonably likely to result in the Company and its Subsidiaries
incurring Environmental Costs and Liabilities in excess of $100,000
individually or in the aggregate.

(q) Real Property.

(i) Schedule 4.1(q)(i) sets forth all of the real
property owned in fee by the Company and its Subsidiaries. Each of the
Company and its Subsidiaries has good and marketable title to each
parcel of real property owned by it free and clear of all mortgages,
pledges, liens, encumbrances and security interests, except (1) those
reflected or reserved against in the balance sheet of the Company dated
as of June 30, 1996 and (2) taxes and general and special assessments
not in default and payable without penalty and interest.

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<PAGE> 34
(ii) Each lease, sublease or other agreement
(collectively, the "Real Property Leases") under which the Company or
any of its Subsidiaries uses or occupies or has the right to use or
occupy, now or in the future, any real property is valid, binding and in
full force and effect, all rent and other sums and charges payable by
the Company and its Subsidiaries as tenants thereunder are current, no
termination event or condition or uncured default of a material nature
on the part of the Company or any such Subsidiary or, to the Company's
knowledge, the landlord, exists under any Real Property Lease. Each of
the Company and its Subsidiaries has a good and valid leasehold interest
in each parcel of real property leased by it free and clear of all
mortgages, pledges, liens, encumbrances and security interests, except
(i) those reflected or reserved against in the balance sheet of the
Company dated as of June 30, 1996 and (ii) taxes and general and special
assessments not in default and payable without penalty and interest.

(r) Board Recommendation. The Board of Directors of the
Company, at a meeting duly called and held, has by the vote of those directors
present (who constituted 100% of the directors then in office) (i) determined
that this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, and the execution and delivery of the Stockholders
Agreement and the transactions contemplated thereby, taken together, are fair
to and in the best interests of the stockholders of the Company and has
approved the same, and (ii) resolved to recommend that the holders of the
shares of Company Common Stock approve this Agreement and the transactions
contemplated herein, including the Merger, and accept the Offer and tender
their shares of Company Common Stock pursuant thereto.

(s) Material Contracts. Each contract, agreement or other
document or instrument to which the Company or any of its Subsidiaries is a
party that was required to be filed as an exhibit to the Company's annual
report on Form 10-K for the year ended September 30, 1995 was so filed and,
from and after September 30, 1995, neither the Company nor any of its
Subsidiaries has entered into any contract, agreement or other document or
instrument (other than this Agreement) that is required to be filed with the
SEC that has not been so filed on or before the date of this Agreement or any
amendment, modification or waiver under any contract, agreement or other
document or instrument that was previously so filed, which amendment,
modification or waiver is required to be so filed. Neither the Company nor any
of its Subsidiaries is a party to an employment agreement.

(t) Related Party Transactions. No director, officer,
"affiliate" or "associate" (as such terms are defined in Rule 12b-2 under the
Exchange Act) of the Company or any of its Subsidiaries (i) has borrowed any
monies from or has outstanding

29
<PAGE> 35
any indebtedness or other similar obligations to the Company or any of its
Subsidiaries; (ii) owns any direct or indirect interest of any kind in, or is a
director, officer, employee, partner, affiliate or associate of, or consultant
or lender to, or borrower from, or has the right to participate in the
management, operations or profits of, any person or entity which is (1) a
competitor, supplier, customer, distributor, lessor, tenant, creditor or debtor
of the Company or any of its Subsidiaries, (2) engaged in a business related to
the business of the Company or any of its Subsidiaries or (3) participating in
any transaction to which the Company or any of its Subsidiaries is a party or
(iii) is otherwise a party to any contract, arrangement or understanding with
the Company or any of its Subsidiaries.

(u) Indebtedness. Except as set forth in the Company's
Quarterly Report on Form 10-Q for the fiscal quarter ended June 30, 1996,
neither the Company nor any of its Subsidiaries has any outstanding
indebtedness for borrowed money or representing the deferred purchase price of
property or services or similar liabilities or obligations, including any
guarantee in respect thereof ("Indebtedness"), or is a party to any agreement,
arrangement or understanding providing for the creation, incurrence or
assumption thereof.

(v) Liens. Except as set forth on Schedule 4.1(v), neither
the Company nor any of its Subsidiaries has granted, created or suffered to
exist with respect to any of its assets, any mortgage, pledge, charge,
hypothecation, collateral assignment, lien (statutory or otherwise),
encumbrance or security agreement of any kind or nature whatsoever.

4.2 Representations and Warranties of Parent and Sub. Parent and Sub
represent and warrant to the Company as follows:

(a) Organization, Standing and Power. Each of Parent and Sub is a
corporation duly organized, validly existing and in good standing under the
laws of its state of incorporation or organization, has all requisite power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted, and is duly qualified and in good standing to conduct
business in each jurisdiction in which the business it is conducting, or the
operation, ownership or leasing of its properties, makes such qualification
necessary, other than in such jurisdictions where the failure so to qualify
would not have a Material Adverse Effect with respect to Parent. Parent and
Sub have heretofore made available to the Company complete and correct copies
of their respective Certificates of Incorporation and Bylaws.

(b) Authority; No Violations; Consents and Approvals.

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<PAGE> 36
(i) Each of Parent and Sub has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate action on the part
of Parent and Sub. This Agreement has been duly executed and delivered
by each of Parent and Sub and assuming this Agreement constitutes the
valid and binding agreement of the Company, constitutes a valid and
binding obligation of Parent and Sub enforceable in accordance with its
terms except that the enforcement hereof may be limited by (a)
bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at
law or in equity).

(ii) The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby by each of
Parent and Sub will not result in any Violation (as defined in Section
4.1(c)(ii)) pursuant to any provision of the respective Articles or
Certificates of Incorporation or Bylaws of Parent or Sub or, except as
to which requisite waivers or consents have been obtained and assuming
the consents, approvals, authorizations or permits and filings or
notifications referred to in paragraph (iii) of this Section 4.2(b) are
duly and timely obtained or made and, if required, the Company
Stockholder Approval has been obtained, result in any Violation of any
loan or credit agreement, note, mortgage, indenture, lease, or other
agreement, obligation, instrument, concession, franchise, license,
judgment, order, decree, statute, law, ordinance, rule or regulation
applicable to Parent or Sub or their respective properties or assets,
which would have a Material Adverse Effect with respect to Parent.

(iii) No consent, approval, order or authorization of, or
registration, declaration or filing with, notice to, or permit from any
Governmental Entity, is required by or with respect to Parent or Sub in
connection with the execution and delivery of this Agreement by each of
Parent and Sub or the consummation by each of Parent or Sub of the
transactions contemplated hereby, except for: (A) filings under the HSR
Act; (B) the filing with the SEC of (x) the Schedule 14D-1 in connection
with the commencement and consummation of the Offer and (y) such reports
under and such other compliance with the Exchange Act and the rules and
regulations thereunder, as may be required in connection with this
Agreement and the transactions contemplated hereby; (C) the filing of
the Certificate of Merger with the Secretary of State of the State of
Delaware; (D) such

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<PAGE> 37
filings and approvals as may be required by any applicable state
securities, "blue sky" or takeover laws; (E) such filings and approvals
as may be required by any foreign pre-merger notification, securities,
corporate or other law, rule or regulation; (F) such filings in
connection with any Gains and Transfer Taxes; and (G) such other such
filings and consents as may be required under any environmental, health
or safety law or regulation pertaining to any notification, disclosure
or required approval necessitated by the Merger or the transactions
contemplated by this Agreement.

(c) Information Supplied. None of the information supplied or
to be supplied by Parent or Sub for inclusion or incorporation by reference in
(i) the Schedule 14D-9 will, at the time the Schedule 14D-9 is filed with the
SEC, and at any time it is amended or supplemented, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they are made, not misleading, and (ii) the Proxy
Statement will, at the date it is first mailed to the Company's stockholders or
at the time of the Company Stockholders Meeting, contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they are made, not misleading. If at any time prior
to the Effective Time any event with respect to Parent or Sub, or with respect
to information supplied by Parent or Sub for inclusion in the Schedule 14D-9 or
the Proxy Statement, shall occur which is required to be described in an
amendment of, or a supplement to, such documents, such event shall be so
described to the Company.

(d) Board Recommendation. The Board of Directors of the
Parent, at a meeting duly called and held, has by the vote of those directors
present determined that each of the Offer and the Merger is fair to and in the
best interests of Parent and has approved the same.

(e) Financing. Parent and Sub have delivered to the Company
true and complete copies of commitments obtained by Parent and Sub from
financially responsible third parties in respect of the debt and equity
financing for the transactions contemplated hereby.

ARTICLE V
COVENANTS RELATING TO CONDUCT OF BUSINESS

5.1 Covenants of the Company. During the period from the date
of this Agreement and continuing until the Effective Time, the Company agrees
as to the Company and its Subsidiaries that (except as expressly contemplated
or permitted by this

32
<PAGE> 38
Agreement, or to the extent that Parent shall otherwise consent in writing):

(a) Ordinary Course. The Company and its Subsidiaries shall
carry on its businesses in the usual, regular and ordinary course in
substantially the same manner as heretofore conducted and shall use all
reasonable efforts to preserve intact its present business organizations, keep
available the services of its current officers and employees and preserve its
relationships with customers, suppliers and others having business dealings
with it to the end that its goodwill and ongoing business shall not be impaired
in any material respect at the Effective Time.

(b) Dividends; Changes in Stock. The Company shall not, nor
shall it permit any of its Subsidiaries to: (i) declare or pay any dividends
on or make other distributions in respect of any of its capital stock; (ii)
split, combine or reclassify any of its capital stock or issue or authorize or
propose the issuance of any other securities in respect of, in lieu of or in
substitution for shares of its capital stock; or (iii) repurchase or otherwise
acquire, or permit any Subsidiary to purchase or otherwise acquire, any shares
of its capital stock, except as required by the terms of its securities
outstanding on the date hereof, as contemplated by this Agreement or as
contemplated by employee benefit and dividend reinvestment plans as in effect
on the date hereof.

(c) Issuance of Securities. The Company shall not, nor shall
it permit any of its Subsidiaries to, (i) grant any options, warrants or
rights, to purchase shares of Company Common Stock, (ii) amend or reprice any
Option or Stock Option Plan, (iii) amend the 1990 ESPP, permit any person not a
participant in the 1990 ESPP on the date of this Agreement to become a
participant in the 1990 ESPP, or permit any participant in the 1990 ESPP to
increase such participant's current payroll deductions with respect to the 1990
ESPP, or (iv) issue, deliver or sell, or authorize or propose to issue, deliver
or sell, any shares of its capital stock of any class or series, any Company
Voting Debt or any securities convertible into, or any rights, warrants or
options to acquire, any such shares, Company Voting Debt or convertible
securities, other than: (A) the issuance of Shares upon the exercise of
Options granted under Stock Option Plans which are outstanding on the date
hereof, or in satisfaction of stock grants or stock based awards made prior to
the date hereof pursuant to Stock Option Plans or based upon any individual
agreements such as employment agreements or executive termination agreements
(in each such case, as in effect on the date hereof), or the issuance of
Options to purchase up to 75,000 Shares in connection with an offer of
employment outstanding on the date of this Agreement; and (B) issuances by a
wholly-owned Subsidiary of its capital stock to its parent.

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(d) Governing Documents. The Company shall not amend or
propose to amend its Certificate of Incorporation or Bylaws.

(e) No Solicitation. From and after the date hereof until the
termination of this Agreement, neither the Company or any of its Subsidiaries,
nor any of their respective officers, directors, employees, representatives,
agents or affiliates (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its Subsidiaries)
(such officers, directors, employees, representatives, agents, affiliates,
investment bankers, attorneys and accountants being referred to herein,
collectively, as "Representatives"), will, directly or indirectly, initiate,
solicit or encourage (including by way of furnishing information or
assistance), or take any other action to facilitate, any inquiries or the
making of any proposal that constitutes, or may reasonably be expected to lead
to, any Acquisition Proposal (as defined below), or enter into or maintain or
continue discussions or negotiate with any person or entity in furtherance of
such inquiries or to obtain an Acquisition Proposal or agree to or endorse any
Acquisition Proposal, and neither the Company nor any of its Subsidiaries will
authorize or permit any of its Representatives to take any such action, and the
Company shall notify Parent orally (within one business day) and in writing (as
promptly as practicable) of all of the relevant details relating to, and all
material aspects of, all inquiries and proposals which it or any of its
Subsidiaries or any of their respective Representatives may receive relating to
any of such matters and, if such inquiry or proposal is in writing, the Company
shall deliver to Parent a copy of such inquiry or proposal promptly; provided,
however, that nothing contained in this Section 5.1(e) shall prohibit the Board
of Directors of the Company from:

(i) furnishing information to, or entering into
discussions or negotiations with, any person or entity that makes an
unsolicited written, bona fide Acquisition Proposal and in respect of
which such person or entity has the necessary funds or commitments
therefor if, and only to the extent that, (A) the Board of Directors of
the Company, after consultation with and based upon the advice of
independent legal counsel (who may be the Company's regularly engaged
independent legal counsel), determines in good faith that such action is
necessary for the Board of Directors of the Company to comply with its
fiduciary duties to stockholders under applicable law, (B) prior to
taking such action, the Company (x) provides reasonable prior notice to
Parent to the effect that it is taking such action and (y) receives from
such person or entity an executed confidentiality agreement in
reasonably customary form, and (C) the Company shall promptly and
continuously advise Parent as to all of the relevant details relating
to, and all material aspects, of any such discussions or negotiations,
or

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<PAGE> 40
(ii) failing to make or withdrawing or modifying its
recommendation referred to in Section 4.1 if there exists an Acquisition
Proposal and the Board of Directors of the Company, after consultation
with and based upon the advice of independent legal counsel (who may be
the Company's regularly engaged independent counsel), determines in good
faith that such action is necessary for the Board of Directors of the
Company to comply with its fiduciary duties to stockholders under
applicable law.

For purposes of this Agreement, "Acquisition Proposal" shall mean any of the
following (other than the transactions between the Company, Parent and Sub
contemplated hereunder) involving the Company or any of its Subsidiaries: (i)
any merger, consolidation, share exchange, recapitalization, business
combination, or other similar transaction; (ii) any sale, lease, exchange,
mortgage, pledge, transfer or other disposition of 15% or more of the assets
(other than real property) of the Company and its Subsidiaries, taken as a
whole, in a single transaction or series of transactions; (iii) any tender
offer or exchange offer for 15% or more of the outstanding shares of capital
stock of the Company or the filing of a registration statement under the
Securities Act in connection therewith; or (iv) any public announcement of a
proposal, plan or intention to do any of the foregoing or any agreement to
engage in any of the foregoing.

(f) No Acquisitions. The Company shall not, nor shall it
permit any of its Subsidiaries to, acquire or agree to acquire by merging or
consolidating with, or by purchasing a substantial equity interest in or a
substantial portion of the assets of, or by any other manner, any business or
any corporation, partnership, association or other business organization or
division thereof.

(g) No Dispositions. Other than: (i) dispositions of real
property or (ii) dispositions in the ordinary course of business consistent
with past practice which are not material, individually or in the aggregate, to
such party and its Subsidiaries taken as a whole, the Company shall not, nor
shall it permit any of its Subsidiaries to, sell, lease, encumber or otherwise
dispose of, or agree to sell, lease (whether such lease is an operating or
capital lease), encumber or otherwise dispose of, any of its assets.

(h) SEC Filings. The Company shall promptly provide Parent
(or its counsel) with copies of all filings made by the Company with the SEC or
any other state or federal Governmental Entity in connection with this
Agreement and the transactions contemplated hereby.

(i) No Dissolution, Etc. Except as otherwise permitted or
contemplated by this Agreement, the Company shall not authorize, recommend,
propose or announce an intention to

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adopt a plan of complete or partial liquidation or dissolution of the Company
or any of its Subsidiaries.

(j) Other Actions. Except as contemplated by this Agreement,
the Company will not nor will it permit any of its Subsidiaries to take or
agree or commit to take any action that is reasonably likely to result in any
of the Company's representations or warranties hereunder being untrue in any
material respect or in any of the Company's covenants hereunder or any of the
conditions to the Merger not being satisfied in all material respects.

(k) Certain Employee Matters. The Company and its
Subsidiaries shall not (without the prior written consent of Parent): (i) grant
any increases in the compensation of any of its directors, officers or key
employees, other than in the ordinary course of business and consistent with
past practice; (ii) pay or agree to pay any pension, retirement allowance or
other employee benefit not required or contemplated by any of the existing
Company Benefit Plans or Company Pension Plans as in effect on the date hereof
to any such director, officer or key employee, whether past or present; (iii)
enter into any new, or materially amend any existing, employment or severance
or termination agreement with any such director, officer or key employee; or
(iv) except as may be required to comply with applicable law, become obligated
under any new Company Employee Benefit Plan or Company Pension Plan, which was
not in existence on the date hereof, or amend any such plan or arrangement in
existence on the date hereof if such amendment would have the effect of
materially enhancing any benefits thereunder. The foregoing shall not prohibit
the Company from lending funds to its respective employees that hold Options to
fund all or a portion of the exercise price under the Options held by such
employees in order that such employees may tender the Shares issuable upon the
exercise of such Options in the Offer. Each such loan shall be limited to an
amount no greater than the aggregate exercise price under such employee's
Options, shall bear interest at the prime rate announced from time to time by
Chase Manhattan Bank, and shall be due and payable upon the consummation of the
Offer.

(l) Indebtedness; Agreements.

(i) Except as set forth on Schedule 5.1(l)(i), the
Company shall not, nor shall the Company permit any of its Subsidiaries
to, assume or incur (which shall not be deemed to include entering into
credit agreements, lines of credit or similar arrangements until
borrowings are made under such arrangements) any indebtedness for
borrowed money or guarantee any such indebtedness or issue or sell any
debt securities or warrants or rights to acquire any debt securities of
such party or any of its Subsidiaries or guarantee any debt securities
of others or enter into any

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<PAGE> 42
lease (whether such lease is an operating or capital lease) or create
any mortgages, liens, security interests or other encumbrances on the
property of the Company or any of its Subsidiaries in connection with
any indebtedness thereof, or enter into any "keep well" or other
agreement or arrangement to maintain the financial condition of another
person.

(ii) The Company shall not, nor shall the Company permit
any of its Subsidiaries to, enter into any contract, agreement or other
document or instrument that would be required to be filed as an exhibit
to an annual report on Form 10-K for the Company and the Company shall
not, nor shall the Company permit any of its Subsidiaries to, enter into
any amendment, modification or waiver under any contract, agreement or
other document or instrument that was previously filed with the SEC,
which amendment, modification or waiver would be required to be so
filed. The Company shall not, nor shall the Company permit any of its
Subsidiaries to, enter into any employment agreement.

(m) Accounting. The Company shall not take any action, other
than in the ordinary course of business, consistent with past practice or as
required by the SEC or by law, with respect to accounting policies, procedures
and practices.

(n) Capital Expenditures; Product Development Costs. The
Company and its Subsidiaries shall not incur any capital expenditures in excess
of $2,000,000. The Company and its Subsidiaries shall not incur any product or
software development costs in excess of $4,000,000 in the aggregate.

ARTICLE VI
ADDITIONAL AGREEMENTS

6.1 Preparation of the Proxy Statement; Company Stockholders
Meeting; Merger without a Company Stockholders Meeting.

(a) As soon as practicable following the date hereof, the
Company and Parent shall prepare and file with the SEC the Proxy Statement.
The Company shall use its best efforts to respond to all SEC comments with
respect to the Proxy Statement and to cause the Proxy Statement to be mailed to
the Company's stockholders at the earliest practicable date.

(b) The Company will, as soon as practicable following the
acceptance for payment of and payment for shares of Company Common Stock by Sub
in the Offer, duly call, give notice of, convene and hold the Company
Stockholders Meeting for the purpose of approving this Agreement and the
transactions contemplated hereby. At the Company Stockholders Meeting, Parent
shall cause all of the shares of Company Common Stock then owned by Parent

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and Sub and any of their Subsidiaries or affiliates to be voted in favor of the
Merger.

(c) Notwithstanding the foregoing clauses (a) and (b), in the
event that Parent or any Subsidiary of Parent shall acquire at least 90% of the
outstanding shares of Company Common Stock in the Offer, the parties hereto
agree, at the request of Sub, to take all necessary and appropriate action to
cause the Merger to become effective, as soon as practicable after the
expiration of the Offer, without a meeting of stockholders of the Company, in
accordance with Section 253 of the DGCL.

(d) Sub shall promptly submit this Agreement and the
transactions contemplated hereby for approval and adoption by its stockholders
by written consent of such stockholders.

6.2 Access to Information. Upon reasonable notice, each of
the Company or Parent, as the case may be, shall (and shall cause each of its
Subsidiaries to) afford to the officers, employees, accountants, counsel and
other representatives of the other party (including, in the case of Parent and
Sub, potential financing sources and their employees, accountants, counsel and
other representatives), access, during normal business hours during the period
prior to the Effective Time, to all its properties, books, contracts,
commitments and records and, during such period, such party shall (and shall
cause each of its Subsidiaries to) furnish promptly to the other party, (a) a
copy of each report, schedule, registration statement and other document filed
or received by it during such period pursuant to SEC requirements and (b) all
other information concerning its business, properties and personnel as such
other party may reasonably request. The Confidentiality Agreement, dated as of
October 8, 1996, between Parent and the Company (the "Confidentiality
Agreement") shall apply with respect to information furnished thereunder or
hereunder and any other activities contemplated thereby.

6.3 Settlements. Neither the Company nor any of its
Subsidiaries shall effect any settlements of any legal proceedings arising out
of or related to the execution, delivery or performance of this Agreement or
the Stockholders Agreement or the consummation of any of the transactions
contemplated hereby or thereby without the consent of Parent.

6.4 Fees and Expenses. (a) Except as otherwise provided in
this Section 6.4 and except with respect to claims for damages incurred as a
result of the breach of this Agreement, all costs and expenses incurred in
connection with this Agreement and the transactions contemplated hereby shall
be paid by the party incurring such expense.

(b) The Company agrees to pay Parent a fee in immediately
available funds equal to $4,000,000 upon the

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termination of this Agreement under Section 8.1, if any of the events set forth
below occurs (each, a "Trigger Event"):

(i) the Board of Directors of the Company shall have withdrawn
or adversely modified, or taken a public position materially
inconsistent with, its approval or recommendation of the Offer, the
Merger, this Agreement or the Stockholders Agreement; or

(ii) an Acquisition Proposal has been recommended or accepted
by the Company or the Company shall have entered into an agreement
(other than a confidentiality agreement as contemplated by Section
5.1(e)) with respect to an Acquisition Proposal.

(c) In the event (i) this Agreement shall be terminated in
accordance with its terms, (ii) at or prior to such termination, any person or
group of persons shall have made an Acquisition Proposal (each such person or
member of a group of such persons being referred to herein as a "Designated
Person"), and (iii) either (A) a transaction contemplated by the term
"Acquisition Proposal" shall be consummated, on or before the 90th day
following the termination of this Agreement, with any Designated Person or any
affiliate of any Designated Person or (B) the Company or any of its
Subsidiaries shall enter into an agreement, on or before the 90th day following
the termination of this Agreement, with respect to an Acquisition Proposal with
any Designated Person or any affiliate of any Designated Person and a
transaction contemplated by the term "Acquisition Proposal" shall thereafter be
consummated with such Designated Person or affiliate thereof, then the Company
shall pay to Parent a fee in immediately available funds equal to $4,000,000,
such fee to be paid contemporaneously with the consummation of the contemplated
transaction.

(d) Any amounts due under this Section 6.4 that are not paid
when due shall bear interest at the rate of 9% per annum from the date due
through and including the date paid.

6.5 Brokers or Finders. (a) The Company represents, as to
itself, its Subsidiaries and its affiliates, that no agent, broker, investment
banker, financial advisor or other firm or person is or will be entitled to any
broker's or finders fee or any other commission or similar fee in connection
with any of the transactions contemplated by this Agreement, except Hambrecht &
Quist LLP, whose fees and expenses will be paid by the Company in accordance
with the Company's agreements with such firm (copies of which have been
delivered by the Company to Parent prior to the date of this Agreement).

(b) Parent represents, as to itself, its Subsidiaries and its
affiliates, that no agent, broker, investment banker, financial advisor or
other firm or person is or will be entitled

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<PAGE> 45
to any broker's or finders fee or any other commission or similar fee in
connection with any of the transactions contemplated by this Agreement, except
for affiliates of Parent.

6.6 Indemnification; Directors' and Officers' Insurance. (a)
The Company shall, and from and after the Effective Time, the Surviving
Corporation shall, indemnify, defend and hold harmless each person who is now,
or has been at any time prior to the date hereof or who becomes prior to the
Effective Time, an officer or director of the Company or any of its
Subsidiaries (the "Indemnified Parties") against all losses, claims, damages,
costs, expenses (including attorneys' fees and expenses), liabilities or
judgments or amounts that are paid in settlement with the approval of the
indemnifying party (which approval shall not be unreasonably withheld) of or in
connection with any threatened or actual claim, action, suit, proceeding or
investigation based in whole or in part on or arising in whole or in part out
of the fact that such person is or was a director or officer of the Company or
any of its Subsidiaries whether pertaining to any matter existing or occurring
at or prior to the Effective Time and whether asserted or claimed prior to, or
at or after, the Effective Time ("Indemnified Liabilities"), including all
Indemnified Liabilities based in whole or in part on, or arising in whole or in
part out of, or pertaining to this Agreement or the transactions contemplated
hereby, in each case to the full extent a corporation is permitted under the
DGCL to indemnify its own directors or officers as the case may be (and Parent
and the Surviving Corporation, as the case may be, will pay expenses in advance
of the final disposition of any such action or proceeding to each Indemnified
Party to the full extent permitted by law). Without limiting the foregoing, in
the event any such claim, action, suit, proceeding or investigation is brought
against any Indemnified Parties (whether arising before or after the Effective
Time), (i) the Indemnified Parties may retain counsel satisfactory to them and
the Company (or them and the Surviving Corporation after the Effective Time)
and the Company (or after the Effective Time, the Surviving Corporation) shall
pay all fees and expenses of such counsel for the Indemnified Parties promptly
as statements therefor are received; and (ii) the Company (or after the
Effective Time, the Surviving Corporation) will use all reasonable efforts to
assist in the vigorous defense of any such matter, provided that neither the
Company nor the Surviving Corporation shall be liable for any settlement
effected without its prior written consent which consent shall not unreasonably
be withheld. Any Indemnified Party wishing to claim indemnification under this
Section 6.6, upon learning of any such claim, action, suit, proceeding or
investigation, shall notify the Company (or after the Effective Time, the
Surviving Corporation) (but the failure so to notify shall not relieve a party
from any liability which it may have under this Section 6.6 except to the
extent such failure prejudices such party), and shall deliver to the Company
(or after the Effective Time, the Surviving Corporation) the

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<PAGE> 46
undertaking contemplated by Section 145(e) of the DGCL. The Indemnified
Parties as a group may retain only one law firm to represent them with respect
to each such matter unless there is, under applicable standards of professional
conduct, a conflict on any significant issue between the positions of any two
or more Indemnified Parties. The Company and Sub agree that all rights to
indemnification, including provisions relating to advances of expenses incurred
in defense of any action or suit, existing in favor of the Indemnified Parties
with respect to matters occurring through the Effective Time, shall survive the
Merger and shall continue in full force and effect for a period of not less
than six years from the Effective Time; provided, however, that all rights to
indemnification in respect of any Indemnified Liabilities asserted or made
within such period shall continue until the disposition of such Indemnified
Liabilities.

(b) For a period of three years after the Effective Time, the
Surviving Corporation shall cause to be maintained in effect the current
policies of directors' and officers' liability insurance maintained by the
Company and its Subsidiaries (provided that Parent may substitute therefor
policies of at least the same coverage and amounts containing terms and
conditions which are no less advantageous in any material respect to the
Indemnified Parties) with respect to matters arising before the Effective Time,
provided that Parent shall not be required to pay an annual premium for such
insurance in excess of 175% of the last annual premium paid by the Company
prior to the date hereof, but in such case shall purchase as much coverage as
possible for such amount. The last annual premium paid by the Company was
$169,100.

(c) The provisions of this Section 6.6 shall be in addition
to, and shall not limit, the indemnification agreements entered into between an
indemnified party and the Company prior to the date hereof, all of which
agreements are identified on Schedule 6.6 hereof and true and correct copies of
which have previously been delivered to Parent. The provisions of this Section
6.6 are intended to be for the benefit of, and shall be enforceable by, each
Indemnified Party, his heirs and his personal representatives and shall be
binding on all successors and assigns of Sub, the Company and the Surviving
Corporation.

6.7 Best Efforts. Subject to the terms and conditions of this
Agreement, each of the parties hereto agrees to use its best efforts to take,
or cause to be taken, all action and to do, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated by this Agreement
and the Stockholders Agreement, subject, as applicable, to the Company
Stockholder Approval, including cooperating fully with the other party,
including by provision of information and making of all necessary filings in
connection with, among other things, approvals under the HSR Act. In case at
any time after the

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Effective Time, any further action is necessary or desirable to carry out the
purposes of this Agreement or to vest the Surviving Corporation with full title
to all properties, assets, rights, approvals, immunities and franchises of
either of the Constituent Corporations, the proper officers and directors of
each party to this Agreement shall take all such necessary action.

6.8 Conduct of Business of Sub. During the period of time
from the date of this Agreement to the Effective Time, Sub shall not engage in
any activities of any nature except as provided in or contemplated by this
Agreement.

6.9 Publicity. The parties will consult with each other and
will mutually agree upon any press release or public announcement pertaining to
the Offer and the Merger and shall not issue any such press release or make any
such public announcement prior to such consultation and agreement, except as
may be required by applicable law or by obligations arising under the Company's
listing agreement with Nasdaq, in which case the party proposing to issue such
press release or make such public announcement shall use reasonable efforts to
consult in good faith with the other party before issuing any such press
release or making any such public announcement.

6.10 Spin-Off of Certain Real Estate. Immediately prior to the
acceptance of Shares in the Offer, the Company shall declare a dividend,
payable to then record holders of Shares, consisting of ownership interests in
an entity ("Spinco") that will own, directly or indirectly, the assets
specified on Schedule 6.10(a) hereto (the "Designated Assets"), the payment of
such dividend to be contingent upon the consummation of the Offer and subject
to compliance with all applicable laws. The form of entity that will be used
for Spinco, all transactions related to such dividend (including, without
limitation, any intercompany transfers) and all documents, agreements and
instruments related to such dividend and related transactions (including,
without limitation, any agreements between Spinco and the Company or any of its
Subsidiaries providing for the allocation of expenses or liabilities and
indemnification) (the "Spin-Off Documents"), shall be in form and substance
reasonably acceptable to Parent and the Company. Notwithstanding the
foregoing, it is agreed that (i) all indebtedness of the Company or any of its
Subsidiaries (other than the Company's Revolving Credit Loan Agreement with
Comerica Bank-California) secured, in whole or in part, by any of the
Designated Assets shall be assumed by Spinco and shall be paid, when due, by
Spinco and the Company shall be released from any liability with respect
thereto, (ii) all costs and expenses solely attributable to the transactions
related to such dividend (including, without limitation, any necessary and
reasonable fees and expenses of counsel, accountants and advisors and any
filing fees), whether before or after the consummation of the Offer, shall be
paid by Spinco when such amounts are due, (iii) Spinco shall indemnify and hold
the Company and its

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Subsidiaries harmless from and against any loss, cost, damage or expense
(including, without limitation, the reasonable fees and expenses of counsel)
arising out of or related to any failure of Spinco to discharge the obligations
specified in clause (i) or clause (ii), (iv) Spinco shall indemnify and hold
Parent, the Company and its Subsidiaries harmless from and against any Taxes
(and any fees, costs and expenses with respect to such Taxes or any dispute
thereof) attributable to, arising out of or relating to (a) Spinco, (b) the
formation of Spinco, (c) the transfer of the Designated Assets to Spinco by the
Company or any of its Subsidiaries, (d) the assumption or refinancing of any
liabilities with respect to the Designated Assets, (e) the sale, exchange,
distribution, dividend or other distribution of any assets by Spinco, (f) the
sale, exchange, distribution, dividend or other disposition of interests in
Spinco by the Company or any of its Subsidiaries, and (g) any steps which are
attendant to or necessary in connection with any of the foregoing transactions,
which indemnification obligations shall survive until sixty days after the
expiration of the applicable statute of limitations with respect to the
assessment of Taxes relating to the foregoing transactions, and which
indemnification obligations shall be due and payable at such times as Taxes
(including estimated Taxes) become due and payable (plus interest from the date
of unreimbursed payment by the Company at a rate of 9% per annum) (with the
filing of Tax Returns and calculation of the "Estimated Tax Amount" being based
upon an appraisal of the Designated Assets by an independent appraiser mutually
acceptable to Parent and the Company and a certification of the adjusted bases
of the Designated Assets provided by Price Waterhouse & Co. or such other "big
six" accounting firm as may be agreed to by Parent and the Company, the costs
of which appraisal and certification will be paid by Spinco) and at such time
as there is a final determination of a deficiency with respect to such reported
Taxes (plus interest from the date of unreimbursed payment by the Company at a
rate of 9% per annum), (v) with respect to the Taxes identified in the
immediately preceding clause (iv), the Company will not agree, without Spinco's
consent, to any extension of the applicable statute of limitations, which
consent will not be unreasonably withheld, and such consent will not be
required if the failure to agree to such extension may reasonably be expected
to result in the proposed assessment of a deficiency for material Taxes
unrelated to Spinco or in liability for indemnified Taxes which exceeds
Spinco's cash, notes receivable from real property sales and cash equivalent
assets at such time, and (vi) any indemnification under this Section 6.10 shall
be made on an after-tax basis and shall be adjusted to take into account any
Tax benefits and Tax detriments attributable to the indemnified loss and to the
receipt or accrual of an indemnification payment hereunder (including any
additional payments pursuant to this clause (vi)). The Company will use its
best efforts to facilitate the dividend and shall seek all consents necessary
(including, without limitation, the consent of the Company's lenders) to
consummate the dividend and related transactions.

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It is understood and agreed that prior to payment of the
dividend, the current lease agreement with respect to the home office building
will be amended to provide for (1) continuation of the current rent for two
years; (2) adjustment of the rental for the succeeding three years at the
current market rental rate at the beginning of such succeeding three years; and
(3) adjustment of the term of the lease to five years with a five year option
to renew at a rental equal to the current market rental rate at the beginning
of such renewal term. It is understood and agreed that the "current market
rental rate" shall be determined by the Company and Spinco, each selecting an
appraiser to make such determination, and that if such appraisers cannot agree,
then they shall select a third appraiser whose determination shall be final and
binding on all parties. Each party shall bear the cost of its appraiser and
the cost of the third appraiser, if necessary, shall be split evenly between
the parties. Finally, under no circumstances shall the rental rate referred to
in (2) above be less than the rental rate in effect prior to such adjustment or
more than 1.2 multiplied by the rental rate in effect prior to such adjustment.
In addition, the lease agreement shall be amended to provide that the Company
may sublease the property with the consent of the landlord, which consent will
not be unreasonably withheld, and that in the event the Company shall sublease
the property and shall receive in rent thereunder an amount in excess of the
rent payable under the lease, such excess shall be paid to the landlord.

In order to facilitate the orderly management of Spinco,
following payment of the dividend for a period of one year Company will provide
(at no cost to Spinco) at least two cubicles of office space, telephone and
secretarial support to two employees of Spinco and will give such Spinco
employees reasonable access to such other office equipment as is reasonable and
necessary. Furthermore, at the time of payment of the dividend, Spinco shall
have at least $100,000 in cash or cash equivalent assets available to it (any
such amounts that do not represent proceeds from the sale of Designated Assets
shall be subject to repayment by Spinco). All funds received in respect of
sales of Designated Assets from the date hereof through the date of the payment
of the dividend shall be credited to the account of Spinco, but shall be
available to satisfy the obligations of Spinco to Company hereunder.

Company shall not be required to pay the dividend until such time
as Spinco has either (i) paid all amounts owed by it to Company with respect to
the Estimated Tax Amount, third party costs related to the dividend or related
transactions or similar matters for which Spinco has agreed to pay or for which
there are existing indemnity claims which it has agreed to indemnify the
Company or (ii) have made adequate and commercially reasonable provision for
the prompt payment of any such amounts from time to time in the future as such
amounts are paid or become due and payable by the Company. The parties
understand and agree that

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terms and provisions with respect to the dividend and related transactions, in
addition to those set forth herein, will be necessary and appropriate in
connection with the transactions contemplated by this Section 6.10. Such
additional terms and provisions, when negotiated by the parties, shall,
together with the provisions of this Section 6.10, be set forth in customary
documentation with respect to spin-off transactions, all of which shall be
finalized by the parties prior to the closing of the Offer.

ARTICLE VII
CONDITIONS PRECEDENT

7.1 Conditions to Each Party's Obligation to Effect the
Merger. The respective obligation of each party to effect the Merger shall be
subject to the satisfaction prior to the Closing Date of the following
conditions:

(a) Stockholder Approval. This Agreement and the Merger shall
have been approved and adopted by the affirmative vote of the holders of a
majority of the Shares entitled to vote thereon if such vote is required by
applicable law; provided that the Parent and Sub shall vote all Shares
purchased pursuant to the Offer or the Stockholders Agreement in favor of the
Merger.

(b) HSR Act. The waiting period (and any extension thereof)
applicable to the Merger under the HSR Act shall have been terminated or shall
have expired.

(c) No Injunctions or Restraints. No temporary restraining
order, preliminary or permanent injunction or other order issued by any court
of competent jurisdiction or other legal restraint or prohibition (an
"Injunction") preventing the consummation of the Merger shall be in effect;
provided, however, that prior to invoking this condition, each party shall use
all commercially reasonable efforts to have any such decree, ruling, injunction
or order vacated.

(d) Statutes; Consents. No statute, rule, order, decree or
regulation shall have been enacted or promulgated by any government or
governmental agency or authority which prohibits the consummation of the
Merger.

(e) Payment for Shares. Sub shall have accepted for payment
and paid for the shares of Company Common Stock tendered in the Offer such
that, after such acceptance and payment, Parent and its affiliates shall own,
at consummation of the Offer, a majority of the outstanding shares of the
Company Common Stock; provided that this condition shall be deemed to have been
satisfied is Sub fails to accept for payment and pay for Shares pursuant to the
Offer in violation of the terms and conditions of the Offer.

45
<PAGE> 51
ARTICLE VIII
TERMINATION AND AMENDMENT

8.1 Termination. This Agreement may be terminated and the
Merger may be abandoned at any time prior to the Effective Time, whether before
or after approval of the matters presented in connection with the Merger by the
stockholders of the Company or Parent:

(a) by mutual written consent of the Company and Parent, or by
mutual action of their respective Boards of Directors;

(b) by either the Company or Parent (i) prior to the
consummation of the Offer if there has been a breach of any representation,
warranty, covenant or agreement on the part of the other set forth in this
Agreement which breach has not been cured within three business days following
receipt by the breaching party of notice of such breach, or (ii) if any
permanent injunction or other order of a court or other competent authority
preventing the consummation of the Merger shall have become final and non-
appealable;

(c) by either the Company or Parent, so long as such party has
not breached its obligations hereunder, if the Merger shall not have been
consummated on or before February 18, 1997; provided, that the right to
terminate this Agreement under this Section 8.1(c) shall not be available to
any party whose failure to fulfill any obligation under this Agreement has been
the cause of or resulted in the failure of the Merger to occur on or before
such date;

(d) by Parent or Company in the event that a Trigger Event has
occurred under Section 6.4(b);

(e) by Parent in the event an Acquisition Proposal has been
made to the Company and the Company shall fail to reaffirm its approval or
recommendation of the Offer, the Merger, this Agreement and the Stockholders
Agreement on or before the fifth business day following the date on which such
Acquisition Proposal shall have been made;

(f) by Parent, if the Offer terminates, is withdrawn,
abandoned or expires by reason of the failure to satisfy any condition set
forth in Exhibit A hereto; or

(g) by the Company, if the Offer shall have expired or have
been withdrawn, abandoned or terminated without any shares of Company Common
Stock being purchased by Sub thereunder on or prior to the 90th day after the
date of commencement of the Offer pursuant to Section 1.2 hereof.

46
<PAGE> 52
8.2 Effect of Termination. In the event of termination of
this Agreement by either the Company or Parent as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Parent, Sub or the Company or their respective
affiliates, officers, directors or shareholders except (i) with respect to this
Section 8.2, the second sentence of Section 6.2, and Section 6.4, and (ii) to
the extent that such termination results from the material breach by a party
hereto of any of its representations or warranties, or of any of its covenants
or agreements, in each case, as set forth in this Agreement except as provided
in Section 9.7.

8.3 Amendment. Subject to applicable law, this Agreement may
be amended, modified or supplemented only by written agreement of Parent, Sub
and the Company at any time prior to the Effective Date with respect to any of
the terms contained herein; provided, however, that, after this Agreement is
approved by the Company's stockholders, no such amendment or modification shall
reduce the amount or change the form of consideration to be delivered to the
stockholders of the Company.

8.4 Extension; Waiver. At any time prior to the Effective
Time, the parties hereto, by action taken or authorized by their respective
Boards of Directors, may, to the extent legally allowed: (i) extend the time
for the performance of any of the obligations or other acts of the other
parties hereto; (ii) waive any inaccuracies in the representations and
warranties contained herein or in any document delivered pursuant hereto; and
(iii) waive compliance with any of the agreements or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid only if set forth in a written instrument signed on
behalf of such party. The failure of any party hereto to assert any of its
rights hereunder shall not constitute a waiver of such rights.

ARTICLE IX
GENERAL PROVISIONS

9.1 Nonsurvival of Representations, Warranties and Agreements.
None of the representations, warranties and agreements in this Agreement or in
any instrument delivered pursuant to this Agreement shall survive the Effective
Time, except for the agreements contained in Article III, and Section 6.6
hereof. The Confidentiality Agreement shall survive the execution and delivery
of this Agreement, and the provisions of the Confidentiality Agreement shall
apply to all information and material delivered by any party hereunder.

9.2 Notices. Any notice or communication required or permitted
hereunder shall be in writing and either delivered personally, telegraphed or
telecopied or sent by certified or

47
<PAGE> 53
registered mail, postage prepaid, and shall be deemed to be given, dated and
received when so delivered personally, telegraphed or telecopied or, if mailed,
five business days after the date of mailing to the following address or
telecopy number, or to such other address or addresses as such person may
subsequently designate by notice given hereunder:

(a) if to Parent or Sub, to:

Cooperative Computing, Inc. or
CCI Acquisition Corp.
6207 Bee Cave Road
Austin, Texas 78746-5146
Attn: Glenn Staats
Telephone: (512) 328-2300
Telecopy: (512) 329-6461

with a copy to:

Weil, Gotshal & Manges
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
Telephone: (214) 746-7748
Telecopy: (214) 746-7777

and

Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201-6950
Attn: Lawrence D. Stuart, Jr.
Telephone: (214) 740-7365
Telecopy: (214) 740-7313

(b) if to the Company, to:

Triad Systems Corporation
3055 Triad Drive
Livermore, California 94550
Attn: James Porter
Telephone: (510) 449-0606
Telecopy: (510) 455-6917

with copies to:

McCutchen, Doyle, Brown & Enersen, LLP
55 South Market Street
Suite 1500
San Jose, California 95113-2373
Attn: Daniel Cooperman
Telephone: (408) 947-8400
Telecopy: (408) 947-4750

48
<PAGE> 54
9.3 Interpretation. When a reference is made in this
Agreement to Sections, such reference shall be to a Section of this Agreement
unless otherwise indicated. The table of contents, glossary of defined terms
and headings contained in this Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Agreement.
Whenever the word "include", "includes" or "including" are used in this
Agreement, they shall be deemed to be followed by the words "without
limitation". The phrase "made available" in this Agreement shall mean that the
information referred to has been made available if requested by the party to
whom such information is to be made available.

9.4 Counterparts. This Agreement may be executed in two or
more counterparts, all of which shall be considered one and the same agreement
and shall become effective when two or more counterparts have been signed by
each of the parties and delivered to the other parties, it being understood
that all parties need not sign the same counterpart.

9.5 Entire Agreement; No Third Party Beneficiaries; Rights of
Ownership. This Agreement (together with the Confidentiality Agreement, the
Stockholders Agreement and any other documents and instruments referred to
herein) constitutes the entire agreement and supersedes all prior agreements
and understandings, both written and oral, among the parties with respect to
the subject matter hereto and, except as provided in Section 6.6, is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder.

9.6 Governing Law. This Agreement shall be governed and
construed in accordance with the laws of the State of Delaware, without giving
effect to the principles of conflicts of law thereof.

9.7 No Remedy in Certain Circumstances. Each party agrees
that, should any court or other competent authority hold any provision of this
Agreement or part hereof to be null, void or unenforceable, or order any party
to take any action inconsistent herewith or not to take an action consistent
herewith or required hereby, the validity, legality and enforceability of the
remaining provisions and obligations contained or set forth herein shall not in
any way be affected or impaired thereby, unless the foregoing inconsistent
action or the failure to take an action constitutes a material breach of this
Agreement or makes the Agreement impossible to perform in which case this
Agreement shall terminate pursuant to Article VIII hereof. Except as otherwise
contemplated by this Agreement, to the extent that a party hereto took an
action inconsistent

49
<PAGE> 55
herewith or failed to take action consistent herewith or required hereby
pursuant to an order or judgment of a court or other competent authority, such
party shall incur no liability or obligation unless such party did not in good
faith seek to resist or object to the imposition or entering of such order or
judgment.

9.8 Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder shall be assigned by any of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other parties, except that Sub may assign, in its sole
discretion, any or all of its rights, interests and obligations hereunder to
any newly-formed direct wholly-owned Subsidiary of Parent. Subject to the
preceding sentence, this Agreement will be binding upon, inure to the benefit
of and be enforceable by the parties and their respective successors and
assigns.

50
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be signed by their respective officers thereunto duly authorized, all as of
the date first written above.

COOPERATIVE COMPUTING, INC.

By: /s/ GLENN E. STAATS
----------------------------------
Name: Glenn E. Staats
--------------------------------
Title: President
-------------------------------

CCI ACQUISITION CORP.

By: /s/ PATRICK K. MCGEE
----------------------------------
Name: Patrick K. McGee
--------------------------------
Title: Vice President
-------------------------------

TRIAD SYSTEMS CORPORATION

By: /s/ JAMES R. PORTER
----------------------------------
Name: James R. Porter
--------------------------------
Title: President and Chief
-------------------------------
Executive Officer
-------------------------------

51
<PAGE> 57
EXHIBIT A

The capitalized terms used in this Exhibit A shall have the
respective meanings given to such terms in the Agreement and Plan of Merger,
dated as of October 17, 1996, among Cooperative Computing, Inc. ("Parent"), CCI
Acquisition Corp. ("Sub") and Triad Systems Corporation ("Company") (the
"Merger Agreement") to which this Exhibit A is attached.

CONDITIONS TO THE OFFER

Notwithstanding any other provision of the Offer, Sub shall not
be required to accept for payment or, subject to any applicable rules and
regulations of the SEC, including Rule 14e-1(c) under the Exchange Act
(relating to Sub's obligation to pay for or return tendered Shares promptly
after expiration or termination of the Offer), to pay for any Shares tendered,
and may postpone the acceptance for payment or, subject to the restriction
referred to above, payment for any Shares tendered, and may amend or terminate
the Offer (whether or not any Shares have theretofore been purchased or paid
for), if (i) there have not been validly tendered and not withdrawn prior to
the time the Offer shall otherwise expire a number of Shares which constitutes
51% of the Shares outstanding on a fully-diluted basis on the date of purchase
("on a fully-diluted basis" having the following meaning, as of any date: the
number of Shares outstanding, together with Shares the Company may be required
to issue pursuant to obligations outstanding at that date under employee stock
option or other benefit plans, or otherwise); (ii) any applicable waiting
periods under the HSR Act shall not have expired or been terminated prior to
the expiration of the Offer; (iii) the debt financing sources for Sub shall not
have provided the applicable debt financing to Sub pursuant to the financing
commitment with respect thereto previously delivered to the Company by Sub; or
(iv) at any time on or after the date of the Merger Agreement and before
acceptance for payment of, or payment for, such Shares any of the following
events shall occur or shall reasonably be deemed by Sub to have occurred:

(A) there shall have been any statute, rule or regulation
enacted, entered or enforced or deemed applicable, or any decree, order
or injunction entered or enforced by any government or governmental
authority in the United States or by any court in the United States
that: (1) restrains or prohibits the making or consummation of the
Offer or the Merger, (2) makes the purchase of or payment for some or
all of the Shares pursuant to the Offer or the Merger illegal, (3)
imposes material limitations on the ability of Sub, the Company or any
of their respective affiliates or Subsidiaries effectively to acquire or
hold, or requiring Sub, the Company or any of their respective

A-1
<PAGE> 58
affiliates or Subsidiaries to dispose of or hold separate, any material
portion of the assets or the business of the Company and its
Subsidiaries taken as a whole, or imposes limitations on the ability of
Sub, the Company or any of their respective affiliates or Subsidiaries
to continue to conduct, own or operate, as heretofore conducted, owned
or operated, all or any material portion of the businesses or assets of
the Company and its Subsidiaries taken as a whole, (4) imposes or
results in material limitations on the ability of Sub or any of its
affiliates to exercise full rights of ownership of the Shares purchased
by them, including, without limitation, the right to vote the Shares
purchased by them on all matters properly presented to the stockholders
of the Company; or (5) prohibits or restricts in a material manner the
financing of the Offer;

(B) any change (or any condition, event or development involving
a prospective change) shall have occurred in the business, operations,
assets or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole;

(C) there shall have occurred (1) any general suspension of
trading in, or limitation on prices for, securities on any national
securities exchange or in the over-the-counter market in the United
States for a period in excess of five hours, (2) the declaration of a
banking moratorium or any suspension of payments in respect of banks in
the United States, (3) any material adverse change in United States
currency exchange rates or a suspension of, or a limitation on, the
markets therefor, (4) the commencement of a war, armed hostilities or
other international or national calamity, directly or indirectly
involving the United States, (5) any limitations (whether or not
mandatory) imposed by any governmental authority on the nature or
extension of credit or further extension of credit by banks or other
lending institutions, or (6) in the case of any of the foregoing, a
material acceleration or worsening thereof;

(D) the representations and warranties of the Company contained
in the Merger Agreement (without giving effect to any "Material Adverse
Effect", "materiality" or similar qualifications contained therein)
shall not be true and correct in all material respects as of the date of

A-2
<PAGE> 59
consummation of the Offer as though made on and as of such date except
(1) for changes specifically permitted by the Merger Agreement and (2)
that those representations and warranties which address matters only as
of a particular date shall remain true and correct as of such date;

(E) the obligations of the Company contained in the Merger
Agreement (without giving effect to any "Material Adverse Effect",
"materiality" or similar qualifications contained therein) shall not
have been performed or complied with in all material respects by the
Company;

(F) the Merger Agreement shall have been terminated in
accordance with its terms;

(G) prior to the purchase of Shares pursuant to the Offer, an
Acquisition Proposal for the Company exists and the Board shall have
withdrawn or materially modified or changed (including by amendment of
the Schedule 14D-9) in a manner adverse to Sub its recommendation of the
Offer, the Merger Agreement or the Merger; or

(H) Parent, Sub and the Company shall not have reached
agreement as to the documents and transactions described in Section 6.10
in accordance with such Section 6.10.

The foregoing conditions are for the sole benefit of Sub and its
affiliates and may be asserted by Sub regardless of the circumstances
(including, without limitation, any action or inaction by Sub or any of its
affiliates) giving rise to any such condition or may be waived by Sub, in whole
or in part, from time to time in its sole discretion, except as otherwise
provided in the Agreement. The failure by Sub at any time to exercise any of
the foregoing rights shall not be deemed a waiver of any such right and each
such right shall be deemed an ongoing right and may be asserted at any time and
from time to time. Any determination by Sub concerning any of the events
described herein shall be final and binding.

A-3

<PAGE> 1
EXHIBIT 2.2

FIRST AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER

THIS FIRST AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the "First
Amendment") is made and entered as of the 15th day of January, 1997 by and
among Cooperative Computing, Inc., a Texas corporation ("Parent"), CCI
Acquisition Corp., a Delaware corporation ("Sub"), and Triad Systems
Corporation, a Delaware corporation (the "Company").

W I T N E S S E T H:

WHEREAS, Parent, Sub and the Company are parties to an Agreement and Plan
of Merger, dated as of October 17, 1996 (the "Merger Agreement");

WHEREAS, Parent, Sub and the Company wish to amend certain provisions of
the Merger Agreement;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:

1. Defined Terms. Terms used herein with their initial letters
capitalized and not otherwise defined herein (including those terms so used and
not defined in the recitals above) shall have the respective meanings given
such terms in the Merger Agreement.

2. Amendment of Section 1.1(b) of the Merger Agreement. The first
sentence of Section 1.1(b) of the Merger Agreement is hereby amended by
deleting each of the two references to "90 calendar days" appearing in clause
(v) of such sentence and replacing each such reference with the following:
"120 calendar days".

3. Amendment of Section 8.1(c) of the Merger Agreement. Section 8.1(c) of
the Merger Agreement is hereby amended by deleting the reference to "February
18, 1997"
<PAGE> 2
appearing in such Section and replacing such reference with the
following: "the 45th day following the consummation of the Offer".

4. Amendment of Section 8.1(g) of the Merger Agreement. Section 8.1(g) of
the Merger Agreement is hereby amended by deleting the reference to "the 90th
day" appearing in such Section and replacing such reference with the following:
"the 120th day".

5. Counterparts. This First Amendment may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

2
<PAGE> 3
IN WITNESS WHEREOF, the parties hereto have executed this First Amendment
as of the date and year first above written.

COOPERATIVE COMPUTING, INC.

By: /s/ MATTHEW HALE
----------------------------------
Name: Matthew Hale
--------------------------------
Title: Chief Financial Officer
-------------------------------

CCI ACQUISITION CORP.

By: /s/ PRESTON W. STAATS
----------------------------------
Name: Preston W. Staats
--------------------------------
Title: Executive Vice President
-------------------------------

TRIAD SYSTEMS CORPORATION

By: /s/ STANLEY MARQUIS
----------------------------------
Name: Stanley Marquis
--------------------------------
Title: Vice President Finance and
-------------------------------
Chief Financial Officer
-------------------------------

<PAGE> 1
EXHIBIT 2.3

SECOND AMENDMENT
TO
AGREEMENT AND PLAN OF MERGER

THIS SECOND AMENDMENT TO AGREEMENT AND PLAN OF MERGER (the
"Second Amendment") is made and entered into as of the 19th day of February,
1997 by and among Cooperative Computing, Inc., a Texas corporation ("Parent"),
CCI Acquisition Corp., a Delaware corporation ("Sub"), and Triad Systems
Corporation, a Delaware corporation (the "Company").

W I T N E S S E T H:

WHEREAS, Parent, Sub and the Company are parties to an Agreement and Plan
of Merger, dated as of October 17, 1996 (as amended by that certain First
Amendment to Agreement and Plan of Merger dated as of January 15, 1997, the
"Merger Agreement");

WHEREAS, Parent, Sub and the Company wish to amend certain provisions of
the Merger Agreement;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants and agreements hereinafter set forth, the parties hereto, intending
to be legally bound, hereby agree as follows:

2. Amendment of Section 1.1(b) of the Merger Agreement. The first
sentence of Section 1.1(b) of the Merger Agreement is hereby amended by
deleting each of the two references to "120 calendar days" appearing in clause
(v) of such sentence and replacing each such reference with the following: "135
calendar days".

<PAGE> 2

3. Amendment of Section 8.1(g) of the Merger Agreement. Section 8.1(g) of
the Merger Agreement is hereby amended by deleting the reference to "the 120th
day" appearing in such Section and replacing such reference with the following:
"the 135th day".

4. Counterparts. This Second Amendment may be executed in one or more
counterparts, each of which will be deemed an original and all of which
together will constitute one and the same instrument.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.]

2
<PAGE> 3

IN WITNESS WHEREOF, the parties hereto have executed this Second
Amendment as of the date and year first above written.

COOPERATIVE COMPUTING, INC.

By: /s/ MATTHEW HALE
----------------------------------
Name: Matthew Hale
--------------------------------
Title: Chief Financial Officer
-------------------------------

CCI ACQUISITION CORP.

By: /s/ GLENN E. STAATS
----------------------------------
Name: Glenn E. Staats
--------------------------------
Title: President
-------------------------------

TRIAD SYSTEMS CORPORATION

By: /s/ STANLEY F. MARQUIS
----------------------------------
Name: Stanley F. Marquis
--------------------------------
Title: Vice President and Chief
-------------------------------
Financial Officer
-------------------------------

<PAGE> 1
EXHIBIT 3.1

RESTATED CERTIFICATE OF INCORPORATION

OF TRIAD SYSTEMS CORPORATION

(Incorporated March 9, 1987 as Delaware Triad Systems Corporation)

FIRST: The name of the Corporation is Triad Systems Corporation
(hereinafter sometimes referred to as the "Corporation").

SECOND: The address of the registered office of the Corporation in the
State of Delaware is Corporation Trust Center, 1209 Orange Street, in the City
of Wilmington, County of New Castle. The name of the registered agent at that
address is The Corporation Trust Company.

THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.

FOURTH:

A. The total number of shares of all classes of stock which the
Corporation shall have authority to issue is fifty-one million (51,000,000),
consisting of:

(1) one million (1,000,000) shares of Preferred Stock, par value
one cent ($0.01) per share (the "Preferred Stock"); and

(2) fifty million (50,000,000) shares of Common Stock, par value
one tenth of one cent ($0.001) per share (the "Common Stock").

B. The Board of Directors is authorized, subject to any limitations
prescribed by law, to provide for the issuance of the shares of Preferred Stock
in series, and by filing a certificate pursuant to the applicable law of the
State of Delaware, to establish from time to time the number of shares to be
included in each such series, and to fix the designation, powers, preferences,
and rights of the shares of each such series and any qualifications,
limitations or restrictions thereon; provided, however, that each share of such
Preferred Stock issued by the Corporation must be initially convertible into
one share of Common Stock and will be entitled to a number of votes no greater
than the number of votes applicable to the shares of Common Stock into which
such shares of Preferred Stock are convertible. The number of authorized shares
of Preferred Stock may be increased or decreased (but not below the number of
shares thereof then outstanding) by the affirmative vote of the holders of a
majority of the Common Stock, without a vote of the holders of the Preferred
Stock, or of any series thereof, unless a vote of any such holders is required
pursuant to the certificate or certificates establishing the series of
Preferred Stock.

1
<PAGE> 2
Pursuant to the foregoing provision, the Board of Directors has created
one series of Preferred Stock with the following rights, powers, preferences,
qualifications, limitations and restrictions:

Section 1. Designation and Amount. The shares of such series shall be
designated as "Senior Cumulative Convertible Preferred Stock" (the "Senior
Preferred Stock"), $0.01 par value per share, and the number of shares
constituting such series shall be 1,000,000.

Section 2. Dividends and Distributions. (A) The holders of the Senior
Preferred Stock shall be entitled to receive, when, as and if declared by the
Board of Directors out of funds legally available for such purpose, cumulative
cash dividends payable (i) for the period (the "Initial Dividend Period") from
the date of first issuance of shares of Senior Preferred Stock to and including
September 30, 1992, on November 2, 1992, and (ii) thereafter, for each
Quarterly Dividend Period (as hereinafter defined), on the first business day
of February, May, August and November in each year (hereinafter referred to as
a "Quarterly Dividend Payment Date"), at the following rates per share: (i) for
the Initial Dividend Period and for each subsequent Quarterly Dividend Period
to and including September 30, 1995, at a rate per annum of $.80; (ii) for each
Quarterly Dividend Period from October 1, 1995 to and including September 30,
1996, at a rate per annum of $1.60; and (iii) for each Quarterly Dividend
Period commencing on October 1, 1996 and thereafter, at a rate per annum of
$2.00, and shall be paid to holders of record on such respective dates which
shall not be more than 60 days preceding such Quarterly Dividend Payment Dates,
as may be determined by the Board of Directors in advance of the payment of the
particular dividend. "Quarterly Dividend Periods" shall commence on October 1,
January 1, April 1 and July 1 in each year and end on the day next preceding
the first day of the next Quarterly Dividend Period. Dividends shall commence
to accrue on a daily basis and be cumulative from the date of first issuance of
shares of the Senior Preferred Stock. The amount of dividends so payable shall
be determined on the basis of a year of 365/6 days. Accrued but unpaid
dividends shall not bear interest. Dividends paid on the shares of Senior
Preferred Stock in an amount less than the total amount of such dividends at
the time accrued and payable on such shares shall be allocated pro rata on a
share-for-share basis among all such shares outstanding at the record date for
such payment.

(B) So long as any shares of the Senior Preferred Stock are
outstanding, no dividends or other distributions, other than dividends or
distributions payable in shares of stock ranking junior (either as to dividends
or upon liquidation, dissolution or winding up) to the Senior Preferred Stock,
shall be declared or paid or distributed, or set aside for payment or
distribution (including repurchases or redemption of stock ranking junior to
the Senior Preferred Stock, other than repurchases of Common Stock from the
Corporation's employees in an amount not to exceed in the aggregate 100,000
shares, and the acceptance by the Corporation of shares of Common Stock in lieu
of cash as payment for all or part of the exercise price of stock options held
by employees or directors), on the Corporation's Common Stock or on any other
shares of stock ranking junior (either as to dividends or upon liquidation,
dissolution or winding up) to the Senior

2
<PAGE> 3

Preferred Stock unless, in each case, the dividends and distributions required
by this Section 2 to be declared on the Senior Preferred Stock shall have been
paid and, in the case of a cash dividend, the Board of Directors shall have
concluded in good faith that such dividend is at a level consistent with a
recurring quarterly dividend, rather than an extraordinary dividend.

(C) The holders of the Senior Preferred Stock shall not be entitled to
receive any dividends or other distributions except as provided herein and in
Section 5.

Section 3. Voting Rights. No share of Senior Preferred Stock shall have
any voting rights whatsoever on any matter, unless and until any holder of the
shares of Senior Preferred Stock notifies the Secretary of the Corporation in
writing that such holder elects to have the voting rights set forth in Sections
3(A) through 3(E) with respect to shares of Senior Preferred Stock. In the
event of such notice, upon receipt thereof by the Secretary of the Corporation,
all of the shares of Senior Preferred Stock shall have the voting rights set
forth below. The Corporation shall, upon the written request of any stockholder
of record of the Corporation, promptly mail to such stockholder a certificate
of the Corporation's Secretary stating whether the foregoing condition has been
met.

(A) Except as otherwise required by law or by this Section 3, the
shares of Senior Preferred Stock shall be voted together with the Corporation's
Common Stock at any annual or special meeting of stockholders of the
Corporation, and shall have voting rights and powers equal to the voting rights
and powers of the Common Stock, with number of votes determined as follows:
each share of Senior Preferred Stock shall be entitled to such number of votes
on the record date fixed for any such meeting, as shall be equal to the whole
number of shares of the Corporation's Common Stock into which such share of
Senior Preferred Stock is convertible immediately after the close of business
on the record date fixed for such meeting. The holders of the shares of the
Senior Preferred Stock shall have no rights with respect to the election of
directors except for the voting rights set forth in Sections 3(B) and 3(C).

(B) (1) Subject to Section 3(C) hereof, the holders of the Senior
Preferred Stock, voting as a separate class, shall have the right to elect one
director (the "Senior Preferred Director") to a class of the Corporation's
Board of Directors separate and apart from the classes of directors elected by
the Common Stock, with a term of office to expire at the 1993 annual meeting of
stockholders and thereafter at each third succeeding annual meeting of
stockholders after such election (subject to earlier termination in accordance
with Section 3(B)(2)), provided that the Senior Preferred Director meets the
eligibility qualifications set forth in the next sentence. To he qualified for
election, the Senior Preferred Director in each case must be nominated by
Richard C. Blum & Associates, Inc. ("RCBA") and be reasonably acceptable to the
Corporation. The Senior Preferred Director may be removed at any time without
cause by the affirmative vote of the holders of a majority of the shares of
Senior Preferred Stock at the time entitled to vote, and any vacancy thereby
created or created by any removal of such director for cause may be filled only
by the vote of such holders.

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<PAGE> 4

(2) The right of the Senior Preferred Stock to elect the Senior
Preferred Director will cease and terminate on the earlier of (a) the filing of
a Schedule 13D with the Securities and Exchange Commission on behalf of RCBA,
together with its affiliates and such accounts and partnerships as RCBA manages
or advises (the "RCBA Group") or (b) receipt by the Corporation of a
certificate from RCBA pursuant to Section 3.7(c) of the Unit Purchase Agreement
dated as of July 2, 1992 by and among RCBA, certain purchasers and the
Corporation (the "Unit Purchase Agreement"), which Schedule 13D or Certificate
reports that the RCBA Group has ceased to own beneficially in the aggregate (i)
either Voting Stock representing 10% or more of the Total Current Voting Power
or Equity Securities representing 10% or more of the Total Potential Voting
Power, or (ii) a majority of the shares of Senior Preferred Stock issued on the
date of first issuance of the Senior Preferred Stock. Upon the termination of
the foregoing special voting rights, the term of office of the Senior Preferred
Director shall forthwith terminate. The Corporation shall, upon the written
request of any stockholder of record of the Corporation, promptly mail to such
stockholder a certificate of the Corporation's Secretary stating whether the
conditions under this Section 3(B)(2) have been met.

(3) For purposes of this Section 3, "Voting Stock" means
outstanding shares of Common Stock, those outstanding shares of Preferred Stock
entitled to vote (other than solely in connection with a default in payment of
dividends) and any other outstanding securities of the Corporation having the
ordinary power to vote in the election of directors of the (Corporation, other
than securities having such power only upon the happening of a contingency
which has not yet occurred. "Total Current Voting Power" means, at the relevant
point in time, all actually issued and outstanding Voting Stock. "Equity
Securities" means any securities having voting rights in the election of the
Corporation's Board of Directors not contingent upon default, any securities
convertible into or exercisable or exchangeable for any shares of the
foregoing, counted in each case as if all such securities are fully converted,
exercised or exchanged for the maximum number of voting securities obtainable,
except that the Preferred Stock (and the Common Stock into which such Preferred
Stock is convertible, unless actually outstanding) shall not be counted for
this purpose. "Total Potential Voting Power" means, at the relevant point in
time, all actually issued and outstanding Equity Securities.

(C) In the event that the Corporation shall be in arrears as to
dividend payments upon the Senior Preferred Stock required under Section 2 for
four consecutive quarters, or for six of any eight consecutive quarters, the
number of directors constituting the Corporation's Board of Directors shall be
increased by that number of directors which, when combined with the Senior
Preferred Director, if any, and with the director, if any, nominated by RCBA
pursuant to Section 3.6(b) of the Unit Purchase Agreement, constitutes not less
than one third of the Corporation's total authorized directors (such number of
directors being referred to herein as the "Default Directors"). Thereafter,
until such time as all dividends in arrears have been paid or declared and set
apart for payment, holders of the Senior Preferred Stock, voting as a separate
class, shall be entitled at each subsequent annual meeting of stockholders or
any subsequent special meeting of stockholders for the election of directors,
to elect the Default Directors to fill

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<PAGE> 5
such newly created directorships. The Default Directors may be removed at any
time, without cause by the affirmative vote of the holders of a majority of the
shares of Senior Preferred Stock at the time entitled to vote, and any vacancy
thereby created or created by any removal of such director for cause may be
filled by the vote of such holders. If and when such dividend arrearage shall
cease to exist, the holders of the Senior Preferred Stock shall be divested of
the foregoing special voting rights, subject to revesting in the event of each
and every subsequent like default in payment of dividends. Upon the termination
of the foregoing special voting rights, the terms of office of all persons who
may have been elected directors pursuant to the foregoing special voting rights
shall forthwith terminate and the number of directors constituting the Board of
Directors shall be reduced by the number added as provided in this section. The
voting rights granted by this Section 3(C) shall be in addition to any other
voting rights granted to the holders of the Senior Preferred Stock in this
Section 3.

(D) Except as set forth herein or as otherwise required by law, holders
of Senior Preferred Stock shall have no special voting rights and their consent
shall not be required (except to the extent that they are entitled to vote with
holders of the Common Stock as set forth herein) for taking any corporate
action.

(E) Notwithstanding anything herein to the contrary, upon the
separation and separate certification of any share of Senior Preferred Stock
from its Unit, as provided in Section 2 of the Unit Certificate attached as
Exhibit B to the Unit Purchase Agreement, the holder of such share of Senior
Preferred Stock shall immediately cease to have any voting rights whatsoever
with respect to such share, except for the voting rights set forth in Section
3(C). The Corporation shall, upon the written request of any stockholder of
record of the Corporation, promptly mail to such stockholder a certificate of
the Corporation's Secretary stating the number of shares of Series Preferred
Stock as to which the foregoing condition has been met.

Section 4. Reacquired Shares. Any shares of Senior Preferred Stock
purchased or otherwise acquired by the Corporation in any manner whatsoever
shall be retired and canceled promptly after the acquisition thereof All such
shares shall upon their cancellation and upon the taking of any action by
applicable law become authorized but unissued shares of Preferred Stock and may
be reissued as part of a new series of Preferred Stock to be created by
resolution or resolutions of the Board of Directors, subject to the conditions
and restrictions on issuance set forth herein.

Section 5. Liquidation, Dissolution or Winding Up.

(A) In the event of any liquidation, dissolution or winding up of the
Corporation, either voluntary or involuntary, the assets and funds of the
Corporation available for distribution to the stockholders shall be distributed
as follows:

(i) The holders of the Senior Preferred Stock shall be entitled
to receive, prior to and in preference to any distribution of any of the assets
and funds of the Corporation to the holders of Common Stock or any shares of
stock ranking junior

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<PAGE> 6
(either as to dividends or upon liquidation, dissolution or winding up) to the
Senior Preferred Stock, $20.00 per share, plus an amount equal to accrued and
unpaid dividends thereon, whether or not earned or declared, to the date of
such distribution (the "Liquidation Preference"). If upon the occurrence of any
liquidation, dissolution or winding up of The Corporation, the assets and funds
available for distribution among the holders of the Senior Preferred Stock
pursuant to this subsection (i) shall be insufficient to permit the payment to
such holders of the full aforesaid preferential amount, then the entire assets
and funds of the Corporation legally available for distribution shall be
distributed ratably among the holders of the Senior Preferred Stock in
proportion to the amount of such Senior Preferred Stock owned by each holder.

(ii) After the distribution described in subsection (i) above
has been paid, the remaining assets and funds of the Corporation available for
distribution to stockholders shall be distributed pro rata among the holders of
Common Stock.

(B) (1) A consolidation or merger of the Corporation with or into any
other corporation or corporations, where the stockholders of the Corporation
immediately prior to such transaction shall own less than a majority of the
voting stock of the surviving corporation immediately following such
consolidation or merger, or a sale, conveyance or disposition of all or
substantially all of the assets of the Corporation (any of which transactions
is referred to as a "Corporate Sale"), shall be deemed a liquidation,
dissolution or winding up of the Corporation for purposes of this Section 5
only in the event that the Price Per Common Share (as defined below) is less
than 150% of the exercise price in effect immediately prior to the closing of
the Corporate Sale of those certain Warrants (the "Warrants") issued pursuant
to the Unit Purchase Agreement (as defined in Section 3 hereof). In such event
the Corporation shall, (i) if the Corporate Sale is a sale, conveyance or
disposition of all or substantially all of the assets of the Corporation,
redeem immediately after such Corporate Sale, to the extent funds are legally
available therefor, all of the outstanding shares of Senior Preferred Stock for
cash or other consideration received by the Corporation in such Corporate Sale
in an amount per share equal to the Liquidation Preference calculated as of the
date of such Corporate Sale, with the value of such other consideration
received in such Corporate Sale to be determined by an Independent Appraiser
(as defined below) (and the Corporation shall not effect such a Corporate Sale
if funds are not legally available therefor without the approval of holders of
a majority of the Senior Preferred Stock) or (ii) if the Corporate Sale is a
merger or consolidation, ensure that the holders of Senior Preferred Stock
receive as part of such Corporate Sale cash or securities with a value equal to
the Liquidation Preference calculated as of the date of such Corporate Sale,
such value to be determined by an Independent Appraiser, and if the Corporation
does not ensure that the holders receive such consideration, the Corporation
shall not effect such Corporate Sale without the approval of holders of a
majority of the Senior Preferred Stock. The Price Per Common Share shall be
calculated by dividing the Corporate Sale Proceeds by the number of shares of
Common Stock on an As-Converted Basis. Common Stock on an As-Converted Basis
shall be deemed to include all shares of Common Stock actually issued and
outstanding immediately prior to the closing of such Corporate Sale and all
shares of Common Stock issuable upon exercise or conversion of

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<PAGE> 7
outstanding rights to acquire Common Stock determined by an independent
appraiser or investment banking firm selected by the Corporation and reasonably
acceptable to a majority of the holders of the Senior Preferred Stock
("Independent Appraiser") to have an exercise price or conversion price of less
than the market value of the Common Stock on the date of determination.
Corporate Sales Proceeds shall be deemed to include the aggregate value of
stock, securities, cash or other property to be distributed to the Corporation
or its stockholders in connection with the Corporate Sale plus the
consideration from the exercise or conversion of all rights to acquire Common
Stock that are included in the Common Stock on an As-Converted Basis, net of
(i) the product of the Liquidation Preference and the number of outstanding
shares of Senior Preferred Stock immediately prior to the closing of the
Corporate Sale (the "Aggregate Liquidation Preference"), and (ii) in the case
of a sale of all or substantially all the assets of the Corporation, the fair
market value of all liabilities other than the Aggregate Liquidation
Preference, as determined by an Independent Appraiser.

(2) In no event shall an amount be paid or distributed to the
holders of the Senior Preferred Stock under this Section 5, if and so long as
such payment would constitute a breach under the Company's indebtedness as in
effect on the date of the original issuance of the Senior Preferred Stock.

(C) (1) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation which will involve the
distribution of assets other than cash or securities, an Independent Appraiser
shall promptly be engaged to determine the value of the assets to be
distributed to the holders of shares of Senior Preferred Stock.

(2) In the event of any voluntary or involuntary liquidation,
dissolution or winding up of the Corporation which will involve the
distribution of securities, such securities shall be valued as follows:

(a) Securities not subject to investment letter or
other similar restrictions on marketability:

(i) If traded on a securities exchange or on
the NASDAQ National Market System, the value shall be deemed to be the average
of the closing prices of the securities on such exchange over the 30-day period
ending three (3) days prior to the closing; and

(ii) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid and asked prices
over the 30-day period ending three (3) days prior to the closing; and

(iii) If there is no active public market, the
value shall be the fair market value thereof, as determined by an Independent
Appraiser.

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<PAGE> 8
(b) The method of valuation of securities subject to
investment letter or other restrictions on free marketability shall be to make
an appropriate discount from the market value determined as above in (a)(i),
(ii) or (iii) to reflect the approximate fair market value thereof, as
determined by an Independent Appraiser.

Section 6. Redemption.

(A) Shares of Senior Preferred Stock may be redeemed, at the option of
the Corporation, at any time or from time to time, subject to the provisions of
this Section 6, out of funds legally available for such purpose. The redemption
price for each share of Senior Preferred Stock shall be an amount in cash equal
to the sum of $20.00 plus all accrued and unpaid dividends thereon to the date
fixed for redemption. If less than all the outstanding shares of Senior
Preferred Stock are to be redeemed in an initial redemption, the shares to be
redeemed shall be at least half of the shares of the Senior Preferred Stock
outstanding on the redemption date, and the shares so to be redeemed shall be
redeemed on a pro-rata basis among all such shares outstanding at the record
date for such redemption. If less than all the outstanding shares of Senior
Preferred Stock are redeemed in such an initial redemption, the Corporation
shall be required to redeem all remaining shares of Senior Preferred Stock
outstanding in any subsequent redemption.

(B) Mechanics of Redemption.

(i) In the event the Corporation shall redeem shares of Senior
Preferred Stock, notice of such redemption (the "Redemption Notice") shall be
given by first class mail, postage prepaid, mailed not less than thirty (30)
nor more than sixty (60) days prior to the redemption date, to each holder of
record of the shares to be redeemed, at such holder's address as the same
appears on the stock register of the Corporation. Each such Redemption Notice
shall state the redemption date (the "Redemption Date"), the number of shares
of Senior Preferred Stock to be redeemed and, if less than all the shares held
by such holder are to be redeemed, the number of such shares to be redeemed
from such holder, the redemption price, the place or places where certificates
for such shares are to be surrendered for payment of the redemption price, and
that dividends on the shares to be redeemed will cease to accrue on such
Redemption Date. A Redemption Notice having been mailed as aforesaid, from and
after the Redemption Date (unless default shall be made by the Corporation in
providing money for the payment of the redemption price), dividends on the
shares of the Senior Preferred Stock so called for redemption shall cease to
accrue, and said shares shall no longer be deemed to be outstanding, and all
rights of the holders thereof as holders of Senior Preferred Stock (except the
right to receive from the Corporation the redemption price) shall cease except
as herein provided. Shares of Senior Preferred Stock so called for redemption
may be tendered by the holder thereof to the Corporation for the exercise of
Warrants issued pursuant to the Unit Purchase Agreement as defined in Section 3
hereof for thirty (30) days after the mailing of the Redemption Notice pursuant
to Section 6(B)(ii) hereof. Upon surrender in accordance with said Redemption
Notice

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<PAGE> 9
of the certificates for any shares of Senior Preferred Stock so redeemed
(properly endorsed or assigned for transfer, if the Corporation shall so
require and the notice shall so state), such shares shall be redeemed by the
Corporation at the redemption price aforesaid.

(ii) The Corporation's obligation to provide moneys in
accordance with the preceding sentence shall be deemed fulfilled if, on or
before the Redemption Date, the Corporation shall deposit in a bank or trust
company having a capital and surplus of at least $50,000,000, funds necessary
for such redemption, in trust, with irrevocable instructions that such funds be
applied to the redemption of the shares of Senior Preferred Stock so called for
redemption. Any interest accrued on such funds shall be paid to the Corporation
from time to time. Any funds so deposited and unclaimed at the end of twelve
(12) months from such Redemption Date shall be released or repaid to the
Corporation, after which the holder or holders of Senior Preferred Stock so
called for redemption shall look only to the Corporation for payment of the
redemption price.

Section 7. Conversion. The holders of the Senior Preferred Stock shall have
conversion rights as follows (the "Conversion Rights"):

(A) Right to Convert.

(i) Subject to subsection (C) below, each share of Senior
Preferred Stock shall be convertible, at the option of the holder thereof, at
any time after the date of issuance of such share at the office of the
Corporation or any transfer agent for the Senior Preferred Stock, into such
number of fully paid and nonassessable shares of Common Stock as is determined
by dividing $20.00 by the Conversion Price at the time in effect for such
share. The initial Conversion Price per share for shares of Senior Preferred
Stock shall be $20.00, provided, however, that the Conversion Price for the
Senior Preferred Stock shall be subject to adjustment as set forth in
subsection (C) below.

(ii) In the event of a call for redemption of any shares of
Senior Preferred Stock pursuant to Section 6 hereof, the Conversion Rights
shall terminate as to the shares designated for redemption at the close of
business on the Redemption Date as may have been fixed in any Redemption Notice
with respect to such shares of Senior Preferred Stock, unless default is made
in payment of the redemption price.

(B) Mechanics of Conversion. Before any holder of Senior Preferred
Stock shall be entitled to convert the same into shares of Common Stock, such
holder shall surrender the certificate or certificates therefor, duly endorsed,
at the office of this Corporation or of any transfer agent for the Senior
Preferred Stock, and shall give written notice by mail, postage prepaid, to the
Corporation at its principal corporate office, of the election to convert the
same and shall state therein the name or names in which the certificate or
certificates for shares of Common Stock are to be issued. The Corporation
shall, as soon as practicable thereafter, issue and deliver at such office to

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such holder of Senior Preferred Stock, or to the nominee or nominees of such
holder, a certificate or certificates for the number of shares of Common Stock
to which such holder shall be entitled as aforesaid. Such conversion shall be
deemed to have been made immediately prior to the close of business on the date
of such surrender of the shares of Senior Preferred Stock to be converted, and
the person or persons entitled to receive the shares of Common Stock issuable
upon such conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock as of such date.

(C) Conversion Price Adjustments. The Conversion Price of the Senior
Preferred Stock shall be subject to adjustment from time to time as follows:

(i) In case the Corporation shall at any time subdivide the
outstanding shares of Common Stock, or shall issue a stock dividend on its
outstanding Common Stock, the Conversion Price of the Senior Preferred Stock in
effect immediately prior to such subdivision or the issuance of such dividend
shall be proportionately decreased, and in case the corporation shall at any
time combine the outstanding shares of Common Stock, the Conversion Price of
the Senior Preferred Stock in effect immediately prior to such combination
shall be proportionately increased, effective at the close of business on the
date of such subdivision, dividend or combination, as the case may be.

(ii) If at any time or from time to time there shall be a
recapitalization of the Common Stock or a consolidation or merger of the
Corporation with or into any other person (other than a consolidation or a
merger in which the Corporation is the surviving entity and the holders of the
Corporation's voting stock (defined for purposes of this Section 7(C) as Common
Stock and Senior Preferred Stock which has not lost its right to vote pursuant
to Section 3(E)) before such consolidation or merger continue to own at least a
majority of the voting power of the Corporation) or a sale of all or
substantially of the assets of the Corporation, provision shall be made so that
the holders of the Senior Preferred Stock shall thereafter be entitled to
receive upon conversion of the Senior Preferred Stock the number of shares of
stock or other securities or property of the Corporation, or otherwise, to
which a holder of Common Stock deliverable upon conversion of the Senior
Preferred Stock would have been entitled upon such event. In any such case,
appropriate adjustment shall be made in the application of the provisions of
this Section 7 with respect to the rights of the holders of the Senior
Preferred Stock after the recapitalization, merger, consolidation or sale of
assets to the end that the provisions of this Section 7 (including adjustment
of the Conversion Price for the Senior Preferred Stock then in effect and the
number of shares purchasable upon conversion of the Senior Preferred Stock)
shall be applicable after that event as nearly equivalent as may be
practicable.

(iii) The Corporation will not, by amendment of its Certificate
of Incorporation or through any reorganization, transfer of assets,
consolidation, merger, dissolution, issue or sale of securities or any other
voluntary action, avoid or seek to avoid the observance or performance of any
of the terms to be observed or

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hereunder by the Corporation, but will at all times in good faith assist in
the carrying out of all the provisions of this subsection (C) and in the taking
of all such action as may be necessary or appropriate in order to protect the
Conversion Rights of the holders of the Senior Preferred Stock against
impairment.

(D) No Fractional Shares and Certificate as to Adjustments.

(i) No fractional shares shall be issued upon conversion of the
Senior Preferred Stock. In lieu of the issuance of any fractional share that
would otherwise be issued, the Corporation shall pay in cash the fair value of
such fraction of a share as of the time when those entitled to receive such
fractions are determined. Whether or not fractional shares are issuable upon
such conversion shall be determined on the basis of the total number of shares
of Senior Preferred Stock the holder is at the time converting into Common
Stock and the number of shares of Common Stock issuable upon such aggregate
conversion.

(ii) Upon the occurrence of each adjustment or readjustment of
the Conversion Price of Senior Preferred Stock pursuant to this Section 7, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to
each holder of Senior Preferred Stock a certificate setting forth such
adjustment or readjustment and showing in detail the facts upon which such
adjustment or readjustment is based. The Corporation shall, upon the written
request at any time of any holder of Senior Preferred Stock, furnish or cause
to be furnished to such holder a like certificate setting forth (a) such
adjustment and readjustment, (b) the Conversion Price for the Senior Preferred
Stock at the time in effect and (c) the number of shares of Common Stock and
the amount, if any, of other property which at the time would be received upon
the conversion of a share of Senior Preferred Stock.

(E) Notices of Record Date. In the event of any taking by the
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class
or any other securities or property, or to receive any other right (including
an event described in Section 7(c)(ii) hereof), the Corporation shall mail to
each holder of Senior Preferred Stock, at least 20 days prior to the date
specified therein, a notice specifying the date on which any such record is to
be taken for the purpose of such dividend, distribution or right, and the
amount and character of such dividend, distribution or right.

(F) Reservation of Stock Issuable Upon Conversion. The Corporation
shall at all times reserve and keep available out of its authorized but Common
Stock solely for the purpose of effecting the conversion of the shares of the
Senior Preferred Stock such number of its shares of Common Stock as shall from
time to time be sufficient to effect the conversion of all outstanding shares
of the Senior Preferred Stock; and if at any time the number of authorized but
unissued shares of

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Common Stock shall not be sufficient to effect the conversion of all then
outstanding shares of the Senior Preferred Stock, in addition to such other
remedies as shall be available to the holder of such stock, the Corporation
will take such corporate action as may, in the opinion of its counsel, be
necessary to increase its authorized but unissued shares of Common Stock to
such number of shares as shall be sufficient for such purposes.

(G) Notices. Any notice required by the provisions of this Section 7 to
be given to the holders of shares of Senior Preferred Stock shall be deemed
given if mailed, postage prepaid, or sent via overnight courier service and
addressed to each holder of record at his address appearing on the books of the
Corporation.

Section 8. Ranking. The Senior Preferred Stock shall be senior to all
other series of the Corporation's preferred stock as to the payment of
dividends and the distribution of assets.

Section 9. Amendment. The Certificate of Incorporation of the Corporation
shall not be amended in any manner which would alter or change the powers,
preferences or special rights of the Senior Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of at least a
majority of the outstanding shares of Senior Preferred Stock, voting together
as a single class.

FIFTH: The following provisions are inserted for the management of the
business and the conduct of the affairs of the Corporation, and for further
definition, limitation and regulation of the powers of the Corporation and of
its directors and stockholders:

A. The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. In addition to the powers and
authority expressly conferred upon them by Statute or by this Certificate of
Incorporation or the By-Laws of the Corporation, the directors are hereby
empowered to exercise all such powers and do all such acts and things as may be
exercised or done by the Corporation.

B. The directors of the Corporation need not be elected by written
ballot unless the By-Laws so provide.

C. Any action required or permitted to be taken by the stockholders of
the Corporation must be effected at a duly called annual or special meeting of
stockholders of the Corporation and may not be effected by any consent in
writing by such stockholders.

D. Special meetings of stockholders of the Corporation may be called
only by the Board of Directors pursuant to a resolution adopted by a majority
of the total number of authorized directors (whether or not there exist any
vacancies in previously authorized directorships at the time any such
resolution is presented to the Board for adoption).

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SIXTH:

A. The directors shall be divided into three classes, as nearly equal
in number as reasonably possible, with the term of office of the first class to
expire at the 1988 annual meeting of stockholders, the term of office of the
second class to expire at the 1989 annual meeting of stockholders and the term
of office of the third class to expire at the 1990 annual meeting of
stockholders. At each annual meeting of stockholders following such initial
classification and election, directors shall be elected to succeed those
directors whose terms expire for a term of office to expire at the third
succeeding annual meeting of stockholders after their election. All directors
shall hold office until the expiration of the term for which elected, and until
their respective successors are elected, except in the case of the death,
resignation, or removal of any director.

B. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, newly created directorships resulting from any increase
in the authorized number of directors or any vacancies in the Board of
Directors resulting from death, resignation, retirement, removal from office,
disqualification or other cause may be filled only by a majority vote of the
directors then in office, though less than a quorum, and directors so chosen
shall hold office for a term expiring at the annual meeting of stockholders at
which the term of office of the class to which they have been elected expires.
No decrease in the number of directors constituting the Board of Directors
shall shorten the term of any incumbent director.

C. Subject to the rights of the holders of any series of Preferred
Stock then outstanding, any directors, or the entire Board of Directors, may be
removed from office at any time, but only for cause and only by the affirmative
vote of the holders of at least a majority of the voting power of all of the
then outstanding shares of capital stock of the Corporation entitled to vote
generally in the election of directors, voting together as a single class.

SEVENTH: The Board of Directors is expressly empowered to adopt, amend
or repeal By-laws of the Corporation. Any adoption, amendment or repeal of
By-laws of the Corporation by the Board of Directors shall require the approval
of a majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any
resolution providing for adoption, amendment or repeal is presented to the
Board). The stockholders shall also have power to adopt, amend or repeal the
By-laws of the Corporation. In addition to any vote of the holders of any class
or series of stock of this Corporation required by law or by this Certificate
of Incorporation, the affirmative vote of the holders of at least a majority of
the voting power of all of the then outstanding shares of the capital stock of
the Corporation entitled to vote generally in the election of directors, voting
together as a single class, shall be required to adopt, amend or repeal any
provisions of the By-laws of the Corporation.

EIGHTH: A director of this Corporation shall not be personally liable
to the Corporation or its stockholders for monetary damages for breach of
fiduciary duty as a

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director, except for liability (i) for any breach of the director's duty of
loyalty to the Corporation or its stockholders, (ii) for acts or omissions not
in good faith or which involve intentional misconduct or a knowing violation of
law, (iii) under Section 174 of the Delaware General Corporation Law, or (iv)
for any transaction from which the director derived an improper personal
benefit.

If the Delaware General Corporation Law is hereafter amended to
authorize the further elimination or limitation of the liability of a director,
then the liability of a director of the Corporation shall be eliminated or
limited to the fullest extent permitted by the Delaware General Corporation
Law, as so amended.

Any repeal or modification of the foregoing provisions of this Article
EIGHTH by the stockholders of the Corporation shall not adversely affect any
right or protection of a director of the Corporation existing at the time of
such repeal or modification.

NINTH: The Board of Directors of the Corporation (the "Board"), when
evaluating any offer of another party, (a) to make a tender or exchange offer
for any Voting Stock of the Corporation (as defined in Article SIXTH) or (b) to
effect any merger, consolidation, or sale of all or substantially all of the
assets of the Corporation, shall, in connection with the exercise of its
judgment in determining what is in the best interests of the Corporation as a
whole, be authorized to give due consideration to such factors as the Board
determines to be relevant, including, without limitation:

(i) the interests of the Corporation's stockholders;

(ii) whether the proposed transaction might violate federal or state
laws;

(iii) not only the consideration being offered in the proposed
transaction, in relation to the then current market price for the outstanding
capital stock of the Corporation, but also to the market price for the capital
stock of the Corporation over a period of years, the estimated price that might
be achieved in a negotiated sale of the Corporation as a whole or in part or
through orderly liquidation, the premiums over market price for the securities
of other corporations in similar transactions, current political, economic and
other factors bearing on securities prices and the Corporation's financial
condition and future prospects; and

(iv) the social, legal and economic effects upon employees, suppliers,
customers and others having similar relationships with the Corporation, and the
communities in which the Corporation conducts its business.

In connection with any such evaluation, the Board is authorized to
conduct such investigations and to engage in such legal proceedings as the
Board may determine.

TENTH: The Corporation reserves the right to amend or repeal any
provision contained in this Certificate of Incorporation in the manner
prescribed by the laws of the State of Delaware and all rights conferred upon
stockholders are granted subject to this

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reservation; provided, however. that, notwithstanding any other provision of
this Certificate of Incorporation or any provision of law which might otherwise
permit a lesser vote or no vote, but in addition to any vote of the holders of
any class or series of the stock of this Corporation required by law or by this
Certificate of Incorporation, the affirmative vote of the holders of at least
66-2/3% of the voting power of all of the then-outstanding shares of the
capital stock of the Corporation entitled to vote generally in the election of
directors, voting together as a single class, shall be required to amend or
repeal Article EIGHTH or this Article TENTH.

IN WITNESS WHEREOF, the Corporation has caused this Restated
Certificate of Incorporation, which only restates and integrates and does not
further amend the provisions of the Restated Certificate of Incorporation of
the Corporation as amended (there being no discrepancy between such provisions
and the provisions of this Restated Certificate of Incorporation) and which has
been duly adopted by the Board of Director of the Corporation in accordance
with the provisions of Section 245 of the General Corporation Law of the State
of Delaware, to be signed and attested by duly authorized officers thereof and
its corporate seal to be hereunto affixed this day of June, 1993.

TRIAD SYSTEMS CORPORATION

By: /s/ JAMES R. PORTER
-------------------------------------
James R. Porter
President and Chief Executive Officer

ATTEST:

/s/ JEROME W. CARLSON
- --------------------------------
Jerome W. Carlson
Secretary

<PAGE> 1
EXHIBIT 3.2

CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
TRIAD SYSTEMS CORPORATION

Triad Systems Corporation, a corporation organized and existing under
and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), does hereby certify:

FIRST: That the Stockholders and the Board of Directors of said
corporation, by joint unanimous written consent, filed with the minutes of the
Corporation, declaring the following amendment to the Certificate of
Incorporation of said corporation:

RESOLVED, that the Certificate of Incorporation be amended by changing
the First Article therof so that, as amended, said Article shall be
and read as follows:

The name of the Corporation is COOPERATIVE COMPUTING, INC.

SECOND: That the aforesaid amendment was duly adopted in accordance
with the applicable provisions of Sections 242 and 228 of the General
Corporation Law of the State of Delaware.

IN WITNESS WHEREOF, said Triad Systems Corporation has caused this
certificate to be signed on this 18th day of March, 1997.

Triad Systems Corporation

By: /s/ GLENN E. STAATS
------------------------
Name: Glenn E. Staats
----------------------
Title: President
---------------------

<PAGE> 1
EXHIBIT 3.3

TRIAD SYSTEMS CORPORATION

A DELAWARE CORPORATION

AMENDED AND RESTATED

BY-LAWS

ARTICLE I

STOCKHOLDERS

Section 1. Annual Meeting. An annual meeting of the stockholders, for
the election of directors to succeed those whose terms expire and for the
transaction of such other business as may properly come before the meeting,
shall be held at such place, on such date, and at such time as the Board of
Directors shall each year fix, which date shall be within thirteen months
subsequent to the last annual meeting of stockholders, or if no such meeting
has been held, the date of incorporation.

Section 2. Special Meetings. Special meetings of the stockholders, for
any purpose or purposes prescribed in the notice of the meeting, may be called
only by the Board of Directors and shall be held at such place, on such date,
and at such time as they shall fix. Business transacted at special meetings
shall be confined to the purpose or purposes stated in the notice.

Section 3. Notice of Meetings. Written notice of the place, date, and
time of all meetings of the stockholders shall be given, not less than ten (10)
nor more than sixty (60) days before the date on which the meeting is to be
held, to each stockholder entitled to vote at such meeting, except as otherwise
provided herein or required by law (meaning, here and hereinafter, as required
from time to time by the Delaware General Corporation Law or the Certificate of
Incorporation of the Corporation).

When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for which the meeting was originally noticed,
or if a new record date is fixed for the adjourned meeting, written notice of
the place, date, and time of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.

Section 4. Quorum. At any meeting of the stockholders, the holders of
a majority of all of the shares of the stock entitled to vote at the meeting,
present in person or by proxy, shall constitute a quorum for all purposes,
unless or except to the extent that the presence of a larger number may be
required by law.

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If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote
who are present, in person or by proxy, may adjourn the meeting to another
place, date, or time.

Section 5. Conduct of the Stockholders' Meeting. At every meeting of
the stockholders, the Chairman, if there is such an officer, or if not, the
President of the Corporation, or in his absence the Vice President designated
by the President, or in the absence of such designation any Vice President, or
in the absence of the President or any Vice President a chairman chosen by the
majority of the voting shares represented in person or by proxy, shall act as
Chairman. The Secretary of the Corporation or a person designated by the
Chairman shall act as Secretary of the meeting. Unless otherwise approved by
the Chairman, attendance at the Stockholders' Meeting is restricted to
stockholders of record, persons authorized in accordance with Section 8 of
these By-Laws to act by proxy, and officers of the corporation.

Section 6. Conduct of Business. The Chairman shall call the meeting to
order, establish the agenda, and conduct the business of the meeting in
accordance therewith or, at the Chairman's discretion, it may be conducted
otherwise in accordance with the wishes of the stockholders in attendance. The
date and time of the opening and closing of the polls for each matter upon
which the stockholders will vote at the meeting shall be announced at the
meeting.

The Chairman shall also conduct the meeting in an orderly manner, rule
on the precedence of, and procedure on, motions and other procedural matters,
and exercise discretion with respect to such procedural matters with fairness
and good faith toward all those entitled to take part. The Chairman may impose
reasonable limits on the amount of time taken up at the meeting on discussion
in general or on remarks by any one stockholder. Should any person in
attendance become unruly or obstruct the meeting proceedings, the Chairman
shall have the power to have such person removed from participation.
Notwithstanding anything in the By-Laws to the contrary, no business shall be
conducted at an annual meeting except in accordance with the procedures set
forth in this Section 6 and Section 7, below. The Chairman of an annual meeting
shall, if the facts warrant, determine and declare to the meeting that business
was not properly brought before the meeting and in accordance with the
provisions of this Section 6 and Section 7, and if he should so determine, he
shall so declare to the meeting and any such business not properly brought
before the meeting shall not be transacted.

Section 7. Notice of Stockholder Business. At an annual or special
meeting of the stockholders, only such business shall be conducted as shall
have been properly brought before the meeting. To be properly brought before a
meeting, business must be (a) specified in the notice of meeting (or any
supplement thereto) given by or at

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the direction of the Board of Directors, (b) properly brought before the
meeting by or at the direction of the Board of Directors, or (c) if an annual
meeting, properly brought before the meeting by a stockholder and (d) if a
special meeting if, and only if, the notice of a special meeting provides for
business to be brought before the meeting by stockholders and such business is
properly brought before the meeting by a stockholder.

For business to be properly brought before a meeting by a stockholder,
the stockholder must have given timely notice thereof in writing to the
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not less than ninety (90) days prior to the meeting; provided,
however, that in the event that less than one hundred (100) days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received not
later than the close of business on the 10th day following the day on which
such notice of the date of the annual meeting was mailed or such public
disclosure was made.

A stockholder's notice to the Secretary shall set forth as to each
matter the stockholder proposes to bring before the annual meeting (a) a brief
description of the business desired to be brought before the annual meeting and
the reasons for conducting such business at the annual meeting, (b) the name
and address, as they appear on the Corporation's books, of the stockholder
proposing such business, (c) the class and number of shares of the Corporation
which are beneficially owned by the stockholder, and (d) any material interest
of the stockholder in such business. Stockholder resolutions shall be no more
than five hundred (500) words in length.

No resolution shall be put before the stockholders:

(a) which is not a proper subject for action by
stockholders under Delaware law;

(b) which is obstructive, frivolous, dilatory or
repugnant to good taste;

(d) which relates to the redress of a personal claim or
grievance against the Corporation or any other person, or if it is designated
to result in a benefit or interest that is not shared by the stockholders at
large;

(e) which relates to operations which account for less
than five percent of the Corporation's total assets at the end of its most
recent fiscal year, and for less than five percent of its net earnings and
gross sales for its most recent fiscal year, and is not otherwise significantly
related to the Corporation's business;

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(f) which deals with a matter beyond the Corporation's
power to effectuate;

(g) which deals with a matter relating to conduct of the
ordinary business operations of the Corporation;

(h) which is counter to or substantially duplicative of a
proposal to be submitted by the Corporation at the meeting;

(i) if the proposal deals with substantially the same
subject matter as a prior proposal submitted to stockholders in the
Corporation's proxy statement and a form of proxy related to any annual or
special meeting of stockholders held within the preceding five calendar years,
it may be omitted from the agenda of any meeting of stockholders held within
three calendar years after the latest such submission, provided that:

(i) if the proposal was submitted at only one
meeting during such preceding period, it received less than five percent of the
total number of votes cast in regard thereto; or

(ii) if the proposal was submitted at only two
meetings during such preceding period, it received at the time of its second
submission less than eight percent of the total number of votes cast in regard
thereto; or

(iii) if the prior proposal was submitted at three
or more meetings during such preceding period, it receded at the time of its
latest submission less than ten percent of the total number of votes cast in
regard thereto.

Section 8. Proxies and Voting. At any meeting Of the stockholders,
every stockholder entitled to vote may vote in person or by proxy authorized by
an instrument in writing or by a transmission permitted by law filed in
accordance with the procedure established for the meeting. No stockholder may
authorize more than one proxy for his shares. Any copy, facsimile
telecommunication or other reliable reproduction of the writing or transmission
created pursuant to this paragraph may be substituted or used in lieu of the
original writing or transmission for any and all purposes for which the
original writing or transmission could be used, provided that such copy,
facsimile transmission or other reproduction shall be complete reproduction for
the entire original writing or transmission.

All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefor by a stockholder entitled to vote or his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballots, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballots shall be

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counted by an inspector or inspectors appointed by the chairman of the meeting.
The Corporation may, and to the extent required by law, shall, in advance of
any meeting of stockholders, appoint one or more inspectors to act at the
meeting and make a written report thereof. The Corporation may designate one or
more persons as alternate inspectors to replace any inspector who fails to act.
If no inspector or alternate is able to act at a meeting of stockholders, the
person presiding at the meeting may, and to the extent required by law, shall,
appoint one or more inspectors to act at the meeting. Each inspector, before
entering upon the discharge of his duties, shall take and sign an oath
faithfully to execute the duties of inspector with strict impartiality and
according to the best of his ability.

All elections shall be determined by a plurality of the votes cast,
and except as otherwise required by law, all other matters shall be determined
by a majority of the votes cast affirmatively or negatively.

Section 9. Stock List. A complete list of stockholders entitled to
vote at any meeting of stockholders, arranged in alphabetical order for each
class of stock and showing the address of each such stockholder and the number
of shares registered in his or her name, shall be open to the examination of
any such stockholder, for any purpose germane to the meeting, during ordinary
business hours for a period of at least ten (10) days prior to the meeting,
either at a place within the city where the meeting is to be held, which place
shall be specified in the notice of the meeting, or if not so specified, at the
place where the meeting is to be held.

The stock list shall also be kept at the place of the meeting during
the whole time thereof and shall be open to the examination of any such
stockholder who is present. This list shall presumptively determine the
identity of the stockholders entitled to vote at the meeting and the number of
shares held by each of them.

ARTICLE II

BOARD OF DIRECTORS

Section 1. Number and Term of Office. The number of directors shall
initially be five and, thereafter, shall be fixed from time to time by the
Board of Directors pursuant to a resolution adopted by a majority of the total
number of authorized directors (whether or not there exist any vacancies in
previously authorized directorships at the time any such resolution is
presented to the Board for adoption) or by the affirmative vote of the holders
of at least a majority of the voting power of all of the then outstanding
shares of capital stock of the Corporation entitled to vote generally in the
election of directors, voting together as a single class. The directors shall
be divided into three classes, as nearly equal in number as reasonably
possible, with the term of office of the first class to expire at the 1988
annual meeting of stockholders, the term of office of the second class to
expire at the 1989 annual

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meeting of stockholders and the term of office of the third class to expire at
the 1990 annual meeting of stockholders. At each annual meeting of
stockholders following such initial classification and election, directors
shall be elected to succeed those directors whose terms expire for a term of
office to expire at the third succeeding annual meeting of stockholders after
their election. All directors shall hold office until the expiration of the
term for which elected and until their successors are elected, except in the
case of the death, resignation or removal of any director.

Section 2. Vacancies and Newly Created Directorships. Subject to the
rights of the holders of any series of Preferred Stock then outstanding, newly
created directorships resulting from any increase in the authorized number of
directors or any vacancies in the Board of Directors resulting from death,
resignation, retirement, removal from office, disqualification or other cause
may be filled only by a majority vote of the directors then in office, though
less than a quorum, and directors so chosen shall hold office for a term
expiring at the annual meeting of stockholders at which the term of office of
the class to which they have been elected expires. No decrease in the number of
directors constituting the Board of Directors shall shorten the term of any
incumbent director.

Section 3. Removal. Subject to the rights of the holders of any series
of Preferred Stock then outstanding, any directors, or the entire Board of
Directors, may be removed from office at any time, but only for cause and only
by the affirmative vote of the holders of at least a majority of the voting
power of all of the then-outstanding shares of capital stock of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class.

Section 4. Regular Meetings. Regular meetings of the Board of
Directors shall be held at such place or places, on such date or dates, and at
such time or times as shall have been established by the Board of Directors and
publicized among all directors. A notice of each regular meeting shall not be
required.

Section 5. Special Meetings. Special meetings of the Board of
Directors may be called by one-third of the directors then in office (rounded
up to the nearest whole number) or by the chief executive officer and shall be
held at such place, on such date, and at such time as they or he or she shall
fix. Notice of the place, date, and time of each such special meeting shall be
given each director by whom it is not waived by mailing written notice not
fewer than five (5) days before the meeting or by telegraphing or personally
delivering the same not fewer than twenty-four (24) hours before the meeting.
Unless otherwise indicated in the notice thereof, any and all business may be
transacted at a special meeting.

Section 6. Quorum. At any meeting of the Board of Directors, a
majority of the total number of authorized directors shall constitute a quorum
for all purposes. If a quorum shall fail to attend any meeting, a majority of
those present may adjourn the meeting to another place, date, or time, without
further notice or waiver thereof.

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Section 7. Participation in Meetings by Conference Telephone. Members
of the Board of Directors, or of any committee thereof, may participate in a
meeting of such Board or committee by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can bear each other and such participation shall constitute presence in
peon at such meeting.

Section 8. Conduct of Business. At any meeting of the Board of
Directors, business shall be transacted in such order and manner as the Board
may from time to time determine, and all matters shall be determined by the
vote of a majority of the directors present, except as otherwise provided
herein or required by law. Action may be taken by the Board of Directors
without a meeting if all members thereof consent thereto in writing, and the
writing or writings are filed with the minutes of proceedings of the Board of
Directors.

Section 9. Powers. The Board of Directors may, except as otherwise
required by law, exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation, including, without limiting the
generality of the foregoing, the unqualified power:

(1) To declare dividends from time to time in accordance
with law;

(2) To purchase or otherwise acquire any property, rights
or privileges on such terms as it shall determine;

(3) To authorize the creation, making and issuance, in
such form as it may determine, of written obligations of every kind, negotiable
or non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;

(4) To remove any officer of the Corporation with or
without cause, and from time to time to devolve the powers and duties of any
officer upon any other person for the time being;

(5) To confer upon any officer of the Corporation the
power to appoint, remove and suspend subordinate officers, employees and
agents;

(6) To adopt from time to time such stock, option, stock
purchase, bonus or other compensation plans for directors, officers, employees
and agents of the Corporation and its subsidiaries as it may determine;

(7) To adopt from time to time such insurance,
retirement, and other benefit plans for directors, officers, employees and
agents of the Corporation and its subsidiaries as it may determine; and

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(8) To adopt from time to time regulations, not
inconsistent with these bylaws, for the management of the Corporation's
business and affairs.

Section 10. Compensation of Directors. Directors, as such, may
receive, pursuant to resolution of the Board of Directors, fixed fees and other
compensation for their services as directors, including, without limitation,
their services as members of committees of the Board of Directors.

Section 11. Nomination of Director Candidates. Subject to the rights
of holders of any class or series of stock having a preference over the Common
Stock as to dividends or upon liquidation, nominations for the election of
Directors may be made by the Board of Directors or a proxy committee appointed
by the Board of Directors or by any stockholder entitled to vote in the
election of Directors generally. However, any stockholder entitled to vote in
the election of Directors generally may nominate one or more persons for
election as Directors at a meeting only if timely notice of such stockholder's
intent to make such nomination or nominations has been given in waiting to the
Secretary of the Corporation. To be timely, a stockholder's notice must be
delivered to or mailed and received at the principal executive offices of the
Corporation not fewer than ninety (90) days prior to the meeting; provided,
however, that in the event that less than one hundred (100) days' notice or
prior public disclosure of the date of the meeting is given or made to
stockholders, notice by the stockholder to be timely must be so received no
later than the close of business on the 10th day following the day on which
such notice of the date of the meeting was mailed or such public disclosure was
made. Each such notice shall set forth: (a) the name and address of the
stockholder who intends to make the nomination and of the person or persons to
be nominated; (b) a representation that the stockholder is a holder of record
of stock of the Corporation entitled to vote for the election of Directors on
the date of such notice and intends to appear in person or by proxy at the
meeting to nominate the person or persons specified in the notice; (c) a
description of all arrangements or understandings between the stockholder and
each nominee and any other person or persons (naming such person or persons)
pursuant to which the nomination or nominations are to be made by the
stockholder (d) such other information regarding each nominee proposed by such
stockholder as would be required to be included in a proxy statement filed
pursuant to the proxy rules of the Securities and Exchange Commission, had the
nominee been nominated, or intended to be nominated, by the Board of Directors;
and (e) the consent of each nominee to serve as a director of the Corporation
if so elected.

In the event that a person is validly designated as a nominee in
accordance with this Section 11 and shall thereafter become unable or unwilling
to stand for election to the Board of Directors, the Board of Directors or the
stockholder who proposed such nominee, as the case may be, may designate a
substitute nominee upon delivery, not fewer than five days prior to the date of
the meeting for the election of such nominee, of a written notice to the
Secretary setting forth such information regarding such substitute nominee as
would have been required to be delivered to the Secretary

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<PAGE> 9
pursuant to this Section 11 had such substitute nominee been initially proposed
as a nominee. Such notice shall include a signed consent to serve as a Director
of the Corporation, if elected, of each such substitute nominee.

If the chairman of the meeting for the election of Directors
determines that a nomination of any candidate for election as a Director at
such meeting vas not made in accordance with the applicable provisions of this
Section 11, such nomination shall be void; provided, however, that nothing in
this Section 11 shall be deemed to limit any voting rights upon the occurrence
of dividend arrearages provided to holders of Preferred Stock pursuant to the
Preferred Stock designation for any series of Preferred Stock

ARTICLE III

COMMITTEES

Section 1. Committees of the Board of Directors. The Board of
Directors, by a vote a majority of the whole Board, may from time to time
designate committees of the Board, with such lawfully delegable powers and
duties as it thereby confers, to serve at the pleasure of the Board and shall,
for those committees and any others provided for herein, elect a director or
directors to serve as the member or members, designating, if it desires, other
directors as alternate members who may replace any absent or disqualified
member at any meeting of the committee. Any committee so designated may
exercise the power and authority of the Board of Directors to declare a
dividend, to authorize the issuance of stock or to adopt a certificate of
ownership and merger pursuant to Section 253 of the Delaware General
Corporation Law if the resolution which designates the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any committee and any alternate
member in his place, the member or members of the committee present at the
meeting and not disqualified from voting, whether or not he or she or they
constitute a quorum, may by unanimous vote appoint another member of the Board
of Directors to act at the meeting in the place of the absent or disqualified
member.

Section 2. Conduct of Business. Each committee may determine the
procedural rules for meeting and conducting its business and shall act in
accordance therewith, except as otherwise provided herein or required by law.
Adequate provision shall be made for notice to members of all meetings;
one-third of the authorized members shall constitute a quorum unless the
committee shall consist of one or two members in which event one member shall
constitute a quorum; and all matters shall be determined by a majority vote of
the members present. Action may be taken by any committee without a meeting if
all members thereof consent thereto in writing, and the writing or writings are
filed with the minutes of the proceedings of such committee.

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ARTICLE IV

OFFICERS

Section 1. Generally. The officers of the Corporation shall consist of
a President, one or more Vice Presidents, a Secretary, a Treasurer and such
other offices as may from time to tithe be appointed by the Board of Directors.
Officers shall be elected by the Board of Directors, which shall consider that
subject at its first meeting after every annual meeting of stockholders. Each
officer shad hold office until his or her successor is elected and qualified or
until his or her earlier resignation or removal. The President shall be a
member of the Board of Directors. Any number of offices may be held by the
same person.

Section 2. President. The President shall be the chief executive
officer of the Corporation. Subject to the provisions of these By-Laws and to
the direction of the Board of Directors, he or she shall have the
responsibility for the general management and control of the business and
affairs of the Corporation and shall perform all duties and have all powers
which are commonly incident to the office of chief executive or which are
delegated to him or her by the Board of Directors. He or she shall have power
to sign all stock certificates, contracts and other instruments of the
Corporation which are authorized and shad have general supervision and
direction of all of the other officers, employees and agents of the
Corporation.

Section 3. Vice President. Each Vice President shall have such powers
and duties as may be delegated to him or her by the Board of Directors. One
Vice President shall be designated by the Board to perform the duties and
exercise the powers of the President in the event of the President's absence or
disability.

Section 4. Treasurer. The Treasurer shall have the responsibility for
maintaining the financial records of the Corporation and shall have custody of
all monies and securities of the Corporation. He or she shall make such
disbursements of the funds of the Corporation as are authorized and shall
render from time to time an account of all such transactions and of the
financial condition of the Corporation. The Treasurer shall also perform such
other duties as the Board of Directors may from time to time prescribe.

Section 5. Secretary. The secretary shall issue all authorized notices
for, and shall keep, or cause to be kept, minutes of all meetings of the
stockholders, the Board of Directors, and all committees of the Board of
Directors. He or she shall have charge of the corporate books and shall
perform such other duties as the Board of Directors may from time to time
prescribe.

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Section 6. Delegation of Authority. The Board of Directors may from
time to time delegate the powers or duties of any officer to any other officers
or agents, notwithstanding any provision hereof.

Section 7. Removal. Any officer of the Corporation may be removed at
any time, with or without cause, by the Board of Directors.

Section 8. Action With Respect to Securities of Other Corporations.
Unless otherwise directed by the Board of Directors, the President or any
officer of the Corporation authorized by the President shall have power to vote
and otherwise act on behalf of the Corporation, in person or by proxy, at any
meeting of stockholders of or with respect to any action of stockholders of any
other corporation in which this Corporation may hold securities and otherwise
to exercise any and all rights and powers which this Corporation may possess by
reason of its ownership of securities in such other corporation.

ARTICLE V

STOCK

Section 1. Certificates of Stock. Each stockholder shall be entitled
to a certificate signed by, or in the name of the Corporation by, the President
or a Vice President, and by the Secretary or an Assistant Secretary, or the
Treasurer or an Assistant Treasurer, certifying the number of shares owned by
him or her. Any of or all the signatures on the certificate may be facsimile.

Section 2. Transfers of Stock. Transfers of stock shall be made only
upon the transfer books of the Corporation kept at an office of the Corporation
or by transfer agents designated to transfer shares of the stock of the
Corporation. Except where a certificate is issued in accordance with Section 4
of Article V of these By-laws, an outstanding certificate for the number of
shares involved shall be surrendered for cancellation before a new certificate
is issued therefor.

Section 3. Record Date. The Board of Directors may fix a record date,
which shall not be more than sixty nor fewer than ten days before the date of
any meeting of stockholders, nor more than sixty days prior to the time for the
other action hereinafter described, as of which there shall be determined the
stockholders who are entitled: to notice of or to vote at any meeting of
stockholders or any adjournment thereof; to express consent to corporate action
in writing without a meeting; to receive payment of any dividend or other
distribution or allotment of any rights; or to exercise any rights with respect
to any change, conversion or exchange of stock or with respect to any other
lawful action.

11
<PAGE> 12
Section 4. Lost. Stolen or Destroyed Certificates. In the event of the
loss, theft or destruction of any certificate of stock, another may be issued
in its place pursuant to such regulations as the Board of Directors may
establish concerning proof of such loss, theft or destruction and concerning
the giving of a satisfactory bond or bonds of indemnity.

Section 5. Regulations. The issue, transfer, conversion and
registration of certificates of stock shall be governed by such other
regulations as the Board of Directors may establish.

ARTICLE VI

NOTICES

Section 1. Notices. Except as otherwise specifically provided herein
or required by law, all notices required to be given to any stockholder,
director, officer, employee or agent shall be in writing and may in every
instance be effectively given by hand delivery to the recipient thereof, by
depositing such notice in the mails, postage paid, or by sending such notice by
prepaid telegram or mailgram. Any such notice shall be addressed to such
stockholder, director, officer, employee or agent at his or her last known
address as the same appears on the books of the Corporation. The time when such
notice shall be deemed to be given shall be the time such notice is received by
such stockholder, director, officer, employee or agent, or by any person
accepting such notice on behalf of such person, if hand delivered, or
dispatched, if delivered through the mails or by telegram or mailgram.

Section 2. Waivers. A written waiver of any notice, signed by a
stockholder, director, officer, employee or agent, whether before or after the
time of the event for which notice is to be given, shall be deemed equivalent
to the notice required to be given to such stockholder, director, officer,
employee or agent. Neither the business nor the purpose of any meeting need be
specified in such a waiver.

ARTICLE VII

MISCELLANEOUS

Section 1. Facsimile Signatures. In addition to the provisions for use
of facsimile signatures elsewhere specifically authorized in these by-laws,
facsimile signatures of any officer or officers of the Corporation may be used
whenever and as authorized by the Board of Directors or a committee thereof.

Section 2. Corporate Seal. The Board of Directors may provide a
suitable seal, containing the name of the Corporation, which seal shall be in
the charge of the Secretary. If and when so directed by the Board of Directors
or a committee thereof, duplicates of the seal may be kept and used by the
Treasurer or by an Assistant Secretary or Assistant Treasurer.

12
<PAGE> 13
Section 3. Reliance Upon Books. Reports and Records. Each director,
each member of any committee designated by the Board of Directors, and each
officer of the Corporation shall, in the performance of her duties, be fury
protected in relying in good faith upon the books of account or other records
of the Corporation, including reports made to the Corporation by any of its
officers, by an independent certified public accountant, or by an appraiser
selected with reasonable care.

Section 4. Fiscal Year. The fiscal year of the Corporation shall be as
fixed by the Board of Directors.

Section 5. Lime Periods. In applying any provision of these by-laws
which require that an act be done or not done a specified number of days prior
to an event or that an act be done during a period of a specified number of
days prior to an event, calendar days shall be used, the day of the doing of
the act shall be excluded, and the day of the event shall be included.

ARTICLE VIII

INDEMNIFICATION OF DIRECTORS AND OFFICERS

Section 1. Right to Indemnification. Each person who was or is made a
parts or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
("proceeding"), by reason of the fact that he or she or a person of whom he or
she is the legal representative, is or was a director, officer or employee of
the Corporation or is or was serving at the request of the Corporation as a
director, officer or employee of another corporation, or of a partnership,
joint venture, trust or other enterprise, including service with respect to
employee benefit plans, whether the basis of such proceeding is alleged action
in an official capacity as a director, officer or employee or in any other
capacity while serving as a director, officer or employee, shall be indemnified
and held harmless boy the Corporation to the fullest extent authorized by
Delaware Law, as the same exists or may hereafter be amended (but, in the case
of any such amendment, only to the extent that such amendment permits the
Corporation to provide broader indemnification rights than said Law permitted
the Corporation to provide prior to such amendment) against all expenses,
liability and loss (including attorneys' fees, judgments, fines, ERISA excise
taxes or penalties, amounts paid or to be paid in settlement and amounts
expended in seeking indemnification granted to such person under applicable
law, this by-law or any agreement with the Corporation) reasonably incurred or
suffered by such person in connection therewith and such indemnification shall
continue as to a person who has ceased to be a director, officer or employee
and shall inure to the benefit of his or her

13
<PAGE> 14
heirs, executors and administrators; provided. however. that, except as
provided in Section 2 of this Article VIII, the Corporation shall indemnify any
such person seeking indemnity in connection with an action, suit or proceeding
(or part thereof) initiated by such person only if such action, suit or
proceeding (or part thereof) was authorized by the board of directors of the
Corporation. Such right shall be a contract right and shall include the right
to be paid by the Corporation expenses incurred in defending any such
proceeding in advance of its final disposition; provided. however. that, if
the Delaware General Corporation Law then so requires, the payment of such
expenses incurred by a director or officer of the Corporation in his or her
capacity as a director or officer (and not in any other capacity in which
service was or is rendered by such person while a director or officer,
including, without limitation, service to an employee benefit plan) in advance
of the final disposition of such proceeding, shall be made only upon delivery
to the Corporation of an undertaking, by or on behalf of such director or
officer, to repay all amounts so advanced if it should be determined ultimately
that such director or officer is not entitled to be indemnified under this
Section or otherwise.

Section 2. Right of Claimant to Bring Suit. If a claim under Section 1
of this Article VIII is not paid in full by the Corporation Within twenty (20)
days after a written claim has been received by the Corporation, the claimant
may at any time thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if such suit is not frivolous or brought in bad
faith, the claimant shall be entitled to be paid also the expense of
prosecuting such claim. It shall be a defense to any such action (other than an
action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the required undertaking,
if any, has been tendered to this Corporation) that the claimant has not met
the standards of conduct which make it permissible under the Delaware General
Corporation Law for the Corporation to indemnify the claimant for the amount
claimed, but the burden of proving such defense shall be on the Corporation.
Neither the failure of the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant
is proper in the circumstances because he or she has met the applicable
standard of conduct set forth in the Delaware General Corporation Law, nor an
actual determination by the Corporation (including its Board of Directors,
independent legal counsel, or its stockholders) that the claimant has not met
such applicable standard of conduct, shall be a defense to the action or create
a presumption that claimant has not met the applicable standard of conduct.

Section 3. Non-Exclusivity of Rights. The rights conferred on any
person in Sections 1 and 2 shall not be exclusive of any other right which such
persons may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, by-law, agreement, vote of stockholders or
disinterested directors or otherwise.

14
<PAGE> 15
Section 4. Indemnification Contracts. The Board of Directors is
authorized to enter into a contract with any director, officer, employee or
agent of the Corporation, or any person serving at the request of the
Corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise, including employee
benefit plans, providing for indemnification rights equivalent to or, if the
Board of Directors so determines, greater than, those provided for in this
Article VIII.

Section 5. Insurance. The Corporation shall maintain insurance to the
extent reasonably available, at its expense, to protect itself and any such
director, officer, employee or agent of the Corporation or another corporation,
partnership, joint venture, trust or other enterprise against any such expense,
liability or loss, whether or not the Corporation would have the power to
indemnify such person against such expense, liability or loss under the
Delaware General Corporation Law.

Section 6. Effect of Amendment. Any amendment, repeal or modification
of any provision of this Article VIII by the stockholders and the directors of
the Corporation shall not adversely affect any right or protection of a
director or officer of the Corporation existing at the time of such amendment,
repeal or modification.

ARTICLE IX

AMENDMENTS

The Board of Directors is expressly empowered to adopt, amend or
repeal By-Laws of the Corporation. Any adoption, amendment or repeal of By-Laws
of the Corporation by the Board of Directors shall require the approval of a
majority of the total number of authorized directors (whether or not there
exist any vacancies in previously authorized directorships at the time any
resolution providing for adoption, amendment or repeal is presented to the
Board). The stockholders shad also have power to adopt, amend or repeal the
By-Laws of the Corporation. In addition to any vote of the holders of any class
or series of stock of this Corporation required by law or by these By-Laws, the
affirmative vote of the holders of at least a majority of the voting power of
an of the then-outstanding shares of the capital stock of the Corporation
entitled to vote generally in the election of directors, voting together as a
single class, shall be required to adopt, amend or repeal any provisions of the
By-Laws of the Corporation.

<PAGE> 1
EXHIBIT 4.1

================================================================================

INDENTURE

Dated as of February 10, 1998

Between

COOPERATIVE COMPUTING, INC., as Issuer,

and

NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee

__________________

$100,000,000

9% Senior Subordinated Notes due 2008, Series A

9% Senior Subordinated Notes due 2008, Series B

================================================================================
<PAGE> 2

INDENTURE dated as of February 10, 1998, between COOPERATIVE
COMPUTING, INC., a Delaware corporation (the "Company"), and NORWEST BANK
MINNESOTA, NATIONAL ASSOCIATION, as trustee (the "Trustee").

Each party hereto agrees as follows for the benefit of each
other party and for the equal and ratable benefit of the Holders of the
Securities:

ARTICLE ONE

DEFINITIONS AND INCORPORATION BY REFERENCE

SECTION 1.01. Definitions.

"Acceleration Notice" has the meaning provided in Section 6.02.

"Acquired Indebtedness" means Indebtedness of a Person or any of its
Subsidiaries existing at the time such Person becomes a Subsidiary of the
Company or at the time it merges or consolidates with the Company or any of its
Subsidiaries or assumed in connection with the acquisition of assets from such
Person and not incurred by such Person in connection with, or in anticipation
or contemplation of, such Person becoming a Subsidiary of the Company or such
acquisition, merger or consolidation.

"Acquired Preferred Stock" means Preferred Stock of any Person at the
time such Person becomes a Subsidiary of the Company or at the time it merges
or consolidates with the Company or any of its Subsidiaries and not issued by
such person in connection with, or in anticipation or contemplation of, such
acquisition, merger or consolidation.

"Affiliate Transaction" has the meaning provided in Section 4.03.

"Agent" means any Registrar, Paying Agent or co-Registrar.

"ARISB Acquisition" means the acquisition of certain assets of ADP
Claims Solutions, Group, Inc. ("ADP") pursuant to the Asset Purchase Agreement
dated November 20, 1997 between the Company and ADP.

"Asset Acquisition" means (i) an Investment by the Company or any
Subsidiary of the Company in any other Person pursuant to which such Person
shall become a Subsidiary of the Company or shall be consolidated or merged
with the Company or any Subsidiary of the Company or (ii) the acquisition by
the Company or any Subsidiary of the Company of assets of any Person comprising
a division or line of business of such Person.

stock by the Company or any of its Subsidiaries) to any Person other than the
Company or a Wholly Owned Subsidiary of the Company of (i) any Capital Stock of
any Subsidiary of the Company or (ii) any other property or assets of the
Company or any Subsidiary of the Company other than in the ordinary course of
business; provided, however, that for purposes of Section 4.08, Asset Sales
shall not include (a) a transaction or series of related transactions in which
the Company or its Subsidiaries receive aggregate consideration of less than
$1,000,000, (b) transactions covered by the Article Five or permitted by
Section 4.09, (c) a Restricted Payment that otherwise qualifies under Section
4.10, (d) any disposition of obsolete or worn out equipment or equipment that
is no longer useful in the conduct of the business of the Company and its
Subsidiaries and that is disposed of, in each case, in the ordinary course of
business or (e) sales of receivables and leases in connection with the lease
financing activities described in clause (xii) of the definition of "Permitted
Indebtedness."

"Asset Swap" means the execution of a definitive agreement, subject
only to approval of the United States Federal Trade Commission, if applicable,
and other customary closing conditions, that the Company in good faith believes
will be satisfied, for a substantially concurrent purchase and sale, or
exchange, of Productive Assets between the Company or any of its Subsidiaries
and another Person or group of affiliated Persons; provided that any amendment
to or waiver of any closing condition that individually or in the aggregate is
material to the Asset Swap shall be deemed to be a new Asset Swap; it being
understood that an Asset Swap may include a cash equalization payment made in
connection therewith provided that such cash payment, if received by the
Company or its Subsidiaries, shall be deemed to be proceeds received from an
Asset Sale and applied in accordance with Section 4.08.

"Bankruptcy Law" has the meaning provided in Section 6.01.

"Board of Directors" means the Board of Directors or other governing
body charged with the ultimate management of any Person, or any duly authorized
committee thereof.

"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person or a duly authorized
committee of such Board of Directors.

"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York or Chicago, Illinois are
not required to be open.

"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations or other equivalents
(however designated) of capital stock of such Person and (ii) with respect to
any Person that is not a corporation, any and all partnership or other equity
interests of such Person.

"Capitalized Lease Obligation" means, as to any Person, the obligation
of such Person to pay rent or other amounts under a lease to which such Person
is a party that is required to be classified and accounted for as a capital
lease obligation under GAAP, and for purposes of this definition, the amount of
such obligation at any date shall be the capitalized amount of such obligation
at such date, determined in accordance with GAAP.

"Cash Equivalents" means (i) marketable direct obligations issued by,
or unconditionally guaranteed by, the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof; (ii)
marketable direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing within one year from the date of acquisition
thereof and, at the time of acquisition, having one of the two highest ratings
obtainable from either Standard & Poor's Corporation or Moody's Investors
Service, Inc.; (iii) commercial paper maturing no more than one year from the
date of creation thereof and, at the time of acquisition, having a rating of at
least A-1 from Standard & Poor's Corporation or at least P-1 from Moody's
Investors Service, Inc.; (iv) certificates of deposit or bankers' acceptances
maturing within one year from the date of acquisition thereof issued by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia or any U.S. branch of a
<PAGE> 4
-3-

foreign bank having at the date of acquisition thereof combined capital and
surplus of not less than $200,000,000; (v) repurchase obligations with a term
of not more than seven days for underlying securities of the types described in
clause (i) above entered into with any bank meeting the qualifications
specified in clause (iv) above; and (vi) investments in money market funds that
invest substantially all their assets in securities of the types described in
clauses (i) through (v) above.

"Change of Control" means the occurrence of one or more of the
following events: (i) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all or substantially all of
the assets of the Company to any Person or group of related Persons for
purposes of Section 13(d) of the Exchange Act (a "Group") (whether or not
otherwise in compliance with the provisions of this Indenture), other than to
Hicks Muse, any of its Affiliates, officers and directors, Glenn E. Staats or
any of his Affiliates or Preston W. Staats or any of his Affiliates
(collectively, the "Permitted Holders"); or (ii) a majority of the board of
directors of the Company or Holding shall consist of Persons who are not
Continuing Directors; or (iii) the acquisition by any Person or Group (other
than the Permitted Holders or any direct or indirect Subsidiary of any
Permitted Holder, including without limitation, Holding) of the power, directly
or indirectly, to vote or direct the voting of securities having more than 50%
of the ordinary voting power for the election of directors of the Company or
Holding.

"Change of Control Date" has the meaning provided in Section 4.15.

"Change of Control Offer" has the meaning provided in Section 4.15.

"Change of Control Payment Date" has the meaning provided in Section
4.15.

"Change of Control Redemption" has the meaning specified in paragraph
5 of the Securities.

"Company" means the Person named as the "Company" in the first
paragraph of this Indenture until a successor shall have become such pursuant
to the applicable provisions of this Indenture, and thereafter "Company" shall
mean such successor.

"Company Request" or "Company Order" means a written request or order
signed in the name of the Company by its Chairman of the Board, its Vice
Chairman of the Board, its President, a Vice President or its Treasurer, and by
its Assistant Treasurer, its Secretary or an Assistant Secretary, and delivered
to the Trustee.

Period, (2) if since the beginning of such Four Quarter Period the Company or
any Subsidiary of the Company shall have made any Asset Sale, the Consolidated
EBITDA for such Four Quarter Period shall be reduced by an amount equal to the
Consolidated EBITDA (if positive) directly attributable to the assets that are
the subject of such Asset Sale for such Four Quarter Period or increased by an
amount equal to the Consolidated EBITDA (if negative) directly attributable
thereto for such Four Quarter Period and Consolidated Fixed Charges for such
Four Quarter Period shall be reduced by an amount equal to the Consolidated
Fixed Charges directly attributable to any Indebtedness or preferred stock of
the Company or any Subsidiary of the Company repaid, repurchased, defeased or
otherwise discharged with respect to the Company and its continuing
Subsidiaries in connection with such Asset Sale for such Four Quarter Period
(or, if the Capital Stock of any Subsidiary of the Company are sold, the
Consolidated Fixed Charges for such Four Quarter Period directly attributable
to the Indebtedness of such Subsidiary to the extent the Company and its
continuing Subsidiaries are no longer liable for such Indebtedness after such
sale), (3) if since the beginning of such Four Quarter Period the Company or
any Subsidiary of the Company (by merger or otherwise) shall have made an
Investment in any Subsidiary of the Company (or any Person that becomes a
Subsidiary of the Company) or an acquisition of assets, including any
acquisition of assets occurring in connection with a transaction causing a
calculation to be made hereunder, which constitutes all or substantially all of
an operating unit of a business, Consolidated EBITDA and Consolidated Fixed
Charges for such Four Quarter Period shall be calculated after giving pro forma
effect thereto (including the Incurrence of any Indebtedness or the issuance of
any preferred stock) as if such Investment or acquisition occurred on the first
day of such Four Quarter Period and (4) if since the beginning of such Four
Quarter Period any Person (that subsequently became a Subsidiary or was merged
with or into the Company or any Subsidiary of the Company since the beginning
of such Four Quarter Period) shall have made any Asset Sale or any Investment
or acquisition of assets that would have required an adjustment pursuant to
clause (2) or (3) above if made by the Company or a Subsidiary of the Company
during such Four Quarter Period, Consolidated EBITDA and Consolidated Fixed
Charges for such Four Quarter Period shall be calculated after giving pro forma
effect thereto as if such Asset Sale, Investment or acquisition of assets
occurred on, with respect to any Investment or acquisition, the first day of
such Four Quarter Period and, with respect to any Asset Sale, the day prior to
the first day of such Four Quarter Period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the
amount of income or earnings relating thereto and the amount of Consolidated
Fixed Charges associated with any Indebtedness incurred or the issuance of any
preferred stock in connection therewith, the pro forma calculations shall be
determined reasonably and in good faith by a responsible financial or
accounting officer of the Company. If any Indebtedness bears a floating rate of
interest and is being given pro forma effect, the interest expense on such
Indebtedness shall be calculated as if the rate in effect on the date of
determination had been the applicable rate for the entire period (taking into
account any agreement under which Interest Swap Obligations are outstanding
applicable to such Indebtedness if such agreement under which such Interest
Swap Obligations are outstanding has a remaining term as at the date of
determination in excess of 12 months); provided, however, that the Consolidated
Interest Expense of the Company attributable to interest on any Indebtedness
incurred under a revolving credit facility computed on a pro forma basis shall
be computed based upon the average daily balance of such Indebtedness during
the Four Quarter Period.

"Consolidated EBITDA" means, for any period, the Consolidated Net
Income for such period, plus the following to the extent deducted in
calculating such Consolidated Net Income: (i) Consolidated Income Tax Expense
for such period; (ii) Consolidated Fixed Charges for such period; and (iii)
Consolidated Non-cash Charges for such period less all non- cash items
increasing Consolidated Net Income for such period.

"Consolidated Fixed Charges" means, with respect to any Person for any
period, the sum, without duplication, of (i) Consolidated Interest Expense and
(ii) the amount of all cash dividend payments or payments in Disqualified
Capital Stock on Preferred Stock of Subsidiaries of such Person or on
Disqualified Capital Stock of such Person held by Persons other than the
Company or any Wholly Owned Subsidiaries paid, accrued or scheduled to be paid
or accrued during such period.
<PAGE> 6
-5-

"Consolidated Income Tax Expense" means, with respect to the Company
for any period, the provision for Federal, state, local and foreign income
taxes payable by the Company and its Subsidiaries for such period as determined
on a consolidated basis in accordance with GAAP.

"Consolidated Interest Expense" means, with respect to any Person for
any period, without duplication, the sum of (i) the interest expense of such
Person and its Subsidiaries for such period as determined on a consolidated
basis in accordance with GAAP, including, without limitation, (a) any
amortization of debt discount, (b) the net cost under Interest Swap Obligations
(including any amortization of discounts), (c) the interest portion of any
deferred payment obligation, (d) all commissions, discounts and other fees and
charges owed with respect to letters of credit, bankers' acceptance financing
or similar facilities, and (e) all accrued or capitalized interest and (ii) the
interest component of Capitalized Lease Obligations paid or accrued by such
Person and its Subsidiaries during such period as determined on a consolidated
basis in accordance with GAAP.

"Consolidated Net Income" of any Person means, for any period, the
aggregate net income (or loss) of such Person and its Subsidiaries for such
period on a consolidated basis, determined in accordance with GAAP; provided,
however, that there shall be excluded therefrom, without duplication, (a) gains
and losses from Asset Sales (without regard to the $1,000,000 limitation set
forth in the definition thereof) or abandonments or reserves relating thereto
and the related tax effects, (b) items classified as extraordinary or
nonrecurring gains and losses, and the related tax effects according to GAAP,
(c) the net income (or loss) of any Person acquired in a pooling of interests
transaction accrued prior to the date it becomes a Subsidiary of such first
referred to Person or is merged or consolidated with it or any of its
Subsidiaries, (d) the net income of any Subsidiary to the extent that the
declaration of dividends or similar distributions by that Subsidiary of that
income is restricted by contract, operation of law or otherwise, (e) the net
income of any Person, other than the Company or a Subsidiary or other than an
Unrestricted Subsidiary, except to the extent of the lesser of (x) dividends or
distributions paid to such first referred to Person or its Subsidiary by such
Person and (y) the net income of such Person (but in no event less than zero),
and the net loss of such Person shall be included only to the extent of the
aggregate Investment of the first referred to Person or a consolidated
Subsidiary of such Person and any non-cash expenses attributable to grants or
exercises of employee stock options, (f) charges relating to the amortization
or write-off of intangibles or other goodwill arising from the ARISB
Acquisition or the Triad Acquisition and (g) the cumulative effect of changes
in accounting principles.

"Consolidated Non-Cash Charges" means, with respect to any Person for
any period, the aggregate depreciation, amortization and other non-cash
expenses of such Person and its Subsidiaries (excluding any such charges
constituting an extraordinary or nonrecurring item) reducing Consolidated Net
Income of such Person and its Subsidiaries for such period, determined on a
consolidated basis in accordance with GAAP.

"Continuing Director" means, as of the date of determination, any
Person who (i) was a member of the board of directors of the Company or
Holdings on the Issue Date, (ii) was nominated for election or elected to the
board of directors of the Company or Holdings, as the case may be, with the
affirmative vote of a majority of the Continuing Directors who were members of
such board of directors at the time of such nomination or election or (iii) is
a representative of a Permitted Holder.

"Corporate Leases" mean the lease agreements with respect to the
Company's offices and facilities in Austin, Texas, leased by the Company from a
corporation owned by Messrs. Glenn and Preston Staats and offices and
facilities in Livermore, California, leased from Triad Park LLC, each as in
effect on the Issue Date or as may be subsequently amended in a way not
materially adverse to holders of the Securities or the Company.

"Corporate Trust Office of the Trustee" means the principal office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of original execution of this
Indenture is located at Sixth Street and Marquette Avenue, Minneapolis,
Minnesota 55479-0069, Attention: Corporate Trust Department.
<PAGE> 7
-6-

"Credit Agreement" means (i) the Credit Agreement, dated as of
February 27, 1997, as amended and restated as of February 10, 1998, among the
Company, Holding, The Chase Manhattan Bank, as administrative agent,
NationsBank of Texas, N.A., as Lender, and any other financial institutions
from time to time party thereto, together with the related documents thereto
(including, without limitation, any guarantee agreements and security
documents) as the same may be amended, supplemented, restated, restored or
otherwise modified from time to time, including amendments, supplements or
modifications relating to the addition or elimination of Subsidiaries of the
Company as borrowers or guarantors or other credit parties thereunder, and (ii)
any renewal, extension, refunding, restructuring, restatements, replacement or
refinancing thereof (whether with the original administrative agent and lenders
or another administrative agent or agents or one or more other lenders and
whether provided under the original Credit Agreement or one or more other
credit or other agreements).

"Currency Agreement" means any foreign exchange contract, currency
swap agreement or other similar agreement or arrangement designed to protect
the Company or any of its Subsidiaries against fluctuations in currency values.

"Custodian" has the meaning provided in Section 6.01.

"Default" means an event or condition the occurrence of which is, or
with the lapse of time or the giving of notice or both would be, an Event of
Default.

"Depository" means, with respect to the Securities issued in the form
of one or more Global Securities, The Depository Trust Company or another
Person designated as Depository by the Company, which must be a clearing agency
registered under the Exchange Act.

"Designated Senior Indebtedness" means (i) all obligations under the
Credit Agreement and (ii) any other Senior Indebtedness of the Company which,
at the date of determination, has an aggregate principal amount outstanding of,
or under which, at the date of determination, the holders thereof are committed
to lend up to, at least $10,000,000 and is specifically designated by the
Company in the instrument evidencing or governing such Senior Indebtedness as
"Designated Senior Indebtedness" for purposes of this Indenture.

"Disqualified Capital Stock" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures
(excluding any maturity as the result of an optional redemption by the issuer
thereof) or is mandatorily redeemable on or before February 1, 2008, pursuant
to a sinking fund obligation or otherwise, or is redeemable at the sole option
of the holder thereof (except, in each case, upon the occurrence of a Change of
Control), in whole or in part, on or prior to February 1, 2008; provided that
only the portion of Capital Stock which so matures or is mandatorily redeemable
or is so redeemable at the sole option of the holder thereof prior to February
1, 2008 shall be deemed to be Disqualified Capital Stock.

"Equity Offering" means a private sale or an underwritten public
offering of Capital Stock (other than Disqualified Capital Stock) of the
Company or Holdings (to the extent, in the case of Holdings, that the net cash
proceeds thereof are contributed to the common or non-redeemable preferred
equity capital of the Company).

"Event of Default" has the meaning provided in Section 6.01.

"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations promulgated by the SEC thereunder.

"Exchange Securities" means the 9% Senior Subordinated Notes due 2008,
Series B, to be issued in exchange for the Initial Securities pursuant to the
Registration Rights Agreement.
<PAGE> 8
-7-

"Final Maturity Date" means February 1, 2008.

"Financial Monitoring and Oversight Agreements" means the Monitoring
and Oversight Agreement among the Company, Holdings and Hicks, Muse & Co.
Partners L.P. ("Hicks Muse Partners"), as in effect on the Issue Date and the
Financial Advisory Agreement among the Company, Holdings and Hicks Muse
Partners, each as in effect on the Issue Date or as may be subsequently amended
in a way not materially adverse to holders of the Securities or the Company.

"Funding Guarantor" has the meaning provided in Section 11.

"GAAP," unless otherwise indicated, means generally accepted
accounting principles in the United States of America as in effect as of the
date of this Indenture, including those set forth in the opinions and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants and statements and pronouncements of the Financial
Accounting Standards Board or the Commission or in such other statements by
such other entity as approved by a significant segment of the accounting
profession. All ratios and computations based on GAAP contained in this
Indenture shall be computed in conformity with GAAP.

"Global Securities" means one or more 144A Global Securities,
Regulation S Global Securities or IAI Global Securities.

"Guarantee" means a guarantee (other than by endorsement of negotiable
instruments for collection in the ordinary course of business), direct or
indirect, in any manner (including, without limitation, letters of credit and
reimbursement agreements in respect thereof), of all or any part of any
Indebtedness.

"Guarantor" means any Subsidiary of the Company that becomes a party
hereto pursuant to Section 4.14.

"Guarantor Blockage Notice" has the meaning provided in Section 12.03.

"Guarantor Payment Blockage Period" has the meaning provided in
Section 12.03.

"Guarantor Senior Indebtedness" means, at any date, (x) all
obligations under Guarantees of the Credit Agreement, if any (including any
interest accruing after the commencement of any proceeding under any Bankruptcy
Law whether or not such interest is an allowable claim enforceable against the
Guarantor in any such proceeding) and (y) all other Indebtedness of the
Guarantor, including interest and premium, if any, thereon, unless, in the
instrument creating or evidencing the same or pursuant to which the same is
outstanding, it is provided that the obligations in respect of such
Indebtedness are not superior in right of payment to the Guarantor's guarantee
of the Securities; provided however, that Guarantor Senior Indebtedness will
not include (1) any obligation of the Guarantor to any Subsidiary, (2) any
liability for federal, state, foreign, local or other taxes owed or owing by
the Guarantor, (3) any accounts payable or other liability to trade creditors
arising in the ordinary course of business (including Guarantees thereof or
instruments evidencing such liabilities) or (4) any Indebtedness, guarantee or
obligation of the Guarantor that is expressly subordinate or junior in right of
payment to any other Indebtedness, guarantee or obligation of the Guarantor,
including any guarantees of Senior Subordinated Indebtedness.

"Guarantor Senior Subordinated Indebtedness" means, with respect to a
Guarantor, the obligations of such Guarantor under the Subsidiary Guarantee and
any other Indebtedness of such Guarantor that specifically provides that such
Indebtedness is to rank pari passu with the Subsidiary Guarantee in right of
payment and is not subordinated by its terms in right of payment to any
Indebtedness or other obligations of the Guarantor which is not Guarantor
Senior Indebtedness.
<PAGE> 9
-8-

"Hicks Muse" means Hicks, Muse, Tate & Furst Incorporated, a Texas
corporation.

"Holders" means the registered holders of the Securities.

"Holding" means Cooperative Computing Holding Company, Inc., a Texas
corporation which owns all the capital stock of the Company.

"IAI Global Security" means a permanent global security in registered
form representing the aggregate principal amount of Securities transferred
after the Issue Date to Institutional Accredited Investors.

"incur" has the meaning set forth in Section 4.04.

"Indebtedness" means with respect to any Person, without duplication,
any liability of such Person (i) for borrowed money, (ii) evidenced by bonds,
debentures, notes or other similar instruments, (iii) constituting Capitalized
Lease Obligations, (iv) incurred or assumed as the deferred purchase price of
property, or pursuant to conditional sale obligations and title retention
agreements (but excluding trade accounts payable arising in the ordinary course
of business), (v) for the reimbursement of any obligor on any letter of credit,
banker's acceptance or similar credit transaction, (vi) for Indebtedness of
others guaranteed by such Person, (vii) for Interest Swap Obligations,
Commodity Agreements and Currency Agreements and (viii) for Indebtedness of any
other Person of the type referred to in clauses (i) through (vii) which is
secured by any Lien on any property or asset of such first referred to Person,
the amount of such Indebtedness being deemed to be the lesser of the value of
such property or asset or the amount of the Indebtedness so secured. The amount
of Indebtedness of any Person at any date shall be the outstanding principal
amount of all unconditional obligations described above, as such amount would
be reflected on a balance sheet prepared in accordance with GAAP, and the
maximum liability at such date of such Person for any contingent obligations
described above.

"Indenture" means this Indenture, as amended or supplemented from time
to time.

"Initial Purchasers" means Chase Securities Inc. and NationsBanc
Montgomery Securities LLC.

"Initial Securities" means the 9% Senior Subordinated Notes due 2008,
Series A, of the Company.

"Institutional Accredited Investor" means an institution that is an
"accredited investor" as that term is defined in Rule 501(a)(1), (2), (3) or
(7) under the Securities Act.

"Interest Payment Date" means each semiannual interest payment date on
February 1 and August 1 of each year, commencing on August 1, 1998.

"Interest Record Date" for the interest payable on any Interest
Payment Date (except a date for payment of defaulted interest) means the
January 15 or July 15 (whether or not a Business Day), as the case may be,
immediately preceding such Interest Payment Date.

"Interest Swap Obligations" means the obligations of any Person under
any interest rate protection agreement, interest rate future, interest rate
option, interest rate swap, interest rate cap or other interest rate hedge or
arrangement.

For purposes of Section 4.10, (A) "Investment" shall include the portion
(proportionate to the Company's equity interest in a Subsidiary to be
designated as an Unrestricted Subsidiary) of the fair market value of the net
assets of such Subsidiary of the Company at the time that such Subsidiary is
designated an Unrestricted Subsidiary; provided, however, that upon a
redesignation of such Unrestricted Subsidiary as a Subsidiary, the Company
shall be deemed to continue to have a permanent "Investment" in an Unrestricted
Subsidiary in an amount (if positive) equal to (1) the Company's "Investment"
in such Subsidiary at the time of such redesignation less (2) the portion
(proportionate to the Company's equity interest in such Subsidiary) of the fair
market value of the net assets of such Subsidiary at the time that such
Subsidiary is so redesignated from an Unrestricted Subsidiary to a Subsidiary;
and (B) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer, in each case as
determined in good faith by the board of directors.

"Issue Date" means the date on which the Securities are originally
issued.

"Lien" means any lien, mortgage, deed of trust, pledge, security
interest, charge or encumbrance of any kind (including any conditional sale or
other title retention agreement, any lease in the nature thereof and any
agreement to give any security interest).

"Net Cash Proceeds" means, with respect to any Asset Sale, the
proceeds in the form of cash or Cash Equivalents (including payments in respect
of deferred payment obligations when received in the form of cash or Cash
Equivalents) received by the Company or any of its Subsidiaries from such Asset
Sale net of (i) reasonable out-of-pocket expenses and fees relating to such
Asset Sale (including, without limitation, legal, accounting and investment
banking fees and sales commissions, recording fees, relocation costs, title
insurance premiums, appraisers, fees and costs reasonably incurred in
preparation of any asset or property for sale), (ii) taxes paid or reasonably
estimated to be payable (calculated based on the combined state, federal and
foreign statutory tax rates applicable to the Company or the Subsidiary engaged
in such Asset Sale), (iii) all distributions and other payments required to be
made to any Person owning a beneficial interest in the assets subject to sale
or minority interest holders in Subsidiaries or joint ventures as a result of
such Asset Sale, (iv) any reserves established in accordance with GAAP for
adjustment in respect of the sales price of such asset or assets or for any
liabilities associated with such Asset Sale, and (v) repayment of Indebtedness
secured by assets subject to such Asset Sale; provided, however, that if the
instrument or agreement governing such Asset Sale requires the transferor to
maintain a portion of the purchase price in escrow (whether as a reserve for
adjustment of the purchase price or otherwise) or to indemnify the transferee
for specified liabilities in a maximum specified amount, the portion of the
cash or Cash Equivalents that is actually placed in escrow or segregated and
set aside by the transferor for such indemnification obligation shall not be
deemed to be Net Cash Proceeds until the escrow terminates or the transferor
ceases to segregate and set aside such funds, in whole or in part, and then
only to the extent of the proceeds released from escrow to the transferor or
that are no longer segregated and set aside by the transferor.

"Obligations" means all obligations for principal, premium, interest,
penalties, fees, indemnifications, reimbursements, damages and other
liabilities payable under the documentation governing, or otherwise relating
to, any Indebtedness.

"Officer" means the Chairman, any Vice Chairman, the President, any
Vice President, the Chief Financial Officer, the Treasurer or the Secretary of
the Company.

"Officers' Certificate" means a certificate signed by two Officers or
by an Officer and an Assistant Treasurer or Assistant Secretary of the Company
complying with Sections 13.04 and 13.05.

"144A Global Security" means a permanent global security in registered
form representing the aggregate principal amount of Initial Securities sold in
reliance on Rule 144A.
<PAGE> 11
-10-

"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an employee of or
counsel to the Company or the Trustee.

"Participants" has the meaning provided in Section 2.15.

"Paying Agent" has the meaning provided in Section 2.03.

"Permitted Holders" has the meaning provided in the definition of
"Change of Control."

"Permitted Indebtedness" means, without duplication, (i) Indebtedness
outstanding on the Issue Date; (ii) Indebtedness of the Company or a Subsidiary
incurred pursuant to the Credit Agreement (including guarantees thereof) in an
aggregate principal amount at any time outstanding not to exceed $100,000,000;
(iii) Indebtedness evidenced by or arising under the Securities and this
Indenture; (iv) Interest Swap Obligations; provided, however, that such
Interest Swap Obligations are entered into to protect the Company from
fluctuations in interest rates of its Indebtedness; (v) additional Indebtedness
of the Company or any of its Subsidiaries not to exceed $20,000,000 in
principal amount outstanding at any time (which amount may, but need not, be
incurred under the Credit Agreement); (vi) Refinancing Indebtedness; (vii)
Indebtedness owed by the Company to any Wholly Owned Subsidiary of the Company
or by any Subsidiary of the Company to the Company or any Wholly Owned
Subsidiary of the Company; (viii) guarantees by the Company or Subsidiaries of
any Indebtedness permitted to be incurred pursuant to this Indenture; (ix)
Indebtedness in respect of performance bonds, bankers' acceptances and surety
or appeal bonds provided by the Company or any of its Subsidiaries to their
customers in the ordinary course of their business; (x) Indebtedness arising
from agreements providing for indemnification, adjustment of purchase price or
similar obligations, or from guarantees or letters of credit, surety bonds or
performance bonds securing any obligations of the Company or any of its
Subsidiaries pursuant to such agreements, in each case incurred in connection
with the disposition of any business assets or Subsidiaries of the Company
(other than guarantees of Indebtedness or other obligations incurred by any
Person acquiring all or any portion of such business assets or Subsidiaries of
the Company for the purpose of financing such acquisition) in a principal
amount not to exceed the gross proceeds actually received by the Company or any
of its Subsidiaries in connection with such disposition; provided, however,
that the principal amount of any Indebtedness incurred pursuant to this clause
(x), when taken together with all Indebtedness incurred pursuant to this clause
(x) and then outstanding, shall not exceed $15,000,000; (xi) Indebtedness
represented by Capitalized Lease Obligations, mortgage financings or purchase
money obligations, in each case incurred for the purpose of financing all or
any part of the purchase price or cost of construction or improvement of
property used in a related business or incurred to refinance any such purchase
price or cost of construction or improvement, in each case incurred no later
than 365 days after the date of such acquisition or the date of completion of
such construction or improvement; provided, however, that the principal amount
of any Indebtedness incurred pursuant to this clause (xi) shall not exceed
$3,000,000 at any time outstanding; and (xii) Indebtedness and other
Obligations of the Company and its Subsidiaries related to lease financing
activities which are not required to be treated as indebtedness on a balance
sheet, as determined in accordance with generally accepted accounting
principles as in effect on the date such Indebtedness or other Obligation is
incurred.

"Permitted Investments" means (i) Investments by the Company or any
Subsidiary of the Company to acquire the stock or assets of any Person (or
Acquired Indebtedness or Acquired Preferred Stock acquired in connection with a
transaction in which such Person becomes a Subsidiary of the Company);
provided, however, that the primary business of such person is in the good
faith judgment of management of the Company a business reasonably related,
ancillary or complementary to the business of the Company; provided, further,
however, that if any such Investment or series of related Investments involves
an Investment by the Company in excess of $3,000,000, the Company is able, at
the time of such investment and immediately after giving effect thereto, to
incur at least $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.04, (ii) Investments received by the
Company or its Subsidiaries as consideration for a sale of assets, (iii)
Investments by the Company or any Wholly Owned Subsidiary of the Company in any
Wholly Owned Subsidiary of the Company (whether existing on the Issue Date or
created thereafter) or any
<PAGE> 12
-11-

Person that after such Investments, and as a result thereof, becomes a Wholly
Owned Subsidiary of the Company and Investments in the Company by any Wholly
Owned Subsidiary of the Company, (iv) Investments in cash and Cash Equivalents,
(v) Investments in securities of trade creditors, wholesalers or customers
received pursuant to any plan of reorganization or similar arrangement, (vi)
loans or advances to employees of the Company or any Subsidiary thereof for
purposes of purchasing the Company's Capital Stock and other loans and advances
to employees made in the ordinary course of business consistent with past
practices of the Company or such Subsidiary, and (vii) additional Investments
in an aggregate amount not to exceed $1,000,000 at any time outstanding.

"Person" means an individual, partnership, corporation, limited
liability company, unincorporated organization, trust or joint venture, or a
governmental agency or political subdivision thereof.

"Physical Securities" means one or more certificated Securities in
registered form.

"Preferred Stock" of any Person means any Capital Stock of such Person
that has preferential rights to any other Capital Stock of such Person with
respect to dividends or redemptions or upon liquidation.

"Private Exchange Securities" has the meaning provided in the
Registration Rights Agreement.

"Private Placement Legend" means the legend initially set forth on the
Initial Securities in the form set forth on Exhibit A hereto.

"Productive Assets" means assets of a kind used or usable by the
Company and its Subsidiaries in its business; provided, however, that
productive assets to be acquired by the Company shall be, in the good faith
judgment of management of the Company, assets which are reasonably related,
ancillary or complementary to the business of the Company as conducted on the
Issue Date.

"Purchase Agreement" means the Purchase Agreement dated as of February
2, 1998 by and among the Company and the Initial Purchasers.

"Purchase Money Indebtedness" means Indebtedness of the Company and
its Subsidiaries incurred in the ordinary course of business for the purpose of
financing all or any part of the purchase price, or the cost of installation,
construction or improvement, of property or equipment.

"Qualified Capital Stock" means any Capital Stock that is not
Disqualified Capital Stock.

"Qualified Institutional Buyer" or "QIB" means a "qualified
institutional buyer" as that term is defined in Rule 144A under the Securities
Act.

"Redemption Date," when used with respect to any Security to be
redeemed, means the date fixed for such redemption pursuant to this Indenture.

"redemption price," when used with respect to any Security to be
redeemed, means the price fixed for such redemption pursuant to this Indenture
as set forth in the form of Security annexed hereto as Exhibit A.

"Refinancing Indebtedness" means any refinancing of Indebtedness of
the Company or any of its Subsidiaries existing as of the Issue Date or
incurred in accordance with Section 4.04 (other than pursuant to clause (iii)
or (iv) of the definition of Permitted Indebtedness) that does not (i) result
in an increase in the aggregate principal amount of Indebtedness (such
principal amount to include, for purposes of this definition, any
<PAGE> 13
-12-

premiums, penalties or accrued interest paid with the proceeds of the
Refinancing Indebtedness) of such Person or (ii) create Indebtedness with (A) a
Weighted Average Life to Maturity that is less than the Weighted Average Life
to Maturity of the Indebtedness being refinanced or (B) a final maturity
earlier than the final maturity of the Indebtedness being refinanced.

"Registrar" has the meaning provided in Section 2.03.

"Registration Rights Agreement" means the Exchange and Registration
Rights Agreement dated as of the Issue Date by and among the Company and the
Initial Purchasers.

"Registration" means a registered exchange offer for the Securities by
the Company or other registration of the Securities under the Securities Act
pursuant to and in accordance with the terms of the Registration Rights
Agreement.

"Regulation S" means Regulation S under the Securities Act.

"Regulation S Global Security" means a permanent global security in
registered form representing the aggregate principal amount of Securities sold
in reliance on Regulation S under the Securities Act.

"Representative" means the indenture trustee or other trustee, agent
or representative in respect of any Senior Indebtedness; provided, however,
that if, and for so long as, any issue of Senior Indebtedness lacks such a
representative, then the Representative for such issue of Senior Indebtedness
shall at all times constitute the holders of a majority in outstanding
principal amount of such issue of Senior Indebtedness.

"Restricted Payment" means (i) the declaration or payment of any
dividend or the making of any other distribution (other than dividends or
distributions payable in Qualified Capital Stock or in options, rights or
warrants to acquire Qualified Capital Stock) on shares of the Company's Capital
Stock, (ii) the purchase, redemption, retirement or other acquisition for value
of any Capital Stock of the Company, or any warrants, rights or options to
acquire shares of Capital Stock of the Company, other than through the exchange
of such Capital Stock or any warrants, rights or options to acquire shares of
any class of such Capital Stock for Qualified Capital Stock or warrants, rights
or options to acquire Qualified Capital Stock, (iii) the making of any
principal payment on, or the purchase, defeasance, redemption, prepayment,
decrease or other acquisition or retirement for value, prior to any scheduled
final maturity, scheduled repayment or scheduled sinking fund payment, of, any
Indebtedness of the Company or its Subsidiaries that is subordinated or junior
in right of payment to the Securities or (iv) the making of any Investment
(other than a Permitted Investment).

"Restricted Security" has the meaning set forth in Rule 144(a)(3)
under the Securities Act; provided, however, that the Trustee shall be entitled
to request and conclusively rely upon an Opinion of Counsel with respect to
whether any Security is a Restricted Security.

"Rule 144A" means Rule 144A under the Securities Act.

"Sale/Leaseback Transaction" means an arrangement relating to property
now owned or hereafter acquired whereby the Company or a Subsidiary transfers
such property to a Person and the Company or a Subsidiary leases it from such
Person.

"SEC" or "Commission" means the Securities and Exchange Commission.

"Secured Indebtedness" means any Indebtedness of the Company secured
by a Lien.
<PAGE> 14
-13-

"Securities" means, collectively, the Initial Securities, the Private
Exchange Securities and the Unrestricted Securities treated as a single class
of securities, as amended or supplemented from time to time in accordance with
the terms of this Indenture.

"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the SEC thereunder.

"Senior Indebtedness" means, at any date, (x) all obligations under
the Credit Agreement (including, with respect to Designated Senior
Indebtedness, any interest accruing after the commencement of any proceeding
under any Bankruptcy Law at the rate specified in the applicable Designated
Senior Indebtedness whether or not such interest is an allowable claim
enforceable against the Company in any such proceeding) and (y) all other
Indebtedness of the Company, including interest (including, with respect to
Designated Senior Indebtedness, any interest accruing after the commencement of
any such proceeding at the rate specified in the applicable Designated Senior
Indebtedness whether or not such interest is an allowed claim enforceable
against the Company in any such proceeding) and premium, if any, thereon,
unless, in the instrument creating or evidencing the same or pursuant to which
the same is outstanding, it is provided that the obligations in respect of such
Indebtedness are not superior in right of payment to the Securities; provided
however, that Senior Indebtedness will not include (1) any obligation of the
Company to any Subsidiary, (2) any liability for federal, state, foreign, local
or other taxes owed or owing by the Company, (3) any accounts payable or other
liability to trade creditors arising in the ordinary course of business
(including Guarantees thereof or instruments evidencing such liabilities) or
(4) any Indebtedness, guarantee or obligation of the Company that is expressly
subordinate or junior in right of payment to any other Indebtedness, guarantee
or obligation of the Company, including any Senior Subordinated Indebtedness.

"Senior Subordinated Indebtedness" means the Securities and any other
Indebtedness of the Company that specifically provides that such Indebtedness
is to rank pari passu with the Securities in right of payment and is not
subordinated by its terms in right of payment to any Indebtedness or other
obligation of the Company which is not Senior Indebtedness.

"Significant Subsidiary" means any Subsidiary that would be a
"significant subsidiary" as defined in Article I, Rule 1-02 of Regulation S-X,
promulgated pursuant to the Securities Act, as such Regulation is in effect on
the date of this Indenture.

"Stated Maturity" means with respect to any installment of interest or
principal on any series of Indebtedness, the date on which such payment of
interest or principal was scheduled to be paid in the original documentation
governing such Indebtedness, and shall not include any contingent obligations
to repay, redeem or repurchase any such interest or principal prior to the date
originally scheduled for the payment thereof.

"Subsidiary," with respect to any Person, means (i) any corporation of
which the outstanding Capital Stock having at least a majority of the votes
entitled to be cast in the election of directors under ordinary circumstances
shall at the time be owned, directly or indirectly through one or more
intermediaries, by such Person or (ii) any other Person of which at least a
majority of the voting interest under ordinary circumstances is at the time,
directly or indirectly, through one or more intermediaries, owned by such
Person. Notwithstanding anything in this Indenture to the contrary, all
references to the Company and its consolidated Subsidiaries or to financial
information prepared on a consolidated basis in accordance with GAAP shall be
deemed to include the Company and its Subsidiaries as to which financial
statements are prepared on a combined basis in accordance with GAAP and to
financial information prepared on such a combined basis. Notwithstanding
anything in this Indenture to the contrary, an Unrestricted Subsidiary shall
not be deemed to be a Subsidiary for purposes of this Indenture.

"Subsidiary Guarantees" means the Guarantee of the Securities by the
Guarantors under Article Eleven.
<PAGE> 15
-14-

"TIA" means the Trust Indenture Act of 1939 (15 U.S. Code Sections
77aaa-77bbbb), as amended, as in effect on the date of this Indenture (except
as provided in Section 9.03) until such time as this Indenture is qualified
under the TIA, and thereafter as in effect on the date on which this Indenture
is qualified under the TIA.

"Triad Acquisition" means the acquisition of Triad Systems Corporation
on February 27, 1997.

"Trust Officer" means any officer within the corporate trust
department (or any successor group of the Trustee) including any vice
president, assistant vice president, assistant secretary or any other officer
or assistant officer of the Trustee customarily performing functions similar to
those performed by the persons who at that time shall be such officers, and
also means, with respect to a particular corporate trust matter, any other
officer to whom such trust matter is referred because of his knowledge of and
familiarity with the particular subject.

"Trustee" means the party named as such in the first paragraph of this
Indenture until a successor replaces it in accordance with the provisions of
this Indenture and thereafter means such successor.

"Unrestricted Securities" means one or more Securities that do not and
are not required to bear the Private Placement Legend in the form set forth in
Exhibit A hereto, including, without limitation, the Exchange Securities and
any Securities registered under the Securities Act pursuant to and in
accordance with the Registration Rights Agreement.

"Unrestricted Subsidiary" means a Subsidiary of the Company created
after the Issue Date and so designated (together with its Subsidiaries) by a
resolution adopted by the board of directors of the Company; provided, however,
that (a) neither the Company nor any of its other Subsidiaries (other than
Unrestricted Subsidiaries) (1) provides any credit support for any Indebtedness
of such Subsidiary or its Subsidiaries (including any undertaking, agreement or
instrument evidencing such Indebtedness) or (2) is directly or indirectly
liable for any Indebtedness of such Subsidiary or its Subsidiaries and (b)
except with respect to the designation described in the last sentence of this
definition at the time of designation of such Subsidiary, such Subsidiary and
its Subsidiaries has no property or assets (other than de minimis assets
resulting from the initial capitalization of such Subsidiary). The board of
directors may designate any Unrestricted Subsidiary to be a Subsidiary;
provided, however, that immediately after giving effect to such designation (x)
the Company could incur $1.00 of additional Indebtedness (other than Permitted
Indebtedness) in compliance with Section 4.04 and (y) no Default or Event of
Default shall have occurred or be continuing. Any designation pursuant to this
definition by the board of directors of the Company shall be evidenced to the
Trustee by the filing with the Trustee of a certified copy of the resolution of
the Company's board of directors giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions.

"U.S. Government Obligations" means direct obligations (or
certificates representing an ownership interest in such obligations) of the
United States of America (including any agency or instrumentality thereof) for
the payment of which the full faith and credit of the United States of America
is pledged and which are not callable or redeemable at the issuer's option.

"Weighted Average Life to Maturity" means, when applied to any
Indebtedness at any date, the number of years obtained by dividing (a) the then
outstanding aggregate principal amount of such Indebtedness into (b) the total
of the product obtained by multiplying (i) the amount of each then remaining
installment, sinking fund, serial maturity or other required payment of
principal, including payment at final maturity, in respect thereof, by (ii) the
number of years (calculated to the nearest one-twelfth) which will elapse
between such date and the making of such payment.
<PAGE> 16
-15-

"Wholly Owned Subsidiary" of any Person means any Subsidiary of such
Person of which all the outstanding voting securities (other than directors'
qualifying shares) which normally have the right to vote in the election of
directors are owned by such Person or any Wholly-Owned Subsidiary of such
Person.

SECTION 1.02. Incorporation by Reference of Trust Indenture Act.

Whenever this Indenture refers to a provision of the TIA, the
provision is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following meanings:

"Commission" means the SEC.

"indenture securities" means the Securities.

"indenture security holder" means a Holder.

"indenture to be qualified" means this Indenture.

"indenture trustee" or "institutional trustee" means the Trustee.

"obligor" means the Company or any other obligor on the Securities.

All other TIA terms used in this Indenture that are defined by the
TIA, defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them therein.

SECTION 1.03. Rules of Construction.

Unless the context otherwise requires:

(1) a term has the meaning assigned to it;

(2) an accounting term not otherwise defined has the
meaning assigned to it in accordance with generally accepted accounting
principles in effect from time to time, and any other reference in this
Indenture to "generally accepted accounting principles" refers to GAAP;

(3) "or" is not exclusive;

(4) words in the singular include the plural, and words
in the plural include the singular;

(5) provisions apply to successive events and
transactions; and

(6) "herein," "hereof" and other words of similar import
refer to this Indenture as a whole and not to any particular Article, Section
or other subdivision.
<PAGE> 17
-16-

ARTICLE TWO

THE SECURITIES

SECTION 2.01. Form and Dating.

The Initial Securities and the Trustee's certificate of authentication
thereof shall be substantially in the form of Exhibit A hereto, which is hereby
incorporated in and expressly made a part of this Indenture. The Exchange
Securities and the Trustee's certificate of authentication thereof shall be
substantially in the form of Exhibit B hereto, which is hereby incorporated in
and expressly made a part of this Indenture. The Securities may have
notations, legends or endorsements required by law, stock exchange rule or
usage. The Company and the Trustee shall approve the form of the Securities
and any notation, legend or endorsement (including the Security Guarantee) on
them. Each Security shall be dated the date of its issuance and shall show the
date of its authentication.

Securities offered and sold in reliance on Rule 144A and Securities
offered and sold in reliance on Regulation S shall be issued initially in the
form of one or more Global Securities, substantially in the form set forth in
Exhibit A hereto, deposited with the Trustee, as custodian for the Depository,
duly executed by the Company and authenticated by the Trustee as hereinafter
provided and shall bear the legend set forth in Exhibit C hereto. The
aggregate principal amount of the Global Securities may from time to time be
increased or decreased by adjustments made on the records of the Trustee, as
custodian for the Depository, as hereinafter provided. Securities issued in
exchange for interests in a Global Security pursuant to Section 2.16 may be
issued in the form of Physical Securities in substantially the form set forth
in Exhibit A.

SECTION 2.02. Execution and Authentication.

Two Officers or an Officer and an Assistant Secretary shall sign, or
one Officer shall sign and one Officer and an Officer and an Assistant
Secretary (each of whom shall, in each case, have been duly authorized by all
requisite corporate actions) shall attest to, the Securities for the Company by
manual or facsimile signature.

If an Officer or Assistant Secretary whose signature is on a Security
or a Subsidiary Guarantee, as the case may be, was an Officer or Assistant
Secretary at the time of such execution but no longer holds that office at the
time the Trustee authenticates the Security or Subsidiary Guarantee, as the
case may be, the Security or Subsidiary Guarantee, as the case may be, shall be
valid nevertheless.

A Security shall not be valid until an authorized signatory of the
Trustee manually signs the certificate of authentication on the Security. The
signature shall be conclusive evidence that the Security has been authenticated
under this Indenture.

The Trustee shall authenticate (i) Initial Securities for original
issue in an aggregate principal amount not to exceed $100,000,000, (ii) Private
Exchange Securities from time to time only in exchange for a like principal
amount of Initial Securities and (iii) Unrestricted Securities from time to
time only in exchange for (A) a like principal amount of Initial Securities or
(B) a like principal amount of Private Exchange Securities, in each case upon a
written order of the Company in the form of an Officers' Certificate. Each
such written order shall specify the amount of Securities to be authenticated
and the date on which the Securities are to be authenticated, whether the
Securities are to be Initial Securities, Private Exchange Securities or
Unrestricted Securities and whether the Securities are to be issued as Physical
Securities or Global Securities and such other information as the Trustee may
reasonably request. The aggregate principal amount of Securities outstanding
at any time may not exceed $100,000,000, except as provided in Sections 2.07
and 2.08.
<PAGE> 18
-17-

Notwithstanding the foregoing, all Securities issued under this
Indenture shall vote and consent together on all matters (as to which any of
such Securities may vote or consent) as one class and no series of Securities
will have the right to vote or consent as a separate class on any matter.

The Trustee may appoint an authenticating agent reasonably acceptable
to the Company to authenticate Securities. Unless otherwise provided in the
appointment, an authenticating agent may authenticate Securities whenever the
Trustee may do so. Each reference in this Indenture to authentication by the
Trustee includes authentication by such agent. An authenticating agent shall
have the same rights as an Agent to deal with the Company and Affiliates of the
Company.

The Securities shall be issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof.

SECTION 2.03. Registrar and Paying Agent.

The Company shall maintain an office or agency, which shall be in the
Borough of Manhattan, The City of New York, where (a) Securities may be
presented or surrendered for registration of transfer or for exchange (the
"Registrar"), (b) Securities may be presented or surrendered for payment (the
"Paying Agent") and (c) notices and demands in respect of the Securities and
this Indenture may be served. The Registrar shall keep a register of the
Securities and of their transfer and exchange. The Company, upon notice to the
Trustee, may appoint one or more co- Registrars and one or more additional
Paying Agents. The term "Paying Agent" includes any additional Paying Agent.
Except as provided herein, the Company may act as Paying Agent, Registrar or
co-Registrar.

The Company shall enter into an appropriate agency agreement with any
Agent not a party to this Indenture, which shall incorporate the provisions of
the TIA. The agreement shall implement the provisions of this Indenture that
relate to such Agent. The Company shall notify the Trustee of the name and
address of any such Agent. If the Company fails to maintain a Registrar or
Paying Agent, or fails to give the foregoing notice, the Trustee shall act as
such and shall be entitled to appropriate compensation in accordance with
Section 8.07.

The Company initially appoints the Trustee as Registrar and Paying
Agent until such time as the Trustee has resigned or a successor has been
appointed.

SECTION 2.04. Paying Agent To Hold Assets in Trust.

The Company shall require each Paying Agent other than the Trustee to
agree in writing that each Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by the Paying Agent for the payment of
principal of, or interest on, the Securities, and shall notify the Trustee of
any Default by the Company in making any such payment. The Company at any time
may require a Paying Agent to distribute all assets held by it to the Trustee
and account for any assets disbursed and the Trustee may at any time during the
continuance of any payment Default, upon written request to a Paying Agent,
require such Paying Agent to distribute all assets held by it to the Trustee
and to account for any assets distributed. Upon distribution to the Trustee of
all assets that shall have been delivered by the Company to the Paying Agent
(if other than the Company), the Paying Agent shall have no further liability
for such assets. If the Company or any of their Affiliates acts as Paying
Agent, it shall, on or before each due date of the principal of or interest on
the Securities, segregate and hold in trust for the benefit of the Persons
entitled thereto a sum sufficient to pay the principal or interest so becoming
due until such sums shall be paid to such Persons or otherwise disposed of as
herein provided and will promptly notify the Trustee of its action or failure
so to act.
<PAGE> 19
-18-

SECTION 2.05. Holder Lists.

The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders. If the Trustee is not the Registrar, the Company shall furnish to
the Trustee before each Interest Record Date and at such other times as the
Trustee may request in writing a list as of such date and in such form as the
Trustee may reasonably require of the names and addresses of Holders, which
list may be conclusively relied upon by the Trustee.

SECTION 2.06. Transfer and Exchange.

Subject to the provisions of Sections 2.15 and 2.16, when Securities
are presented to the Registrar or a co- Registrar with a request to register
the transfer of such Securities or to exchange such Securities for an equal
principal amount of Securities of other authorized denominations of the same
series, the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if its requirements for such transaction are met;
provided, however, that the Securities surrendered for transfer or exchange
shall be duly endorsed or accompanied by a written instrument of transfer in
form satisfactory to the Company and the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing. To
permit registrations of transfers and exchanges, the Company shall execute and
the Trustee shall authenticate Securities at the Registrar's or co-Registrar's
written request. No service charge shall be made for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in connection
therewith (other than any such transfer taxes or other governmental charge
payable upon exchanges or transfers pursuant to Section 2.10 or 3.06). The
Registrar or co-Registrar shall not be required to register the transfer or
exchange of any Security (i) during a period beginning at the opening of
business 15 days before the mailing of a notice of redemption of Securities and
ending at the close of business on the day of such mailing and (ii) selected
for redemption in whole or in part pursuant to Article Three hereof, except the
unredeemed portion of any Security being redeemed in part.

Prior to the registration of any transfer by a Holder as provided
herein, the Company, the Trustee and any Agent of the Company shall treat the
person in whose name the Security is registered as the owner thereof for all
purposes whether or not the Security shall be overdue, and none of the Company,
the Trustee nor any such Agent shall be affected by notice to the contrary.
Any consent, waiver or actions of a Holder shall be binding upon any subsequent
Holders of such Security or a Security received upon transfer. Any Holder of a
beneficial interest in a Global Security shall, by acceptance of such
beneficial interest in a Global Security, agree that transfers of beneficial
interests in such Global Security may be effected only through a book-entry
system maintained by the Depository (or its agent), and that ownership of a
beneficial interest in a Global Security shall be required to be reflected in a
book entry.

SECTION 2.07. Replacement Securities.

If a mutilated Security is surrendered to the Trustee or if the Holder
of a Security claims that the Security has been lost, destroyed or wrongfully
taken, the Company shall issue and the Trustee shall authenticate a replacement
Security if the Trustee's requirements for replacement of Securities are met.
If required by the Company or the Trustee, such Holder must provide an
indemnity bond or other indemnity, sufficient in the judgment of the Company
and the Trustee, to protect the Company, the Trustee and any Agent from any
loss which any of them may suffer if a Security is replaced. The Company may
charge such Holder for their reasonable out-of-pocket expenses in replacing a
Security, including reasonable fees and expenses of counsel.

Every replacement Security is an additional obligation of the Company.
<PAGE> 20
-19-

SECTION 2.08. Outstanding Securities.

Securities outstanding at any time are all the Securities that have
been authenticated by the Trustee except those canceled by it, those delivered
to it for cancellation and those described in this Section 2.08 as not
outstanding. Subject to Section 2.09, a Security does not cease to be
outstanding because the Company or any Affiliates of the Company holds the
Security.

If a Security is replaced pursuant to Section 2.07 (other than a
mutilated Security surrendered for replacement), it ceases to be outstanding
unless the Trustee receives proof satisfactory to it that the replaced Security
is held by a bona fide purchaser. A mutilated Security ceases to be
outstanding upon surrender of such Security and replacement thereof pursuant to
Section 2.07.

If on a Redemption Date or the Final Maturity Date the Paying Agent
holds money sufficient to pay all of the principal and interest due on the
Securities payable on that date, and is not prohibited from paying such money
to the Holders pursuant to the terms of this Indenture, then on and after that
date such Securities cease to be outstanding and interest on them ceases to
accrue.

SECTION 2.09. Treasury Securities.

In determining whether the Holders of the required principal amount of
Securities have concurred in any direction, waiver or consent, Securities owned
by the Company, the Guarantors or any of their respective Affiliates shall be
disregarded, except that, for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Securities that a Trust Officer of the Trustee actually knows are so owned
shall be disregarded.

The Company shall notify the Trustee, in writing, when the Company or
any of its Affiliates repurchases or otherwise acquires Securities, of the
aggregate principal amount of such Securities so repurchased or otherwise
acquired.

SECTION 2.10. Temporary Securities.

Until definitive Securities are ready for delivery, the Company may
prepare and the Trustee shall authenticate temporary Securities upon receipt of
a written order of the Company in the form of an Officers' Certificate. The
Officers' Certificate shall specify the amount of temporary Securities to be
authenticated and the date on which the temporary Securities are to be
authenticated.

Temporary Securities shall be substantially in the form of definitive
Securities but may have variations that the Company considers appropriate for
temporary Securities. Without unreasonable delay, the Company shall prepare
and the Trustee shall authenticate upon receipt of a written order of the
Company pursuant to Section 2.02 definitive Securities in exchange for
temporary Securities.

SECTION 2.11. Cancellation.

The Company at any time may deliver Securities to the Trustee for
cancellation. The Registrar and the Paying Agent shall forward to the Trustee
any Securities surrendered to them for transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent,
and no one else, shall cancel, and at the written direction of the Company,
dispose of and deliver evidence of such disposal of all Securities surrendered
for transfer, exchange, payment or cancellation. Subject to Section 2.07, the
Company may not issue new Securities to replace Securities that they have paid
or delivered to the Trustee for cancellation. If the Company shall acquire any
of the Securities, such acquisition shall not operate as a redemption or
satisfaction of the Indebtedness represented by such Securities unless and
until the same are surrendered to the Trustee for cancellation pursuant to this
Section 2.11.
<PAGE> 21
-20-

SECTION 2.12. Defaulted Interest.

The Company shall pay interest on overdue principal from time to time
on demand at the rate of interest then borne by the Securities. The Company
shall, to the extent lawful, pay interest on overdue installments of interest
(without regard to any applicable grace periods) from time to time on demand at
the rate of interest then borne by the Securities.

If the Company defaults in a payment of interest on the Securities, it
shall pay the defaulted interest, plus (to the extent lawful) any interest
payable on the defaulted interest to the Persons who are Holders on a
subsequent special record date, which date shall be the fifteenth day preceding
the date fixed by the Company for the payment of defaulted interest or the next
succeeding Business Day if such date is not a Business Day. At least 15 days
before the subsequent special record date, the Company shall mail to each
Holder, with a copy to the Trustee, a notice that states the subsequent special
record date, the payment date and the amount of defaulted interest, and
interest payable on such defaulted interest, if any, to be paid.

Notwithstanding the foregoing, any interest which is paid prior to the
expiration of the 30-day period set forth in Section 6.01(i) shall be paid to
Holders as of the Interest Record Date for the Interest Payment Date for which
interest has not been paid.

SECTION 2.13. CUSIP Number.

The Company in issuing the Securities will use a "CUSIP" number and
the Trustee shall use the CUSIP number in notices of redemption or exchange as
a convenience to Holders; provided, however, that any such notice may state
that no representation is made as to the correctness or accuracy of the CUSIP
number printed in the notice or on the Securities, and that reliance may be
placed only on the other identification numbers printed on the Securities. The
Company shall promptly notify the Trustee of any changes in CUSIP numbers.

SECTION 2.14. Deposit of Moneys.

Prior to 11 a.m. New York City time on each Interest Payment Date,
Redemption Date, and the Final Maturity Date, the Company shall deposit with
the Paying Agent in immediately available funds money sufficient to make cash
payments, if any, due on such Interest Payment Date, Redemption Date or Final
Maturity Date, as the case may be, in a timely manner which permits the Paying
Agent to remit payment to the Holders on such Interest Payment Date, Redemption
Date or Final Maturity Date, as the case may be.

SECTION 2.15. Book-Entry Provisions for Global Securities.

(a) The Global Securities initially shall (i) be registered in the
name of the Depository or the nominee of such Depository, (ii) be delivered to
the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit C.

Members of, or participants in, the Depository ("Participants") shall
have no rights under this Indenture with respect to any Global Security held on
their behalf by the Depository, or the Trustee as its custodian, or under the
Global Security, and the Depository may be treated by the Company, the Trustee
and any agent of the Company or the Trustee as the absolute owner of the Global
Security for all purposes whatsoever. Notwithstanding the foregoing, nothing
herein shall prevent the Company, the Trustee or any agent of the Company or
the Trustee from giving effect to any written certification, proxy or other
authorization furnished by the Depository or impair, as between the Depository
and Participants, the operation of customary practices governing the exercise
of the rights of a Holder of any Security.
<PAGE> 22
-21-

(b) Transfers of Global Securities shall be limited to transfers in
whole, but not in part, to the Depository, its successors or their respective
nominees. Interests of beneficial owners in the Global Securities may be
transferred or exchanged for Physical Securities in accordance with the rules
and procedures of the Depository and the provisions of Section 2.16; provided,
however, that Physical Securities shall be transferred to all beneficial owners
in exchange for their beneficial interests in Global Securities if (i) the
Depository notifies the Company that it is unwilling or unable to continue as
Depository for any Global Security and a successor Depository is not appointed
by the Company within 90 days of such notice or (ii) an Event of Default has
occurred and is continuing and the Registrar has received a request from the
Depository to issue Physical Securities.

(c) In connection with any transfer or exchange of a portion of the
beneficial interest in a Global Security to beneficial owners pursuant to
paragraph (b), the Registrar shall (if one or more Physical Securities are to
be issued) reflect on its books and records the date and a decrease in the
principal amount of such Global Security in an amount equal to the principal
amount of the beneficial interest in the Global Security to be transferred, and
the Company shall execute, and the Trustee shall authenticate and deliver, one
or more Physical Securities of like tenor and amount.

(d) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b) of this Section 2.15,
the Global Securities shall be deemed to be surrendered to the Trustee for
cancellation, and the Company shall execute, and the Trustee shall upon written
instructions from the Company authenticate and deliver, to each beneficial
owner identified by the Depository in exchange for its beneficial interest in
the Global Securities, an equal aggregate principal amount of Physical
Securities of authorized denominations.

(e) Any Physical Security constituting a Restricted Security
delivered in exchange for an interest in a Global Security pursuant to
paragraph (c) of this Section 2.15 shall, except as otherwise provided by
Section 2.16, bear the Private Placement Legend.

(f) The Holder of any Global Security may grant proxies and otherwise
authorize any Person, including Participants and Persons that may hold
interests through Participants, to take any action which a Holder is entitled
to take under this Indenture or the Securities.

SECTION 2.16. Registration of Transfers and Exchanges.

(a) Transfer and Exchange of Physical Securities. When Physical
Securities are presented to the Registrar or co-Registrar with a request:

(i) to register the transfer of the Physical Securities; or

(ii) to exchange such Physical Securities for an equal
principal amount of Physical Securities of other authorized denominations,

the Registrar or co-Registrar shall register the transfer or make the
exchange as requested if the requirements under this Indenture as set forth in
this Section 2.16 for such transactions are met; provided, however, that the
Physical Securities presented or surrendered for registration of transfer or
exchange:

(I) shall be duly endorsed or accompanied by a written instrument
of transfer in form satisfactory to the Registrar or co-Registrar, duly
executed by the Holder thereof or his attorney duly authorized in writing; and

(II) in the case of Physical Securities the offer and sale of which
have not been registered under the Securities Act, such Physical Securities
shall be accompanied, in the sole discretion of the Company, by the following
additional information and documents, as applicable:

<PAGE> 23
-22-

(A) if such Physical Security is being delivered to the Registrar
or co-Registrar by a Holder for registration in the name of
such Holder, without transfer, a certification from such Holder
to that effect (substantially in the form of Exhibit D hereto);
or

(B) if such Physical Security is being transferred to a QIB in
accordance with Rule 144A, a certification to that effect
(substantially in the form of Exhibit D hereto); or

(C) if such Physical Security is being transferred to an
Institutional Accredited Investor, delivery of a certification
to that effect (substantially in the form of Exhibit D hereto)
and a transferee letter of representation (substantially in the
form of Exhibit E hereto) and, at the option of the Company, an
Opinion of Counsel reasonably satisfactory to the Company to
the effect that such transfer is in compliance with the
Securities Act; or

(D) if such Physical Security is being transferred in reliance on
Regulation S, delivery of a certification to that effect
(substantially in the form of Exhibit D hereto) and a
transferor certificate for Regulation S transfers substantially
in the form of Exhibit F hereto and, at the option of the
Company, an Opinion of Counsel reasonably satisfactory to the
Company to the effect that such transfer is in compliance with
the Securities Act; or

(E) if such Physical Security is being transferred in reliance on
Rule 144 under the Securities Act, delivery of a certification
to that effect (substantially in the form of Exhibit D hereto)
and, at the option of the Company, an Opinion of Counsel
reasonably satisfactory to the Company to the effect that such
transfer is in compliance with the Securities Act; or

(F) if such Physical Security is being transferred in reliance on
another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially
in the form of Exhibit D hereto) and, at the option of the
Company, an Opinion of Counsel reasonably acceptable to the
Company to the effect that such transfer is in compliance with
the Securities Act.

(b) Restrictions on Transfer of a Physical Security for a Beneficial
Interest in a Global Security. A Physical Security the offer and sale of which
has not been registered under the Securities Act may not be exchanged for a
beneficial interest in a Global Security except upon satisfaction of the
requirements set forth below. Upon receipt by the Registrar or co-Registrar of
a Physical Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Registrar or co-Registrar, together with:

(A) certification, substantially in the form of Exhibit D hereto,
that such Physical Security is being transferred (I) to a QIB,
(II) to an Accredited Investor or (III) in an offshore
transaction in reliance on Regulation S and, with respect to
(II) or (III), at the option of the Company, an Opinion of
Counsel reasonably acceptable to the Company to the effect that
such transfer is in compliance with the Securities Act; and

(B) written instructions directing the Registrar or co-Registrar
to make, or to direct the Depository to make, an endorsement on
the applicable Global Security to reflect an increase in the
aggregate amount of the Securities represented by the Global
Security,
<PAGE> 24
-23-

then the Registrar or co-Registrar shall cancel such Physical Security and
cause, or direct the Depository to cause, in accordance with the standing
instructions and procedures existing between the Depository and the Registrar
or co-Registrar, the principal amount of Securities represented by the
applicable Global Security to be increased accordingly. If no 144A Global
Security, IAI Global Security or Regulation S Global Security, as the case may
be, is then outstanding, the Company shall, unless either of the events in the
proviso to Section 2.15(b) have occurred and are continuing, issue and the
Trustee shall, upon written instructions from the Company in accordance with
Section 2.02, authenticate such a Global Security in the appropriate principal
amount.

(c) Transfer and Exchange of Global Securities. The transfer and
exchange of Global Securities or beneficial interests therein shall be effected
through the Depository in accordance with this Indenture (including the
restrictions on transfer set forth herein) and the procedures of the Depository
therefor. Upon receipt by the Registrar or Co- Registrar of written
instructions, or such other instruction as is customary for the Depository,
from the Depository or its nominee, requesting the registration of transfer of
an interest in a 144A Global Security, an IAI Global Security or a Regulation S
Global Security, as the case may be, to another type of Global Security,
together with the applicable Global Securities (or, if the applicable type of
Global Security required to represent the interest as requested to be obtained
is not then outstanding, only the Global Security representing the interest
being transferred), the Registrar or Co-Registrar shall reflect on its books
and records (and the applicable Global Security) the applicable increase and
decrease of the principal amount of Securities represented by such types of
Global Securities, giving effect to such transfer. If the applicable type of
Global Security required to represent the interest as requested to be obtained
is not outstanding at the time of such request, the Company shall issue and the
Trustee shall, upon written instructions from the Company in accordance with
Section 2.02, authenticate a new Global Security of such type in principal
amount equal to the principal amount of the interest requested to be
transferred.

(d) Transfer of a Beneficial Interest in a Global Security for a
Physical Security.

(i) Any Person having a beneficial interest in a Global
Security may upon request exchange such beneficial interest for a Physical
Security; provided, however, that prior to the Registration, a transferee that
is a QIB or Institutional Accredited Investor may not exchange a beneficial
interest in Global Security for a Physical Security. Upon receipt by the
Registrar or co-Registrar of written instructions, or such other form of
instructions as is customary for the Depository, from the Depository or its
nominee on behalf of any Person having a beneficial interest in a Global
Security and upon receipt by the Trustee of a written order or such other form
of instructions as is customary for the Depository or the Person designated by
the Depository as having such a beneficial interest containing registration
instructions and, in the case of any such transfer or exchange of a beneficial
interest in Securities the offer and sale of which have not been registered
under the Securities Act, the following additional information and documents:

(A) if such beneficial interest is being transferred in reliance
on Rule 144 under the Securities Act, delivery of a
certification to that effect (substantially in the form of
Exhibit D hereto) and, at the option of the Company, an Opinion
of Counsel reasonably satisfactory to the Company to the effect
that such transfer is in compliance with the Securities Act; or

(B) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act, a certification to that effect (substantially
in the form of Exhibit D hereto) and, at the option of the
Company, an Opinion of Counsel reasonably satisfactory to the
Company to the effect that such transfer is in compliance with
the Securities Act,

then the Registrar or co-Registrar will cause, in accordance with the
standing instructions and procedures existing between the Depository and
the Registrar or co-Registrar, the aggregate principal amount of the
applicable Global Security to be reduced and, following such reduction, the
Company will execute and, upon receipt of an authentication order in the
form of an Officers' Certificate in accordance with Section 2.02, the
Trustee will authenticate and deliver to the transferee a Physical Security
in the appropriate principal amount.
<PAGE> 25
-24-

(ii) Securities issued in exchange for a beneficial
interest in a Global Security pursuant to this Section 2.16(d) shall be
registered in such names and in such authorized denominations as the
Depository, pursuant to instructions from its direct or indirect participants
or otherwise, shall instruct the Registrar or co-Registrar in writing. The
Registrar or co-Registrar shall deliver such Physical Securities to the
Persons in whose names such Physical Securities are so registered.

(e) Restrictions on Transfer and Exchange of Global Securities.
Notwithstanding any other provisions of this Indenture, a Global Security may
not be transferred as a whole except by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository or another
nominee of the Depository or by the Depository or any such nominee to a
successor Depository or a nominee of such successor Depository.

(f) Private Placement Legend. Upon the transfer, exchange or
replacement of Securities not bearing the Private Placement Legend, the
Registrar or co-Registrar shall deliver Securities that do not bear the Private
Placement Legend. Upon the transfer, exchange or replacement of Securities
bearing the Private Placement Legend, the Registrar or co-Registrar shall
deliver only Securities that bear the Private Placement Legend unless, and the
Trustee is hereby authorized to deliver Securities without the Private
Placement Legend if, (i) there is delivered to the Trustee an Opinion of
Counsel reasonably satisfactory to the Company and the Trustee to the effect
that neither such legend nor the related restrictions on transfer are required
in order to maintain compliance with the provisions of the Securities Act; (ii)
such Security has been sold pursuant to an effective registration statement
under the Securities Act (including pursuant to a Registration); or (iii) the
date of such transfer, exchange or replacement is two years after the later of
(x) the Issue Date and (y) the last date that the Company or any affiliate (as
defined in Rule 144 under the Securities Act) of the Company was the owner of
such Securities (or any predecessor thereto).

(g) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of such Security set forth in this Indenture and in the Private
Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.

The Trustee shall have no obligation or duty to monitor, determine or
inquire as to compliance with any restrictions on transfer imposed under this
Indenture or under applicable law with respect to any transfer of any interest
in any Security (including any transfers between or among Participants or
beneficial owners of interest in any Global Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by the terms
of, this Indenture, and to examine the same to determine substantial compliance
as to form with the express requirements hereof.

The Registrar shall retain copies of all letters, notices and other
written communications received pursuant to Section 2.15 or this Section 2.16.
The Company shall have the right to inspect and make copies of all such
letters, notices or other written communications at any reasonable time upon
the giving of reasonable written notice to the Registrar.
<PAGE> 26
-25-

ARTICLE THREE

REDEMPTION

SECTION 3.01. Notices to Trustee.

If the Company elects to redeem Securities pursuant to paragraph 5 of
the Securities at the applicable redemption price set forth thereon, it shall
notify the Trustee in writing of the Redemption Date and the principal amount
of Securities to be redeemed. The Company shall give such notice to the
Trustee at least 45 days before the Redemption Date (unless a shorter notice
shall be agreed to by the Trustee in writing), together with an Officers'
Certificate stating that such redemption will comply with the conditions
contained herein and in the Securities, the Redemption Date, the redemption
price and the principal amount of the Securities to be redeemed. Any such
notice may be canceled by notice in accordance with Section 13.02 at any time
prior to notice of such redemption being mailed to any Holder and shall thereby
be void and of no effect.

SECTION 3.02. Selection of Securities To Be Redeemed.

If less than all of the Securities are to be redeemed pursuant to
paragraph 5 of the Securities, the Trustee shall select the Securities to be
redeemed in compliance with the requirements of the national securities
exchange, if any, on which the Securities are listed or, if the Securities are
not then listed on a national securities exchange, on a pro rata basis;
provided, however, that no Securities of $1,000 or less shall be redeemed in
part. On and after the Redemption Date, interest shall cease to accrue on the
Securities or portions thereof called for redemption, whether or not such
Securities are presented for payment.

SECTION 3.03. Notice of Redemption.

At least 30 days but not more than 60 days before a Redemption Date,
the Company shall mail a notice of redemption by first-class mail to each
Holder whose Securities are to be redeemed at such Holder's registered address;
provided, however, that notice of a redemption pursuant to paragraph 5(b) of
the Securities shall be mailed to each Holder whose Securities are to be
redeemed no later than 60 days after the date of the closing of the relevant
Equity Offering of the Company.

Each notice of redemption shall identify the Securities to be redeemed
(including the CUSIP number thereon) and shall state:

(1) the Redemption Date;

(2) the redemption price;

(3) the name and address of the Paying Agent to which the
Securities are to be surrendered for redemption;

(4) that Securities called for redemption must be
surrendered to the Paying Agent to collect the redemption price;

(5) that, as long as the Company has deposited with the
Paying Agent funds in satisfaction of the applicable redemption price pursuant
to this Indenture, interest on Securities called for redemption ceases to
accrue on and after the Redemption Date and the only remaining right of the
Holders is to receive payment of the redemption price upon surrender to the
Paying Agent;
<PAGE> 27
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(6) in the case of any redemption pursuant to paragraph 5
of the Securities, if any Security is being redeemed in part, the portion of
the principal amount of such Security to be redeemed and that, after the
Redemption Date, upon surrender of such Security, a new Security or Securities
in principal amount equal to the unredeemed portion thereof will be issued;

(7) the subparagraph of the Securities pursuant to which
such redemption is being made; and

(8) that no representation is made as to the accuracy of
the CUSIP number listed in such notice or printed on such Security.

At the Company's request, the Trustee shall give the notice of
redemption on behalf of the Company, in the Company's name and at the Company's
expense.

SECTION 3.04. Effect of Notice of Redemption.

Once a notice of redemption is mailed, Securities called for
redemption become due and payable on the Redemption Date and at the redemption
price. Upon surrender to the Paying Agent, such Securities shall be paid at
the redemption price, plus accrued interest thereon, if any, to the Redemption
Date, but interest installments whose maturity is on or prior to such
Redemption Date shall be payable to the Holders of record at the close of
business on the relevant Interest Record Date.

SECTION 3.05. Deposit of Redemption Price.

On or before the Redemption Date, the Company shall deposit with the
Paying Agent (or if the Company is its own Paying Agent, it shall, on or before
the Redemption Date, segregate and hold in trust) money sufficient to pay the
redemption price of and accrued interest, if any, on all Securities to be
redeemed on that date other than Securities or portions thereof called for
redemption on that date which have been delivered by the Company to the Trustee
for cancellation.

If any Security surrendered for redemption in the manner provided in
the Securities shall not be so paid on the Redemption Date due to the failure
of the Company to deposit with the Paying Agent money sufficient to pay the
redemption price thereof, the principal and accrued and unpaid interest, if
any, thereon shall, until paid or duly provided for, bear interest as provided
in Sections 2.12 and 4.01 with respect to any payment default.

SECTION 3.06. Securities Redeemed in Part.

Upon surrender of a Security that is redeemed in part, the Trustee
shall authenticate for the Holder a new Security equal in principal amount to
the unredeemed portion of the Security surrendered.

ARTICLE FOUR

COVENANTS

SECTION 4.01. Payment of Securities.

The Company shall pay the principal of and interest on the Securities
in the manner provided in the Securities. An installment of principal or
interest shall be considered paid on the date due if the Trustee or Paying
Agent (other than the Company or any Affiliates of the Company) holds on that
date money designated for and sufficient to pay the installment in full and is
not prohibited from paying such money to the Holders of the Securities pursuant
to the terms of this Indenture.
<PAGE> 28
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The Company shall pay cash interest on overdue principal at the same
rate per annum borne by the Securities. The Company shall pay cash interest on
overdue installments of interest at the same rate per annum borne by the
Securities, to the extent lawful, as provided in Section 2.12.

Notwithstanding anything to the contrary contained in this Indenture,
the Company may, to the extent it is required to do so by law, deduct or
withhold income or other similar taxes imposed by the United States of America
from principal, premium or interest payments hereunder.

SECTION 4.02. Maintenance of Office or Agency.

The Company shall give prompt written notice to the Trustee of the
location, and any change in the location, of any office or agency required by
Section 2.03. If at any time the Company shall fail to maintain any such
required office or agency or shall fail to furnish the Trustee with the address
thereof, such presentations, surrenders, notices and demands may be made or
served at the address of the Trustee set forth in Section 13.

SECTION 4.03. Limitations on Transactions with Affiliates.

Neither the Company nor any of its Subsidiaries will, directly or
indirectly, enter into or permit to exist any transaction (including, without
limitation, the purchase, sale, lease or exchange of any property or the
rendering of any service) with or for the benefit of any of its Affiliates
(other than transactions between the Company and a Wholly Owned Subsidiary of
the Company or among Wholly Owned Subsidiaries of the Company) (an "Affiliate
Transaction"), other than Affiliate Transactions on terms that are no less
favorable than those that might reasonably have been obtained in a comparable
transaction on an arm's-length basis from a person that is not an Affiliate;
provided, however, that for a transaction or series of related transactions
involving value of $5,000,000 or more, such determination will be made in good
faith by a majority of members of the board of directors of the Company and by
a majority of the disinterested members of the board of directors of the
Company, if any; provided, further, that for a transaction or series of related
transactions involving value of $15,000,000 or more, the board of directors of
the Company has received an opinion from a nationally recognized investment
banking firm that such Affiliate Transaction is fair, from a financial point of
view, to the Company or such Subsidiary. The foregoing restrictions will not
apply to (1) reasonable and customary directors' fees, indemnification and
similar arrangements and payments thereunder, (2) any obligations of the
Company under the Financial Monitoring and Oversight Agreements, the Corporate
Leases or any employment agreement, noncompetition or confidentiality agreement
with any officer of the Company (provided that each amendment of any of the
foregoing agreements shall be subject to the limitations of this covenant), (3)
reasonable and customary investment banking, financial advisory, commercial
banking and similar fees and expenses paid to any of the Initial Purchasers and
their Affiliates, (4) any Restricted Payment permitted to be made pursuant to
Section 4.10, (5) any issuance of securities, or other payments, awards or
grants in cash, securities or otherwise pursuant to, or the funding of,
employment arrangements, stock options and stock ownership plans approved by
the board of directors of the Company, (6) loans or advances to employees in
the ordinary course of business of the Company or any of its Subsidiaries
consistent with past practices, and (7) the issuance of Capital Stock of the
Company (other than Disqualified Stock).

SECTION 4.04. Limitation on Incurrence of Additional Indebtedness and
Issuance of Disqualified Capital Stock.

(a) The Company will not, and will not permit any of its Subsidiaries
to, directly or indirectly, create, incur, assume, Guarantee or otherwise
become directly or indirectly liable, contingently or otherwise, with respect
to (collectively, "incur") any Indebtedness (other than Permitted Indebtedness)
and the Company
<PAGE> 29
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will not issue any Disqualified Capital Stock and will not permit its
Subsidiaries to issue any Preferred Stock except Preferred Stock of a
Subsidiary issued to (and as long as it is held by) the Company or a
Wholly-Owned Subsidiary of the Company; provided, however, that the Company and
its Subsidiaries may incur Indebtedness or issue shares of such Capital Stock
if, in either case, at the time of and immediately after giving pro forma
effect to such incurrence of Indebtedness or the issuance of such Capital
Stock, as the case may be, and the use of proceeds therefrom, the Company's
Consolidated Coverage Ratio is greater than 2.00 to 1.00.

(b) In addition, the Company will not incur any Secured
Indebtedness (other than Senior Indebtedness) unless contemporaneously
therewith effective provision is made to secure the Securities equally and
ratably with such Secured Indebtedness for so long as such Secured Indebtedness
is secured by a Lien.

(c) The Company will not incur or suffer to exist, or permit any
of its Subsidiaries to incur or suffer to exist, any Obligations with respect
to an Unrestricted Subsidiary that would violate the provisions set forth in
the definition of Unrestricted Subsidiary.

SECTION 4.05. Limitation on Layering.

The Company will not incur any Indebtedness if such Indebtedness is
subordinate or junior in ranking in any respect to any Senior Indebtedness
unless such Indebtedness is Senior Subordinated Indebtedness or is
contractually subordinated in right of payment to all Senior Subordinated
Indebtedness (including the Securities).

SECTION 4.06. Payments for Consents.

Neither the Company nor any of its Subsidiaries will, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Securities for or as an
inducement to any consent, waiver or amendment of any of the terms or
provisions of this Indenture or the Securities unless such consideration is
offered to be paid or is paid to all Holders of the Securities that consent,
waive or agree to amend in the time frame set forth in the solicitation
documents relating to such consent, waiver or agreement.

SECTION 4.07. Limitation on Investment Company Status.

The Company and its Subsidiaries shall not take any action, or
otherwise permit to exist any circumstance, that would require the Company to
register as an "investment company" under the Investment Company Act of 1940,
as amended.

SECTION 4.08. Limitation on Asset Sales.

Neither the Company nor any of its Subsidiaries will consummate an
Asset Sale unless (i) the Company or the applicable Subsidiary, as the case may
be, receives consideration at the time of such Asset Sale at least equal to the
fair market value of the assets sold or otherwise disposed of (as determined in
good faith by management of the Company or, if such Asset Sale involves
consideration in excess of $5,000,000, by the board of directors of the
Company, as evidenced by a board resolution), (ii) at least 75% of the
consideration received by the Company or such Subsidiary, as the case may be,
from such Asset Sale is in the form of cash or Cash Equivalents and is received
at the time of such disposition and (iii) upon the consummation of an Asset
Sale, the Company applies, or causes such Subsidiary to apply, such Net Cash
Proceeds within 180 days of receipt thereof either (A) to repay any Senior
Indebtedness of the Company or any Indebtedness of a Subsidiary of the Company
(and, to the extent such Senior Indebtedness relates to principal under a
revolving credit or similar facility, to obtain a corresponding reduction in
the commitments thereunder, except that the Company may temporarily repay
Senior Indebtedness using the consideration from such Asset Sale and thereafter
use such funds to reinvest pursuant to clause (B) below within the period set
forth therein without having to obtain a corresponding
<PAGE> 30
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reduction in the commitments under such revolving credit or similar facility),
(B) to reinvest, or to be contractually committed to reinvest pursuant to a
binding agreement, in Productive Assets and, in the latter case, to have so
reinvested within 360 days of the date of receipt of such Net Cash Proceeds or
(C) to purchase Securities and other Senior Subordinated Indebtedness, pro rata
tendered to the Company for purchase at a price equal to 100% of the principal
amount thereof (or the accreted value of such other Senior Subordinated
Indebtedness, if such other Senior Subordinated Indebtedness is issued at a
discount) plus accrued interest thereon, if any, to the date of purchase
pursuant to an offer to purchase made by the Company as set forth below (a "Net
Proceeds Offer"); provided, however, that the Company may defer making a Net
Proceeds Offer until the aggregate Net Cash Proceeds from Asset Sales not
otherwise applied in accordance with this covenant equal or exceed $5,000,000.

Subject to the deferral right set forth in the final proviso of the
preceding paragraph, each notice of a Net Proceeds Offer will be mailed, by
first-class mail, to holders of Securities not more than 180 days after the
relevant Asset Sale or, in the event the Company or a Subsidiary has entered
into a binding agreement as provided in (B) above, within 180 days following
the termination of such agreement but in no event later than 360 days after the
relevant Asset Sale. Such notice will specify, among other things, the purchase
date (which will be no earlier than 30 days nor later than 45 days from the
date such notice is mailed, except as otherwise required by law) and will
otherwise comply with the procedures set forth in this Indenture. Upon
receiving notice of the Net Proceeds Offer, holders of Securities may elect to
tender their Securities in whole or in part in integral multiples of $1,000. To
the extent holders properly tender Securities in an amount which, together with
all other Senior Subordinated Indebtedness so tendered, exceeds the Net
Proceeds Offer, Securities and other Senior Subordinated Indebtedness of
tendering holders will be repurchased on a pro rata basis (based upon the
aggregate principal amount tendered). To the extent that the aggregate
principal amount of Securities tendered pursuant to any Net Proceeds Offer,
which, together with the aggregate principal amount or aggregate accreted
value, as the case may be, of all other Senior Subordinated Indebtedness so
tendered, is less than the amount of Net Cash Proceeds subject to such Net
Proceeds Offer, the Company may use any remaining portion of such Net Cash
Proceeds not required to fund the repurchase of tendered Securities and other
Senior Subordinated Indebtedness for any purposes otherwise permitted by this
Indenture. Upon the consummation of any Net Proceeds Offer, the amount of Net
Cash Proceeds subject to any future Net Proceeds Offer from the Asset Sales
giving rise to such Net Cash Proceeds shall be deemed to be zero.

The Company will comply with the requirements of Rule 14e-1 under the
Exchange Act to the extent applicable in connection with the repurchase of
Securities pursuant to a Net Proceeds Offer.

SECTION 4.09. Limitation on Asset Swaps.

The Company will not, and will not permit any Subsidiary to, engage in
any Asset Swaps, unless: (i) at the time of entering into such Asset Swap, and
immediately after giving effect to such Asset Swap, no Default or Event of
Default shall have occurred and be continuing or would occur as a consequence
thereof; (ii) in the event such Asset Swap involves an aggregate amount in
excess of $2.0 million, the terms of such Asset Swap have been approved by a
majority of the members of the board of directors of the Company which
determination shall include a determination that the fair market value of the
assets being received in such swap are at least equal to the fair market value
of the assets being swapped and (iii) in the event such Asset Swap involves an
aggregate amount in excess of $10.0 million, the Company has also received a
written opinion from an independent investment banking firm of nationally
recognized standing that such Asset Swap is fair to the Company or such
Subsidiary, as the case may be, from a financial point of view.

SECTION 4.10. Limitation on Restricted Payments.

(a) Neither the Company nor any of its Subsidiaries will, directly or
indirectly, make any Restricted Payment if at the time of such Restricted
Payment and immediately after giving effect thereto:
<PAGE> 31
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(i) a Default or Event of Default shall have occurred and
be continuing at the time of or after giving effect to such Restricted
Payment; or

(ii) the Company is not able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with
Section 4.04; or

(iii) the aggregate amount of Restricted Payments made
subsequent to the Issue Date (the amount expended for such purposes,
if other than in cash, being the fair market value of such property as
determined by the board of directors of the Company in good faith)
exceeds the sum of (a) 50% of Consolidated Net Income (or, in the case
such Consolidated Net Income shall be a deficit, minus 100% of such
deficit) accruing during the period (treated as one accounting period)
from the Issue Date to the end of the most recent fiscal quarter
ending prior to the date of such Restricted Payment as to which
financial results are available plus (b) 100% of the aggregate net
proceeds, including the fair market value of property other than cash
as determined by the board of directors of the Company in good faith,
received subsequent to the Issue Date by the Company from any Person
(other than a Subsidiary of the Company) from the issuance and sale
subsequent to the Issue Date of Qualified Capital Stock of the Company
(excluding (i) any net proceeds from issuances and sales financed
directly or indirectly using funds borrowed from the Company or any
Subsidiary of the Company, until and to the extent such borrowing is
repaid, but including the proceeds from the issuance and sale of any
securities convertible into or exchangeable for Qualified Capital
Stock to the extent such securities are so converted or exchanged and
including any additional proceeds received by the Company upon such
conversion or exchange and (ii) any net proceeds received from
issuances and sales that are used to consummate a transaction
described in clauses (2) and (3) of paragraph (b) below), plus (c)
without duplication of any amount included in clause (iii)(b) above,
100% of the aggregate net proceeds, including the fair market value of
property other than cash (valued as provided in clause (iii)(b)
above), received by the Company as a capital contribution after the
Issue Date, plus (d) the amount equal to the net reduction in
Investments (other than Permitted Investments) made by the Company or
any of its Subsidiaries in any Person resulting from (i) repurchases
or redemptions of such Investments by such Person, proceeds realized
upon the sale of such Investment to an unaffiliated purchaser and
repayments of loans or advances or other transfers of assets by such
Person to the Company or any Subsidiary of the Company or (ii) the
redesignation of Unrestricted Subsidiaries as Subsidiaries (valued in
each case as provided in the definition of "Investment") not to
exceed, in the case of any Subsidiary, the amount of Investments
previously made by the Company or any Subsidiary in such Unrestricted
Subsidiary, which amount was included in the calculation of Restricted
Payments; provided, however, that no amount shall be included under
this clause (d) to the extent it is already included in Consolidated
Net Income, plus (e) the aggregate net cash proceeds received by a
Person in consideration for the issuance of such Person's Capital
Stock (other than Disqualified Capital Stock) that are held by such
Person at the time such Person is merged with and into the Company in
accordance with Article Five hereof on or subsequent to the Issue
Date; provided, however, that concurrently with or immediately
following such merger the Company uses an amount equal to such net
cash proceeds to redeem or repurchase the Company's Capital Stock,
plus (f) $5,000,000.

of the Company that is subordinate or junior in right of payment to the
Securities either (x) solely in exchange for shares of Qualified Capital Stock
(or warrants, options or other rights to acquire Qualified Capital Stock), for
shares of Disqualified Capital Stock that have a redemption date no earlier
than, and require the payment of current dividends or distributions in cash no
earlier than, in each case, the maturity date and interest payments dates,
respectively, of the Indebtedness being acquired, or for Indebtedness of the
Company that is subordinate or junior in right of payment to the Securities, at
least to the extent that the Indebtedness being acquired is subordinated to the
Securities and has a Weighted Average Life to Maturity no less than that of the
Indebtedness being acquired or (y) through the application of the net proceeds
of a substantially concurrent sale for cash (other than to a Subsidiary of the
Company) of shares of Qualified Capital Stock (or warrants, options or other
rights to acquire Qualified Capital Stock), shares of Disqualified Capital
Stock that have a redemption date no earlier than, and require the payment of
current dividends or distributions in cash no earlier than, in each case, the
maturity date and interest payments dates, respectively, of the Indebtedness
being refinanced, or Indebtedness of the Company that is subordinate or junior
in right of payment to the Securities at least to the extent that the
Indebtedness being acquired is subordinated to the Securities and has a
Weighted Average Life to Maturity no less than that of the Indebtedness being
refinanced; (4) payments by the Company to repurchase or to enable Holding
(including for the purpose of this clause (4) and for the purposes of clauses
(5) and (6) below, any corporation that, directly or indirectly, owns all of
the Common Stock of Holding) to repurchase, Capital Stock of Holding from
employees of Holding or its Subsidiaries or such other Corporation in an
aggregate amount not to exceed $5,000,000; (5) payments to enable Holding to
redeem or repurchase stock purchase or similar rights granted by Holding with
respect to its Capital Stock in an aggregate amount not to exceed $1,000,000;
(6) payments, not to exceed $200,000 in the aggregate, to enable Holding to
make cash payments to holders of its Capital Stock in lieu of the issuance of
fractional shares of its Capital Stock; (7) payments made pursuant to any
merger, consolidation or sale of assets effected in accordance with Article
Five hereof; provided, however, that no such payment may be made pursuant to
this clause (7) unless, after giving effect to such transaction (and the
incurrence of any Indebtedness in connection therewith and the use of the
proceeds thereof), the Company would be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
4.04 such that after incurring that $1.00 of additional Indebtedness, the
Consolidated Coverage Ratio would be greater than 2.00 to 1.00; (8) payments to
enable Holding or the Company to pay dividends on its Capital Stock (other than
Disqualified Capital Stock) after the first Equity Offering in an annual amount
not to exceed 6.00% of the gross proceeds (before deducting underwriting
discounts and commissions and other fees and expenses of the offering) received
from shares of Capital Stock (other than Disqualified Stock) sold for the
account of the issuer thereof (and not for the account of any stockholder) in
such initial Equity Offering and contributed to the Company, (9) payments by
the Company to fund the payment by any direct or indirect holding company
thereof of audit, accounting, legal or other similar expenses, to pay franchise
or other similar taxes and to pay other corporate overhead expenses, so long as
such dividends are paid as and when needed by its respective direct or indirect
holding company and so long as the aggregate amount of payments pursuant to
this clause (9) does not exceed $1,000,000 in any calendar year; (10) payments
by the Company to fund taxes of Holding for a given taxable year in an amount
equal to the Company's "separate return liability," as if the Company were the
parent of a consolidated group (for purposes of this clause (iv) "separate
return liability" for a given taxable year shall mean the hypothetical United
States tax liability of the Company defined as if the Company had filed its own
United States federal tax return for such taxable year) and (11) payments by
the Company under the Financial Monitoring and Oversight Agreements or the
Corporate Leases; provided, however, that in the case of clauses (3), (4), (5),
(6), (7) and (8), no Event of Default shall have occurred or be continuing at
the time of such payment or as a result thereof. In determining the aggregate
amount of Restricted Payments made subsequent to the Issue Date, amounts
expended pursuant to clauses (1), (4), (5), (6), (7) and (8) shall be included
in such calculation.

SECTION 4.11. Notice of Defaults.

Upon becoming aware of any Default or Event of Default, the Company
shall promptly deliver an Officers' Certificate to the Trustee specifying the
Default or Event of Default and if any Holder seeks to exercise any remedy
hereunder with respect to a claimed Default under this Indenture or the
Securities, the Company shall promptly deliver to the Trustee by registered or
certified mail or by telegram, telex or certified mail an Officers' Certificate
specifying such event, notice or other action.
<PAGE> 33
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SECTION 4.12. Reports.

So long as any of the Securities are outstanding, the Company will
provide to the holders of Securities and file with the Commission, to the
extent such submissions are accepted for filing by the Commission, copies of
the annual reports and of the information, documents and other reports that the
Company would have been required to file with the Commission pursuant to
Sections 13 or 15(d) of the Exchange Act regardless of whether the Company is
then obligated to file such reports, commencing for the period ended March 31,
1998; provided that the Company will provide to the holders of the Securities a
consolidated balance sheet, statement of operations and a statement of cash
flows for the period ended December 31, 1997 and related management discussion
and analysis no later than February 27, 1998.

SECTION 4.13. Limitations on Dividend and Other Payment Restrictions
Affecting Subsidiaries.

The Company will not, and will not permit any of its Subsidiaries to,
directly or indirectly, create or otherwise cause to permit to exist or become
effective, by operation of the charter of such Subsidiary or by reason of any
agreement, instrument, judgment, decree, rule, order, statute or governmental
regulation, any encumbrance or restriction on the ability of any Subsidiary to
(a) pay dividends or make any other distributions on its Capital Stock; (b)
make loans or advances or pay any Indebtedness or other obligation owed to the
Company or any of its Subsidiaries; or (c) transfer any of its property or
assets to the Company, except for such encumbrances or restrictions existing
under or by reason of: (1) applicable law; (2) this Indenture; (3) customary
non-assignment provisions of any lease governing a leasehold interest of the
Company or any Subsidiary; (4) any instrument governing Acquired Indebtedness
or Acquired Preferred Stock, which encumbrance or restriction is not applicable
to any Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired; (5) agreements
existing on the Issue Date (including the Credit Agreement) as such agreements
are from time to time in effect; provided, however, that any amendments or
modifications of such agreements that affect the encumbrances or restrictions
of the types subject to this covenant shall not result in such encumbrances or
restrictions being less favorable to the Company in any material respect, as
determined in good faith by the board of directors of the Company, than the
provisions as in effect before giving effect to the respective amendment or
modification; (6) any restriction with respect to such a Subsidiary imposed
pursuant to an agreement entered into for the sale or disposition of all or
substantially all the Capital Stock or assets of such Subsidiary pending the
closing of such sale or disposition; (7) an agreement effecting a refinancing,
replacement or substitution of Indebtedness issued, assumed or incurred
pursuant to an agreement referred to in clause (2), (4) or (5) above or any
other agreement evidencing Indebtedness permitted under this Indenture;
provided, however, that the provisions relating to such encumbrance or
restriction contained in any such refinancing, replacement or substitution
agreement or any such other agreement are no less favorable to the Company in
any material respect as determined in good faith by the board of directors of
the Company than the provisions relating to such encumbrance or restriction
contained in agreements referred to in such clause (2), (4) or (5); (8)
restrictions on the transfer of the assets subject to any Lien imposed by the
holder of such Lien; (9) a licensing agreement to the extent such restrictions
or encumbrances limit the transfer of property subject to such licensing
agreement; (10) restrictions relating to Subsidiary preferred stock that
require that due and payable dividends thereon to be paid in full prior to
dividends on such Subsidiary's common stock or (11) any agreement or charter
provision evidencing Indebtedness or Capital Stock permitted under this
Indenture; provided, however, that the provisions relating to such encumbrance
or restriction contained in such agreement or charter provision are not less
favorable to the Company in any material respect as determined in good faith by
the board of directors of the Company than the provisions relating to such
encumbrance or restriction contained in this Indenture.

SECTION 4.14. Restriction on Transfer of Assets to Subsidiaries; Additional
Subsidiary Guarantees.

If, at any time, (x) more than 20% of the Company's consolidated total
assets are owned by Subsidiaries of the Company or (y) more than 20% of the
Company's Consolidated EBITDA is derived from Subsidiaries of the Company, the
Company shall cause such Subsidiaries to (i) execute and deliver to the Trustee
a supplemental indenture in form reasonably satisfactory to the Trustee
pursuant to which such Subsidiaries
<PAGE> 34
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shall unconditionally guarantee, on a senior subordinated basis, all the
Company's obligations under the Securities and (ii) deliver to the Trustee an
Opinion of Counsel that such supplemental indenture has been duly executed and
delivered by such Subsidiaries; provided that if no Default or Event of Default
shall have occurred or be continuing, and neither condition (x) or (y) is then
met, such guarantees will automatically, with no action required on behalf of
the Company or its Subsidiaries, be released; provided, however, that the
provisions contained herein shall not apply to Subsidiaries of the Company
organized outside of the United States.

SECTION 4.15. Change of Control.

(a) Upon the occurrence of a Change of Control, each Holder will have
the right to require that the Company purchase all or a portion of such
Holder's Securities in cash pursuant to the offer described below (the "Change
of Control Offer"), at a purchase price equal to 101% of the principal amount
thereof plus accrued and unpaid interest, if any, to the date of purchase.

(b) Prior to the mailing of the notice referred to below, but in any
event within 30 days following the date on which the Company becomes aware that
a Change of Control has occurred, the Company covenants that if the purchase of
the Securities would violate or constitute a default under any other
Indebtedness of the Company, then the Company shall, to the extent needed to
permit such purchase of Securities, either (i) repay all such Indebtedness and
terminate all commitments outstanding thereunder or (ii) obtain the requisite
consents, if any, under any such Indebtedness required to permit the purchase
of the Securities as provided below. The Company will first comply with the
covenant in the preceding sentence before it will be required to make the
Change of Control Offer or purchase the Securities pursuant to the provisions
described below.

(c) Within 30 days following the date on which the Company becomes
aware that a Change of Control has occurred (the "Change of Control Date"), the
Company shall send, by first class mail, postage prepaid, a notice to each
Holder of Securities, which notice shall govern the terms of the Change of
Control Offer. The notice to the Holders shall contain all instructions and
materials necessary to enable such Holders to tender Securities pursuant to the
Change of Control Offer. Such notice shall state:

(1) that the Change of Control Offer is being made pursuant to this
Section 4.15 and that all Securities validly tendered and not withdrawn will be
accepted for payment;

(2) the purchase price (including the amount of accrued interest, if
any) and the purchase date (which shall be no earlier than 30 days nor later
than 45 days from the date such notice is mailed, other than as may be required
by law) (the "Change of Control Payment Date");

(3) that any Security not tendered will continue to accrue interest;

(4) that, unless the Company defaults in making payment therefor, any
Security accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date;

(5) that Holders electing to have a Security purchased pursuant to a
Change of Control Offer will be required to surrender the Security, with the
form entitled "Option of Holder to Elect Purchase" on the reverse of the
Security completed, to the Paying Agent and Registrar for the Securities at the
address specified in the notice prior to the close of business on the Business
Day prior to the Change of Control Payment Date;

(6) that Holders will be entitled to withdraw their election if the
Paying Agent receives, not later than five Business Days prior to the Change of
Control Payment Date, a telegram, telex, facsimile transmission or letter
setting forth the name of the Holder, the principal amount of the Securities
the Holder delivered for purchase and a statement that such Holder is
withdrawing his election to have such Security purchased;
<PAGE> 35
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(7) that Holders whose Securities are purchased only in part will be
issued new Securities in a principal amount equal to the unpurchased portion of
the Securities surrendered; provided, however, that each Security purchased and
each new Security issued shall be in a principal amount of $1,000 or integral
multiples thereof; and

(8) the circumstances and relevant facts regarding such Change of
Control.

(d) On or before the Change of Control Payment Date, the Company
shall (i) accept for payment Securities or portions thereof (in integral
multiples of $1,000) validly tendered pursuant to the Change of Control Offer,
(ii) deposit with the Paying Agent in accordance with Section 2.14 U.S. Legal
Tender sufficient to pay the purchase price plus accrued and unpaid interest,
if any, of all Securities so tendered and (iii) deliver to the Trustee
Securities so accepted together with an Officers' Certificate stating the
Securities or portions thereof being purchased by the Company. Upon receipt by
the Paying Agent of the monies specified in clause (ii) above and a copy of the
Officers' Certificate specified in clause (iii) above, the Paying Agent shall
promptly mail to the Holders of Securities so accepted payment in an amount
equal to the purchase price plus accrued and unpaid interest, if any, out of
the funds deposited with the Paying Agent in accordance with the preceding
sentence. The Trustee shall promptly authenticate and mail to such Holders new
Securities equal in principal amount to any unpurchased portion of the
Securities surrendered. Upon the payment of the purchase price for the
Securities accepted for purchase, the Trustee shall return the Securities
purchased to the Company for cancellation. Any monies remaining after the
purchase of Securities pursuant to a Change of Control Offer shall be returned
within three Business Days by the Trustee to the Company except with respect to
monies owed as obligations to the Trustee pursuant to Article Eight. For
purposes of this Section 4.15, the Trustee shall, except with respect to monies
owed as obligations to the Trustee pursuant to Article Eight, act as the Paying
Agent.

(e) The Company will comply with the requirements of Rule 14e-1 under
the Exchange Act and any other notes laws and regulations thereunder to the
extent such laws and regulations are applicable in connection with the purchase
of the Securities pursuant to a Change of Control Offer. To the extent the
provisions of any such rule conflict with the provisions of this Indenture
relating to a Change of Control Offer, the Company shall comply with the
provisions of such rule and be deemed not to have breached its obligations
relating to such Change of Control Offer by virtue thereof.

(f) Paragraphs (a)-(e) of this Section 4.15 notwithstanding, the
Company shall not be required to make a Change of Control Offer if, instead,
the Company elects to effect a Change of Control Redemption in compliance with
the requirements listed on the Securities in Exhibit A and Exhibit B hereof.

SECTION 4.16. Compliance Certificate.

The Company shall deliver to the Trustee within 120 days after the
close of each fiscal year a certificate signed by the principal executive
officer, principal financial officer or principal accounting officer stating
that a review of the activities of the Company has been made under the
supervision of the signing officer with a view to determining whether a Default
or Event of Default has occurred and whether or not the signets know of any
failure of the Company to comply with any of its obligations under this
Indenture or any Default or Event of Default by the Company that occurred
during such fiscal year. If they do know of such a Default or Event of
Default, their status and the action the Company is taking or proposes to take
with respect thereto. The first certificate to be delivered by the Company
pursuant to this Section 4.16 shall be for the fiscal year ending September 30,
1998.

SECTION 4.17. Corporate Existence.

Subject to Article Five, the Company shall do or shall cause to be
done all things necessary to preserve and keep in full force and effect its
corporate existence and the corporate, partnership or other existence of each
Subsidiary in accordance with the respective organizational documents of each
such Subsidiary and the
<PAGE> 36
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rights (charter and statutory) and material franchises of the Company and the
Subsidiaries; provided, however, that the Company shall not be required to
preserve any such right or franchise, or the corporate existence of any
Subsidiary, if the Board of Directors of the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and the Subsidiaries, taken as a whole; provided, further, however,
that a determination of the Board of Directors of the Company shall not be
required in the event of a merger of one or more Wholly-Owned Subsidiaries of
the Company with or into another Wholly-Owned Subsidiary of the Company or
another Person, if the surviving Person is a Wholly-Owned Subsidiary of the
Company organized under the laws of the United States or a State thereof or of
the District of Columbia. This Section 4.17 shall not prohibit the Company
from taking any other action otherwise permitted by, and made in accordance
with, the provisions of this Indenture.

ARTICLE FIVE

MERGERS; SUCCESSOR CORPORATION

SECTION 5.01. Mergers, Sale of Assets, etc.

(a) The Company may not, in a single transaction or a series of
related transactions, consolidate with or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all of its
assets to, another Person or adopt a plan of liquidation unless (i) either (1)
the Company is the surviving or continuing Person or (2) the Person (if other
than the Company) formed by such consolidation or into which the Company is
merged or the person that acquires by conveyance, transfer or lease the
properties and assets of the Company substantially as an entirety or in the
case of a plan of liquidation, the Person to which assets of the Company have
been transferred, shall be a corporation, partnership, limited liability
company or trust organized and existing under the laws of the United States or
any State thereof or the District of Columbia; (ii) such surviving person shall
assume all of the obligations of the Company under the Securities and this
Indenture pursuant to a supplemental indenture in a form reasonably
satisfactory to the Trustee; (iii) immediately after giving effect to such
transaction and the use of the proceeds therefrom (on a pro forma basis,
including giving effect to any Indebtedness incurred or anticipated to be
incurred in connection with such transaction), the Company (in the case of
clause (1) of the foregoing clause (i)) or such Person (in the case of clause
(2) of the foregoing clause (i)) shall be able to incur $1.00 of additional
Indebtedness (other than Permitted Indebtedness) in compliance with Section
4.04; (iv) immediately after giving effect to such transactions, no Default or
Event of Default shall have occurred or be continuing; and (v) the Company has
delivered to the Trustee prior to the consummation of the proposed transaction
an Officers' Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer complies with this Indenture and that all
conditions precedent in this Indenture relating to such transaction have been
satisfied.

(b) For purposes of the foregoing subsection (a) the transfer (by
lease, assignment, sale or otherwise, in a single transaction or series of
related transactions) of all or substantially all the properties and assets of
one or more Subsidiaries the Capital Stock of which constitutes all or
substantially all of the properties and assets of the Company shall be deemed
to be the transfer of all or substantially all of the properties and assets of
the Company.

(c) Notwithstanding clauses (i) and (ii) in paragraph (a) above, (1)
any Subsidiary of the Company may consolidate with, merge into or transfer all
or part of its properties and assets to the Company; provided that the Company
is the surviving corporation, and (2) the Company may merge with an Affiliate
thereof incorporated solely for the purpose of reincorporating the Company in
another jurisdiction in the U.S. to realize tax or other benefits.
<PAGE> 37
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SECTION 5.02. Successor Corporation Substituted.

In the event of any transaction (other than a lease) described in and
complying with the conditions listed in Section 5.01 in which the Company is
not the surviving Person and the surviving Person is to assume all the
Obligations of the Company under the Securities and this Indenture, such
surviving Person shall succeed to, and be substituted for, and may exercise
every right and power of, the Company and the Company shall be discharged from
its Obligations under this Indenture and the Securities.

ARTICLE SIX

DEFAULT AND REMEDIES

SECTION 6.01. Events of Default.

Each of the following shall be an "Event of Default" for purposes of
this Indenture:

(i) the failure to pay interest on the Securities when the same
becomes due and payable and the Default continues for a period of 30 days
(whether or not such payment is prohibited by the provisions described under
Article Seven);

(ii) the failure to pay principal of or premium, if any, on any
Securities when such principal or premium, if any, becomes due and payable, at
maturity, upon redemption or otherwise (whether or not such payment is
prohibited by the provisions described in Article Seven);

(iii) a default in the observance or performance of any other
covenant or agreement contained in the Securities or this Indenture, which
default continues for a period of 30 days after the Company receives written
notice thereof specifying the default from the Trustee or Holders of at least
25% in aggregate principal amount of outstanding Securities;

(iv) the failure to pay at the final stated maturity (giving effect
to any extensions thereof) the principal amount of any Indebtedness of the
Company or any Subsidiary of the Company, or the acceleration of the final
stated maturity of any such Indebtedness, if the aggregate principal amount of
such Indebtedness, together with the aggregate principal amount of any other
such Indebtedness in default for failure to pay principal at the final stated
maturity (giving effect to any extensions thereof) or which has been
accelerated, aggregates $10,000,000 or more at any time in each case after a
10-day period during which such default shall not have been cured or such
acceleration rescinded;

(v) one or more judgments in an aggregate amount in excess of
$10,000,000 (which are not covered by insurance as to which the insurer has not
disclaimed coverage) being rendered against the Company or any of its
Significant Subsidiaries and such judgment or judgments remain undischarged or
unstayed for a period of 60 days after such judgment or judgments become final
and nonappealable;

(vi) the Company or any of its Significant Subsidiaries pursuant to
or within the meaning of any Bankruptcy Law: (i) commences a voluntary case or
proceeding under any Bankruptcy Law; (ii) consents to the entry of an order for
relief against it in an involuntary case or proceeding under any Bankruptcy
Law; (iii) consents or acquiesces in the institution of a bankruptcy or
insolvency proceeding against it; (iv) consents to the appointment of a
Custodian of it or for all or substantially all of its property; or (v) makes a
general assignment for the benefit of its creditors, or any of them takes any
action to authorize or effect any of the foregoing; or

(vii) a court of competent jurisdiction enters an order or decree
under any Bankruptcy Law that: (i) is for relief against the Company or any
Significant Subsidiary of the Company in an involuntary case or proceeding;
(ii) appoints a Custodian of the Company or any Significant Subsidiary of the
Company for all or substantially all of its property; or (iii) orders the
liquidation of the Company or any Significant Subsidiary of
<PAGE> 38
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the Company; and in each case the order or decree remains unstayed and in
effect for 60 days; provided, however, that if the entry of such order or
decree is appealed and dismissed on appeal, then the Event of Default hereunder
by reason of the entry of such order or decree shall be deemed to have been
cured.

The term "Bankruptcy Law" means Title 11, U.S. Code or any similar
Federal, state or foreign law for the relief of debtors. The term "Custodian"
means any receiver, trustee, assignee, liquidator, sequestrator or similar
official under any Bankruptcy Law.

SECTION 6.02. Acceleration.

If an Event of Default with respect to the Securities (other than an
Event of Default specified in clause (vi) or (vii) of Section 6.01) occurs and
is continuing and has not been waived pursuant to Section 6.04, the Trustee or
the Holders of at least 25% in aggregate principal amount of the outstanding
Securities, by notice in writing to the Company (and to the Trustee if given by
the Holders) specifying the respective Event of Default and that it is a
"notice of acceleration" (an "Acceleration Notice") may declare the unpaid
principal of (and premium, if any) and accrued interest to the date of
acceleration on all outstanding Securities to be due and payable immediately
and, upon any such declaration, such principal amount (and premium, if any) and
accrued interest, notwithstanding anything contained in this Indenture or the
Securities to the contrary, shall become immediately due and payable, except
that if there are any amounts outstanding under the Credit Agreement, the same
will become due and payable upon the first to occur of an acceleration under
the Credit Agreement or five business days after receipt by the Company and the
agent under the Credit Agreement of such Acceleration Notice (unless all Events
of Default specified in such Acceleration Notice have been cured or waived).

If an Event of Default specified in clause (vi) or (vii) of Section
6.01 occurs, all unpaid principal of and accrued interest on all outstanding
Securities shall ipso facto become immediately due and payable without any
declaration or other act on the part of the Trustee or any Holder.

Any such declaration with respect to the Securities may be rescinded
and annulled by the Holders of a majority in aggregate principal amount of the
outstanding Securities by written notice to the Trustee if (i) the rescission
would not conflict with any judgment or decree of a court of competent
jurisdiction, (ii) all existing Events of Default have been cured or waived
except nonpayment of principal of or interest on the Securities that has become
due solely by such declaration of acceleration, (iii) to the extent the payment
of such interest is lawful, interest (at the same rate specified in the
Securities) on overdue installments of interest and overdue payments of
principal, which has become due otherwise than by such declaration of
acceleration, has been paid, (iv) the Company has paid the Trustee its
reasonable compensation and reimbursed the Trustee for its expenses,
disbursements and advances and (v) in the event of the cure or waiver of a
Default or Event of Default of the type described in Section 6.01(vi) and
(vii), the Trustee has received an Officers' Certificate and Opinion of Counsel
that such Default or Event of Default has been cured or waived. No such
rescission shall affect any subsequent Default or impair any right consequent
thereto.

SECTION 6.03. Other Remedies.

If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy by proceeding at law or in equity to collect the
payment of principal of or interest on the Securities or to enforce the
performance of any provision of the Securities or this Indenture.

The Trustee may maintain a proceeding even if it does not possess any
of the Securities or does not produce any of them in the proceeding. A delay
or omission by the Trustee or any Holder in exercising any right or remedy
maturing upon an Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default. No remedy is
exclusive of any other remedy. All available remedies are cumulative to the
extent permitted by law.
<PAGE> 39
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SECTION 6.04. Waiver of Past Default.

Subject to Sections 6.07 and 10.02, the Holders of not less than a
majority in aggregate principal amount of the outstanding Securities by written
notice to the Trustee may waive an existing Default or Event of Default and its
consequences, except a Default in the payment of principal of or interest on
any Security as specified in clauses (i) and (ii) of Section 6.01. The Company
shall deliver to the Trustee an Officers' Certificate stating that the
requisite percentage of Holders have consented to such waiver and attaching
copies of such consents. In case of any such waiver, the Company, the Trustee
and the Holders shall be restored to their former positions and rights
hereunder and under the Securities, respectively. This paragraph of this
Section 6.04 shall be in lieu of Section 316(a)(1)(B) of the TIA and such
Section 316(a)(1)(B) of the TIA is hereby expressly excluded from this
Indenture and the Securities, as permitted by the TIA.

Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred for every
purpose of this Indenture and the Securities, but no such waiver shall extend
to any subsequent or other Default or Event of Default or impair any right
consequent thereon.

SECTION 6.05. Control by Majority.

Subject to Section 2.09, the Holders of a majority in principal amount
of the outstanding Securities may direct the time, method and place of
conducting any proceeding for any remedy available to the Trustee or exercising
any trust or power conferred on it. However, the Trustee may refuse to follow
any direction that conflicts with law or this Indenture that the Trustee
determines may be unduly prejudicial to the rights of another Holder, it being
understood that the Trustee shall have no duty (subject to Section 7.01) to
ascertain whether or not such actions or forebearances are unduly prejudicial
to such Holders, or that may involve the Trustee in personal liability;
provided, however, that the Trustee may take any other action deemed proper by
the Trustee which is not inconsistent with such direction. In the event the
Trustee takes any action or follows any direction pursuant to this Indenture,
the Trustee shall be entitled to indemnification satisfactory to it in its sole
discretion against any loss or expense caused by taking such action or
following such direction. This Section 6.05 shall be in lieu of Section
316(a)(1)(A) of the TIA, and such Section 316(a)(1)(A) of the TIA is hereby
expressly excluded from this Indenture and the Securities, as permitted by the
TIA.

SECTION 6.06. Limitation on Suits.

A Holder may not pursue any remedy with respect to this Indenture or
the Securities unless:

(i) the Holder gives to the Trustee written notice of a
continuing Event of Default;

(ii) the Holders of at least 25% in aggregate principal
amount of the outstanding Securities make a written request to the Trustee to
pursue a remedy;

(iii) such Holder or Holders offer and, if requested,
provide to the Trustee indemnity satisfactory to the Trustee against any loss,
liability or expense;

(iv) the Trustee does not comply with the request within
60 days after receipt of the request and the offer and, if requested, the
provision of indemnity; and

(v) during such 60-day period the Holders of a majority
in principal amount of the outstanding Securities do not give the Trustee a
direction which, in the opinion of the Trustee, is inconsistent with the
request.

A Holder may not use this Indenture to prejudice the rights of another
Holder or to obtain a preference or priority over such other Holder.
<PAGE> 40
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SECTION 6.07. Rights of Holders To Receive Payment.

Notwithstanding any other provision of this Indenture, the right of
any Holder to receive payment of principal of or interest on a Security, on or
after the respective due dates expressed in the Security, or to bring suit for
the enforcement of any such payment on or after such respective dates, shall
not be impaired or affected without the consent of the Holder.

SECTION 6.08. Collection Suit by Trustee.

If an Event of Default in payment of principal or interest specified
in Section 6.01(a) or (b) occurs and is continuing, the Trustee may recover
judgment in its own name and as trustee of an express trust against the Company
or any other obligor on the Securities for the whole amount of principal and
accrued interest remaining unpaid, together with interest overdue on principal
and to the extent that payment of such interest is lawful, interest on overdue
installments of interest, in each case at the rate per annum borne by the
Securities and such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.

SECTION 6.09. Trustee May File Proofs of Claim.

The Trustee may file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims of the
Trustee (including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel) and the
Holders allowed in any judicial proceedings relative to the Company (or any
other obligor upon the Securities), its creditors or its property and shall be
entitled and empowered to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute the same, and any
Custodian in any such judicial proceedings is hereby authorized by each Holder
to make such payments to the Trustee and, in the event that the Trustee shall
consent to the making of such payments directly to the Holders, to pay to the
Trustee any amount due to it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agent and counsel, and any other
amounts due the Trustee under Section 8.07. Nothing herein contained shall be
deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Holder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities or the rights of any Holder thereof, or to
authorize the Trustee to vote in respect of the claim of any Holder in any such
proceeding; provided, however, that the Trustee may, on behalf of the Holders,
vote for the election of a trustee in bankruptcy or similar official and may be
a member of the creditors' committee.

SECTION 6.10. Priorities.

If the Trustee collects any money or property pursuant to this Article
Six, it shall pay out the money or property in the following order:

First: to the Trustee for amounts due under Section 8.07;

Second: to Holders for amounts due and unpaid on the Securities for
principal and interest, ratably, without preference or priority of any kind,
according to the amounts due and payable on the Securities for principal and
interest, respectively; and

Third: to the Company.

The Trustee, upon prior written notice to the Company, may fix a
record date and payment date for any payment to the Holders pursuant to this
Section 6.10.
<PAGE> 41
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SECTION 6.11. Undertaking for Costs.

In any suit for the enforcement of any right or remedy under this
Indenture or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court in its discretion may require the filing by any party
litigant in the suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in the suit, having
due regard to the merits and good faith of the claims or defenses made by the
party litigant. This Section 6.11 shall not apply to a suit by the Trustee, a
suit by a Holder or group of Holders of more than 10% in aggregate principal
amount of the outstanding Securities, or to any suit instituted by any Holder
for the enforcement or the payment of the principal or interest on any
Securities on or after the respective due dates expressed in the Security.

ARTICLE SEVEN

SUBORDINATION OF SECURITIES

SECTION 7.01. Agreement To Subordinate.

The Company agrees, and each Holder by accepting a Security agrees,
that the Indebtedness evidenced by the Securities and other Obligations with
respect to the Securities are subordinated in right of payment, to the extent
and in the manner provided in this Article Seven, to the payment when due of
all Senior Indebtedness of the Company and that such subordination is for the
benefit of and enforceable by the holders of Senior Indebtedness. The
Securities shall in all respects rank pari passu with all other Senior
Subordinated Indebtedness of the Company, and only Indebtedness of the Company
which is Senior Indebtedness will rank senior to the Securities in accordance
with the provisions set forth herein. Unsecured Indebtedness is not deemed to
be subordinate or junior to Secured Indebtedness merely because it is
unsecured, nor is any Indebtedness deemed to be subordinate or junior to other
Indebtedness merely because it matures after such other Indebtedness. All
provisions of this Article Seven shall be subject to Section 7.12.

SECTION 7.02. Liquidation, Dissolution, Bankruptcy

Upon any payment or distribution of the assets of the Company upon a
total or partial liquidation or dissolution or reorganization or bankruptcy of
or similar proceeding relating to the Company or its property:

(1) holders of Senior Indebtedness of the Company shall
be entitled to receive payment in full in cash or Cash Equivalents of all
Senior Indebtedness of the Company before Holders shall be entitled to receive
any payment of principal of or interest on or other Obligations with respect to
the Securities; and

(2) until the Senior Indebtedness of the Company is paid
in full in cash or Cash Equivalents, or other form acceptable to holders of
Senior Indebtedness, any payment or distribution to which Holders would be
entitled but for the provisions of this Article Seven shall be made to holders
of Senior Indebtedness as their interests may appear.

SECTION 7.03. Default on Senior Indebtedness.

The Company may not pay the principal of, premium (if any), or
interest on, and other Obligations with respect to, the Securities or make any
deposit pursuant to Section 9.01 or repurchase, redeem or otherwise retire any
Securities (collectively, "pay the Securities") if (i) any Senior Indebtedness
is not paid in cash or Cash Equivalents, or other form acceptable to holders of
Senior Indebtedness, when due or (ii) any other
<PAGE> 42
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default on Senior Indebtedness occurs and the maturity of such Senior
Indebtedness is accelerated in accordance with its terms unless, in either
case, (x) the default has been cured or waived or is no longer continuing
and/or and any such acceleration has been rescinded or (y) such Senior
Indebtedness has been paid in full in cash or cash equivalents, or other form
acceptable to holders of Senior Indebtedness; provided, however, that the
Company may pay the Securities but subject to the provisions of the first
sentence of this Section 7.03 and the provisions of Section 7.02, without
regard to the foregoing if the Company and the Trustee receive written notice
approving such payment from the Representatives of the Designated Senior
Indebtedness with respect to which either of the events set forth in clause (i)
or (ii) of this sentence has occurred and is continuing. During the
continuance of any default (other than a default described in clause (i) or
(ii) of the preceding sentence) with respect to any Designated Senior
Indebtedness pursuant to which the maturity thereof may be accelerated
immediately without further notice (except such notice as may be required to
effect such acceleration) or the expiration of any applicable grace periods,
the Company may not pay the Securities (except (i) in Qualified Capital Stock
issued by the Company to pay interest on the Securities or issued in exchange
for the Securities, (ii) in securities substantially identical to the
Securities issued by the Company in payment of interest accrued thereon or
(iii) in securities issued by the Company which are subordinated to the Senior
Indebtedness at least to the same extent as the Securities and having a
Weighted Average Life to Maturity at least equal to the remaining Weighted
Average Life to Maturity of the Securities, as long as the court, in approving
any payment or distribution or stock or securities of the type described in the
preceding clauses (i)-(iii), gives effect to the subordination provisions set
forth in this Indenture) for a period (a "Payment Blockage Period") commencing
upon the receipt by the Trustee (with a copy to the Company) of written notice
(a "Blockage Notice") of such default from the Representative of the holders of
such Designated Senior Indebtedness specifying an election to effect a Payment
Blockage Period and ending 179 days thereafter (or earlier if such Payment
Blockage Period is terminated (i) by written notice to the Trustee and the
Company from the Person or Persons who gave such Blockage Notice, (ii) because
the default giving rise to such Blockage Notice is no longer continuing or
(iii) because such Designated Senior Indebtedness has been repaid in full).
Notwithstanding the provisions of the immediately preceding sentence, but
subject to the provisions of the first sentence of this Section 7.03 and the
provisions of Section 7.02, the Company may resume payments on the Securities
after the end of such Payment Blockage Period. Not more than one Blockage
Notice may be given, and not more than one Payment Blockage Period may occur,
in any consecutive 360-day period, irrespective of the number of defaults with
respect to Designated Senior Indebtedness during such period.

SECTION 7.04. Acceleration of Payment of Securities.

If payment of the Securities is accelerated because of an Event of
Default, the Company shall promptly notify the holders or the Representative
(if any) of each issue of Designated Senior Indebtedness which is then
outstanding; provided, however, that the Company and the Trustee shall be
obligated to notify such a Representative only if such Representative has
delivered or caused to be delivered an address for the service of such a notice
to the Company and the Trustee (and the Company and the Trustee shall only
obligated to deliver the notice to the address so specified). If a notice is
required pursuant to the immediately preceding sentence, the Company may not
pay the Securities (except payment (i) in Qualified Capital Stock issued by the
Company to pay interest on the Securities or issued in exchange for the
Securities, (ii) in securities substantially identical to the Securities issued
by the Company in payment of interest accrued thereon or (iii) in securities
issued by the Company which are subordinated to the Senior Indebtedness at
least to the same extent as the Securities and have a Weighted Average Life to
Maturity at least equal to the remaining Weighted Average Life to Maturity of
the Securities, as long as the court, in approving any payment or distribution
or stock or securities of the type described in the preceding clauses
(i)-(iii), gives effect to the subordination provisions set forth in this
Indenture), until five Business Days after the respective Representative of the
Designated Senior Indebtedness receives notice (at the address specified in the
preceding sentence) of such acceleration and, thereafter, may pay the
Securities only if the provisions of this Article Seven otherwise permit
payment at that time.
<PAGE> 43
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SECTION 7.05. When Distribution Must Be Paid.

If a payment or distribution is made to the Trustee or to Holders that
because of this Article Seven should not have been made to them, the Trustee or
the Holders who receive such payment or distribution shall hold it in trust for
holders of Senior Indebtedness and promptly pay it over to them as their
respective interests may appear.

SECTION 7.06. Subrogation.

After all Senior Indebtedness is paid in full in cash or Cash
Equivalents, or other form acceptable to holders of Senior Indebtedness, and
until the Securities are paid in full, Holders shall be subrogated to the
rights of holders of Senior Indebtedness to receive distributions applicable to
Senior Indebtedness. A payment or distribution made under this Article Seven
to holders of Senior Indebtedness which otherwise would have been made to
Holders is not, as between the Company and the Holders, a payment by the
Company of Senior Indebtedness.

SECTION 7.07. Relative Rights.

This Article Seven defines the relative rights of Holders of the
Securities on the one hand and holders of Senior Indebtedness on the other
hand. Nothing in this Indenture shall:

(1) impair, as between the Company and the Holders, the
obligation of the Company, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their terms; or

(2) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders of Senior Indebtedness to receive payments or distributions otherwise
payable to Holders.

SECTION 7.08. Subordination May Not Be Impaired by Company.

No right of any holder of Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Securities shall be impaired
by any act or failure to act by the Company or by the failure of the Company to
comply with this Indenture.

SECTION 7.09. Rights of Trustee and Paying Agent.

Notwithstanding Section 7.03, the Trustee or Paying Agent may continue
to make payments on the Securities and shall not be charged with knowledge of
the existence of facts that would prohibit the making of any such payments
unless, not less than one Business Day prior to the date of such payment, a
Trust Officer of the Trustee receives notice satisfactory to it that payments
may not be made under this Article Seven. The Company, the Registrar or
co-registrar, the Paying Agent, a Representative or a holder of Senior
Indebtedness may give the notice; provided, however, that if an issue of Senior
Indebtedness has a Representative, only the Representative may give the notice.
Each Paying Agent shall have the same rights and obligations under this Article
Seven as does the Trustee.

The Trustee in its individual or any other capacity may hold Senior
Indebtedness with the same rights it would have if it were not Trustee. The
Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article Seven with respect to any Senior Indebtedness which may at any time be
held by it, to the same extent as any other holder of Senior Indebtedness; and
nothing in Article Seven shall deprive the Trustee of any of its rights as such
holder. Nothing in this Article Seven shall apply to claims of, or payments
to, the Trustee under or pursuant to Section 8.07.
<PAGE> 44
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SECTION 7.10. Distribution or Notice to Representative.

Whenever a payment or distribution is to be made or a notice given to
holders of Senior Indebtedness, the payment or distribution may be made and the
notice given to their Representative (if any).

SECTION 7.11. Article Seven Not To Prevent Events of Default or Limit Right
To Accelerate.

The failure to make a payment in respect of the Securities by reason
of any provision in this Article Seven shall not be construed as preventing the
occurrence of a Default or Event of Default. Nothing in this Article Seven
shall have any effect on the right of the Holders or the Trustee to accelerate
the maturity of the Securities.

SECTION 7.12. Trust Moneys Not Subordinated.

Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in trust under
Article Nine by the Trustee for the payment of principal of and interest on the
Securities shall not be subordinated to the prior payment of any Senior
Indebtedness or subject to the restrictions set forth in this Article Seven,
and none of the Holders shall be obligated to pay over any such amount to the
Company, any holder of Senior Indebtedness of the Company, or any other
creditor of the Company.

SECTION 7.13. Trustee Entitled To Rely.

Upon any payment or distribution pursuant to this Article Seven, the
Trustee and the Holders shall be entitled to rely (i) upon any order or decree
of a court of competent jurisdiction in which any proceedings of the nature
referred to in Section 7.02 are pending, (ii) upon a certificate of the
liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or to the Holders or (iii) upon the Representatives
for the holders of Senior Indebtedness for the purpose of ascertaining the
Persons entitled to participate in such payment or distribution, the holders of
Senior Indebtedness and other Indebtedness of the Company, the amount thereof
or payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article Seven. In the event that the
Trustee determines, in good faith, that evidence is required with respect to
the right of any Person as a holder of Senior Indebtedness to participate in
any payment or distribution pursuant to this Article Seven, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Senior Indebtedness held by such Person, the extent
to which such Person is entitled to participate in such payment or distribution
and other facts pertinent to the rights of such Person under this Article
Seven, and, if such evidence is not furnished, the Trustee may defer any
payment to such Person pending judicial determination as to the right of such
Person to receive such payment or distribution. The Trustee shall have the
right to seek a declaratory judgment as to any right of such Person to receive
such payment or distribution. The provisions of Sections 8.01 and 8.02 shall
be applicable to all actions or omissions of actions by the Trustee pursuant to
this Article Seven.

SECTION 7.14. Trustee To Effectuate Subordination

Each Holder by accepting a Security authorizes and directs the Trustee
on his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Holder and the holders
of Senior Indebtedness as provided in this Article Seven and appoints the
Trustee as attorney-in-fact for any and all such purposes.

SECTION 7.15. Trustee Not Fiduciary for Holders of Senior Indebtedness.

The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Senior Indebtedness and, subject to the first sentence of Section
7.09, shall not be liable to any such holders if it shall mistakenly pay over
or distribute to Holders or the Company, or any other Person, money or assets
to which any holders of Senior Indebtedness shall be entitled by virtue of this
Article Seven or otherwise.
<PAGE> 45
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SECTION 7.16. Reliance by Holders of Senior Indebtedness on Subordination
Provisions.

Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Senior Indebtedness, whether such
Senior Indebtedness was created or acquired before or after the issuance of the
Securities, to acquire and continue to hold, or to continue to hold, such
Senior Indebtedness and such holder of Senior Indebtedness shall be deemed
conclusively to have relied on such subordination provisions in acquiring and
continuing to hold, or in continuing to hold, such Senior Indebtedness.

ARTICLE EIGHT

TRUSTEE

SECTION 8.01. Duties of Trustee.

(a) If a Default has occurred and is continuing, the Trustee shall
exercise such of the rights and powers vested in it by this Indenture and use
the same degree of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of its own affairs.

(b) Except during the continuance of a Default:

(1) The Trustee shall not be liable except for the performance of such
duties as are specifically set forth herein; and

(2) In the absence of bad faith on its part, the Trustee may conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, upon certificates or opinions conforming to the requirements
of this Indenture; however, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall examine such certificates and opinions to determine
whether or not they conform to the requirements of this Indenture.

(c) The Trustee shall not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:

(1) This paragraph does not limit the effect of paragraph (b) of this
Section 8.01;

(2) The Trustee shall not be liable for any error of judgment made in
good faith by a Trust Officer, unless it is proved that the Trustee was
negligent in ascertaining the pertinent facts; and

(3) The Trustee shall not be liable with respect to any action it takes
or omits to take in good faith in accordance with a direction received by it
pursuant to Section 6.05.

(d) No provision of this Indenture shall require the Trustee to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or take any action at the request or direction of
Holders if it shall have reasonable grounds for believing that repayment of
such funds is not assured to it or it does not receive from such Holders an
indemnity satisfactory to it in its sole discretion against such risk,
liability, loss, fee or expense which might be incurred by it in compliance
with such request or direction.
<PAGE> 46
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(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c) and (d) of this Section 8.01.

(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the Company.
Money held in trust by the Trustee need not be segregated from other funds
except to the extent required by law.

SECTION 8.02. Rights of Trustee.

Subject to Section 8.01:

(a) The Trustee may rely on any document believed by it to be
genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the
document.

(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate and/or an Opinion of Counsel, which
shall conform to the provisions of Section 13.05. The Trustee shall
not be liable for any action it takes or omits to take in good faith
in reliance on such certificate or opinion.

(c) The Trustee may act through attorneys and agents of its
selection and shall not be responsible for the misconduct or
negligence of any agent or attorney (other than an agent who is an
employee of the Trustee) appointed with due care and appointed with
the consent of the Company.

(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith which it reasonably believes to be
authorized or within its rights or powers.

(e) Before the Trustee acts or refrains from acting, it may
consult with counsel and the advice or opinion of such counsel as to
matters of law shall be full and complete authorization and protection
from liability in respect of any action taken, omitted or suffered by
it hereunder in good faith and in accordance with the advice or
opinion of such counsel.

(f) Any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution.

(g) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the request
or direction of any of the Holders pursuant to this Indenture, unless
such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction.

(h) The Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction,
consent, order, bond, debenture, note, other evidence of indebtedness
or other paper or document, but the Trustee, in its discretion, may
make such further inquiry or investigation into such facts or matters
as it may see fit, and, if the Trustee shall determine to make such
further inquiry or investigation, it shall be entitled to examine the
books, records and premises of the Company, personally or by agent or
attorney.

(i) The Trustee shall not be deemed to have notice of any
Event of Default unless a Trust Officer of the Trustee has actual
knowledge thereof or unless the Trustee shall have received written
notice thereof at the Corporate Trust Office of the Trustee, and such
notice references the Securities and this Indenture.
<PAGE> 47
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(j) The Trustee shall not be required to give any bond or
surety in respect of the performance of its powers and duties
hereunder.

(k) The permissive rights of the Trustee to do things
enumerated in this Indenture shall not be construed as a duty and the
Trustee shall not be answerable for other than its gross negligence or
willful misconduct.

SECTION 8.03. Individual Rights of Trustee.

The Trustee in its individual or any other capacity may become the
owner or pledgee of Securities and may otherwise deal with the Company or their
Affiliates with the same rights it would have if it were not Trustee, subject
to Section 8.10 hereof. Any Agent may do the same with like rights. However,
the Trustee is subject to Sections 8.10 and 8.11.

SECTION 8.04. Trustee's Disclaimer.

The Trustee shall not be responsible for and makes no representation
as to the validity or adequacy of this Indenture or the Securities, it shall
not be accountable for the Company's use of the proceeds from the Securities,
and it shall not be responsible for any statement of the Company in this
Indenture or any document issued in connection with the sale of Securities or
any statement in the Securities other than the Trustee's certificate of
authentication.

SECTION 8.05. Notice of Defaults.

If a Default or an Event of Default occurs and is continuing and the
Trustee has actual knowledge of such Defaults or Events of Default, the Trustee
shall mail to each Holder notice of the Default or Event of Default within 30
days after the occurrence thereof. Except in the case of a Default or an Event
of Default in payment of principal of or interest on any Security including an
accelerated payment and the failure to make payment on the Change of Control
Payment Date pursuant to a Change of Control Offer or a Default or Event of
Default in complying with Section 5.01, the Trustee may withhold the notice if
and so long as a committee of its Trust Officers in good faith determines that
withholding the notice is in the interest of Holders. This Section 8.05 shall
be in lieu of the proviso to Section 315(b) of the TIA and such proviso to
Section 315(b) of the TIA is hereby expressly excluded from this Indenture and
the Securities, as permitted by the TIA.

SECTION 8.06. Reports by Trustee to Holders.

If required by TIA Section 313(a), as amended, within 60 days after
each May 1 beginning with October 1, 1998, the Trustee shall mail to each
Holder a report dated as of such May 1 that complies with TIA Section 313(a).
The Trustee also shall comply with TIA Section 313(b), (c) and (d).

A copy of each such report at the time of its mailing to Holders shall
be filed with the SEC and each stock exchange, if any, on which the Securities
are listed.

The Company shall promptly notify the Trustee in writing if the
Securities become listed on any stock exchange or of any delisting thereof.

SECTION 8.07. Compensation and Indemnity.

The Company shall pay to the Trustee from time to time, and the
Trustee shall be entitled to, such compensation as the Company and the Trustee
shall from time to time agree in writing for its services. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company shall reimburse the Trustee upon request for all
reasonable disbursements, expenses and advances,
<PAGE> 48
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including all costs and expenses of collection (including reasonable fees,
disbursements and expenses of its agents and outside counsel) incurred or made
by it in addition to the compensation for its services except any such
disbursements, expenses and advances as may be attributable to the Trustee's
negligence or willful misconduct. Such expenses shall include the reasonable
compensation, disbursements and expenses of the Trustee's agents, accountants,
experts and outside counsel.

The Company shall indemnify the Trustee for, and hold it harmless
against any and all loss, damage, claims, liability or expense, including taxes
(other than franchise taxes imposed on the Trustee and taxes based upon,
measured by or determined by the income of the Trustee), arising out of or in
connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses of defending itself against or
investigating any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder, except to the extent that
such loss, damage, claim, liability or expense is due to its own negligence or
willful misconduct. The Trustee shall notify the Company promptly of any claim
asserted against the Trustee for which it may seek indemnity. However, the
failure by the Trustee to so notify the Company shall not relieve the Company
of its obligations hereunder unless the Company has been prejudiced thereby.
The Company shall defend the claim and the Trustee shall cooperate in the
defense at the Company's expense, provided that the Company shall not be liable
in any action or for which it has assumed the defense for the expenses of
separate counsel to the Trustee unless (1) the employment of separate counsel
has been authorized by the Company, (2) the Trustee has reasonably concluded
(based upon advice of counsel to the Trustee) that there may be legal defenses
available to the Trustee that are different from or in addition to those
available to the Company or (3) a conflict or potential conflict exists (based
upon advice of counsel to the Trustee) between the Trustee and the Company, and
provided, further, that in any such event the Company's reimbursement
obligation with respect to separate counsel of the Trustee will be limited to
the reasonable fees and expenses of such counsel.

The Company need not pay for any settlement made without their written
consent, which consent shall not be unreasonably withheld. The Company need
not reimburse any expense or indemnify against any loss or liability incurred
by the Trustee as a result of its own negligence or willful misconduct.

To secure the Company's payment obligations in this Section 8.07, the
Trustee shall have a Lien prior to the Securities against all money or property
held or collected by the Trustee, in its capacity as Trustee, except money or
property held in trust to pay principal of or interest on particular
Securities.

When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.01(vi) or (vii) occurs, the expenses (including
the reasonable fees and expenses of its agents and counsel) and the
compensation for the services shall be preferred over the status of the Holders
in a proceeding under any Bankruptcy Law and are intended to constitute
expenses of administration under any Bankruptcy Law. The Company's obligations
under this Section 8.07 and any claim arising hereunder shall survive the
resignation or removal of any Trustee, the discharge of the Company's
obligations pursuant to Article Eight and any rejection or termination under
any Bankruptcy Law.

SECTION 8.08. Replacement of Trustee.

The Trustee may resign at any time by so notifying the Company in
writing at least 10 days in advance. The Holders of a majority in principal
amount of the outstanding Securities may remove the Trustee by so notifying the
Trustee and the Company in writing and may appoint a successor Trustee with the
Company's consent. The Company may remove the Trustee if:

(a) the Trustee fails to comply with Section 8.10;

(b) the Trustee is adjudged bankrupt or insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
<PAGE> 49
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(d) the Trustee becomes incapable of acting.

If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason (the Trustee in such event being referred to
herein as the retiring Trustee), the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holders
of a majority in principal amount of the Securities may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.

A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. As promptly as
practicable after that, the retiring Trustee shall transfer, after payment of
all sums then owing to the Trustee pursuant to Section 8.07, all property held
by it as Trustee to the successor Trustee, subject to the Lien provided in
Section 8.07, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have the rights, powers and duties
of the Trustee under this Indenture. A successor Trustee shall mail notice of
its succession to each Holder.

If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or
the Holders of at least 10% in principal amount of the outstanding Securities
may petition, at the expense of the Company, any court of competent
jurisdiction for the appointment of a successor Trustee.

If the Trustee fails to comply with Section 8.10, any Holder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.

Notwithstanding replacement of the Trustee pursuant to this Section
8.08, the Company's obligations under Section 8.07 shall continue for the
benefit of the retiring Trustee.

SECTION 8.09. Successor Trustee by Merger, etc.

If the Trustee consolidates with, merges or converts into, or
transfers all or substantially all of its corporate trust business to, another
corporation or banking corporation, the resulting, surviving or transferee
corporation or banking corporation without any further act shall be the
successor Trustee; provided, however, that such corporation shall be otherwise
qualified and eligible under this Article Eight.

SECTION 8.10. Eligibility; Disqualification.

This Indenture shall always have a Trustee which shall be eligible to
act as Trustee under TIA Sections 310(a)(1) and 310(a)(2). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as set forth in its
most recent published annual report of condition. If the Trustee has or shall
acquire any "conflicting interest" within the meaning of TIA Section 310(b),
the Trustee and the Company shall comply with the provisions of TIA Section
310(b); provided, however, that there shall be excluded from the operation of
TIA Section 310(b)(1) any indenture or indentures under which other securities
or certificates of interest or participation in other securities of the Company
are outstanding if the requirements for such exclusion set forth in TIA Section
310(b)(1) are met. If at any time the Trustee shall cease to be eligible in
accordance with the provisions of this Section 8.10, the Trustee shall resign
immediately in the manner and with the effect hereinbefore specified in this
Article Eight. The provisions of TIA Section 310 shall apply to the Company
and any other obligor of the Securities.
<PAGE> 50
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SECTION 8.11. Preferential Collection of Claims Against the Company.

The Trustee shall comply with TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311(b). A Trustee who has resigned
or been removed shall be subject to TIA Section 311(a) to the extent indicated
therein.

ARTICLE NINE

DISCHARGE OF INDENTURE; DEFEASANCE

SECTION 9.01. Termination of the Company's Obligations.

The Company may terminate its obligations under the Securities and
this Indenture as well as the obligations of the Guarantors under their
respective Subsidiary Guarantees, except those obligations referred to in the
penultimate paragraph of this Section 9.01, if :

(i) either (a) all the Securities theretofore
authenticated and delivered (except lost, stolen or destroyed Securities which
have been replaced or paid and Securities for whose payment money has
theretofore been deposited in trust or segregated and held in trust by the
Company and thereafter repaid to the Company or discharged from such trust)
have been delivered to the Trustee for cancellation or (b) all Securities not
theretofore delivered to the Trustee for cancellation have become due and
payable or have been called for redemption and the Company has irrevocably
deposited or caused to be deposited with the Trustee funds in an amount
sufficient to pay and discharge the entire Indebtedness on the Securities not
theretofore delivered to the Trustee for cancellation, for principal of,
premium, if any, and interest on the Securities to the date of deposit together
with irrevocable instructions from the Company directing the Trustee to apply
such funds to the payment thereof at maturity or redemption, as the case may
be;

(ii) the Company has paid all other sums payable under
this Indenture by the Company; and

(iii) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel stating that all conditions precedent
under this Indenture relating to the satisfaction and discharge of this
Indenture have been complied with.

Notwithstanding the first paragraph of this Section 9.01, the
Company's obligations in Sections 2.03, 2.04, 2.05, 2.06, 2.07, 8.07, 8.08,
9.05 and 9.06 shall survive until the Securities are no longer outstanding.
After the Securities are no longer outstanding, the Company's obligations in
Sections 8.07, 8.08, 9.05 and 9.06 shall survive.

After such delivery or irrevocable deposit, the Trustee upon request
shall acknowledge in writing the discharge of the Company's and Guarantors'
obligations under the Securities, the Subsidiary Guarantees and this Indenture
except for those surviving obligations specified above.

SECTION 9.02. Legal Defeasance and Covenant Defeasance

(a) The Company may terminate its obligations in respect of the
Securities by delivering all outstanding Securities to the Trustee for
cancellation and paying all sums payable by it on account of principal of and
interest on all Securities or otherwise. In addition to the foregoing, the
Company may, at its option, at any time elect to have either paragraph (b) or
(c) below be applied to all outstanding Securities, subject in either case to
compliance with the conditions set forth in Section 9.03.
<PAGE> 51
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(b) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (b), the Company shall, subject to the
satisfaction of the conditions set forth in Section 9.03, be deemed to have
paid and discharged the entire indebtedness represented by the outstanding
Securities and shall be deemed to be discharged from all obligations with
respect to the Securities, except for (i) the rights of Holders to receive
payments in respect of the principal of, premium, if any, and interest on the
Securities when such payments are due, (ii) the Company's obligations with
respect to the Securities under Sections 2.03 through 2.07, inclusive, 4.02 and
4.16, (iii) the rights, powers, trust, duties and immunities of the Trustee
under this Indenture and the Company's obligations in connection therewith and
(iv) Article Nine of this Indenture (hereinafter, "Legal Defeasance"). Subject
to compliance with this Article Nine, the Company may exercise its option under
this paragraph (b) notwithstanding the prior exercise of its option under
paragraph (c) hereof.

(c) Upon the Company's exercise under paragraph (a) hereof of the
option applicable to this paragraph (c), the Company shall, subject to the
satisfaction of the conditions set forth in Section 9.03, be released from its
obligations under the covenants contained in Sections 4.03 through 4.15,
inclusive, and Article Five with respect to the outstanding Securities
(hereinafter, "Covenant Defeasance") and thereafter any omission to comply with
such obligations shall not constitute a Default or an Event of Default with
respect to the Securities. In addition, upon the Company's exercise under
paragraph (a) hereof of the option applicable to this paragraph (c), subject to
the satisfaction of the conditions set forth in Section 9.03, any failure or
omission to comply with such obligations shall not constitute a Default or
Event of Default with respect to the Securities.

SECTION 9.03. Conditions to Legal Defeasance or Covenant Defeasance.

In order to exercise either Legal Defeasance pursuant to Section
9.02(b) or Covenant Defeasance pursuant to Section 9.02(c):

(a) the Company must irrevocably deposit or cause to be
deposited with the Trustee, in trust, for the benefit of the Holders,
cash in U.S. legal tender or United States Government Obligations, or
a combination thereof, in such amounts as will be sufficient, in the
opinion of a nationally recognized firm of independent public
accountants, to pay the principal of premium, if any, and interest on
the Securities on the stated date for payment thereof or on the
applicable redemption date, as the case may be;

(b) the Company shall have delivered to the Trustee an
Opinion of Counsel in the United States reasonably acceptable to the
Trustee or a private letter ruling issued to the Company by the
Internal Revenue Service to the effect that the Holders of Securities
will not recognize income, gain or loss for federal income tax
purposes as a result of the deposit and related defeasance and will be
subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such option had
not been exercised and, in the case of an Opinion of Counsel furnished
in connection with a Legal Defeasance, accompanied by a private letter
ruling issued to the Company by the Internal Revenue Service to such
effect;

(c) no Default or Event of Default shall have occurred and be
continuing on the date of such deposit (other than a Default or Event
of Default resulting from the borrowing of funds to be applied to such
deposit);

(d) such Legal Defeasance or Covenant Defeasance shall not
result in a breach or violation of or constitute a Default under this
Indenture or any other loan agreement or instrument to which the
Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound;

(e) the Company shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for or relating to the Legal Defeasance
or the Covenant Defeasance have been complied with; and
<PAGE> 52
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(f) the Company shall have delivered to the Trustee an
Opinion of Counsel to the effect that assuming no intervening
bankruptcy or insolvency of the Company between the date of deposit
and the 91st day following the deposit and that no Holder is an
insider of the Company, after the 91st day following the deposit, the
trust funds will not be subject to the effect of any applicable
bankruptcy, insolvency, reorganization or similar law affecting
creditors' rights generally.

Notwithstanding the foregoing, the Opinion of Counsel required by
clause (b) above need not be delivered if all Securities not theretofore
delivered to the Trustee for cancellation (x) have become due and payable, (y)
will become due and payable on the Final Maturity Date within one year or (z)
are to be called for redemption within one year under arrangements satisfactory
to the Trustee for the giving of notice of redemption by the Trustee in the
name, and at the expense, of the Company.

SECTION 9.04. Application of Trust Money; Trustee Acknowledgment and
Indemnity.

The Trustee shall hold in trust money or United States Government
Obligations deposited with it pursuant to this Article Nine, and shall apply
the deposited money and the money from United States Government Obligations in
accordance with this Indenture solely to the payment of principal of and
interest on the Securities.

After such delivery or irrevocable deposit and delivery of any
required Officers' Certificate or Opinion of Counsel, the Trustee upon request
shall acknowledge in writing the discharge of the Company's obligations under
the Securities and this Indenture except for those surviving obligations
specified above.

The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the United States Government
Obligations deposited pursuant to this Article Nine or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of outstanding
Securities.

SECTION 9.05. Repayment to Company.

Subject to Sections 8.07 and 9.04, the Trustee and the Paying Agent
shall promptly pay to the Company upon written request any excess money held by
them at any time. The Trustee and the Paying Agent shall promptly pay to the
Company any money held by it for the payment of principal or interest that
remains unclaimed for one year; provided, however, that the Trustee or such
Paying Agent before being required to make any payment may at the expense of
the Company cause to be published once in a newspaper of general circulation in
the City of New York or mail to each Holder entitled to such money notice that
such money remains unclaimed and that, after a date specified therein which
shall be at least 30 days from the date of such publication or mailing, any
unclaimed balance of such money then remaining shall be repaid to the Company.
After payment to the Company, Holders entitled to money must look solely to the
Company for payment as general creditors unless an applicable abandoned
property law designates another person and all liability of the Trustee or
Paying Agent with respect to such money shall thereupon cease.

SECTION 9.06. Reinstatement.

If the Trustee or Paying Agent is unable to apply any money or United
States Government Obligations by reason of any legal proceeding or by reason of
any order or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the Company's
obligations under this Indenture and the Securities shall be revived and
reinstated as though no deposit had occurred pursuant to Section 9.03 until
such time as the Trustee or Paying Agent is permitted to apply all such money
or United States Government Obligations in accordance with Section 9.03;
provided, however, that if the Company has made any payment of interest on or
principal of any Securities because of the reinstatement of its obligations,
the Company shall be subrogated to the rights of the Holders of such Securities
to receive such payment from the money or United States Government Obligations
held by the Trustee or Paying Agent.
<PAGE> 53
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ARTICLE TEN

AMENDMENTS, SUPPLEMENTS AND WAIVERS

SECTION 10.01. Without Consent of Holders.

The Company and the Guarantors, if any, when authorized by a
resolution of the Board of Directors, and the Trustee may amend or supplement
this Indenture or the Securities without notice to or consent of any Holder:

(a) to cure any ambiguity, defect or inconsistency; provided,
however, that such amendment or supplement does not adversely affect
the rights of any Holder in any material respect;

(b) to effect the assumption by a successor Person of all
obligations of the Company under the Securities and this Indenture in
connection with any transaction complying with Article Five of this
Indenture;

(d) to comply with any requirements of the SEC in order to
effect or maintain the qualification of this Indenture under the TIA;

(e) to make any change that would provide any additional
benefit or rights to the Holders;

(f) to make any other change that does not adversely affect
the rights of any Holder in any material respect under this Indenture;

(g) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company;

(h) to add a Guarantor in accordance with Section 4.14 or
otherwise;

provided, however, that the Company has delivered to the Trustee an
Opinion of Counsel stating that such amendment or supplement complies with the
provisions of this Section 10.01.

SECTION 10.02. With Consent of Holders.

Subject to Section 6.07, the Company and the Guarantors, if any, when
authorized by a Board Resolution, and the Trustee may modify, amend or
supplement, or waive compliance by the Company with any provision of, this
Indenture or the Securities with the written consent of the Holders of at least
a majority in principal amount of the outstanding Securities. However, without
the consent of each Holder affected, no such modification, amendment,
supplement or waiver, including a waiver pursuant to Section 6.04, may:

(a) reduce the principal amount of Securities whose Holders
must consent to an amendment, supplement or waiver;
<PAGE> 54
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(b) reduce the principal of or change the Stated Maturity of
any Security or alter the provisions with respect to the repurchase or
redemption of the Securities;

(d) make any Security payable in money other than that stated
in the Securities or this Indenture;

(e) make any change in the provisions of this Indenture
protecting the rights of each holder of a Security to receive payment
of principal of or premium, if any, or interest on such Security on or
after the due date thereof, or to bring suit to enforce such payment
or permitting holders of a majority in principal amount of the
Securities to waive a Default or Event of Default; or

(f) alter the Company's obligation to purchase the Securities
arising under Section 4.08 or 4.15, amend, modify or change the
obligation of the Company to make or consummate a Change of Control
Offer or Net Proceeds Offer or waive any default in the performance
thereof or modify any of the provisions or definitions with respect to
any such offers.

It shall not be necessary for the consent of the Holders under this
Section 10.02 to approve the particular form of any proposed amendment,
supplement or waiver, but it shall be sufficient if such consent approves the
substance thereof.

After an amendment, supplement or waiver under this Section 10.02
becomes effective, the Company shall mail to the Holders affected thereby a
notice briefly describing the amendment, supplement or waiver. Any failure of
the Company to mail such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such amendment, supplement or
waiver.

SECTION 10.03. Compliance with Trust Indenture Act.

Every amendment to or supplement of this Indenture or the Securities
shall comply with the TIA as then in effect.

SECTION 10.04. Record Date for Consents and Effect of Consents.

Until an amendment, supplement or, waiver becomes effective, a consent
to it by a Holder is a continuing consent by the Holder and every subsequent
Holder of a Security or portion of a Security that evidences the same debt as
the consenting Holder's Security, even if notation of the consent is not made
on any Security. Subject to the following paragraph, any such Holder or
subsequent Holder may revoke the consent as to such Holder's Security or
portion of a Security by notice to the Trustee or the Company received before
the date on which the Trustee receives an Officers' Certificate certifying that
the Holders of the requisite principal amount of Notes have consented (and not
theretofore revoked such consent) to the amendment, supplement or waiver (at
which time such amendment, supplement or waiver shall become effective).

The Company may, but shall not be obligated to, fix a record date for
the purpose of determining the Holders of Securities entitled to consent to any
amendment, supplement or waiver. If a record date is fixed, then those persons
who were Holders of Securities at such record date (or their duly designated
proxies), and only those persons, shall be entitled to consent to such
amendment, supplement or waiver or to revoke any consent previously given,
whether or not such persons continue to be Holders of such Securities after
such record date. No such consent shall be valid or effective for more than
120 days after such record date. The Trustee is entitled to rely upon any
electronic instruction from beneficial owners to the Holders of any Global
Security.
<PAGE> 55
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After an amendment, supplement or waiver becomes effective, it shall
bind every Holder, unless it makes a change described in any of clauses (a)
through (f) of Section 10.02. In that case the amendment, supplement or waiver
shall bind each Holder of a Security who has consented to it and every
subsequent Holder of a Security or portion of a Security that evidences the
same debt as the consenting Holder's Security.

SECTION 10.05. Notation on or Exchange of Securities.

If an amendment, supplement or waiver changes the terms of a Security,
the Trustee may require the Holder of the Security to deliver it to the
Trustee. The Trustee may place an appropriate notation on the Security about
the changed terms and return it to the Holder. Alternatively, if the Company
or the Trustee so determine, the Company in exchange for the Security shall
issue and the Trustee shall authenticate a new Security that reflects the
changed terms. Failure to make the appropriate notation or issue a new
Security shall not affect the validity and effect of such amendment, supplement
or waiver.

SECTION 10.06. Trustee To Sign Amendments, etc.

The Trustee shall be entitled to receive, and shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of any
amendment, supplement or waiver authorized pursuant to this Article Ten is
authorized or permitted by this Indenture and that such amendment, supplement
or waiver constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms (subject to customary exceptions).
The Trustee may, but shall not be obligated to, execute any such amendment,
supplement or waiver which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.

ARTICLE ELEVEN

GUARANTEE

SECTION 11.01. Unconditional Guarantee.

Subject to the provisions of Article Twelve, each Person who becomes a
Guarantor pursuant to Section 4.14 of this Indenture shall hereby
unconditionally, jointly and severally, guarantee (each, a "Guarantee") to each
Holder of a Security authenticated by the Trustee and to the Trustee and its
successors and assigns that the principal of and interest on the Securities
will be promptly paid in full when due, subject to any applicable grace period,
whether at maturity, by acceleration or otherwise, and interest on the overdue
principal and interest on any overdue interest on the Securities and all other
obligations of the Company to the Holders or the Trustee hereunder or under the
Securities will be promptly paid in full or performed, all in accordance with
the terms hereof and thereof; subject, however, to the limitations set forth in
Section 11.04. Each Guarantor hereby agrees that its obligations hereunder
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Securities or this Indenture, the absence of any action
to enforce the same, any waiver or consent by any Holder of the Securities with
respect to any provisions hereof or thereof, the recovery of any judgment
against the Company, any action to enforce the same or any other circumstance
which might otherwise constitute a legal or equitable discharge or defense of a
Guarantor. Each Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of insolvency or bankruptcy
of the Company, any right to require a proceeding first against the Company,
protest, notice and all demands whatsoever and covenants that the Guarantee
will not be discharged except by complete performance of the obligations
contained in the Securities, this Indenture, and this Guarantee. If any Holder
or the Trustee is required by any court or otherwise to return to the Company,
any Guarantor, or any custodian, trustee, liquidator or other similar official
acting in relation to the Company or any Guarantor, any amount paid by the
Company or any Guarantor to the Trustee or such Holder, this Guarantee, to the
extent theretofore discharged, shall be reinstated in full force and effect.
Each Guarantor further agrees that, as between each Guarantor, on the one hand,
and the Holders and
<PAGE> 56
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the Trustee, on the other hand, (x) the maturity of the obligations guaranteed
hereby may be accelerated as provided in Article Six for the purpose of this
Guarantee, notwithstanding any stay, injunction or other prohibition preventing
such acceleration in respect of the obligations guaranteed hereby, and (y) in
the event of any acceleration of such obligations as provided in Article Six,
such obligations (whether or not due and payable) shall forth become due and
payable by each Guarantor for the purpose of this Guarantee.

SECTION 11.02. Severability.

In case any provision of this Guarantee shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.

SECTION 11.03. Release of a Guarantor.

If the Securities are defeased in accordance with the terms of this
Indenture, or if, subject to the requirements of Section 5.01, if applicable,
all or substantially all of the assets of any Guarantor or all of the equity
interests of any Guarantor are sold (including by issuance or otherwise) by the
Company in a transaction constituting an Asset Sale and (x) the Net Cash
Proceeds from such Asset Sale are used in accordance with Section 4.08 or (y)
the Company delivers to the Trustee an Officers' Certificate to the effect that
the Net Cash Proceeds from such Asset Sale shall be used in accordance with
Section 4.08 and within the time limits specified by Section 4.08, then each
Guarantor (in the case of defeasance) or such Guarantor (in the event of a sale
or other disposition of all of the assets or the equity interests of such
Guarantor) or the corporation acquiring such assets (in the event of a sale or
other disposition of all or substantially all of the assets of such Guarantor)
shall be released and discharged from all obligations under this Article Eleven
without any further action required on the part of the Trustee or any Holder.
The Trustee shall, at the sole cost and expense of the Company and upon receipt
at the reasonable request of the Trustee of an Opinion of Counsel that the
provisions of this Section 11.03 have been complied with, deliver an
appropriate instrument evidencing such release upon receipt of a request by the
Company accompanied by an Officers' Certificate certifying as to the compliance
with this Section 11.03. Any Guarantor not so released remains liable for the
full amount of principal of and interest on the Securities and the other
obligations of the Company hereunder as provided in this Article Eleven.

SECTION 11.04. Limitation of Guarantor's Liability.

Each Guarantor, and by its acceptance hereof each Holder and the
Trustee, hereby confirms that it is the intention of all such parties that the
guarantee by such Guarantor pursuant to its Guarantee not constitute a
fraudulent transfer or conveyance for purposes of title 11 of the United States
Code, as amended, the Uniform Fraudulent Conveyance Act, the Uniform Fraudulent
Transfer Act or any similar U.S. Federal or state or other applicable law. To
effectuate the foregoing intention, the Holders and each Guarantor hereby
irrevocably agree that the obligations of each Guarantor under its Guarantee
shall be limited to the maximum amount as will, after giving effect to all
other contingent and fixed liabilities of such Guarantor and after giving
effect to any collections from or payments made by or on behalf of any other
Guarantor in respect of the obligations of such other Guarantor under its
Guarantee or pursuant to Section 11.05, result in the obligations of such
Guarantor under its Guarantee not constituting such a fraudulent transfer or
conveyance.

SECTION 11.05. Contribution.

In order to provide for just and equitable contribution among the
Guarantors, the Guarantors agree, inter se, that in the event any payment or
distribution is made by any Guarantor (a "Funding Guarantor") under the
Guarantee, such Funding Guarantor shall be entitled to a contribution from all
other Guarantors in a pro rata amount, based on the net assets of each
Guarantor (including the Funding Guarantor), determined in accordance with
GAAP, subject to Section 11.04, for all payments, damages and expenses incurred
by such Funding Guarantor in discharging the Company's obligations with respect
to the Securities or any other Guarantor's obligations with respect to the
Guarantee.
<PAGE> 57
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SECTION 11.06. Subordination of Subrogation and Other Rights.

Each Guarantor hereby agrees that any claim against the Company that
arises from the payment, performance or enforcement of such Guarantor's
obligations under its Guarantee or this Indenture, including, without
limitation, any right of subrogation, shall be subject and subordinate to, and
no payment with respect to any such claim of such Guarantor shall be made
before, the payment in full in cash of all outstanding Securities in accordance
with the provisions provided therefor in this Indenture.

ARTICLE TWELVE

SUBORDINATION OF GUARANTEE

SECTION 12.01. Agreement To Subordinate.

Each Guarantor agrees, and each Holder by accepting a Security agrees,
that the Indebtedness evidenced by the Securities and other Obligations with
respect to the Securities (including the Subsidiary Guarantee) are subordinated
in right of payment, to the extent and in the manner provided in this Article
Twelve, to the payment when due of all Guarantor Senior Indebtedness of such
Guarantor and that such subordination is for the benefit of and enforceable by
the holders of Guarantor Senior Indebtedness. The Subsidiary Guarantees shall
in all respects rank pari passu with all other Guarantor Senior Subordinated
Indebtedness of a Guarantor, and only Indebtedness of a Guarantor which is
Guarantor Senior Indebtedness will rank senior to the Securities and the
Subsidiary Guarantees in accordance with the provisions set forth herein.
Unsecured Indebtedness is not deemed to be subordinate or junior to Secured
Indebtedness merely because it is unsecured, nor is any Indebtedness deemed to
be subordinate or junior to other Indebtedness merely because it matures after
such other Indebtedness. All provisions of this Article Twelve shall be
subject to Section 12.12.

SECTION 12.02. Liquidation, Dissolution, Bankruptcy.

Upon any payment or distribution of the assets of a Guarantor upon a
total or partial liquidation or dissolution or reorganization or bankruptcy of
or similar proceeding relating to a Guarantor or its property:

(1) holders of Guarantor Senior Indebtedness of such
Guarantor shall be entitled to receive payment in full in cash or Cash
Equivalents of all Guarantor Senior Indebtedness of such Guarantor before
Holders shall be entitled to receive any payment of principal of or interest on
or other Obligations with respect to the Securities; and

(2) until the Guarantor Senior Indebtedness of such
Guarantor is paid in full in cash or cash equivalents, or other form acceptable
to holders of Guarantor Senior Indebtedness, any payment or distribution to
which Holders would be entitled but for the provisions of this Article Twelve
shall be made to holders of Guarantor Senior Indebtedness as their interests
may appear.

SECTION 12.03. Default on Guarantor Senior Indebtedness.

No Guarantor may pay the principal of, premium (if any), or interest
on, and other Obligations with respect to, the Securities or the Subsidiary
Guarantees or make any deposit pursuant to Section 9.01 or repurchase, redeem
or otherwise retire any Securities or the Subsidiary Guarantees (collectively,
"pay the Securities") if (i) any Guarantor Senior Indebtedness is not paid in
cash or cash equivalents when due or (ii) any other default on Guarantor Senior
Indebtedness occurs and the maturity of such Guarantor Senior Indebtedness is
accelerated in accordance with its terms unless, in either case, (x) the
default has been cured or waived or is no longer
<PAGE> 58
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continuing and/or and any such acceleration has been rescinded or (y) such
Guarantor Senior Indebtedness has been paid in full in cash or cash
equivalents, or other form acceptable to holders of Guarantor Senior
Indebtedness; provided, however, that the Guarantor may pay the Securities but
subject to the provisions of the first sentence of this Section 12.03 and the
provisions of Section 12.02, without regard to the foregoing if the Company and
the Trustee receive written notice approving such payment from the
Representatives of the Designated Senior Indebtedness with respect to which
either of the events set forth in clause (i) or (ii) of this sentence has
occurred or is continuing. During the continuance of any default (other than a
default described in clause (i) or (ii) of the preceding sentence) with respect
to any Designated Senior Indebtedness pursuant to which the maturity thereof
may be accelerated immediately without further notice (except such notice as
may be required to effect such acceleration) or the expiration of any
applicable grace periods, a Guarantor may not pay the Securities (except (i) in
Qualified Capital Stock issued by such Guarantor to pay interest on the
Securities or issued in exchange for its Subsidiary Guarantee, (ii) in
securities substantially identical to its Subsidiary Guarantee issued by such
Guarantor in payment of interest accrued thereon or (iii) in securities issued
by such Guarantor which are subordinated to the Guarantor Senior Indebtedness
at least to the same extent as its Subsidiary Guarantee and having a Weighted
Average Life to Maturity at least equal to the remaining Weighted Average Life
to Maturity of the Securities, as long as the court, in approving any payment
or distribution or stock or securities of the type described in the preceding
clauses (i)-(iii), gives effect to the subordination provisions set for in this
Indenture) for a period (a "Guarantor Payment Blockage Period") commencing upon
the receipt by the Trustee (with a copy to the Company) of written notice (a
"Guarantor Blockage Notice") of such default from the Representative of the
holders of such Designated Senior Indebtedness specifying an election to effect
a Guarantor Payment Blockage Period and ending 179 days thereafter (or earlier
if such Guarantor Payment Blockage Period is terminated (i) by written notice
to the Trustee and the Company from the Person or Persons who gave such
Guarantor Blockage Notice, (ii) because the default giving rise to such
Guarantor Blockage Notice is no longer continuing or (iii) because such
Designated Senior Indebtedness has been repaid in full.) Notwithstanding the
provisions of the immediately preceding sentence, but subject to the provisions
of the first sentence of this Section 12.03 and the provisions of Section
12.02, the Guarantor may resume payments on the Securities after the end of
such Payment Blockage Period. Not more than one Blockage Notice may be given,
and not more than one Payment Blockage Period may occur, in any consecutive
360-day period, irrespective of the number of defaults with respect to
Designated Senior Indebtedness during such period.

SECTION 12.04. Acceleration of Payment of Securities.

If a notice is required pursuant to the first sentence of Section
7.04, no Guarantor may pay the Securities (except payment (i) in Qualified
Capital Stock issued by the Guarantor to pay interest on the Securities or
issued in exchange for its Subsidiary Guarantee, (ii) in securities
substantially identical to the Subsidiary Guarantee issued by the Guarantor in
payment of interest accrued thereon or (iii) in securities issued by the
Guarantor which are subordinated to the Guarantor Senior Indebtedness at least
to the same extent as the Subsidiary Guarantee and have a Weighted Average Life
to Maturity at least equal to the remaining Weighted Average Life to Maturity
of the Securities, as long as the court, in approving any payment or
distribution or stock or securities of the type described in the preceding
clauses (i)-(iii), gives effect to the subordination provisions set forth in
this Indenture), until five Business Days after the respective Representative
of the Designated Senior Indebtedness receives notice (at the address specified
in the preceding sentence) of such acceleration and, thereafter, may pay the
Securities only if the provisions of this Article Twelve otherwise permit
payment at that time.

SECTION 12.05. When Distribution Must Be Paid Over.

If a payment or distribution is made to the Trustee or to Holders that
because of this Article Twelve should not have been made to them, the Trustee
or the Holders who receive such payment or distribution shall hold it in trust
for holders of Guarantor Senior Indebtedness and promptly pay it over to them
as their respective interests may appear.
<PAGE> 59
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SECTION 12.06. Subrogation.

After all Guarantor Senior Indebtedness is paid in full in cash or
Cash Equivalents, or other form acceptable to holders of Senior Indebtedness,
and until the Securities are paid in full, Holders shall be subrogated to the
rights of holders of Guarantor Senior Indebtedness to receive distributions
applicable to Guarantor Senior Indebtedness. A distribution made under this
Article Twelve to holders of Guarantor Senior Indebtedness which otherwise
would have been made to Holders is not, as between the Guarantor and the
Holders, a payment by any Guarantor of Guarantor Senior Indebtedness.

SECTION 12.07. Relative Rights.

This Article Twelve defines the relative rights of Holders of the
Securities on the one hand and holders of Guarantor Senior Indebtedness on the
other hand. Nothing in this Indenture shall:

(1) impair, as between the Guarantor and the Holders, the
obligation of any Guarantor, which is absolute and unconditional, to pay
principal of and interest on the Securities in accordance with their terms; or

(2) prevent the Trustee or any Holder from exercising its
available remedies upon a Default or Event of Default, subject to the rights of
holders of Guarantor Senior Indebtedness to receive payments or distributions
otherwise payable to Holders.

SECTION 12.08. Subordination May Not Be Impaired by Guarantor.

No right of any holder of Guarantor Senior Indebtedness to enforce the
subordination of the Indebtedness evidenced by the Securities or the Subsidiary
Guarantees shall be impaired by any act or failure to act by any Guarantor or
by the failure of any Guarantor to comply with this Indenture.

SECTION 12.09. Rights of Trustee and Paying Agent.

Notwithstanding Section 12.03, the Trustee or Paying Agent may
continue to make payments on the Securities and shall not be charged with
knowledge of the existence of facts that would prohibit the making of any such
payments unless, not less than one Business Day prior to the date of such
payment, a Trust Officer of the Trustee receives notice satisfactory to it that
payments may not be made under this Article Twelve. A Guarantor, the Registrar
or co-registrar, the Paying Agent, a Representative or a holder of Guarantor
Senior Indebtedness may give the notice; provided, however, that if an issue of
Guarantor Senior Indebtedness has a Representative, only the Representative may
give the notice. Each Paying Agent shall have the same rights and obligations
under this Article Twelve as does the Trustee.

The Trustee in its individual or any other capacity may hold Guarantor
Senior Indebtedness with the same rights it would have if it were not Trustee.
The Registrar and co-registrar and the Paying Agent may do the same with like
rights. The Trustee shall be entitled to all the rights set forth in this
Article Twelve with respect to any Guarantor Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Guarantor
Senior Indebtedness; and nothing in Article Twelve shall deprive the Trustee of
any of its rights as such holder. Nothing in this Article Twelve shall apply
to claims of, or payments to, the Trustee under or pursuant to Section 8.07.

SECTION 12.10. Distribution or Notice to Representative.

Whenever a payment or distribution is to be made or a notice given to
holders of Guarantor Senior Indebtedness, the payment or distribution may be
made and the notice given to their Representative (if any).
<PAGE> 60
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SECTION 12.11. Article Twelve Not To Prevent Events of Default or Limit Right
To Accelerate.

The failure to make a payment in respect of the Securities by reason
of any provision in this Article Twelve shall not be construed as preventing
the occurrence of a Default or Event of Default. Nothing in this Article
Twelve shall have any effect on the right of the Holders or the Trustee to
accelerate the maturity of the Securities.

SECTION 12.12. Trust Moneys Not Subordinate.

Notwithstanding anything contained herein to the contrary, payments
from money or the proceeds of U.S. Government Obligations held in trust under
Article Nine by the Trustee for the payment of principal of and interest on the
Securities shall not be subordinated to the prior payment of any Guarantor
Senior Indebtedness or subject to the restrictions set forth in this Article
Twelve, and none of the Holders shall be obligated to pay over any such amount
to such Guarantor, any holder of Guarantor Senior Indebtedness of such
Guarantor, or any other creditor of such Guarantor.

SECTION 12.13. Trustee Entitled To Rely.

Upon any payment or distribution pursuant to this Article Twelve, the
Trustee and the Holders shall be entitled to rely (i) upon any order or decree
of a court of competent jurisdiction in which any proceedings of the nature
referred to in Section 12.02 are pending, (ii) upon a certificate of the
liquidating trustee or agent or other Person making such payment or
distribution to the Trustee or to the Holders or (iii) upon the Representatives
for the holders of Guarantor Senior Indebtedness for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Guarantor Senior Indebtedness and other
Indebtedness of any Guarantor, the amount thereof or payable thereon, the
amount or amounts paid or distributed thereon and all other facts pertinent
thereto or to this Article Twelve. In the event that the Trustee determines,
in good faith, that evidence is required with respect to the right of any
Person as a holder of Guarantor Senior Indebtedness to participate in any
payment or distribution pursuant to this Article Twelve, the Trustee may
request such Person to furnish evidence to the reasonable satisfaction of the
Trustee as to the amount of Guarantor Senior Indebtedness held by such Person,
the extent to which such Person is entitled to participate in such payment or
distribution and other facts pertinent to the rights of such Person under this
Article Twelve, and, if such evidence is not furnished, the Trustee may defer
any payment to such Person pending judicial determination as to the right of
such Person to receive such payment or distribution. The Trustee shall have
the right to seek a declaratory judgment as to any right of such Person to
receive such payment or distribution. The provisions of Sections 8.01 and 8.02
shall be applicable to all actions or omissions of actions by the Trustee
pursuant to this Article Twelve.

SECTION 12.14. Trustee To Effectuate Subordination.

Each Holder by accepting a Security authorizes and directs the Trustee
on his behalf to take such action as may be necessary or appropriate to
acknowledge or effectuate the subordination between the Holder and the holders
of Guarantor Senior Indebtedness as provided in this Article Twelve and
appoints the Trustee as attorney-in-fact for any and all such purposes.

SECTION 12.15. Trustee Not Fiduciary for Holders of Guarantor Senior
Indebtedness.

The Trustee shall not be deemed to owe any fiduciary duty to the
holders of Guarantor Senior Indebtedness and, subject to the first sentence of
Section 12.09, shall not be liable to any such holders if it shall mistakenly
pay over or distribute to Holders or the Guarantor, or any other Person, money
or assets to which any holders of Guarantor Senior Indebtedness shall be
entitled by virtue of this Article Twelve or otherwise.
<PAGE> 61
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SECTION 12.16. Reliance by Holders of Guarantor Senior Indebtedness on
Subordination Provisions.

Each Holder by accepting a Security acknowledges and agrees that the
foregoing subordination provisions are, and are intended to be, an inducement
and a consideration to each holder of any Guarantor Senior Indebtedness,
whether such Guarantor Senior Indebtedness was created or acquired before or
after the issuance of the Securities, to acquire and continue to hold, or to
continue to hold, such Guarantor Senior Indebtedness and such holder of
Guarantor Senior Indebtedness shall be deemed conclusively to have relied on
such subordination provisions in acquiring and continuing to hold, or in
continuing to hold, such Guarantor Senior Indebtedness.

ARTICLE THIRTEEN

MISCELLANEOUS

SECTION 13.01. Trust Indenture Act Controls.

This Indenture is subject to the provisions of the TIA that are
required to be a part of this Indenture, and shall, to the extent applicable,
be governed by such provisions. If any provision of this Indenture modifies
any TIA provision that may be so modified, such TIA provision shall be deemed
to apply to this Indenture as so modified. If any provision of this Indenture
excludes any TIA provision that may be so excluded, such TIA provision shall be
excluded from this Indenture.

The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.

SECTION 13.02. Notices.

Any notice or communication shall be sufficiently given if in writing
and delivered in person, by facsimile and confirmed by overnight courier, or
mailed by first-class mail addressed as follows:

if to the Company:

COOPERATIVE COMPUTING, INC.

6207 Bee Cave Road
Austin, TX 78746-5146

Attention: Glenn E. Staats

Facsimile: (512) 328-6461
Telephone: (512) 328-2300
<PAGE> 62
-61-

if to the Trustee:

NORWEST BANK MINNESOTA, National Association
Sixth Street and Marquette Avenue
Minneapolis, MN 55479-0069

Attention: Corporate Trust Department

Facsimile: (612) 667-9825
Telephone: (612) 316-1445

The Company or the Trustee by notice to the other may designate
additional or different addresses for subsequent notices or communications.

Any notice or communication mailed, first-class, postage prepaid, to a
Holder including any notice delivered in connection with TIA Section 310(b),
TIA Section 313(c), TIA Section 314(a) and TIA Section 315(b), shall be
mailed to him at his address as set forth on the Security Register and shall be
sufficiently given to him if so mailed within the time prescribed. To the
extent required by the TIA, any notice or communication shall also be mailed to
any Person described in TIA Section 313(c).

Failure to mail a notice or communication to a Holder or any defect in
it shall not affect its sufficiency with respect to other Holders. Except for
a notice to the Trustee, which is deemed given only when received, if a notice
or communication is mailed in the manner provided above, it is duly given,
whether or not the addressee receives it.

SECTION 13.03. Communications by Holders with Other Holders.

Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Securities.
The Company, the Trustee, the Registrar and any other person shall have the
protection of TIA Section 312(c).

SECTION 13.04. Certificate and Opinion as to Conditions Precedent.

Upon any request or application by the Company to the Trustee to take
or refrain from taking any action under this Indenture, the Company shall
furnish to the Trustee at the request of the Trustee:

(1) an Officers' Certificate in form and substance satisfactory to the
Trustee stating that, in the opinion of the signers, all conditions precedent,
if any, provided for in this Indenture relating to the proposed action have
been complied with; and

(2) an Opinion of Counsel in form and substance satisfactory to the
Trustee stating that, in the opinion of such counsel, all such conditions
precedent have been complied with; provided, however, that with respect to
matters of fact an Opinion of Counsel may rely on an Officers' Certificate or
certificates of public officials.

SECTION 13.05. Statements Required in Certificate.

Each certificate with respect to compliance with a condition or
covenant provided for in this Indenture shall include:

(1) a statement that the person making such certificate has read such
covenant or condition;
<PAGE> 63
-62-

(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements contained in such certificate are based;

(3) a statement that, in the opinion of such person, he has made such
examination or investigation as is necessary to enable him to express an
informed opinion as to whether or not such covenant or condition has been
complied with; and

(4) a statement as to whether or not, in the opinion of such person,
such condition or covenant has been complied with.

SECTION 13.06. Rules by Trustee, Paying Agent, Registrar.

The Trustee may make reasonable rules for action by or at a meeting of
Holders. The Paying Agent or Registrar may make reasonable rules for its
functions.

SECTION 13.07. Governing Law.

THE LAWS OF THE STATE OF NEW YORK SHALL GOVERN THIS INDENTURE, THE
SECURITIES AND THE SUBSIDIARY GUARANTEES WITHOUT REGARD TO PRINCIPLES OF
CONFLICTS OF LAW TO THE EXTENT THAT THE APPLICATION OF THE LAWS OF ANOTHER
JURISDICTION WOULD BE REQUIRED THEREBY.

SECTION 13.08. No Recourse Against Others.

No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any Guarantor under the Securities or the Subsidiary
Guarantees, as the case may be, or this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
by accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities and
the Subsidiary Guarantees.

SECTION 13.09. Successors.

All agreements of the Company in this Indenture and the Securities
shall bind its successor. All agreements of each Guarantor in this Indenture
shall bind its successor. All agreements of the Trustee in this Indenture
shall bind its successor.

SECTION 13.10. Counterpart Originals.

The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.

SECTION 13.11. Severability.

In case any provision in this Indenture, in the Securities or in the
Subsidiary Guarantees shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby, and a Holder shall have no claim therefor against
any party hereto.
<PAGE> 64
-63-

SECTION 13.12. No Adverse Interpretation of Other Agreements.

This Indenture may not be used to interpret another indenture, loan or
debt agreement of the Company or a Subsidiary of the Company. Any such
indenture, loan or debt agreement may not be used to interpret this Indenture.

SECTION 13.13. Legal Holidays.

If a payment date is not a Business Day at a place of payment, payment
may be made at that place on the next succeeding Business Day.

[Signature Pages Follow]
<PAGE> 65
S-1

SIGNATURES

IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed as of the date first written above.

COOPERATIVE COMPUTING, INC.

By: /s/ MATTHEW HALE
-------------------------------
Name: Matthew Hale
Title: Chief Financial Officer

NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee

By: /s/ CURTIS D. SCHWEGMAN
-------------------------------
Name: Curtis D. Schwegman
Title: Assistant Vice President

<PAGE> 1
EXHIBIT 4.2

[FORM OF SERIES B SECURITY]

COOPERATIVE COMPUTING, INC.

9% Senior Subordinated Note due 2008, Series B
CUSIP No.
No. [ ] $[ ]

COOPERATIVE COMPUTING, INC., a Delaware corporation (the "Company",
which term includes any successor corporation), for value received, promises to
pay to or registered assigns the principal sum of Dollars,
on February 1, 2008.

Interest Payment Dates: February 1 and August 1, commencing on
August 1, 1998.

Interest Record Dates: January 15 and July 15.

Reference is made to the further provisions of this Security contained
herein, which will for all purposes have the same effect as if set forth at
this place.

IN WITNESS WHEREOF, the Company has caused this Security to be signed
manually or by facsimile by its duly authorized officers.

COOPERATIVE COMPUTING, INC.

By:
-----------------------------------
Name:
Title:

Dated:

[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]

This is one of the 9% Senior Subordinated Notes due 2008, Series B,
described in the within-mentioned Indenture.

Dated:

NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION,
as Trustee

By:
-----------------------------------
Authorized Signatory

B-1
<PAGE> 2
(REVERSE OF SECURITY)

COOPERATIVE COMPUTING, INC.

9% Senior Note due 2008, Series B

1. Interest.

COOPERATIVE COMPUTING, INC. a Delaware corporation (the "Company")
promises to pay interest on the principal amount of this Security at the rate
per annum shown above. Cash interest on the Securities will accrue from the
most recent date to which interest has been paid or, if no interest has been
paid, from February 1, 1998. The Company will pay interest semi-annually in
arrears on each Interest Payment Date, commencing on August 1, 1998. Interest
will be computed on the basis of a 360-day year of twelve 30-day months.

The Company shall pay interest on overdue principal from time to time on
demand and on overdue installments of interest (without regard to any applicable
grace periods) to the extent lawful from time to time on demand, in each case at
the rate borne by the Securities.

2. Method of Payment.

The Company shall pay interest on the Securities (except defaulted
interest) to the persons who are the registered Holders at the close of
business on the Interest Record Date immediately preceding the Interest Payment
Date even if the Securities are canceled on registration of transfer or
registration of exchange after such Interest Record Date. Holders must
surrender Securities to a Paying Agent to collect principal payments. The
Company shall pay principal and interest in money of the United States that at
the time of payment is legal tender for payment of public and private debts
("U.S. Legal Tender"). However, the Company may pay principal and interest by
wire transfer of Federal funds (provided that the Paying Agent shall have
received wire instructions on or prior to the relevant Interest Record Date),
or interest by check payable in such U.S. Legal Tender. The Company may
deliver any such interest payment to the Paying Agent or to a Holder at the
Holder's registered address.

3. Paying Agent and Registrar.

Initially, NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION (the "Trustee")
will act as Paying Agent and Registrar. The Company may change any Paying
Agent or Registrar without notice to the Holders. The Company may, subject to
certain exceptions, act as Registrar.

4. Indenture.

The Company issued the Securities under an Indenture, dated as of
February 10, 1998 (the "Indenture"), by and between the Company and the
Trustee. Capitalized terms herein are used as defined in the Indenture unless
otherwise defined herein. This Security is one of a duly authorized issue of
Securities of the Company designated as its 9% Senior Subordinated Notes due
2008, Series B limited in aggregate principal amount to $100,000,000, which may
be issued under the Indenture. The Securities include the Initial Securities
(as defined in the Indenture), the Private Exchange Securities (as defined in
the Indenture) and the Unrestricted Securities (as defined in the Indenture).
All Securities issued under the Indenture are treated as a single class of
securities under the Indenture. The terms of the Securities include those
stated in the Indenture and those made part of the Indenture by reference to
the Trust Indenture Act of 1939 (15 U.S.C. Sections 77aaa-77bbbb) (the "TIA"),
as

B-2
<PAGE> 3
in effect on the date of the Indenture (except as otherwise indicated in the
Indenture) until such time as the Indenture is qualified under the TIA, and
thereafter as in effect on the date on which the Indenture is qualified under
the TIA. Notwithstanding anything to the contrary herein, the Securities are
subject to all such terms, and holders of Securities are referred to the
Indenture and the TIA for a statement of them. The Securities are general
unsecured obligations of the Company. The Securities are subordinated in right
of payment to all Senior Indebtedness of the Company to the extent and in the
manner provided in the Indenture. Each Holder of a Security, by accepting a
Security, agrees to such subordination, authorizes the Trustee to give effect to
such subordination and appoints the Trustee as attorney-in-fact for such
purpose.

5. Optional Redemption.

(a) The Securities will be redeemable at the option of the Company, in
whole or in part, at any time on or after November 1, 2001, at the redemption
prices (expressed as a percentage of principal amount) set forth below, plus
accrued and unpaid interest thereon, if any, to the Redemption Date (subject to
the right of holders of record on the relevant Interest Record Date to receive
interest due on the relevant Interest Payment Date) if redeemed during the
12-month period commencing on November 1 of the years indicated below:

<TABLE>
<CAPTION>
Year Percentage
<S> <C>
2003 104.500%
2004 103.000%
2005 101.500%
2006 and thereafter 100.000%
</TABLE>

(b) Prior to February 1, 2002, the Company may, at its option, use the
net cash proceeds of one or more Equity Offerings to redeem up to 35% of the
principal amount of the Notes at a redemption price equal to []% of the
principal amount thereof plus accrued and unpaid interest to the redemption
date; provided, however, that after any such redemption, at least 65% of the
aggregate principal amount of the Notes originally issued would remain
outstanding immediately after giving effect to such redemption. Any such
redemption will be required to occur on or prior to the date that is one year
after the receipt by the Company of the proceeds of an Equity Offering. The
Company shall effect such redemption on a pro rata basis.

(c) Prior to February 1, 2003, upon the occurrence of a Change of
Control, the Company will have the option to redeem the Notes in whole but not
in part (a "Change of Control Redemption") at a redemption price equal to 100%
of the principal amount thereof, plus accrued and unpaid interest to the
redemption date, plus the Applicable Premium. In order to effect a Change of
Control Redemption, the Company must send a notice to each holder of the Notes,
which notice shall govern the terms of the Change of Control Redemption. Such
notice must comply with the provisions of Section 3.03 of the Indenture;
provided, however, that such notice must be mailed to holders of the Notes
within 30 days following the date the Change of Control occurred (the "Change
of Control Redemption Date") and state that the Company is effecting a Change
of Control Redemption in lieu of a Change of Control Offer.

"Applicable Premium" means, with respect to a Note at any Change of
Control Redemption Date, the greater of (i) 1.0% of the principal amount of
such Note and (ii) the excess of (A) the present value at such time of (1) the
redemption price of such Note at February 1, 2003 (such redemption price being
described in paragraph (a) above) plus (2) all semi-annual payments of interest
through February 1, 2003 computed using a discount rate equal to the Treasury
Rate plus 75 basis points over (B) the principal amount of such Note.

"Treasury Rate" means the yield to maturity at the time of computation
of United States Treasury Securities with a constant maturity (as compiled and
published in the most recent Federal Reserve Statistical Release H.15(519) that
has become publicly available at least two business days prior to the Change of
Control Redemption Date (or, if such Statistical Release is no longer
published, any publicly available source or similar market data)) most nearly
equal to the period from the Change of Control Redemption Date to February

B-3
<PAGE> 4
1, 2003; provided, however, that if the period from the Change of Control
Redemption Date to February 1, 2003 is not equal to the constant maturity of a
United States Treasury security for which a weekly average yield is given, the
Treasury Rate shall be obtained by linear interpolation (calculated to the
nearest one-twelfth of a year) from the weekly average yields of United States
Treasury Securities for which such yields are given except that if the period
from the Change of Control Redemption Date to February 1, 2003 is less than one
year, the weekly average yield on actually traded United States Treasury
Securities adjusted to a constant maturity of one year shall be used.

6. Notice of Redemption.

Notice of redemption will be mailed by first-class mail at least 30
days but not more than 60 days before the Redemption Date to each Holder of
Securities to be redeemed at its registered address. The Trustee may select
for redemption portions of the principal amount of Securities that have
denominations equal to or larger than $1,000 principal amount. Securities and
portions of them the Trustee so selects shall be in amounts of $1,000 principal
amount or integral multiples thereof.

If any Security is to be redeemed in part only, the notice of redemption
that relates to such Security shall state the portion of the principal amount
thereof to be redeemed. A new Security in a principal amount equal to the
unredeemed portion thereof will be issued in the name of the Holder thereof upon
cancellation of the original Security. On and after the Redemption Date,
interest will cease to accrue on Securities or portions thereof called for
redemption so long as the Company has deposited with the Paying Agent for the
Securities funds in satisfaction of the redemption price pursuant to the
Indenture and the Paying Agent is not prohibited from paying such funds to the
Holders pursuant to the terms of the Indenture.

7. Change of Control Offer.

Following the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall, within 30
days after the Change of Control Date, offer to purchase all Securities then
outstanding at a purchase price in cash equal to 101% of the aggregate
principal amount thereof, plus accrued and unpaid interest thereon, if any, to
the date of such purchase (subject to the right of Holders of record on the
relevant Interest Record Date to receive interest due on the relevant Interest
Payment Date).

8. Limitation on Disposition of Assets.

The Company is, subject to certain conditions and certain exceptions,
obligated to offer to purchase the Securities at a purchase price equal to 100%
of the principal amount thereof, plus accrued and unpaid interest thereon, if
any, to the date of such purchase (subject to the right of Holders of record on
the Interest Relevant Record Date to receive interest due on the relevant
Interest Payment Date) with the proceeds of certain asset dispositions.

9. Denominations; Transfer; Exchange.

The Securities are in registered form, without coupons, in
denominations of $1,000 and integral multiples of $1,000. A Holder shall
register the transfer of or exchange Securities in accordance with the
Indenture. The Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay certain transfer
taxes or similar governmental charges payable in connection therewith as
permitted by the Indenture. The Registrar need not register the transfer of or
exchange any Securities or portions thereof selected for redemption, except the
unredeemed portion of any security being redeemed in part.

B-4
<PAGE> 5
10. Persons Deemed Owners.

The registered Holder of a Security shall be treated as the owner of it
for all purposes.

11. Unclaimed Funds.

If funds for the payment of principal or interest remain unclaimed for
one year, the Trustee and the Paying Agent will repay the funds to the Company
at their written request. After that, all liability of the Trustee and such
Paying Agent with respect to such funds shall cease.

12. Legal Defeasance and Covenant Defeasance.

The Company and the Guarantors may be discharged from their obligations
under the Indenture, the Securities and the Subsidiary Guarantees, except for
certain provisions thereof, and may be discharged from obligations to comply
with certain covenants contained in the Indenture, the Securities and the
Subsidiary Guarantees, in each case upon satisfaction of certain conditions
specified in the Indenture.

13. Amendment; Supplement; Waiver.

Subject to certain exceptions, the Indenture, the Securities and the
Subsidiary Guarantees may be amended or supplemented with the written consent
of the Holders of at least a majority in aggregate principal amount of the
Securities then outstanding, and any existing Default or Event of Default or
compliance with any provision may be waived with the consent of the Holders of
a majority in aggregate principal amount of the Securities then outstanding.
Without notice to or consent of any Holder, the parties thereto may amend or
supplement the Indenture, the Securities and the Subsidiary Guarantees to,
among other things, cure any ambiguity, defect or inconsistency, provide for
uncertificated Securities in addition to or in place of certificated Securities
or comply with any requirements of the SEC in connection with the qualification
of the Indenture under the TIA, or make any other change that does not
materially adversely affect the rights of any Holder of a Security.

14. Restrictive Covenants.

The Indenture contains certain covenants that, among other things,
limit the ability of the Company and its Subsidiaries to make restricted
payments, to incur indebtedness, to sell assets, to permit restrictions on
dividends and other payments by Subsidiaries to the Company, to consolidate,
merge or sell all or substantially all of its assets and to engage in
transactions with affiliates. The limitations are subject to a number of
important qualifications and exceptions. The Company must report annually to
the Trustee on compliance with such limitations.

15. Defaults and Remedies.

If an Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of Securities then
outstanding may declare all the Securities to be due and payable immediately in
the manner and with the effect provided in the Indenture. Holders of
Securities may not enforce the Indenture, the Securities or the Subsidiary
Guarantees except as provided in the Indenture. The Trustee is not obligated
to enforce the Indenture, the Securities or the Subsidiary Guarantees unless it
has received indemnity satisfactory to it. The Indenture permits, subject to
certain limitations therein provided, Holders of a majority in aggregate
principal amount of the Securities then outstanding to direct the Trustee in
its exercise of any trust or power. The Trustee may withhold from Holders of
Securities notice of certain continuing Defaults or Events of Default if it
determines that withholding notice is in their interest.

B-5
<PAGE> 6
16. Trustee Dealings with Company and Guarantors.

The Trustee under the Indenture, in its individual or any other
capacity, may become the owner or pledgee of Securities and may otherwise deal
with the Company, the Guarantors, their respective Subsidiaries or their
respective Affiliates as if it were not the Trustee.

17. No Recourse Against Others.

No director, officer, employee, incorporator or stockholder of the
Company or any Guarantor, as such, shall have any liability for any obligations
of the Company or any Guarantor under the Securities or the Subsidiary
Guarantees, as the case may be, or the Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation. Each Holder
by accepting a Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the Securities and
the Subsidiary Guarantees.

18. Authentication.

This Security shall not be valid until the Trustee or authenticating
agent signs the certificate of authentication on this Security.

19. Abbreviations and Defined Terms.

Customary abbreviations may be used in the name of a Holder of a
Security or an assignee, such as: TEN COM (= tenants in common), TEN ENT (=
tenants by the entireties), JT TEN (= joint tenants with right of survivorship
and not as tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts
to Minors Act).

20. CUSIP Numbers.

Pursuant to a recommendation promulgated by the Committee on Uniform
Security Identification Procedures, the Company has caused CUSIP numbers to be
printed on the Securities as a convenience to the Holders of the Securities.
No representation is made as to the accuracy of such numbers as printed on the
Securities and reliance may be placed only on the other identification numbers
printed hereon.

21. Governing Law.

The laws of the State of New York shall govern the Indenture, this
Security and any Subsidiary Guarantee thereof without regard to principles of
conflicts of laws to the extent that the application of the laws of another
jurisdiction would be required thereby.

B-6
<PAGE> 7
ASSIGNMENT FORM

I or we assign and transfer this Security to

- --------------------------------------------------------------------------------

- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee or transferee)

- --------------------------------------------------------------------------------
(Insert Social Security or other identifying number of assignee or transferee)

and irrevocably appoint
---------------------------------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for him.

Dated: Signed:
----------------------- -----------------------------------
(Signed exactly as name appears
on the other side of this Security)

Signature Guarantee:
------------------------------------------------------------
Participant in a recognized Signature Guarantee Medallion
Program (or other signature guarantor program reasonably
acceptable to the Trustee)

<PAGE> 8
OPTION OF HOLDER TO ELECT PURCHASE

If you want to elect to have this Security purchased by the Company
pursuant to Section 4.08 or Section 4.15 of the Indenture, check the
appropriate box:

Section 4.08 [ ] Section 4.15 [ ]

If you want to elect to have only part of this Security purchased by
the Company pursuant to Section 4.08 or Section 4.15 of the Indenture, state the
amount: $_____________

Dated: Your Signature:
-------------------- -----------------------------------
(Signed exactly as name appears
on the other side of this Security)

Signature Guarantee:
------------------------------------------------------------
Participant in a recognized Signature Guarantee
Medallion Program (or other signature guarantor
program reasonably acceptable to the Trustee)

<PAGE> 1
EXHIBIT 4.3

COOPERATIVE COMPUTING, INC.

$100,000,000

9% Senior Subordinated Notes due 2008

EXCHANGE AND REGISTRATION RIGHTS AGREEMENT

February 10, 1998
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY
SECURITIES LLC
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017

Ladies and Gentlemen:

Cooperative Computing, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to Chase Securities Inc. and NationsBanc
Montgomery Securities LLC (the "Initial Purchasers"), upon the terms and
subject to the conditions set forth in a purchase agreement dated February 2,
1998 between the Company and the Initial Purchasers (the "Purchase Agreement")
$100,000,000 aggregate principal amount of its 9% Senior Subordinated Notes due
2008 (the "Securities"). Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Purchase Agreement.

As an inducement to the Initial Purchasers to enter into the
Purchase Agreement and in satisfaction of a condition to the obligations of the
Initial Purchasers thereunder, the Company agrees with the Initial Purchasers,
for the benefit of the holders (including the Initial Purchasers) of the
Securities, the Exchange Securities (as defined herein) and the Private
Exchange Securities (as defined herein) (collectively, the "Holders"), as
follows:

1. Registered Exchange Offer. The Company shall (i)
prepare and, not later than 120 days following the date of original issuance of
the Securities (the "Issue Date"), file with the Commission a registration
statement (the "Exchange Offer Registration Statement") on an appropriate form
under the Securities Act with respect to a proposed offer to the Holders of the
Securities (the "Registered Exchange Offer") to issue and deliver to such
Holders, in exchange for the Securities, a like aggregate principal amount of
debt securities of the Company that are identical in all material respects to
the Securities (the "Exchange Securities"), except for the transfer
restrictions relating to the Securities, (ii) use its reasonable best efforts
to cause the Exchange Offer Registration Statement to become effective under
the Securities Act no later than 180 days after the Issue Date and the
Registered Exchange Offer to be consummated no later than 225 days after the
Issue Date and (iii) keep the Exchange Offer
<PAGE> 2
-2-

Registration Statement effective for not less than 30 days (or longer, if
required by applicable law) after the date on which notice of the Registered
Exchange Offer is mailed to the Holders (such period being called the "Exchange
Offer Registration Period"). The Exchange Securities will be issued under the
Indenture or an indenture (the "Exchange Securities Indenture") between the
Company and the Trustee or such other bank or trust company that is reasonably
satisfactory to the Initial Purchasers, as trustee (the "Exchange Securities
Trustee"), such indenture to be identical in all material respects to the
Indenture, except for the transfer restrictions relating to the Securities (as
described above).

Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer,
it being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for Exchange Securities (assuming that such
Holder (a) is not an affiliate of the Company, or an Exchanging Dealer (as
defined herein) not complying with the requirements of the next sentence, (b)
is not an Initial Purchaser holding Securities that have, or that are
reasonably likely to have, the status of an unsold allotment in an initial
distribution, (c) acquires the Exchange Securities in the ordinary course of
such Holder's business, and (d) has no arrangements or understandings with any
person to participate in the distribution of the Exchange Securities) and to
trade such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and without material
restrictions under the securities laws of the several states of the United
States. The Company, the Initial Purchasers and each Exchanging Dealer
acknowledge that, pursuant to current interpretations by the Commission's staff
of Section 5 of the Securities Act, (i) each Holder that is a broker- dealer
electing to exchange Securities acquired for its own account as a result of
market-making activities or other trading activities for Exchange Securities
(an "Exchanging Dealer"), is required to deliver a prospectus containing
substantially the information set forth in Annex A hereto on the cover of such
prospectus, in Annex B hereto in the "Exchange Offer Procedures" and "Purpose
of the Exchange Offer" sections of such prospectus, and in Annex C hereto in
the "Plan of Distribution" section of such prospectus in connection with a sale
of any such Exchange Securities received by such Exchanging Dealer pursuant to
the Registered Exchange Offer and (ii) if any Initial Purchaser elects to sell
Private Exchange Securities (as defined) acquired in exchange for Securities
constituting any portion of an unsold allotment, it is required to deliver a
prospectus containing the information required by Items 507 or 508 of
Regulation S-K under the Securities Act and the Exchange Act ("Regulation
S-K"), as applicable, in connection with such a sale.

Upon consummation of the Registered Exchange Offer in
accordance with this Section 1, the provisions of this Agreement shall continue
to apply, mutatis mutandis, solely with respect to Transfer Restricted
Securities that are Private Exchange Securities, Exchange Securities as to
which clause (v) of the first paragraph of Section 2 hereof is applicable and
Exchange Securities held by Participating Broker-Dealers (as defined), and the
Company shall
<PAGE> 3
-3-

have no further obligations to register Transfer Restricted Securities (other
than Private Exchange Securities and other than in respect of Exchange
Securities as to which clause (v) of the first paragraph of Section 2 hereof
applies) pursuant to Section 2 hereof.

If, prior to the consummation of the Registered Exchange
Offer, any Holder holds any Securities acquired by it that have, or that are
reasonably likely to be determined to have, the status of an unsold allotment
in an initial distribution, or any Holder is not entitled to participate in the
Registered Exchange Offer, the Company shall, upon the request of any such
Holder, simultaneously with the delivery of the Exchange Securities in the
Registered Exchange Offer, issue and deliver to any such Holder, in exchange
for the Securities held by such Holder (the "Private Exchange"), a like
aggregate principal amount of debt securities of the Company that are identical
in all material respects to the Exchange Securities (the "Private Exchange
Securities"), except for the transfer restrictions relating to such Private
Exchange Securities. The Private Exchange Securities will be issued under the
same indenture as the Exchange Securities, and the Company shall use its
reasonable best efforts to cause the Private Exchange Securities to bear the
same CUSIP number as the Exchange Securities.

In connection with the Registered Exchange Offer, the Company
shall:

(a) mail to each Holder a copy of the prospectus forming
part of the Exchange Offer Registration Statement, together with an appropriate
letter of transmittal and related documents;

(b) keep the Registered Exchange Offer open for not less
than 30 days (or longer, if required by applicable law) after the date
on which notice of the Registered Exchange Offer is mailed to the
Holders;

(c) utilize the services of a depositary for the
Registered Exchange Offer with an address in the Borough of Manhattan,
The City of New York;

(d) permit Holders to withdraw tendered Securities at any
time prior to the close of business, New York City time, on the last
business day on which the Registered Exchange Offer shall remain open;
and

(e) otherwise comply in all respects with all laws that
are applicable to the Registered Exchange Offer.

As soon as practicable after the close of the Registered
Exchange Offer and any Private Exchange, as the case may be, the Company shall:
<PAGE> 4
-4-

(a) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer and the
Private Exchange;

(b) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and

(c) cause the Trustee or the Exchange Securities Trustee,
as the case may be, promptly to authenticate and deliver to each
Holder, Exchange Securities or Private Exchange Securities, as the
case may be, equal in principal amount to the Securities of such
Holder so accepted for exchange.

The Company shall use its reasonable best efforts to keep the
Exchange Offer Registration Statement effective and to amend and supplement the
prospectus contained therein in order to permit such prospectus to be used by
all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided that (i) in the case where
such prospectus and any amendment or supplement thereto must be delivered by an
Exchanging Dealer, such period shall be the lesser of 90 days and the date on
which all Exchanging Dealers have sold all Exchange Securities held by them and
(ii) the Company shall make such prospectus and any amendment or supplement
thereto available to any broker- dealer for use in connection with any resale
of any Exchange Securities for a period of not less than 90 days after the
consummation of the Registered Exchange Offer.

The Indenture or the Exchange Securities Indenture, as the
case may be, shall provide that the Securities, the Exchange Securities and the
Private Exchange Securities shall vote and consent together on all matters as
one class and that none of the Securities, the Exchange Securities or the
Private Exchange Securities will have the right to vote or consent as a
separate class on any matter.

Interest on each Exchange Security and Private Exchange
Security issued pursuant to the Registered Exchange Offer and in the Private
Exchange will accrue from the last interest payment date on which interest was
paid on the Securities surrendered in exchange therefor or, if no interest has
been paid on the Securities, from the Issue Date.

Each Holder participating in the Registered Exchange Offer
shall be required to represent to the Company that at the time of the
consummation of the Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Securities or the Exchange Securities
within the meaning of the Securities Act and (iii) such Holder is not an
affiliate of the Company or, if it is
<PAGE> 5
-5-

such an affiliate, such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable and (iv)
if such Holder is an Exchanging Dealer, such person shall comply with the
prospectus delivery requirements of the Securities Act.

Notwithstanding any other provisions hereof, the Company will
ensure that (i) any Exchange Offer Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Exchange Offer Registration
Statement and any amendment thereto does not, when it becomes effective,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (iii) any prospectus forming part of any Exchange Offer
Registration Statement, and any supplement to such prospectus, does not, as of
the consummation of the Registered Exchange Offer, include an untrue statement
of a material fact or omit to state a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.

2. Shelf Registration. If (i) because of any change in
law or applicable interpretations thereof by the Commission's staff the Company
is not permitted to effect the Registered Exchange Offer as contemplated by
Section 1 hereof, or (ii) any Securities validly tendered pursuant to the
Registered Exchange Offer are not exchanged for Exchange Securities within 225
days after the Issue Date, or (iii) any Initial Purchaser so requests in
writing within 60 days after the Registered Exchange Offer with respect to
Private Exchange Securities, or (iv) any applicable law or interpretations do
not permit any Holder to participate in the Registered Exchange Offer, or (v)
any Holder that participates in the Registered Exchange Offer does not receive
freely transferable Exchange Securities in exchange for tendered Securities
(the obligation to comply with a prospectus delivery requirement being
understood not to constitute a restriction on transferability), or (vi) the
Company so elects, then the following provisions shall apply:

(a) The Company shall use its reasonable best efforts to
file as promptly as practicable (but in no event more than 180 days after so
required or requested, in each case pursuant to this Section 2) with the
Commission, and thereafter shall use its reasonable best efforts to cause to be
declared effective, a shelf registration statement on an appropriate form under
the Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined below) by the Holders thereof from time to time in
accordance with the methods of distribution set forth in such registration
statement (hereafter, a "Shelf Registration Statement" and, together with any
Exchange Offer Registration Statement, a "Registration Statement"); provided,
however, that no Holder of Securities or Exchange Securities (other than the
Initial
<PAGE> 6
-6-

Purchasers) shall be entitled to have Securities or Exchange Securities held by
it covered by such Shelf Registration Statement unless such Holder agrees in
writing to be bound by all of the provisions of this Agreement applicable to
such Holder.

(b) The Company shall use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective in order to permit
the prospectus forming part thereof to be used by Holders of Transfer
Restricted Securities for a period ending on the earlier of (i) two years from
the Issue Date or such shorter period that will terminate when all the Transfer
Restricted Securities covered by the Shelf Registration Statement have been
sold pursuant thereto and (ii) the date on which the Securities become eligible
for resale without volume restrictions pursuant to Rule 144 under the
Securities Act (in any such case, such period being called the "Shelf
Registration Period"). The Company shall be deemed not to have used its
reasonable best efforts to keep the Shelf Registration Statement effective
during the requisite period if it voluntarily takes any action that would
result in Holders of Transfer Restricted Securities covered thereby not being
able to offer and sell such Transfer Restricted Securities during that period,
unless such action is required by applicable law; provided, however, that the
foregoing shall not apply to actions taken by the Company in good faith and for
valid business reasons (not including avoidance of its obligations hereunder),
including, without limitation, the acquisition or divestiture of assets, so
long as the Company within 120 days thereafter complies with the requirements
of Section 4(j) hereof. Any such period during which the Company fails to keep
the registration statement effective and usable for offers and sales of
Securities and Exchange Securities is referred to as a "Suspension Period." A
Suspension Period shall commence on and include the date that the Company gives
notice that the Shelf Registration Statement is no longer effective or the
prospectus included therein is no longer usable for offers and sales of
Securities and Exchange Securities and shall end on the date when each Holder
of Securities and Exchange Securities covered by such registration statement
either receives the copies of the supplemented or amended prospectus
contemplated by Section 4(j) hereof or is advised in writing by the company
that use of the prospectus may be resumed. If one or more Suspension Periods
occur, the two-year period referenced above shall be extended by the aggregate
of the number of days included in each such Suspension Period.

(c) Notwithstanding any other provisions hereof, the
Company will ensure that (i) any Shelf Registration Statement and any amendment
thereto and any prospectus forming part thereof and any supplement thereto
complies in all material respects with the Securities Act and the rules and
regulations of the Commission thereunder, (ii) any Shelf Registration Statement
and any amendment thereto (in either case, other than with respect to
information included therein in reliance upon or in conformity with written
information furnished to the Company by or on behalf of any Holder specifically
for use therein (the "Holders' Information")) does not, when it becomes
effective, contain an untrue statement of a
<PAGE> 7
-7-

material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any
prospectus forming part of any Shelf Registration Statement, and any supplement
to such prospectus (in either case, other than with respect to Holders'
Information), does not include an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.

3. Liquidated Damages. (a) The parties hereto agree
that the Holders of Transfer Restricted Securities will suffer damages if the
Company fails to fulfill its obligations under Section 1 or Section 2, as
applicable, and that it would not be feasible to ascertain the extent of such
damages. Accordingly, if (i) the applicable Registration Statement is not
filed with the Commission on or prior to 120 days after the Issue Date, (ii)
the Exchange Offer Registration Statement or the Shelf Registration Statement,
as the case may be, is not declared effective within 180 days after the Issue
Date (or in the case of a Shelf Registration Statement required to be filed in
response to a change in law or the applicable interpretations of the
Commission's staff, if later, within 45 days after publication of the change in
law or interpretation), (iii) the Registered Exchange Offer is not consummated
on or prior to 225 days after the Issue Date, or (iv) the Shelf Registration
Statement is filed and declared effective within 180 days after the Issue Date
(or in the case of a Shelf Registration Statement required to be filed in
response to a change in law or the applicable interpretations of the
Commission's staff, if later, within 45 days after publication of the change in
law or interpretation) but shall thereafter cease to be effective (at any time
that the Company is obligated to maintain the effectiveness thereof) without
being succeeded within 90 days by an additional Registration Statement filed
and declared effective (each such event referred to in clauses (i) through
(iv), a "Registration Default"), the Company will be obligated to pay
liquidated damages to each Holder of Transfer Restricted Securities, during the
period of one or more such Registration Defaults, in an amount equal to $ 0.05
per week per $1,000 principal amount of Transfer Restricted Securities held by
such Holder until (a) the applicable Registration Statement is filed, (b) the
Exchange Offer Registration Statement is declared effective and the Registered
Exchange Offer is consummated, (c) the Shelf Registration Statement is declared
effective or (d) the Shelf Registration Statement again becomes effective, as
the case may be. Following the cure of all Registration Defaults, the accrual
of liquidated damages will cease. As used herein, the term "Transfer
Restricted Securities" means (i) each Security until the date on which such
Security has been exchanged for a freely transferable Exchange Security in the
Registered Exchange Offer, (ii) each Security or Private Exchange Security
until the date on which it has been effectively registered under the Securities
Act and disposed of in accordance with the Shelf Registration Statement or
(iii) each Security or Private Exchange Security until the date on which it is
distributed to the public pursuant to Rule 144 under the Securities Act or is
saleable pursuant to Rule 144(k) under the Securities Act. Notwithstanding
anything to the
<PAGE> 8
-8-

contrary in this Section 3(a), the Company shall not be required to pay
liquidated damages to a Holder of Transfer Restricted Securities if such Holder
failed to comply with its obligations to make the representations set forth in
the second to last paragraph of Section 1 or failed to provide the information
required to be provided by it, if any, pursuant to Section 4(n).

(b) The Company shall notify the Trustee and the Paying
Agent under the Indenture immediately upon the happening of each and every
Registration Default. The Company shall pay the liquidated damages due on the
Transfer Restricted Securities by depositing with the Paying Agent (which may
not be the Company for these purposes), in trust, for the benefit of the
Holders thereof, prior to 10:00 a.m., New York City time, on the next interest
payment date specified by the Indenture and the Securities, sums sufficient to
pay the liquidated damages then due. The liquidated damages due shall be
payable on each interest payment date specified by the Indenture and the
Securities to the record holder entitled to receive the interest payment to be
made on such date. Each obligation to pay liquidated damages shall be deemed
to accrue from and including the date of the applicable Registration Default.

(c) The parties hereto agree that the liquidated damages
provided for in this Section 3 constitute a reasonable estimate of and are
intended to constitute the sole damages that will be suffered by Holders of
Transfer Restricted Securities by reason of the failure of (i) the Shelf
Registration Statement or the Exchange Offer Registration Statement to be
filed, (ii) the Shelf Registration Statement to remain effective or (iii) the
Exchange Offer Registration Statement to be declared effective and the
Registered Exchange Offer to be consummated, in each case to the extent
required by this Agreement.

4. Registration Procedures. In connection with any
Registration Statement, the following provisions shall apply:

(a) The Company shall (i) furnish to each Initial
Purchaser, prior to the filing thereof with the Commission, a copy of the
Registration Statement and each amendment thereof and each supplement, if any,
to the prospectus included therein and, in the event that any of the Initial
Purchasers (with respect to any portion of the unsold allotment from the
original offering) are participating in the Registered Exchange Offer or the
Shelf Registration, shall use its reasonable best efforts to reflect in each
such document, when so filed with the Commission, such comments as any Initial
Purchaser may reasonably propose; (ii) include the information set forth in
Annex A hereto on the cover, in Annex B hereto in the "Exchange Offer
Procedures" and "Purpose of the Exchange Offer" sections and in Annex C hereto
in the "Plan of Distribution" section of the prospectus forming a part of the
Exchange Offer Registration Statement, and include the information set forth in
Annex D hereto in the Letter of Transmittal delivered pursuant to the
Registered Exchange Offer; and (iii) if requested by any Initial Purchaser,
include the information required by Items 507 or 508 of Regulation S-K, as
applicable, in the prospectus forming a part of the Exchange Offer Registration
Statement.
<PAGE> 9
-9-

(b) The Company shall advise each Initial Purchaser, each
Exchanging Dealer and the Holders (if applicable) and, if requested by any such
person, confirm such advice in writing (which advice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use of
the prospectus until the requisite changes have been made):

(i) when any Registration Statement and any
amendment thereto has been filed with the Commission and when such
Registration Statement or any post-effective amendment thereto has
become effective;

(ii) of any request by the Commission for
amendments or supplements to any Registration Statement or the
prospectus included therein or for additional information;

(iii) of the issuance by the Commission of any stop
order suspending the effectiveness of any Registration Statement or
the initiation of any proceedings for that purpose;

(iv) of the receipt by the Company of any
notification with respect to the suspension of the qualification of
the Securities, the Exchange Securities or the Private Exchange
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose;

(v) of the happening of any event that requires
the making of any changes in any Registration Statement in order that
the statements therein are not misleading and do not omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; and

(vi) of the happening of any event that requires
any changes in the prospectus forming a part of any Registration
Statement so that, as of such date, the statements therein are not
misleading and do not omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading.

(c) The Company will make every reasonable effort to
obtain the withdrawal at the earliest possible time of any order suspending the
effectiveness of any Registration Statement.
<PAGE> 10
-10-

(d) The Company will furnish to each Holder of Transfer
Restricted Securities included within the coverage of any Shelf Registration
Statement, without charge, at least one conformed copy of such Shelf
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules and, if any such Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).

(e) The Company will, during the Shelf Registration
Period, promptly deliver to each Holder of Transfer Restricted Securities
included within the coverage of any Shelf Registration Statement, without
charge, as many copies of the prospectus (including each preliminary
prospectus) included in such Shelf Registration Statement and any amendment or
supplement thereto as such Holder may reasonably request; and the Company
consents to the use of such prospectus or any amendment or supplement thereto
by each of the selling Holders of Transfer Restricted Securities in connection
with the offer and sale of the Transfer Restricted Securities covered by such
prospectus or any amendment or supplement thereto.

(f) The Company will furnish to each Initial Purchaser
and each Exchanging Dealer, and to any other Holder who so requests, without
charge, at least one conformed copy of the Exchange Offer Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules and, if any Initial Purchaser or Exchanging Dealer or
any such Holder so requests in writing, all exhibits thereto (including those,
if any, incorporated by reference).

(g) The Company will, during the Exchange Offer
Registration Period or the Shelf Registration Period, as applicable, promptly
deliver to each Initial Purchaser, each Exchanging Dealer and such other
Holders that are required to deliver a prospectus following the Registered
Exchange Offer, without charge, as many copies of the final prospectus included
in the Exchange Offer Registration Statement or the Shelf Registration
Statement and any amendment or supplement thereto as such Initial Purchaser,
Exchanging Dealer or other Holders may reasonably request; and the Company
consents to the use of such prospectus or any amendment or supplement thereto
by any such Initial Purchaser, Exchanging Dealer or other Holders, as
applicable, as aforesaid.

(h) Prior to the effective date of any Registration
Statement, the Company will use its reasonable best efforts to register or
qualify, or cooperate with the Holders of Securities, Exchange Securities or
Private Exchange Securities included therein and their respective counsel in
connection with the registration or qualification of, such Securities, Exchange
Securities or Private Exchange Securities for offer and sale under the
securities or blue sky laws of such jurisdictions as any such Holder reasonably
requests in writing and do any and all other acts or things necessary or
advisable to enable the offer and sale in such jurisdictions of
<PAGE> 11
-11-

the Securities, Exchange Securities or Private Exchange Securities covered by
such Registration Statement; provided that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not then so
qualified or to take any action which would subject it to general service of
process or to taxation in any such jurisdiction where it is not then so
subject.

(i) The Company will cooperate with the Holders of
Securities, Exchange Securities or Private Exchange Securities to facilitate
the timely preparation and delivery of certificates representing Securities,
Exchange Securities or Private Exchange Securities to be sold pursuant to any
Registration Statement free of any restrictive legends and in such
denominations and registered in such names as the Holders thereof may request
in writing prior to sales of Securities, Exchange Securities or Private
Exchange Securities pursuant to such Registration Statement.

(j) If (i) any event contemplated by Section 4(b)(ii)
through (v) occurs during the period for which the Company is required to
maintain an effective Registration Statement, or (ii) any Suspension Period
remains in effect more than 120 days after the occurrence thereof, the Company
will promptly prepare and file with the Commission a post-effective amendment
to the Registration Statement or a supplement to the related prospectus or file
any other required document so that, as thereafter delivered to purchasers of
the Securities, Exchange Securities or Private Exchange Securities from a
Holder, the prospectus will not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading.

(k) Not later than the effective date of the applicable
Registration Statement, the Company will provide a CUSIP number for the
Securities, the Exchange Securities and the Private Exchange Securities, as the
case may be, and provide the applicable trustee with printed certificates for
the Securities, the Exchange Securities or the Private Exchange Securities, as
the case may be, in a form eligible for deposit with The Depository Trust
Company.

(l) The Company will comply with all applicable rules and
regulations of the Commission and will make generally available to its security
holders as soon as practicable after the effective date of the applicable
Registration Statement an earning statement satisfying the provisions of
Section 11(a) of the Securities Act; provided that in no event shall such
earning statement be delivered later than 45 days after the end of a 12-month
period (or 90 days, if such period is a fiscal year) beginning with the first
month of the Company's first fiscal quarter commencing after the effective date
of the applicable Registration Statement, which statement shall cover such
12-month period.
<PAGE> 12
-12-

(m) The Company will cause the Indenture or the Exchange
Securities Indenture, as the case may be, to be qualified under the Trust
Indenture Act as required by applicable law in a timely manner.

(n) The Company may require each Holder of Transfer
Restricted Securities to be registered pursuant to any Shelf Registration
Statement to furnish to the Company such information concerning the Holder and
the distribution of such Transfer Restricted Securities as the Company may from
time to time reasonably require for inclusion in such Shelf Registration
Statement, and the Company may exclude from such registration the Transfer
Restricted Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.

(o) In the case of a Shelf Registration Statement, each
Holder of Transfer Restricted Securities to be registered pursuant thereto
agrees by acquisition of such Transfer Restricted Securities that, upon receipt
of any notice from the Company (i) of a Suspension Period under Section 2(b)
hereof or (ii) pursuant to Section 4(b)(ii) through (v) hereof, such Holder
will discontinue disposition of such Transfer Restricted Securities until such
Holder's receipt of (x) notice that the Suspension Period has ended or (y)
copies of the supplemental or amended prospectus contemplated by Section 4(j)
hereof, as the case may be, or until advised in writing (the "Advice") by the
Company that the use of the applicable prospectus may be resumed. If the
Company shall give any notice under Section 4(b)(ii) through (v) during the
period that the Company is required to maintain an effective Registration
Statement (the "Effectiveness Period"), such Effectiveness Period shall be
extended by the number of days during such period from and including the date
of the giving of such notice to and including the date when each seller of
Transfer Restricted Securities covered by such Registration Statement shall
have received (x) the copies of the supplemental or amended prospectus
contemplated by Section 4(j) (if an amended or supplemental prospectus is
required) or (y) the Advice (if no amended or supplemental prospectus is
required).

(p) In the case of a Shelf Registration Statement, the
Company shall enter into such customary agreements (including, if requested, an
underwriting agreement in customary form) and take all such other action, if
any, as Holders of a majority in aggregate principal amount of the Securities,
Exchange Securities and Private Exchange Securities being sold or the managing
underwriters (if any) shall reasonably request in order to facilitate any
disposition of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Shelf Registration Statement.

(q) In the case of a Shelf Registration Statement, the
Company shall (i) make reasonably available for inspection by a representative
of, and Special Counsel (as defined below) acting for, Holders of a majority in
aggregate principal amount of the Securities,
<PAGE> 13
-13-

Exchange Securities and Private Exchange Securities being sold and any
underwriter participating in any disposition of Securities, Exchange Securities
or Private Exchange Securities pursuant to such Shelf Registration Statement,
all relevant financial and other records, pertinent corporate documents and
properties of the Company and its subsidiaries and (ii) use its reasonable best
efforts to have its officers, directors, employees, accountants and counsel
supply all relevant information reasonably requested by such representative,
Special Counsel or any such underwriter (an "Inspector") in connection with
such Shelf Registration Statement.

(r) In the case of a Shelf Registration Statement, the
Company shall, if requested by the managing underwriters (if any) in connection
with such Shelf Registration Statement, use its reasonable best efforts to
cause (i) its counsel to deliver an opinion relating to the Shelf Registration
Statement and the Securities, Exchange Securities or Private Exchange
Securities, as applicable, in customary form, (ii) its officers to execute and
deliver all customary documents and certificates requested by Holders of a
majority in aggregate principal amount of the Securities, Exchange Securities
and Private Exchange Securities being sold, their Special Counsel or the
managing underwriters (if any) and (iii) its independent public accountants to
provide a comfort letter or letters in customary form, subject to receipt of
appropriate documentation as contemplated, and only if permitted, by Statement
of Auditing Standards No. 72.

5. Registration Expenses. The Company will bear all
expenses incurred in connection with the performance of its obligations under
Sections 1, 2, 3 and 4 and the Company will reimburse the Initial Purchasers
and the Holders for the reasonable fees and disbursements of one firm of
attorneys chosen by the Holders of a majority in aggregate principal amount of
the Securities, the Exchange Securities and the Private Exchange Securities to
be sold pursuant to each Registration Statement (the "Special Counsel") acting
for the Initial Purchasers or Holders in connection therewith.

6. Indemnification. (a) In the event of a Shelf
Registration Statement or in connection with any prospectus delivery pursuant
to an Exchange Offer Registration Statement by an Initial Purchaser or
Exchanging Dealer, as applicable, the Company shall indemnify and hold harmless
each Holder (including, without limitation, any such Initial Purchaser or
Exchanging Dealer), its affiliates, each person who controls such Holder or
such affiliates within the meaning of the Securities Act or Exchange Act and
their respective officers, directors, employees, representatives and agents
(collectively referred to for purposes of this Section 6 and Section 7 as a
"Holder") from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, without limitation, any
loss, claim, damage, liability or action relating to purchases and sales of
Securities, Exchange Securities or Private Exchange Securities), to which that
Holder may become subject, whether commenced or threatened, under the
Securities Act, the Exchange Act, any other federal or state statutory law
<PAGE> 14
-14-

or regulation, at common law or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue statement
or alleged untrue statement of a material fact contained in any such
Registration Statement or any prospectus forming part thereof or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and shall reimburse each Holder promptly
upon demand for any legal or other expenses reasonably incurred by that Holder
in connection with investigating or defending or preparing to defend against or
appearing as a third party witness in connection with any such loss, claim,
damage, liability or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the extent that any
such loss, claim, damage, liability or action arises out of, or is based upon,
an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with any
Holders' Information; and provided, further, that with respect to any such
untrue statement in or omission from any related preliminary prospectus, the
indemnity agreement contained in this Section 6(a) shall not inure to the
benefit of any Holder from whom the person asserting any such loss, claim,
damage, liability or action received Securities, Exchange Securities or Private
Exchange Securities to the extent that such loss, claim, damage, liability or
action of or with respect to such Holder results from the fact that both (A) a
copy of the final prospectus was not sent or given to such person at or prior
to the written confirmation of the sale of such Securities, Exchange Securities
or Private Exchange Securities to such person and (B) the untrue statement in
or omission from the related preliminary prospectus was corrected in the final
prospectus unless, in either case, such failure to deliver the final prospectus
was a result of non-compliance by the Company with Section 4(e) or 4(g).

(b) In the event of a Shelf Registration Statement, each
Holder, severally and not jointly, shall indemnify and hold harmless the
Company, its affiliates, each person who controls such Holder or such
affiliates within the meaning of the Securities Act or Exchange Act and their
respective officers, directors, employees, representatives and agents
(collectively referred to for purposes of this Section 6(b) and Section 7 as
the Company), from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof, to which the Company may become
subject, whether commenced or threatened, under the Securities Act, the
Exchange Act, any other federal or state statutory law or regulation, at common
law or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue
statement of a material fact contained in any such Registration Statement or
any prospectus forming part thereof or in any amendment or supplement thereto
or (ii) the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case
<PAGE> 15
-15-

only to the extent that the untrue statement or alleged untrue statement or
omission or alleged omission was made in reliance upon and in conformity with
any Holders' Information furnished to the Company by such Holder, and shall
reimburse the Company for any legal or other expenses reasonably incurred by
the Company in connection with investigating or defending or preparing to
defend against or appearing as a third party witness in connection with any
such loss, claim, damage, liability or action as such expenses are incurred;
provided, however, that no such Holder shall be liable for any indemnity claims
hereunder in excess of the amount of net proceeds received by such Holder from
the sale of Securities, Exchange Securities or Private Exchange Securities
pursuant to such Shelf Registration Statement.

(c) Promptly after receipt by an indemnified party under
this Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 6(a) or 6(b), notify the
indemnifying party in writing of the claim or the commencement of that action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 6 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 6. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 6 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than the reasonable costs of
investigation; provided, however, that an indemnified party shall have the
right to employ its own counsel in any such action, but the fees, expenses and
other charges of such counsel for the indemnified party will be at the expense
of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in
<PAGE> 16
-16-

connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the reasonable fees, disbursements and other charges of more than
one separate firm of attorneys (in addition to any local counsel) at any one
time for all such indemnified party or parties. Each indemnified party, as a
condition of the indemnity agreements contained in Sections 6(a) and 6(b),
shall use all reasonable efforts to cooperate with the indemnifying party in
the defense of any such action or claim. No indemnifying party shall be liable
for any settlement of any such action effected without its written consent
(which consent shall not be unreasonably withheld), but if settled with its
written consent or if there be a final judgment for the plaintiff in any such
action, the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of such
settlement or judgment. No indemnifying party shall, without the prior written
consent of the indemnified party (which consent shall not be unreasonably
withheld), effect any settlement of any pending or threatened proceeding in
respect of which any indemnified party is a party and indemnity could have been
sought hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such proceeding.

7. Contribution. If the indemnification provided for in
Section 6 is unavailable or insufficient to hold harmless an indemnified party
under Section 6(a) or 6(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company from the offering and
sale of the Securities, on the one hand, and a Holder with respect to the sale
by such Holder of Securities, Exchange Securities or Private Exchange
Securities, on the other, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Company on the one hand and such Holder on the
other with respect to the statements or omissions that resulted in such loss,
claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company on the one hand and a Holder on the other with respect to such offering
and such sale shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities (before deducting expenses)
received by or on behalf of the Company as set forth in the table on the cover
of the Offering Memorandum, on the one hand, bear to the total proceeds
received by such Holder with respect to its sale of Securities, Exchange
Securities or Private Exchange Securities, on the other. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to the Company or information supplied by the
Company on the one hand or to any Holders' Information supplied by such
<PAGE> 17
-17-

Holder on the other, the intent of the parties and their relative knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission. The parties hereto agree that it would not be just and
equitable if contributions pursuant to this Section 7 were to be determined by
pro rata allocation or by any other method of allocation that does not take
into account the equitable considerations referred to herein. The amount paid
or payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 7
shall be deemed to include, for purposes of this Section 7, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 7, an indemnifying party that is
a Holder of Securities, Exchange Securities or Private Exchange Securities
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities, Exchange Securities or Private
Exchange Securities sold by such indemnifying party to any purchaser exceeds
the amount of any damages which such indemnifying party has otherwise paid or
become liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) shall be entitled
to contribution from any person who was not guilty of such fraudulent
misrepresentation.

8. Rules 144 and 144A. The Company shall use its
reasonable best efforts to file the reports required to be filed by it under
the Securities Act and the Exchange Act in a timely manner and, if at any time
the Company is not required to file such reports, it will, upon the written
request of any Holder of Transfer Restricted Securities, make publicly
available other information so long as necessary to permit sales of such
Holder's securities pursuant to Rules 144 and 144A. The Company covenants that
it will take such further action as any Holder of Transfer Restricted
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Transfer Restricted Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including, without limitation, the requirements
of Rule 144A(d)(4)). Upon the written request of any Holder of Transfer
Restricted Securities, the Company shall deliver to such Holder a written
statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 8 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.

9. Underwritten Registrations. If any of the Transfer
Restricted Securities covered by any Shelf Registration Statement are to be
sold in an underwritten offering, the investment banker or investment bankers
and manager or managers that will administer the offering will be selected by
the Company, subject to the consent of the Holders of a majority in aggregate
principal amount of such Transfer Restricted Securities included in such
offering (which shall not be unreasonably withheld or delayed), and such
Holders shall be responsible for all underwriting commissions and discounts in
connection therewith.
<PAGE> 18
-18-

No person may participate in any underwritten registration
hereunder unless such person (i) agrees to sell such person's Transfer
Restricted Securities on the basis reasonably provided in any underwriting
arrangements approved by the persons entitled hereunder to approve such
arrangements and (ii) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.

10. Miscellaneous. (a) Amendments and Waivers. The
provisions of this Agreement may not be amended, modified or supplemented, and
waivers or consents to departures from the provisions hereof may not be given,
unless the Company has obtained the written consent of Holders of a majority in
aggregate principal amount of the Securities, the Exchange Securities and the
Private Exchange Securities, taken as a single class. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with
respect to a matter that relates exclusively to the rights of Holders whose
Securities, Exchange Securities or Private Exchange Securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by Holders of a majority in
aggregate principal amount of the Securities, the Exchange Securities and the
Private Exchange Securities being sold by such Holders pursuant to such
Registration Statement.

(b) Notices. All notices and other communications
provided for or permitted hereunder shall be made in writing by hand-delivery,
first-class mail, telecopier or air courier guaranteeing next-day delivery:

(1) if to a Holder, at the most current address given by
such Holder to the Company in accordance with the provisions of this
Section 10(b), which address initially is, with respect to each
Holder, the address of such Holder maintained by the Registrar under
the Indenture, with a copy in like manner to Chase Securities Inc. and
NationsBanc Montgomery Securities LLC;

(2) if to an Initial Purchaser, initially at its address
set forth in the Purchase Agreement; and

(3) if to the Company, initially at the address of the
Company set forth in the Purchase Agreement.

All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; one business
day after being delivered to a next-day air courier; five business days after
being deposited in the mail; and when receipt is acknowledged by the
recipient's telecopier machine, if sent by telecopier.
<PAGE> 19
-19-

(d) Counterparts. This Agreement may be executed in any
number of counterparts (which may be delivered in original form or by
telecopier) and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.

(e) Definition of Terms. For purposes of this Agreement,
(a) the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.

(f) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.

(g) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

(h) Remedies. In the event of a breach by the Company or
by any Holder of any of their obligations under this Agreement, each Holder or
the Company, as the case may be, in addition to being entitled to exercise all
rights granted by law, including recovery of damages (other than the recovery
of damages for a breach by the Company of its obligations under Sections 1 or 2
hereof for which liquidated damages have been paid pursuant to Section 3
hereof), will be entitled to specific performance of its rights under this
Agreement. The Company and each Holder agree that monetary damages would not
be adequate compensation for any loss incurred by reason of a breach by it of
any of the provisions of this Agreement and hereby further agree that, in the
event of any action for specific performance in respect of such breach, it
shall waive the defense that a remedy at law would be adequate.

(i) No Inconsistent Agreements. The Company represents,
warrants and agrees that (i) it has not entered into, and shall not, on or
after the date of this Agreement, enter into any agreement that is inconsistent
with the rights granted to the Holders in this Agreement or otherwise conflicts
with the provisions hereof, (ii) it has not previously entered into any
agreement which remains in effect granting any registration rights with respect
to any of its debt securities to any person and (iii) without limiting the
generality of the foregoing, without the written consent of the Holders of a
majority in aggregate principal amount of the
<PAGE> 20
-20-

then outstanding Transfer Restricted Securities, it shall not grant to any
person the right to request the Company to register any debt securities of the
Company under the Securities Act unless the rights so granted are not in
conflict or inconsistent with the provisions of this Agreement.

(j) No Piggyback on Registrations. Neither the Company
nor any of its security holders (other than the Holders of Transfer Restricted
Securities in such capacity) shall have the right to include any securities of
the Company in any Shelf Registration or Registered Exchange Offer other than
Transfer Restricted Securities.

(k) Severability. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law. If any term,
provision, covenant or restriction of this Agreement is held by a court of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their reasonable best efforts
to find and employ an alternative means to achieve the same or substantially
the same result as that contemplated by such term, provision, covenant or
restriction. It is hereby stipulated and declared to be the intention of the
parties that they would have executed the remaining terms, provisions,
covenants and restrictions without including any of such that may be hereafter
declared invalid, illegal, void or unenforceable.
<PAGE> 21
S-1

Please confirm that the foregoing correctly sets forth the agreement
between the Company and the Initial Purchasers.

Very truly yours,

COOPERATIVE COMPUTING, INC.

By: /s/ MATTHEW HALE
---------------------------------
Name: Matthew Hale
Title: Chief Financial Officer
Accepted:

CHASE SECURITIES INC.

By: /s/ JAMES P. CASEY
---------------------------------
Authorized Signatory

NATIONSBANC MONTGOMERY SECURITIES LLC

By: /s/ STUART B. GLEICHENHAUS
---------------------------------
Authorized Signatory

<PAGE> 22
ANNEX A

Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange
Securities. The Letter of Transmittal states that by so acknowledging and by
delivering a prospectus, a broker-dealer will not be deemed to admit that it
is an "underwriter" within the meaning of the Securities Act. This Prospectus,
as it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for such securities where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 90 days after the
Expiration Date (as defined here), it will make this Prospectus available to any
broker-dealer for use in connection with any such resale. See "Plan of
Distribution."
<PAGE> 23
ANNEX B

Each broker-dealer that receives Exchange Securities for its own account in
exchange for Securities, where such Securities were acquired by such
broker-dealer as a result of market-making activities or other trading
activities, must acknowledge that it will deliver a prospectus in connection
with any resale of such Exchange Securities. See "Plan of Distribution."
<PAGE> 24
ANNEX C

PLAN OF DISTRIBUTION

Each broker-dealer that receives Exchange Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such Exchange Securities.
This Prospectus, as it may be amended or supplemented from time to time, may be
used by a broker-dealer in connection with resales of Exchange Securities
received in exchange for Securities where such Securities were acquired as a
result of market-making activities or other trading activities. The Company has
agreed that, for a period of 90 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until ________, 199_, all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.

The Company will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers
for their own account pursuant to the Registered Exchange Offer may be sold
from time to time in one or more transactions in the over-the-counter market,
in negotiated transactions, through the writing of options on the Exchange
Securities or a combination of such methods of resale, at market prices
prevailing at the time of resale, at prices related to such prevailing market
prices or at negotiated prices. Any such resale may be made directly to
purchasers or to or through brokers or dealers who may receive compensation in
the form of commissions or concessions from any such broker-dealer or the
purchasers of any such Exchange Securities. Any broker-dealer that resells
Exchange Securities that were received by it for its own account pursuant to
the Registered Exchange Offer and any broker or dealer that participates in a
distribution of such Exchange Securities may be deemed to be an "underwriter"
within the meaning of the Securities Act and any profit on any such resale of
Exchange Securities and any commission or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Letter of Transmittal states that, by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit
that it is an "underwriter" within the meaning of the Securities Act.

For a period of 90 days after the Expiration Date the Company will
promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the Letter of Transmittal. The Company has agreed to pay all expenses
incident to the Registered Exchange Offer (including the expenses of one
counsel for the Holders of the Securities) other than commissions or
concessions of any broker-dealers and will indemnify the Holders of the
Securities (including any broker-dealers) against certain liabilities,
including liabilities under the Securities Act.
<PAGE> 25
ANNEX D

* CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS
OR SUPPLEMENTS.

Name:
Address:

If the undersigned is not a broker-dealer, the undersigned represents that it
is not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Securities that were acquired as
a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.

<PAGE> 1
EXHIBIT 10.1

PROJECT LEASE AGREEMENT

BETWEEN

3055 TRIAD DR. CORP.

AS LANDLORD

AND

TRIAD SYSTEMS CORPORATION

AS TENANT

DATED AS OF AUGUST 1, 1988

<PAGE> 2

PROJECT LEASE AGREEMENT

STATE OF CALIFORNIA)
)
COUNTY OF ALAMEDA )

THIS PROJECT LEASE AGREEMENT is made and entered into as of
the 1st day of August, 1988, by and between 3055 TRIAD DR. CORP., a California
corporation with its principal office in Livermore, Alameda County, California
(hereinafter called "Landlord"), and TRIAD SYSTEMS CORPORATION, a Delaware
corporation authorized to do business in California (hereinafter called
"Tenant").

W I T N E S S E T H:

ARTICLE I

Lease of Property - Term of Lease

Section 1.01. Landlord, in consideration of the rents,
covenants, agreements, and conditions herein set forth which Tenant hereby
agrees shall be paid, kept, and performed by Tenant, does hereby lease, let,
demise, and rent exclusively unto Tenant, and Tenant does hereby rent and lease
from Landlord, the following described premises:

A tract of land containing 15.0633 acres, and being Parcel Two of
Parcel Map 5112, filed September 29, 1987 in Book 122 of Parcel Maps,
Pages 11 through 14, inclusive, Alameda County Records.

Section 1.02. This Lease is subject to:

(a) All present and future laws, ordinances, resolutions,
regulations and orders of all municipal, county, state,
federal or other governmental bodies, boards, agencies, or
other authority now or hereafter having jurisdiction; and

(b) The matters set forth in Exhibit "A" attached hereto and
incorporated by reference herein for all purposes, to the
extent, and only to the extent, that same may validly affect
the above described premises.

<PAGE> 3

Section 1.03. TO HAVE AND TO HOLD the hereinabove described
tract of land subject to the matters as aforesaid, together with all and
singular the rights, privileges, and appurtenances thereunto attaching or in
anywise belong, unto Tenant, its legal representatives, successors and assigns,
for a term commencing August 1, 1988 and ending at midnight on August 31, 2003,
subject to earlier termination as herein provided, and upon and subject to the
covenants, agreements, terms, provisions and limitations hereinafter set forth,
all of which Tenant covenants and agrees to perform and observe.

ARTICLE 2

Definitions

Section 2.01. The terms defined in this Section shall, for
all purposes of this Lease, and all agreements supplemental hereto, have the
meanings herein specified, unless the context otherwise requires.

(a) The terms "Agreement", "Lease Agreement", and "this Lease"
shall mean and refer to this instrument.

(b) The term "Default Rate" shall mean the lesser of (a) the
Prime Rate plus five percent (5%) per annum or (b) the
maximum non-usurious rate permitted by law.

(d) The term "Demised Premises" shall mean the Demised Land and
the Improvements.

(e) The term "Event of Default" shall have the same meaning as
ascribed to it in Section 12.01 of this Agreement.

(f) The term "Impositions" shall mean all taxes, assessments, use
and occupancy taxes, transit taxes, water and sewer charges,
rates and rents, charges for public utilities, excises,
levies, license and permit fees and other charges, general
and special, ordinary and extraordinary, foreseen and
unforeseen, of any kind and nature whatsoever, which shall or
may during the term of this Lease be assessed, levied,
charged, confirmed or imposed upon or accrue or become due or
payable out of or on account of or become a lien on the
Demised Premises or any part thereof, the appurtenances
thereto or the sidewalks or streets adjacent thereto, or the
rent and income received by or for the account of Tenant from
any subtenants or for any use or occupation of the Demised
Premises, and such franchises,

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<PAGE> 4

licenses and permits as may be appurtenant to the use of the
Demised Premises, or any documents to which Tenant is a
party, creating or transferring an interest or estate in the
Demised Premises payable to any governmental body; but shall
not include any income taxes, capital levy, estate,
succession, inheritance or transfer taxes or similar tax of
Landlord, or any franchise taxes imposed upon any owner of
the fee of the Demised Premises, or any income, profits or
revenue tax, assessment or charge imposed upon the rent or
other benefit received by Landlord under this Lease, by any
municipality, county or state, the United States of America
or any governmental body; provided, however, that if at any
time during the term of this Lease, the present method of
taxation or assessment shall be so changed that the whole or
any part of the taxes, assessments, levies, impositions or
charges now levied, assessed or imposed on real estate and
improvements thereon shall be discontinued and, as a
substitute therefor, taxes, assessments, levies, impositions,
or charges shall be levied, assessed and/or imposed wholly or
partially as a capital levy or otherwise on the rents
received from said real estate or the rents reserved herein
or any part thereof, then such substitute taxes, assessments,
levies, impositions or charges, to the extent so levied,
assessed and/or imposed, shall be deemed to be included
within the term H Impositions n to the extent that such
substitute tax would be payable if the Demised Premises were
the only property of Landlord subject to such tax.

(g) The term "Improvements" shall mean the improvements presently
erected on the Demised Land which are owned by Landlord,
consisting of three (3) buildings containing approximately
219,818 square feet of rentable area with on-site parking for
710 automobiles, as well as any additions thereto or
alterations thereof installed by Tenant pursuant to the terms
of this Lease but excluding any personal property,
furnishings, and trade fixtures owned by Tenant.

(h) The term "Landlord's Mortgagee" shall mean the holder of any
"Landlord's Mortgage" (as defined in Section 11.01 hereof).

(i) The term "Prime Rate" shall mean the average of the annual
rates of interest announced or published, at the applicable
time, by the three largest (considering the capital and
surplus of such banks) national banks then doing business in
Livermore, Alameda County, California, as their "prime rate"
regardless of whether

-3-
<PAGE> 5

such rate is actually the lowest rate actually charged by any
such banks.

(j) The phrases "term of this lease", "Lease term", "term" or
similar phrases shall mean the period of time set forth in
Section 1.03 hereof.

(k) The term "Tenants shall mean Triad Systems Corporation or any
other corporation resulting from the merger, acquisition,
consolidation, or dissolution of Triad Systems Corporation or
an entity which acquires all or substantially all of the
assets of Triad Systems Corporation.

(l) The term "unavoidable delays" shall mean delays due to
strikes, lock- outs, acts of God, inability to obtain labor
or materials, governmental restrictions, enemy action, war,
civil commotion, fire, unavoidable casualty, construction
delays due to unusual weather, or other similar causes beyond
the reasonable control of Tenant.

Section 2.02. The captions and the Article numbers of this
Lease are for convenience and reference only and in no way define, limit, or
describe the scope or intent of this Lease nor in any way affect this Lease.

Section 2.03. The table of contents preceding this Lease,
although under the same cover, is for the purpose of convenience and reference
only and is not to be deemed or construed in any way as part of this Lease, nor
as supplemental thereto or amendatory thereof.

ARTICLE 3

Rent

Section 3.01. Tenant, in consideration of the leasing of the
Demised Premises to it by Landlord, hereby covenants and agrees to pay to
Landlord at the times and as and in the manner herein provided and subject to
the terms, provisions, and conditions herein set forth, without notice or
demand and (except as referred to in Section 3.07 hereof) without any setoff or
deduction whatsoever, the rental provided for in this Article 3.

Section 3.02. The annual base rental (herein called "Annual
Base Rental") due hereunder shall be $2,505,720.00.

-4-
<PAGE> 6

The Annual Base Rental shall be paid monthly in advance in
twelve (12) equal installments, one such installment to be payable on the first
day of each month during the term hereof.

Section 3.03. All payments of Annual Base Rental, additional
rent and other payments required to be made to Landlord shall be in funds which
are legal tender at the place of payment at the time of payment and shall be
made to Landlord, at the office of Landlord at 3055 Triad Drive, Livermore,
Alameda County, California, or to such other person and/or at such other place
as Landlord may designate from time to time in writing to Tenant; provided,
however, for purposes of establishing or laying venue in any proceeding
relating to this Lease, all such amounts shall be deemed payable in Livermore,
Alameda County, California, where exclusive venue shall lie. In addition to
other proper methods of payment, all payments of Annual Base Rental, additional
rent, and other sums payable to Landlord by Tenant under this Lease may be
made, and shall be deemed to have been properly made, by the mailing or
delivery to Landlord of Tenant's good and sufficient check or draft in the
amount of such payment, and shall be deemed timely made if received by Landlord
on or before the due date thereof; provided that if such check or draft be not
paid and honored upon presentation thereof, duly endorsed, for any reason
whatsoever, such check or draft shall not constitute payment.

No sale or transfer of ownership of Landlord's interest in
the Demised Premises shall be binding upon Tenant until Tenant shall have
received written notice from Landlord (or the successor assignor) of such sale
or transfer, together with a certified copy of the recorded deed or other
instrument of conveyance.

Section 3.04. This Lease shall be deemed and construed to be
a "net lease", and Tenant shall pay to Landlord, net throughout the term of
this Lease, the Annual Base Rental, additional rent and other payments due
hereunder, free of any Impositions and without abatement, deduction or set-off;
and under no circumstances or conditions, whether now existing or hereafter
arising, or whether or not beyond the present contemplation of the parties,
shall Landlord or Tenant be expected or required to make any payment of any
kind whatsoever or be under any other obligation or liability hereunder except
as herein otherwise expressly set forth.

Section 3.05. All additional rent and other charges and
payments provided for under this Lease shall constitute rent payable hereunder
with the same effect as if the same were the Annual Base Rental reserved and
provided for herein and, in the event of the non-payment by Tenant of any such
additional rent or other payments when due according to the terms of this
Lease, Landlord shall have the same rights and remedies in respect

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<PAGE> 7

thereof as Landlord shall or may have in respect of the Annual Base Rental
herein reserved and provided for. When used in this Lease the term "rent" means
and includes Annual Base Rent, additional rent and all other sums payable under
this lease.

Section 3.06. No happening, event, occurrence or situation
during the term of this Lease, whether foreseen or unforeseen, and however
extraordinary, shall relieve Tenant from its liability to pay the Annual Base
Rental, additional rent and other charges and payments under this Lease, or
shall relieve Tenant from any of its other obligations under this Lease, and
Tenant waives any rights now or hereafter conferred upon it by statute,
proclamation, decree or order, or otherwise, to any abatement, diminution,
reduction or suspension of rent on account of any such event, happening,
occurrence or situation.

ARTICLE 4

Payment of Impositions

Section 4.01. As additional rent during the term of
this Lease Tenant will pay or cause to be paid, as and when the same shall
become due, all Impositions as defined in Section 2.01(c), except that:

(a) All Impositions for the fiscal year or tax year in which this
Lease begins as well as during the year in which the term of
this Lease expires shall be apportioned so that Tenant shall
pay its proportionate share of the Impositions which are
payable in the year in which the term of this Lease begins
and in the year in which the term of this Lease expires, and
Landlord shall pay its proportionate part of such amounts.

(b) Where any Imposition is permitted by law to be paid in
installments, Tenant may pay such Imposition in installments
as and when such installments become due or the day any fine,
penalty, interest or costs may be added thereto or imposed,
or the day any lien may be filed, whichever is later;
provided, however, that the amount of all installments of any
such Impositions which are to become due and payable after
the expiration of the term of this Lease shall not be
apportioned (except as provided in subsection (a) hereof) but
shall be and become due and payable to Landlord or the taxing
authority six (6) months before the date of the expiration of
the term of this Lease.

Section 4.02. Tenant shall pay all such Impositions directly
to the taxing authority, and shall exhibit and deliver

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<PAGE> 8

to Landlord Photostat copies of the receipted bills or other evidence
satisfactory to Landlord showing such payment promptly after such receipts
shall have been received by Tenant but in all events at least thirty (30) days
prior to the date of delinquency (subject to Tenant's rights to contest such
Impositions as set forth in Section 4.03, below).

Section 4.03. Tenant may, if Tenant shall so desire, contest
the validity or amount of any Imposition, in which event, Tenant may defer the
payment thereof during the pendency of such contest; provided that, no later
than the date the same shall have become due, Tenant shall have deposited with
Landlord's Mortgagee (referred to in this Section 4.03 as the "Imposition
Trustee") an amount sufficient to pay such contested item together with the
interest and penalties thereon (as reasonably estimated by Landlord or the
Imposition Trustee if said amount be deposited with it), which amount shall be
applied to the payment of such item when the amount thereof shall be finally
fixed and determined. In lieu of such cash deposit, Tenant may deliver to
Landlord, a surety company bond in form and substance reasonably satisfactory
to Landlord, issued by a company reasonably acceptable to Landlord. Nothing
herein contained, however, shall be so construed, as to allow such items to
remain unpaid for such length of time as shall permit the Demised Premises, or
any part thereof, to be sold by any governmental, city or municipal authority
for the non-payment of the same; and if at any time, in the judgment of
Landlord, reasonably exercised, it shall become necessary so to do, Landlord,
after written notice to Tenant, may, under protest if so requested by Tenant,
direct the application of the said moneys so deposited or so much thereof as
may be required to prevent the sale of the Demised Premises or any part
thereof, or foreclosure of the lien created thereon by such item. If the amount
so deposited as aforesaid shall exceed the amount of such payment, the excess
shall be paid to Tenant or, in case there shall be any deficiency, the amount
of such deficiency shall be promptly paid on demand by Tenant to Landlord, or,
at the election of Tenant, to the Imposition Trustee, and, if not paid, shall
be payable as additional rent with interest at the Default Rate contemporaneous
with the next installment or any subsequent installments of Annual Base Rental
and thereafter becoming due and shall be collectible as rent.

Section 4.04. The certificate, advice, bill or statement
issued or given by the appropriate officials authorized or designated by law to
issue or give the same or to receive payment of any Impositions, of the
existence, non- payment or amount of such Imposition shall be prima facie
evidence for all purposes of the existence, non-payment or amount of such
Imposition.

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<PAGE> 9

Section 4.05. Tenant may render the Demised Premises for all
taxing jurisdictions and may, if Tenant shall so desire, endeavor at any time
or times to obtain a lowering of the assessed valuation upon the Demised
Premises for the purpose of reducing taxes thereon and, in such event, Landlord
will offer no objection, and, at the request of Tenant, will cooperate with
Tenant, but without expense to Landlord, in effecting such a reduction. Tenant
shall be authorized to collect any tax refund payable as a result of any
proceeding Tenant may institute for that purpose and any such tax refund shall
be the property of Tenant to the extent to which it may be based on a payment
made by Tenant, subject, however, to an apportionment between Landlord and
Tenant with respect to taxes paid or contributed by Landlord in the year in
which this Lease began and the year in which the term of this Lease ends, after
deducting from such refund the costs and expenses, including reasonable legal
fees, incurred by Tenant in connection with obtaining such refund.

Section 4.06. Landlord shall not be required to join in any
action or proceeding referred to in Section 4.03 or Section 4.05 hereof unless
required by law or any rule or regulation in order to make such action or
proceeding effective, in which event, any such action or proceeding may be
taken by Tenant in the name of, but without expense to, Landlord, Tenant hereby
agreeing to save Landlord harmless from all costs, expenses, claims, loss or
damage by reason of, in connection with, on account of, growing out of, or
resulting from, any such action or proceeding.

Section 4.07. If Landlord is required by Landlord's Mortgagee
to escrow sums for Imposition, then in such event, Tenant shall deposit in
escrow with Landlord's Mortgagee an amount equal to one-twelfth (l/12th) of the
amount of the Impositions for such prior calendar year, on the 1st day of each
calendar month of the then-current calendar year. To the extent that the sums
thus deposited are sufficient therefor, Landlord's Mortgagee shall pay
therefrom all Impositions due for such calendar year at the time or times when
the payments thereof become due. In the event that the sums thus deposited by
Tenant are insufficient to pay the actual amount of Impositions for such
then-current year, then in such event, Tenant shall be obligated to pay the
amount of any such deficiency to the appropriate taxing authority; in the event
that the amount so deposited (including income accruing thereon) exceeds the
amount of Impositions for such then-current calendar year, the excess shall be
refunded to Tenant.

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<PAGE> 10

ARTICLE 5

Alterations and Additions

Section 5.01. Tenant shall have the right, from time to time,
to make, during the term of this Lease at its sole cost and expense, additions,
alterations and changes (hereinafter sometimes referred to in this Section 5.01
as "alterations") in or to the Demised Premises, provided Tenant shall not then
be in default in the performance of any of Tenant's covenants or agreements in
this Lease, subject, however, in all cases to the following:

(a) no structural or exterior alterations shall be commenced
except upon prior written consent of Landlord;

(b) no alterations of any kind, shall be made which would tend
(i) to impair the structural soundness of the Improvements,
(ii) to decrease the total cubical volume of the
Improvements, (iii) to give to any owner, lessee or occupant
of any other property or to any other person or corporation
any easement, right-of-way or any other right over Landlord's
interest in the Demised Premises, or (iv) to modify the basic
utility and function of the Improvements;

(c) no alterations shall be undertaken until Tenant shall have
procured and paid for, so far as the same may be required
from time to time, all permits and authorizations of all
municipal departments and governmental subdivisions having
jurisdiction. Landlord shall join, but without expense to
Landlord, in the application for such permits or
authorizations whenever such action is necessary and is
requested by Tenant;

(d) any alterations involving in the aggregate an estimated cost
of more than $100,000.00 shall be conducted under the
supervision of an architect or engineer selected by Tenant,
and no such alterations shall be made, except in substantial
accordance with detailed plans and specifications and cost
estimates prepared and approved in writing by such architect
or engineer;

(e) any alterations shall be made within a reasonable time
(subject to unavoidable delays) and in a good and workmanlike
manner and in compliance with all applicable permits and
authorizations and building and zoning laws and with all
other laws, ordinances, orders, rules, regulations and
requirements of all federal, state and municipal governments,
departments,

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<PAGE> 11

commissions, boards and officers, and in accordance with the
orders, rules and regulations of the National Board of Fire
Underwriters, or any other body or bodies hereafter
exercising similar functions;

(f) if any involuntary liens for labor and materials supplied or
claimed to have been supplied to the Demised Premises shall
be filed, Tenant shall pay, bond or otherwise obtain the
release or discharge thereof with reasonable promptness but
in all events prior to foreclosure thereof;

(g) a policy of workmen's compensation insurance covering all
persons employed in connection with the work and with respect
to whom death or bodily-injury claims could be asserted
against Landlord, Tenant or the Demised Premises and, to the
extent that the insurance under subsection (b) of Section
7.01 hereof does not adequately protect Landlord with respect
to said alterations, comprehensive general liability
insurance for the mutual benefit of Landlord and Tenant in a
minimum amount of $5,000,000.00, which comprehensive general
liability insurance policy shall include (i) coverage for
bodily injury and death, property damage and product's
liability coverage; and (ii) contractual liability coverage
insuring the obligations of Tenant under the terms of this
Lease shall be maintained by Tenant at the Tenant's sole cost
and expense at all times when any work is in progress in
connection with any alterations. All such insurance policies
shall be in standard form and shall be in such responsible
companies as Landlord shall approve, which approval shall not
be unreasonably withheld. All policies of liability insurance
and certificates of workmen's compensation insurance therefor
issued by the respective insurers, bearing notations
evidencing the payment of premiums or accompanied by other
evidence reasonably satisfactory to Landlord of such payment,
shall be delivered to Landlord prior to the commencement of
any alterations;

(h) if the cost of any such alterations shall be in excess of
$100,000.00 as reasonably estimated by the architect,
Landlord may require Tenant to furnish to Landlord a surety
company bond in form reasonably satisfactory to Landlord,
issued by a company reasonably acceptable to Landlord, or
other security reasonably satisfactory to Landlord, in an
amount at least equal to the estimated cost of such
alterations, guaranteeing the completion and payment of the
cost thereof free and clear of all liens, conditional bills

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<PAGE> 12

of sale and chattel mortgages growing out of such alteration
work other than Permitted Mortgages.

In no event shall Tenant be entitled to any abatement,
allowance, reduction or suspension of the Annual Base Rental, additional rent
and other payment herein reserved or required to be paid by reason of such
alterations nor shall Tenant, by reason thereof, be released of or from any
other obligations imposed upon Tenant under this Lease.

Whether under the provisions of this Lease or otherwise,
neither Tenant nor any of Tenant's agents, employees, representatives,
contractors or subcontractors shall have any power or authority to do and act
or thing or to make any contract or agreement which shall result in the
creation of any mechanics' lien or other lien or claim upon or against
Landlord's interest in the Demised Premises, and Landlord shall have no
responsibility to Tenant or to any contractor, subcontractor, supplier,
materialman, workman or other person, firm or corporation who shall engage in
or participate in any additions, alterations, changes or replacements thereof
unless Landlord shall expressly undertake such obligation by an agreement in
writing signed by Landlord and made between Landlord and Tenant, or such
contractor, subcontractor, supplier, materialman, workman or other person, firm
or corporation.

ARTICLE 6

Use, Maintenance, and Repairs

Section 6.01. Tenant is presently occupying the Demised
Premises under the Existing Lease and is fully aware of the physical condition
and state thereof, and Tenant accepts the same on an "AS-IS, WHERE-IS basis in
the physical condition and state in which the Demised Premises now are without
any representation or warranty, express or implied in fact or by law, by
Landlord and without recourse to Landlord, as to the physical nature, condition
or usability thereof.

Landlord shall not be required to furnish any services or
facilities or to make any repairs or alterations in or to the Demised Premises,
throughout the term of this Lease, Tenant hereby assuming the full and sole
responsibility for the condition, demolition, construction, operation, repair,
replacement, maintenance and management of the Demised Premises, as herein
stated.

Section 6.02. Tenant shall use the Demised Premises solely
for general office purposes as its corporate headquarters and for related
purposes incidental thereto including, but not

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<PAGE> 13

limited to, manufacturing and warehousing uses incidental thereto.

Section 6.03. Tenant shall not use or occupy or permit the
Demised Premises to be used or occupied, nor do or permit anything to be done
in or on the Demised Premises, in whole or in part, in a manner which would in
any way make void or voidable any insurance then in force with respect thereto,
or which would make it impossible to obtain fire or other insurance thereon
required to be furnished by Tenant hereunder, or as will cause or be apt to
cause structural injury to the Improvements or any part thereof, or as will
constitute a public or private nuisance, and shall not use or occupy or permit
the Demised Premises to be used or occupied, in whole or in part, in a manner
which violates any present or future, ordinary or extraordinary, foreseen or
unforeseen laws, regulations, ordinances or requirements of the federal, state
or municipal governments, or of any departments, subdivision, bureaus or
offices thereof, or of any other governmental, public or quasi-public
authorities now existing or hereafter created, having jurisdiction over the
Demised Premises; provided, however, that Tenant may, in good faith (and
wherever necessary, in the name of, but without expense to, Landlord) and after
having secured Landlord to its reasonable satisfaction by cash or by a surety
company bond in an amount, in a company and in substance reasonably
satisfactory to Landlord, against loss or damage, contest the validity of any
such laws, regulations, ordinances or requirements and, pending the
determination of such contest, may postpone compliance therewith, except that
Tenant shall not so postpone compliance therewith as to subject Landlord to any
fine or penalty or to prosecution for a crime, or to cause the Demised Premises
or any part thereof to be condemned or to be vacated. Tenant will indemnify and
save harmless Landlord against any recovery or loss to which Landlord may be
subject or which Landlord may sustain, including reasonable attorney's fees and
expenses incurred by Landlord arising or alleged to arise from any breach of
this covenant or by reason of any action or proceedings which may be brought
against Landlord or against the Demised Premises, or any part thereof, by
virtue of violation of any such laws, regulations, ordinances or requirements
relating to the use and occupancy of the Demised Premises, or by virtue of any
such present or future law of the United States of America, or of the State of
California, or the County of Alameda, City of Livermore, or other municipal,
public or quasi-public authority now existing or hereafter created, having
jurisdiction in the premises.

Section 6.04. Tenant shall take good care of the Demised
Premises, make all repairs thereto, interior and exterior, structural and non-
structural, ordinary and extraordinary, foreseen and unforeseen, and shall
maintain and keep the Demised Premises and the sidewalks and curbs in first
class

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<PAGE> 14

order, repair and condition, reasonable wear and tear excepted. Tenant shall
also keep the Common Areas of the Demised Premises free and clear from rubbish
and shall not encumber or obstruct the same or allow the same to be encumbered
or obstructed in any manner.

Section 6.05. Tenant shall have the right at any time and
from time to time to sell or dispose of any building equipment or personal
property subject to this Lease which may have become obsolete or unfitted for
use or which is no longer useful, necessary or profitable in the conduct of
Tenant's business, provided that if such equipment or property be necessary to
the operation of the Improvements, Tenant shall then or theretofore substitute
for the same other building equipment or personal property not necessarily of
the same character, but capable of performing the same function as that
performed by the property so disposed of, and of high quality and suitable for
its intended purpose.

Section 6.06. Tenant shall diligently comply with and execute
at its own expense during the term of this Lease, all present and future laws,
acts, rules, requirements, orders, directions, ordinances, and/or regulations,
ordinary and extraordinary, foreseen or unforeseen, concerning the condition or
use of the Demised Premises or any part thereof, or the streets adjacent
thereto, of any federal, state, municipal or other public department, bureau,
officer or authority or of the National Board of Fire Underwriters, or other
body having similar functions, or of any liability, fire, or other insurance
company having policies outstanding with respect to the Demised Premises,
whether or not such laws, acts, rules, requirements, orders, directions,
ordinances and/or regulations require the making of structural alterations or
the use or application of portions of the Demised Premises for compliance
therewith or interfere with the use and enjoyment of the Demised Premises, and
shall protect, hold harmless and indemnify Landlord of and from all fines,
penalties, claim or claims for damages of every kind and nature arising out of
any failure to comply with any such laws, acts, rules, requirements, orders,
directions, ordinances and/or regulations; provided, further, that Tenant may,
in good faith (and wherever necessary, in the name of, but without expense to,
Landlord), and after having secured Landlord to its reasonable satisfaction by
cash or by a surety company bond in an amount, in a company and in substance
satisfactory to Landlord, against loss or damage, contest the validity of any
such law, act, rule, requirement, order, direction, ordinance and/or regulation
and, pending the determination of such contest, may postpone compliance
therewith, except that Tenant shall not so postpone compliance therewith, as to
subject Landlord to any fine or penalty or to prosecution for a crime, or to
cause the Demised Premises or any part thereof to be condemned or to be
vacated.

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<PAGE> 15

Section 6.07. Landlord shall not be responsible or liable for
any damage or injury to any property, fixtures, merchandise or decorations or
to any person or persons at any time on the Demised Premises from steam, gas or
electricity or from water, rain or snow, whether the same may leak into, issue
or flow from any part of the Improvements or from pipes or plumbing work of the
same, or from any other place or quarter; nor shall Landlord be in any way
responsible or liable in case of any accident or injury including death to any
of Tenant's employees, agents, or to any person or persons in or about the
Demised Premises or the streets or sidewalks adjacent thereto and Tenant agrees
that it will not hold Landlord in any way responsible or liable therefor and
will further indemnify and hold Landlord harmless from and against any and all
claims, liability, penalties, damages, expenses and judgments arising from
injury to persons or property of any nature and also for any matter or thing
growing out of the occupation of the Demised Premises, or of the streets or
sidewalks adjacent thereto. Landlord shall not be liable for interference with
light or incorporeal hereditaments by anybody, or caused by the operation by or
for any governmental authority in the construction of any public or
quasi-public work, and Landlord shall not be liable for any latent or any other
defects in the Improvements or any building or buildings now or hereafter
erected upon the Demised Land. Landlord here assigns to Tenant, without
warranty, on a non-exclusive basis, any and all warranties, guaranties, or
other rights which Landlord may have against any contractors constructing any
portion of the Improvements.

Section 6.08. Landlord shall have the right to show the
Demised Premises at any time during the term hereof to any prospective
purchasers or mortgagees of the same, and may enter upon the Demised Premises,
or any part thereof, for the purpose of ascertaining the condition of said
premises or whether Tenant as observing and performing the obligations assumed
by it under this Lease, all without hindrance or molestation from Tenant.
Landlord shall also have the right to enter upon the Demised Premises for the
purpose of making any necessary repairs thereto and performing any work thereof
that may be necessary by reason of Tenant's failure to make any such repairs or
perform any such work. The above-mentioned rights of entry shall be exercisable
only at reasonable times, at reasonable hours, at reasonable intervals and on
reasonable notice. Nothing contained herein, however, shall impose or imply any
duty on the part of Landlord to make any such repairs or perform any such work.

Section 6.09. Notice is hereby given that Landlord shall not
be liable for any labor or materials furnished or to be furnished to Tenant
upon credit, and that no mechanics' or other lien, for any such labor or
materials shall attach to or affect the reversionary or other estate or
interest of Landlord in and

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<PAGE> 16

to the Demised Premises. Whenever and as often as any such lien shall have been
filed against the Demised Premises, if based upon any action or interest of
Tenant, any subtenant or of any one claiming through Tenant or such subtenant,
Tenant shall forthwith take such action by bonding, deposit or payment as will
remove or satisfy the lien and, in default thereof for thirty (30) days after
notice to Tenant, then in addition to any other of Landlord's rights and
remedies, Landlord may pay the amount of such mechanics' lien, or discharge the
same by bond or deposit, and the amount so paid or deposited (including the
premium on any such bond) with interest thereon at the Default Rate from the
date of such payment or deposit shall be deemed additional rent reserved under
this Lease and, at the option of Landlord, shall be payable contemporaneously
with the next installment of rent or with any subsequent installment of rent
thereafter becoming due.

Section 6.10. Upon the expiration of the term of this Lease
or on the sooner termination thereof, Tenant shall peaceably and quietly leave,
surrender and yield up unto Landlord all and singular the Demised Premises
broom-clean and free of occupants and shall repair all damage to the Demised
Premises caused by or resulting from the removal of any removable property of
Tenant. Any removable property of Tenant which shall remain on the Demised
Premises after the expiration of the term of this Lease or sooner termination
thereof and the removal of Tenant from the Demised Premises may, at the option
of Landlord, be deemed to have been abandoned, and either may be retained by
Landlord as its property or may be disposed of in such manner as Landlord may
see fit. If such personal property or any part thereof shall be sold, Landlord
may receive and retain the proceeds of such sale and apply the same, at its
option, against the expenses of the sale, the cost of moving and storage, any
arrears of rent or additional rent payable hereunder and any damages to which
Landlord may be entitled under Article 12 hereof or pursuant to law.

Section 6.11. If Tenant holds over and refuses to surrender
possession of the Demised Premises after the termination of this Lease by lapse
of time or otherwise, Landlord shall have the option to treat such holding over
as a tenancy at sufferance. During such tenancy the Annual Base Rental shall be
one hundred fifty percent (150%) of the amount in effect immediately prior to
the termination of this Lease, plus a prorated part of the Impositions.

Section 6.12. Tenant will indemnify, protect and save
harmless Landlord from and against each and every claim, demand, fine, penalty,
cause of action, liability, damage, judgment or 1088, of whatsoever kind or
nature, to which Landlord may be subject or which Landlord may sustain,
including without limitation, reasonable attorneys' fees, reasonable costs and
other

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<PAGE> 17

reasonable expenses incurred by Landlord in defending against the same,
resulting or alleged to result from any violation by Tenant or any failure of
Tenant in the performance of any of the covenants or agreements contained in
this Article or in any other Article of this Lease.

ARTICLE 7

Insurance

Section 7.01. During the term of this Lease, Tenant will, at
its sole cost and expense, keep and maintain policies of --

(a) insurance on the Improvements or any replacements or
substitutions therefor against loss or damage by fire and
against loss or damage by other risks now insured against by
"ALL RISKS" provisions of policies generally in force on
Improvements of like type in Livermore, California, in
amounts sufficient to provide coverage for the full insurable
value of the Improvements or any replacements or
substitutions therefor, the policy for which insurance shall
have a replacement cost endorsement or similar provision. The
term "full insurable value" shall mean actual replacement
value (exclusive of cost of excavation, foundations and
footings). Such "full insurable value" shall be determined
from time to time (but not more frequently than once in any
twelve calendar months) at the request of Landlord, by one of
the insurers or, at the option of Tenant, by an appraiser,
engineer, architect or contractor approved in writing by
Landlord (which approval shall not be unreasonably withheld)
and paid by Tenant. No omission on the part of Landlord to
request any such determination shall relieve Tenant of any of
its obligations under this Article;

(b) comprehensive general public liability insurance protecting
and indemnifying Tenant and Landlord against any and all
claims for damages to person or property or for loss of life
or of property occurring upon, in, or about the Demised
Premises and the adjoining streets, in a minimum amount of
$5,000,000.00;

(c) war risk insurance upon the Improvements as and when such
insurance is obtainable from the United States Government or
any agency or instrumentality thereof, and a state of war or
national or public emergency exists or threatens, in the
maximum amount obtainable up to the full insurable value
thereof;

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<PAGE> 18

(d) boiler and pressure apparatus liability insurance to the
limit of not less than $100,000 in respect of any one
accident, provided, however, that if the improvements shall
be without a boiler plant, no such boiler insurance will be
required; and

(e) such other insurance on the Improvements or any replacements
or substitutions therefor and in such amounts as may from
time to time be reasonably required by Landlord against other
insurable hazards which at the time are commonly insured
against in the case of premises similarly situated, due
regard being given to the height and type of the
Improvements, its construction, location, use and occupancy,
or any replacements or substitutions therefor.

Section 7.02. All insurance provided for in subsections (a),
(b), (d), and (e) of Section 7.01 hereof shall be effected under policies,
issued by companies which are rated at least XII-A by Tests Rating Guide or
other national rating organizations.

Any policies of insurance of the character described in subsections (a), (c)
and (e) of Section 7.01 hereof shall expressly provide that any losses
thereunder shall be adjusted with and approved by Landlord, Tenant and
Landlord's Mortgagee. All such insurance shall be carried in the name of
Landlord, Tenant and Landlord's Mortgagee and loss thereunder shall be paid to
Landlord's Mortgagee and held pursuant to the terms of its mortgage.

Section 7.03. At the times required under the provisions of
Section 7.01 and not less than thirty (30) days prior to the expiration dates
of the expiring policies theretofore furnished pursuant to this Article 7,
originals or certified copies of the policies bearing notations evidencing the
payment of premiums or accompanied by other evidence satisfactory to Landlord
of such payment shall be delivered by Tenant to Landlord, except that whenever
there shall be a Landlord's Mortgage, the originals of such policies of
insurance may be deposited with Landlord's Mortgagee until Landlord's Mortgage
shall be paid, in which event duplicate originals or certified copies of such
policies shall meanwhile be delivered to Landlord. If Tenant defaults in
obtaining any insurance as required in this Article 7, Landlord may at its
option, but without any obligation so to do, obtain such insurance and pay the
premiums therefor, and Tenant shall reimburse Landlord for any premiums so
paid, together with interest thereon at the Default Rate, and any premiums so
paid by Landlord shall be considered as additional rent due and owing by Tenant
to Landlord. In the event of the termination of this Lease, Landlord shall
succeed to all of the

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<PAGE> 19

rights of Tenant in and to any insurance policies then in force and effect,
including all unearned premiums.

Section 7.04. Tenant shall not take out separate insurance
concurrent in form or contributing in the event of loss with that required in
this Article 7 to be furnished by, or which may reasonably be required to be
furnished by Tenant, unless Landlord is included therein as an insured, with
loss payable as in this Lease provided. Tenant shall immediately notify
Landlord of the taking out of any such separate insurance and shall deliver the
policy or policies or certified copies as provided in Section 7.03 hereof.

Section 7.05. Each policy delivered hereunder shall contain
an agreement by the insurer that such policy shall not be canceled without at
least thirty (30) days' prior written notice to Landlord and any Landlord's
Mortgagee.

Section 7.06. At the expiration of the term of this Lease,
all policies shall be transferred to Landlord free of all right, title and
interest of Tenant except as to Tenant ' s interest with respect to any prior
casualty loss and those claiming under Tenant, and Landlord shall pay to Tenant
an amount equal to the unearned premiums apportioned as of such expiration
date.

Section 7.07. Notwithstanding any provision to the contrary
contained herein, during the term of the "Loan," provided that Tenant complies
with all the requirements of the "Beneficiary" under the "Deed of Trust" (as
all such quoted terms are defined in Section 25.12, below), with respect to
insurance, Tenant shall be deemed to be in compliance with the terms hereof.

ARTICLE 8

Damage or Destruction

Section 8.01. If, at any time during the term of this Lease,
the Demised Premises or any part thereof shall be damaged or destroyed by fire
or other casualty (including any casualty for which insurance coverage was not
obtained or obtainable) of any kind or nature, ordinary or extraordinary,
foreseen or unforeseen, Tenant, at its sole cost and expense, and whether or
not the insurance proceeds, if any, shall be sufficient for the purpose, shall
commence and thereafter proceed with reasonable diligence (subject to a
reasonable time allowance for the purpose of adjusting the insurance loss and
for unavoidable delay) to repair, alter, restore, replace or rebuild the same
as nearly as possible to its value immediately prior to such damage or

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<PAGE> 20

destruction, subject to such changes or alterations as Tenant may elect to make
in conformity with the provisions of Section 5.01 hereof. Such repair,
alteration, restoration, replacement or rebuilding, including such changes and
alterations as aforementioned and including temporary repairs for the
protection of other property pending the completion of any thereof, are
sometimes referred to in this Article 8 as the "Work".

Section 8.02. Except as otherwise provided in this Article 8,
the conditions under which any Work is to be performed and the method of
proceeding with and performing the same shall be governed by all of the
provisions of Section 5.01 hereof.

Section 8.03. Subject to the terms of Landlord's Mortgage,
all insurance proceeds paid to Landlord's Mortgagee (referred to in this
Article 8 as the "Insurance Trustee") on account of such damage or destruction
under the policies of insurance provided for in Article 7 hereof, (sometimes
referred to in this Article 8 as the Insurance Proceeds), shall be applied by
the Insurance Trustee to the payment of the cost of the Work to the extent such
Insurance Proceeds shall be sufficient for that purpose, and shall be paid out
to or for the account of Tenant from time to time as such Work progresses. The
Insurance Trustee shall make such payments or disbursement upon the written
request by Tenant when accompanied by the following:

(a) a certificate, dated not more than fifteen (15) days prior to
such request, signed by Tenant or its duly authorized
representative and by a qualified architect of recognized
standing in charge of the Work who shall be selected by
Tenant setting forth that --

(i) the sum then requested either has been paid by
Tenant or is justly due to contractors,
subcontractors, materialmen, architects or other
persons who have rendered services or furnished
materials in connection with the Work, giving a
brief description of the services and materials and
the several amounts so paid or due and stating that
no part thereof has been made the basis of any
previous or then pending request or has been paid
out of any proceeds of insurance received by Tenant,
and that the sum requested does not exceed the cost
of the services and materials described in the
certificate,

(ii) except for the amount stated in such certificate to
be due as aforesaid, there is no outstanding
indebtedness known to the persons signing such
certificate after due inquiry which might become the
basis of a vendor's, mechanic's or

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<PAGE> 21

materialmens' or similar lien upon such Work, the
Demised Premises or Tenant's leasehold interest, or
any part thereof, and

(iii) the cost, as estimated by the persons signing such
certificate, of the Work required to be done
subsequent to the date of such certificate in order
to complete the same, does not exceed the amount of
Insurance Proceeds remaining in the hands of the
Insurance Trustee after the payment of the sum so
requested; and

(b) a certificate, dated not more than fifteen (15) days prior to
such request, of a title or abstract company satisfactory to
Landlord then doing business in the City of Livermore,
covering the period from the date of this Lease (or the date
of the last such certificate furnished pursuant to any of the
applicable provisions of this Lease) to the date of such
certificate, setting forth all liens and encumbrances, if
any, of record and reflecting that there are no involuntary
liens or encumbrances of record of any kind on the Demised
Premises except those permitted by the terms of this Lease
and except such as will be discharged by payment of the
amount then requested.

Subject to the terms of Landlord' 8 Mortgage, upon compliance
with the foregoing provisions of this Section 8.03, the Insurance Trustee
shall, out of the Insurance Proceeds, pay or cause to be paid to Tenant or to
the persons named in the certificate the respective amounts stated therein to
have been paid by Tenant or to be due to them, as the

Upon receipt by the Insurance Trustee of evidence
satisfactory to it of the character required by subsections (a) and (b) of this
Section 8.03 that the Work has been completed and paid for in full and there
are no liens of the character referred to therein, and if Tenant is not then in
default, the Insurance Trustee shall pay any remaining balance of the Insurance
Proceeds to Landlord's Mortgagee, if there be any, and if not, to Tenant.

If the Insurance Proceeds received by the Insurance Trustee
shall be insufficient to pay the entire cost of the Work as reasonably
estimated by Landlord, Tenant shall supply the amount of any such deficiency
and shall first apply the same to the payment of the cost of the Work before
calling upon the Insurance Trustee for the disbursement of the Insurance
Proceeds held by the Insurance Trustee.

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<PAGE> 22

Under no circumstance shall Landlord be obligated to make any
payment, disbursement or contribution towards the cost of the Work.

Section 8.04. In no event shall Tenant be entitled to any
abatement, allowance, reduction or suspension of rent because part or all of
the Demised Premises shall be untenantable owing to the partial or total
destruction thereof; and notwithstanding anything herein to the contrary, no
such damage or destruction shall affect in any way the obligation of Tenant to
pay the Annual Base Rental, additional rent and other payments herein reserved
or required to be paid, nor release Tenant of or from any obligation imposed
upon Tenant under this Lease.

ARTICLE 9

Condemnation

Section 9.01. If, at any time during the term of this Lease,
title to the whole or substantially all of the Demised Premises shall be taken
in condemnation proceedings or by any right of eminent domain, this Lease shall
terminate and expire on the date of such taking and the Annual Base Rental and
additional rent reserved shall be apportioned and paid to the date of such
taking. For purposes of this Article 9, "substantially all of the Demised
Premises" shall be deemed to have been taken if the untaken portion cannot be
practically and economically used or converted for use by Tenant for the
purposes for which the Demised Premises are being used immediately prior to
such taking.

In the event of any such taking and the termination of this
Lease:

(a) Landlord shall be entitled to receive

(i) the entirety of such portion of said award or awards
as shall represent compensation for the value of the
Demised Land, or the part thereof so taken,
considered as vacant and unimproved and such portion
of such award or awards with the interest, if any,
paid by the condemning authority as shall represent
consequential damages, if any, to the portion of the
Demised Land not so taken, considered as vacant and
unimproved; plus

(ii) such portion of said award or awards, with interest,
if any paid by the condemning authority as shall
represent compensation for the value which the
Improvements would have had at the

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<PAGE> 23

expiration of the term of this Lease, but for such
taking;

(b) Tenant shall be entitled to receive the balance of said award
or awards, with interest, if any paid by the condemning
authority as shall represent compensation for the value of
the Improvements or portion thereof taken.

Tenant hereby assigns to Landlord all rights which Tenant may
have by virtue of this Lease or otherwise in and to any portion of said award
or awards described in item (a), above and grants to Landlord the exclusive
right to negotiate with the condemning authority with respect to such award or
awards or portions thereof.

Section 9.02. In the event of any such taking of less than
the whole or substantially all of the Demised Premises, the term of this Lease
shall not be reduced or affected in any way, and

(a) Landlord shall be entitled to receive and retain as its own
property such portion of the award or awards with the
interest thereon, if any, paid by the condemning authority as
shall represent compensation for the value of the Demised
Land, or the part thereof, so taken considered as vacant and
unimproved, plus consequential damages to the portion or
portions of the Demised Land not so taken, considered as
vacant and unimproved.

(b) if the balance of said award or awards (including
compensation for the Improvements or portion thereof taken,
and damages if any to the Improvements not so taken) (herein
sometimes referred to as "Condemnation Proceeds") shall be
paid to Landlord's Mortgagee (who in this Article 9 is
referred to as the "Condemnation Trustee") and held pursuant
to the terms of Landlord's Mortgage and this Article 9;

(c) Tenant, at its sole cost and expense and whether or not the
Condemnation Proceeds payable under subsection (b) of this
Section 9.02 shall be sufficient for the purpose, shall
commence and thereafter proceed with reasonable diligence to
repair, alter and restore the remaining part of the Demised
Premises so as to constitute a complete, rentable project,
subject to such changes or alterations as Tenant may elect to
make in conformity with the provisions of Section 5.01
hereof. Such repairs, alterations or restoration, including
such changes and alterations as above mentioned and including
temporary repairs, for the protection of

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<PAGE> 24

other property pending the completion of any thereof, are
sometimes referred to in this Section 9.02 as the "Work";

(d) the conditions under which the Work is to be performed and
the method of proceeding with and performing the same shall
be governed by all of the provisions of Section 5.01 hereof;
and

(e) subject to the terms of Landlord's Mortgage, the Condemnation
Trustee shall hold, apply, make available and pay over to
Tenant the Condemnation Proceeds in the same manner as is
provided to be done by the Insurance Trustee with respect to
insurance proceeds under the provisions of Section 7.02
hereof, provided that the references in Section 7.02 to the
provisions of Sections 8.01, 8.02 and 8.03 shall be deemed to
be references to the provisions of subsections (c), (d) and
(e) respectively of this Section 9.02;

Section 9.03. If the whole or any part of the Demised
Premises or of Tenant's interest in this Lease shall be taken in condemnation
proceedings or by any right of eminent domain for a temporary use or occupancy,
the term of this Lease shall not be reduced or affected in any way and Tenant
shall continue to pay in full the Annual Base Rental, additional rent and other
payments herein reserved, without reduction or abatement in the manner and at
the times herein specified and, except only to the extent that Tenant is
prevented from so doing pursuant to the terms of the order of the condemning
authority, Tenant shall continue to perform and observe all of the other
covenants, agreements, terms and provisions of this Lease as though such taking
had not occurred.

Section 9.04. Landlord and Tenant each covenant and agree to
seek separate awards in all such condemnation proceedings and to use their
respective best efforts to see that such separate awards are made at all stages
of all such proceedings.

Section 9.05. Tenant, Landlord and Landlord's Mortgagee shall
each have the right, at its own expense, to appear in any condemnation
proceeding and to participate in any and all hearings, trials and appeals
therein.

Section 9.06. In the event Landlord or Tenant shall receive
notice of any proposed or pending condemnation proceeding affecting the Demised
Premises, the party receiving such notice shall promptly notify the other party
and Landlord's Mortgagee.

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<PAGE> 25

ARTICLE 10

Assignment and Sublease

Section 10.01. Tenant shall not assign, transfer, pledge,
mortgage or sublease the Demised Premises or any portion thereof or any
interest therein without the prior written consent of Landlord which shall not
be unreasonably withheld.

Section 10.02. If this Lease be assigned with Landlord's
consent, Landlord may and i8 hereby empowered to collect Annual Base Rental and
other sums payable hereunder to accrue thereafter from the assignee. In such
event, Landlord may apply the net amount received by it to the Annual Base
Rental, additional rent and other payments herein reserved or provided for.

Section 10.03. The making of any assignment, mortgage,
pledge, encumbrance or subletting, in whole or in part, shall not operate to
relieve Tenant from Tenant's obligations under this Lease and, notwithstanding
any such assignment, mortgage, pledge, encumbrance or subletting, Tenant shall
remain liable for the payment of all Annual Base Rental, additional rent and
other charges and for the due performance of all the covenants, agreements,
terms and provisions of this Lease to the full end of the term of this Lease,
whether or not there shall have been any prior termination of this Lease by
summary proceedings or otherwise.

Section 10.04. Any consent by Landlord herein contained or
hereafter given to any act or acts for which Landlord's consent is by the terms
hereof required, shall be held to apply only to the specific transaction hereby
or thereby approved.

ARTICLE 11

Mortgage of the Fee

Section 11.01. Any first lien mortgage or deed of trust (a
"Landlord's Mortgage") hereafter covering Landlord's interest in the Demised
Premises including, without limitation, any such deed of trust in favor of The
Variable Annuity Life Insurance Company, shall be subject to the Tenant's
interest under this Lease provided, however, upon request of any such
Landlord's Mortgagee, Tenant shall subordinate its interest hereunder to any
such Landlord's Mortgage so long as such Landlord's mortgagee agrees not to
disturb Tenant's possession provided Tenant is not in default hereunder.

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<PAGE> 26

ARTICLE 12

Default Provisions

Section 12.01. This Lease and the term and estate hereby
granted are subject to the limitation that

(a) whenever Tenant shall default in the payment of any
installment of Annual Base Rental, additional rent or any
other sum payable by Tenant to Landlord on any date upon
which the same ought to be paid, and if such default shall
continue for ten (10) days after Landlord shall have given to
Tenant a written notice specifying such default; or

(b) whenever Tenant shall do, or permit to be done, whether by
action or inaction, anything contrary to any covenant or
agreement on the part of Tenant herein contained or shall
fail in keeping or performance of any of the covenants,
agreements, terms or provisions contained in this Lease which
on the part or behalf of Tenant are to be kept or performed
(other than those referred to in the foregoing subsection (a)
of this Section 12.01) and Tenant shall fail to commence
(subject to unavoidable delay) to take steps to remedy the
same within thirty (30) days after Landlord shall have given
to Tenant a written notice specifying the same, or having so
commenced shall thereafter fail to proceed diligently to
remedy the same, but, in all events, within ninety (90) days
after such notice; or

(c) whenever a decree or order for relief shall be entered by a
court having jurisdiction over Tenant in an involuntary case
under the federal bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state
bankruptcy, insolvency or other similar law, or a receiver,
liquidator, assignee, custodian, trustee, sequestrator (or
similar official) shall be appointed for any substantial part
of Tenant's property, or the winding-up or liquidation of
Tenant's affairs shall be ordered, and such situation under
this subsection (c) shall continue and shall not be remedied
by Tenant within one hundred twenty (120) days after the
happening of any such event; or

(d) whenever Tenant shall commence a voluntary case under the
federal bankruptcy laws, as now constituted or hereafter
amended, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or Tenant shall consent to
the appointment of a receiver, liquidator, assignee, trustee,
custodian, sequestrator

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<PAGE> 27

(or other similar official) of any substantial part of the
property of Tenant, or to the taking possession of any such
property by any such functionary or the making of any
assignment for the benefit of creditors by Tenant, or Tenant
shall fail generally to pay its debts as such debts become
due, or any corporate Tenant shall take corporate action in
furtherance of any of the foregoing;

(any of the aforesaid occurrence being herein referred to as an "Event of
Default") then at any time thereafter Landlord may at its option, in addition
to all other rights and remedies given hereunder or by law or equity, do any
one or more of the following:

(a) Landlord shall be entitled to keep this Lease in full force
and effect and Landlord may enforce all of its rights and
remedies under this Lease, including the right to recover
rent and other sums as they become due, plus interest at the
highest rate then allowed by law, from the due date of each
installment of rent or other sum until paid; or

(b) Landlord may terminate Tenant's right to possession by giving
Tenant written notice of termination, whereupon this Lease
and all of Tenant's rights in the Premises shall terminate.
Any termination under this paragraph shall not release Tenant
from the payment of any sum then due Landlord or from any
claim for damages or rent accrued.

Exercise by Landlord of any one or more remedies hereunder
granted or otherwise available shall not be deemed to be an acceptance of
surrender of the Demised Premises by Tenant, whether by agreement or by
operation of law, it being understood that such surrender can be effected only
by the written agreement of Landlord and Tenant.

Section 12.02. Upon any such termination of this Lease or
Tenant's right to possession of the Demised Premises or upon expiration of this
Lease, Tenant shall peaceably quit and surrender the Demised Premises to
Landlord, and Landlord may without further notice enter upon, re-enter, possess
and repossess itself thereof, by force summary proceedings, ejectment or
otherwise, and may dispossess and remove Tenant and all other persons and
property from the Demised Premised and may have, hold and enjoy the Demised
Premises and the right to receive all rental and other income of and from the
same.

Section 12.03. In the event Landlord exercises the remedies
grant pursuant to Section 12.01(b), Landlord may recover

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<PAGE> 28

from Tenant all damages incurred by Landlord by reason of Tenant's default,
including, but not limited to: (i) the cost of recovering possession of the
Premises: (ii) expenses of reletting, including necessary renovation and
alteration of the Premises; (iii) reasonable attorneys' fees, any real estate
commissions actually paid and that portion of any leasing commission paid by
Landlord applicable to the unexpired term of this Lease; (iv) the worth at the
time of award of the unpaid rent which had been earned at the time of
termination; and (v) any other amount necessary to compensate Landlord for all
the detriment proximately caused by Tenant's failure to perform Tenant's
obligations under this Lease, or which in the ordinary course of things would
be likely to result therefrom.

The "worth at the time of award" of the amounts referred to
in subparagraph (iv) of this Section 12.03 shall be computed by allowing
interest at the maximum rate then permitted by law. The term "rent" as used in
this paragraph shall include all sums required to be paid by Tenant to Landlord
pursuant to the terms of this Lease. Actions to collect amounts due by Tenant
provided for in this paragraph of Section 12.03 may be brought from time to
time by Landlord during the aforesaid period, on one or more occasions, without
the necessity of Landlord's waiting until expiration of such period; and in no
event shall Tenant be entitled to any excess of rent (or rent plus other sums)
obtained by reletting over and above the rent

Suit or suits for the recovery of such damages, or any
installments thereof, may be brought by Landlord from time to time at its
election, and nothing contained herein shall be deemed to require Landlord to
postpone suit until the date when the term of this Lease would have expired if
it had not been terminated under the provisions of this Article 12, or under
any provisions of law, or had Landlord not re-entered the premises.

Nothing herein contained shall be construed as limiting or
precluding the recovery by Landlord against Tenant of any damages to which
Landlord may lawfully be entitled in any case other than those particularly
provided for above.

Section 12.04. To the extent permitted by law, Tenant, for
Tenant, and on behalf of any and all persons claiming through or under Tenant,
including creditors of all kinds, does hereby waive and surrender all right and
privilege which they or any of them might have under or by reason of any
present or future law, to redeem the Demised Premises or to have a continuance
of this Lease for the term hereby demised after being dispossessed or ejected
therefrom by process of law or under the terms of this Lease or after the
termination of this Lease as herein provided.

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<PAGE> 29

Section 12.05. The words "enter", "entry", "re-enter" or
"reentry" are not restricted to their technical legal meanings.

Section 12.06. In case of any default arising hereunder or
holding over or possession by Tenant after the expiration or termination of
this Lease, Tenant shall pay Landlord for all actual reasonable expenses
incurred by Landlord by reason thereof, including but not limited to reasonable
attorneys' fees.

Section 12.07. In the event of termination of this Lease or
of Tenant's right to possession of the Demised Premises or repossession of the
Demised Premises for an event of default, Landlord shall not have any
obligation to re-let or attempt to re-let the Demised Premises, or any portion
thereof, or to collect rental after re-letting (if any); but Landlord shall
have the option to re-let or attempt to re-let and in the event of re-letting
Landlord may re-let the whole or any portion of the Demised Premises for any
period, to any tenant, and for any use and purpose.

Section 12.08. In the event of any default by Landlord,
Tenant's exclusive remedy shall be an action for damages (Tenant hereby waiving
the benefit of any laws granting it a lien upon the property of Landlord and/or
upon rent due Landlord), but prior to any such action Tenant will give Landlord
written notice specifying such default with particularity, and Landlord shall
thereupon have a reasonable period, but in no event less than thirty (30) days,
in which to commence to cure any such default. Unless and until Landlord fails
so to commence to cure any default after such notice or having so commenced
thereafter fails to exercise reasonable diligence to complete such curing,
Tenant shall not have any remedy or cause of action by reason thereof. All
obligations of Landlord hereunder will be construed as covenants, not
conditions; and all such obligations will be binding upon Landlord only during
the period of its possession of the Demised Premises and not thereafter.

ARTICLE 13

Landlord's Right To Perform; Cumulative Remedies; Waivers

Section 13.01. If Tenant shall fail to pay any Imposition or
make any other payment required to be made under this Lease or shall default in
the performance of any other covenant, agreement, term, provision or condition
herein contained, or shall default in the performance of any covenant,
agreement, term, provision or condition contained in any sublease of the
Demised Premises and shall not cure such default within

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<PAGE> 30

the time permitted in any such sublease, Landlord, without being under any
obligation to do so and without thereby waiving such default, may make such
payment and/or remedy such other default for the account and at the expense of
Tenant (and enter the Demised Premises for such purposes) immediately and
without notice in the case of emergency, or, in any other case, if Tenant shall
fail to make such payment or remedy such default with all reasonable dispatch
after Landlord shall have notified Tenant in writing of such default. Bills for
any reasonable expense incurred by Landlord in connection therewith, and bills
for all reasonable costs, expenses and disbursements of every kind and nature
whatsoever, including reasonable counsel fees, involved in collection or
endeavoring to collect the Annual Base Rental or additional rent or any part
thereof, or enforcing or endeavoring to enforce any right against Tenant, under
or in connection with this Lease, or pursuant to law, including (without being
limited to) any such reasonable attorney's fees and cost, expense and
disbursements involved in instituting and prosecuting summary proceedings, as
well as reasonable bills for any property, material, labor or services
provided, furnished or rendered, or caused to be furnished or rendered, by
Landlord to Tenant, with respect to the Demised Premises and other equipment
and construction work done for the account of Tenant (together with interest at
the Default Rate from the respective dates of Landlord's making of each such
payment or incurring of each such cost or expense), may be sent by Landlord to
Tenant monthly, or immediately, at Landlord's option, and shall be due and
payable in accordance with the term of said bills and if not paid when due the
amount thereof shall immediately become due and payable as additional rent
under this lease.

Section 13.02. Landlord may restrain any breach or threatened
breach of any covenant, agreement, term, provision or condition herein
contained, but the mention herein of any particular remedy shall not, in any
case other than those particularly provided for above, preclude Landlord from
any other remedy it might have, either in law or in equity. The failure of
Landlord to insist upon the strict performance of any one of the covenants,
agreements, terms, provisions or conditions of this Lease or to exercise any
right, remedy or election herein contained or permitted by law shall not
constitute or be construed as a waiver or relinquishment for the future of such
covenant, agreement, term, provision, condition, right, remedy or election, but
the same shall continue and remain in full force and effect. Any right or
remedy of Landlord in this Lease specified or any other right or remedy that
Landlord may have at law, in equity or otherwise upon breach of any covenant,
agreement, term, provision or condition in this Lease contained upon the part
of Tenant to be performed, shall be distinct, separate and cumulative rights or
remedies and no one of them whether exercised by Landlord or not, shall be
deemed to be in

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<PAGE> 31

exclusion of any other. No covenant, agreement, term, provision or condition of
this Lease shall be deemed to have been waived by Landlord unless such waiver
be in writing, signed by Landlord or Landlord's agent duly authorized in
writing. Consent of Landlord to any act or matter must be in writing and shall
apply only with respect to the particular act or matter to which such consent
is given and shall not relieve Tenant from the obligations wherever required
under this Lease to obtain the consent of Landlord to any other act or matter.
Receipt or acceptance of Annual Base Rent or additional rent by Landlord shall
not be deemed to be a waiver of any default under the covenants, agreements,
terms, provisions and conditions of this Lease, or of any right which Landlord
may be entitled to exercise under this Lease. In the event that Tenant is in
arrears in the payment of Annual Base Rent or additional rent, Tenant waives
Tenant's right, if any, to designate the items against which any payments made
by Tenant are to be credited and Tenant agrees that Landlord may apply any
payments made by Tenant to any items Landlord sees fit irrespective of and
notwithstanding any designation or request by Tenant as to the items against
which any such payments shall be credited. This Lease may not be changed
orally, but only by an agreement in writing signed by the party against whom
enforcement of any waiver, change, modification or discharge is sought.

ARTICLE 14

Intentionally Omitted

ARTICLE 15

Intentionally Omitted

ARTICLE 16

Intentionally Omitted

ARTICLE 17

Impairment of Landlord's Title

Section 17.01. Nothing in this Lease shall be deemed or
construed to mean that Landlord has granted to Tenant any right, power or
permission to do any act or to make any agreement which may create, give rise
to, or be the foundation for, any

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<PAGE> 32

right, title, interest, lien, charge or other encumbrance upon the estate of
Landlord in the Demised Premises other than to the extent of the leasehold
created hereunder or to be created under any new lease which Landlord is
obligated to execute hereunder.

ARTICLE 18

Tenant's Bankruptcy

Section 18.01. Landlord and Tenant agree that if Tenant ever
becomes the subject of a voluntary or involuntary bankruptcy, reorganization,
composition, or other similar type proceeding under the Federal Bankruptcy
Laws, as now enacted or hereinafter amended, then "adequate protection" of
Landlord's interest in the Demised Premises pursuant to the provisions of
Sections 361 and 363 (or their successor sections) of the Bankruptcy Code, 11
U.S.C. Paragraph 101, et seq. (such Bankruptcy Code as amended from time to
time being herein referred to as the "Bankruptcy Code") prior to assumption
and/or assignment of the Lease by Tenant shall included, but not be limited to
the continued payment by Tenant of all Annual Base Rental, additional rent and
all other sums due and owing under this Lease and the performance of all other
covenants and obligations under this Lease by Tenant.

Section 18.02. Any person or entity to which this Lease is
assigned pursuant to the provisions of the Bankruptcy Code, shall be deemed
without further act or deed to have assumed all of the obligations of Tenant
arising under this Lease on and after the effective date of such assignment.
Any such assignee shall, upon demand by Landlord, execute and deliver to
Landlord an instrument confirming such assumption of liability.

Section 18.03. Notwithstanding anything in this Lease to the
contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated as "rent", shall constitute "rent"
for the purposes of Section 502(b)(7) of the Bankruptcy Code.

Section 18.04. If this Lease is assigned to any person or
entity pursuant to the provisions of the Bankruptcy Code, any and all monies or
other considerations payable or otherwise to be delivered in connection with
such assignment shall be paid or delivered to Landlord, shall be and remain the
exclusive property of Landlord and shall not constitute property of Tenant or
of the Estate of Tenant within the meaning of the Bankruptcy Code. Any and all
monies or other considerations constituting Landlord's property under the
preceding sentence not paid or delivered to Landlord shall be held in trust by
Tenant for the benefit of

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<PAGE> 33

Landlord and shall be promptly paid to or turned over to Landlord.

Section 18.05. If Tenant assumes this Lease and proposes to
assign the same pursuant to the provisions of the Bankruptcy Code to any person
or entity who shall have made a bona fide offer to accept an assignment of this
Lease on terms acceptable to the tenant, then notice of such proposed offer/
assignment, setting forth (i) the name and address of such person or entity,
(ii) all of the terms and conditions of such offer, and (iii) the adequate
assurance -to be provided Landlord to assure such person's or entity's future
performance under the Lease, shall be given to Landlord by Tenant no later than
twenty (20) days after receipt by Tenant, but in any event no later than ten
(10) days prior to the date that Tenant shall made application to a court of
competent jurisdiction for authority and approval to enter into such assumption
and assignment, and Landlord shall thereupon have the prior right and option,
to be exercised by notice to Tenant given at an prior to the effective date of
such proposed assignment, to accept an assignment of this Lease upon the same
terms and conditions and for the same consideration, if any, as the bona fide
offer made by such persons or entity, less any brokerage commissions which may
be payable out of the consideration to be paid by such person for the
assignment of this Lease.

ARTICLE 19

Estoppel Certificate

Section 19.01. Landlord and Tenant shall execute and deliver
to each other, at such time or times as either Landlord or Tenant may request,
a certificate evidencing:

(a) whether or not the Lease is in full force and effect;

(b) whether or not the Lease has been modified or amended in any
respect, and submitting copies of such modifications or
amendments, if any;

(c) whether or not there are any existing defaults hereunder to
the knowledge of the party executing the certificate, and
specifying the nature of such defaults, if any; and

(d) such other matters as may be reasonably requested by the other
party.

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<PAGE> 34

ARTICLE 20

Intentionally Omitted

ARTICLE 21

Invalidity of Particular Provisions

Section 21.01. If any term or provision of this Lease or the
application thereof to any person or circumstances shall, to any extent, be
invalid or unenforceable, the remainder of this Lease, or the application of
such term or provisions to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby, and
each term and provision of this Lease shall be valid and be enforced to the
fullest extent permitted by law.

ARTICLE 22

Notice

Section 22.01. Any notice, communication, request, reply or advice, or
duplicate thereof (in this Section 22.01 severally and collectively, for
convenience, called "Notice") , in this Lease provided or permitted to be
given, made or accepted by either party to any other party must be in writing,
and may, unless otherwise in this instrument expressly provided, be given or be
served by depositing the same in the United States mail, adequate postage
prepaid and registered or certified and addressed to the party to be notified,
with return receipt requested, or by delivering the same in person to such
party, or, if the party or parties to be notified be incorporated, to an
officer of such party, or by prepaid telegram, when appropriate, addressed to
the party to be notified. Notice deposited in the mail in the manner
hereinabove described shall be effective, unless otherwise stated in this
Lease, from and after the expiration of three (3) days after it is so
deposited. Notice given in any other manner shall be effective only if and when
received by the party to be notified. For purposes of Notice the addresses of
the parties shall, until changed as hereinafter provided, be as follows:

If to Landlord, to: 3055 Triad Dr. Corp.
3055 Triad Drive
Livermore, California 94550

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<PAGE> 35

If to Tenant, to: Triad Systems Corporation
3055 Triad Drive
Livermore, California 94550

With a copy to: Ware & Freidenrich
400 Hamilton Avenue
Palo Alto, California 94301-1809
Attention: Jeff Trant

However, the parties hereto and their respective heirs, successors, legal
representatives and assigns shall have the right from time to time and at any
time to change their respective addresses and each shall have the right to
specify as its/their address any other address within the continental United
States of America by at least fifteen (15) days' written Notice to the other
party; provided, however, if at any one time more than one person or party owns
an interest in the Demised Premises, nevertheless such persons or parties may
not designate more than two places or addresses to receive Notice pursuant to
the terms hereof. Each party shall have the right to change such party's
address for purposes of Notice, by giving written Notice to the other party in
the manner herein set forth.

ARTICLE 23

Non-Waiver

Section 23.01. No variations, modifications or changes herein
or hereof shall be binding upon any party hereto unless executed by it or by a
duly authorized officer or a duly authorized agent of the particular party. No
waiver or waivers of any breach or default or any breaches or defaults by
either party of any term, condition or liability of or performance by the other
party of any duty or obligation hereunder, including without limitation the
acceptance by Landlord or payment by Tenant of any rentals at any time or in
any manner other than as herein provided, shall be deemed a waiver thereof or
of any waiver thereof in the future, nor shall any such waiver or waivers be
deemed or construed to be a waiver or waivers of subsequent breaches or
defaults of any kind, character or description under any circumstance.

Section 23.02. The acceptance by Landlord of any performance,
Annual Base Rental, additional rent or other sum or sums of money or other
charges herein reserved to be paid or provided to be done by Tenant from any
person, firm or corporation other than Tenant shall not discharge Tenant or any
others liable with Tenant except to the extent of the performance and payment
so accepted by Landlord from liability to pay the Annual Base Rental herein
reserved, additional rent or other sum or sums

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<PAGE> 36

of money and other charges herein provided to be paid by Tenant or from
liability to perform any of the terms, covenants, conditions and agreements
herein set forth.

ARTICLE 24

Warranty of Peaceful Possession;
Limitation of Landlord's Liability

Section 24.01. Landlord covenants and warrants that Tenant on paying
the rents herein provided and performing all of its covenants and agreements
herein contained, shall and may peaceably and quietly have, hold, occupy, use
and enjoy, and shall have the full, exclusive and unrestricted use and
enjoyment of, all of the Demised Premises during the entire term hereof, for
any and all lawful purposes subject to the other terms and provisions hereof;
and provided Tenant has fully performed all of its obligations hereunder,
Landlord agrees to warrant and forever defend the title to the Demised Land
against the claims of any and all persons whomsoever lawfully claiming or to
claim the same or any part thereof, subject only to the provisions of this
Lease.

Section 24.02. It is expressly understood and agreed that the term
"Landlord" as used in this Lease, means only the owner for the time being of
the Demised Premises, and in the event of the sale, assignment or transfer by
such owner of its interest in said premises, such owner shall thereupon be
released and discharged from all covenants and obligations of Landlord
thereafter accruing; but such covenants and obligations shall run with the land
and be binding upon each new owner or successor for the time being of the
Demised Premises. No such change in ownership shall be binding on Tenant until
notice thereof shall be given to Tenant, accompanied by a counterpart original
or certified copy of the instrument of conveyance which shall have effected
such change. Under no circumstances whatsoever shall Landlord ever be liable
hereunder for consequential damages or special damages; and all liability of
Landlord for damages for breach of any covenant, duty or obligation of Landlord
hereunder may be satisfied only out of the interest of Landlord in the Demised
Premises existing at the time any such liability is adjudicated in a
proceedings as to which the judgment adjudicating such liability is
non-appealable and not subject to further review.

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<PAGE> 37
ARTICLE 25

Miscellaneous

Section 25.01. This Lease Agreement has been negotiated in
and shall be construed and enforced in accordance with the laws of the State of
California.

Section 25.02. All personal pronouns used in this Agreement
shall include the other genders whether used in the masculine or feminine or
neuter gender and the singular shall include the plural whenever and as often
as may be appropriate. The words "hereof," "herein," "hereunder," "hereinafter"
and the like refer to this entire instrument, not just to the specific Article,
section or paragraph in which such words appear.

Section 25.03. This Lease shall constitute a real right and
covenant running with the Demised Premises, and this lease and all of its terms
and provisions shall be binding upon and inure to the benefit of the parties
hereto, their respective heirs, legal representatives, successors and assigns
(subject to the limitations on assignment by Tenant hereunder), and whenever in
this Lease a reference to either of the parties hereto is made, such reference
shall be deemed to include, wherever applicable, a reference to the heirs,
legal representatives, successors and assigns of said party.

Section 25.04. Intentionally Omitted.

Section 25.05. Tenant shall keep accurate books of account
showing all costs and expenses incurred and charges made and all credits and
returns made and received in connection with the management of the Demised
Premises. Upon written requests from Landlord, Tenant shall furnish to Landlord
copies of significant contracts and agreements relating to maintenance,
operation and upkeep of the Improvements.

Section 25.06. Intentionally Omitted.

Section 25.07. In any circumstances where Landlord is
permitted to enter upon the Demised Premises during this Lease, whether for the
purpose of curing any default of Tenant, repairing damage resulting from fire
or other casualty or an eminent domain taking or is otherwise permitted
hereunder or by law to go upon the Demised Premises, no such entry shall
constitute an eviction or disturbance of Tenant's use and possession of the
Demised Premises or a breach by Landlord of any of its obligations hereunder or
render Landlord liable for damages of 1088 of business or otherwise or entitle
Tenant to be relieved from any of its obligations hereunder or grant Tenant any
right of set-off or recoupment or other remedy; and in

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<PAGE> 38

connection with any such entry incident to performance of repairs,
replacements, maintenance or construction, all of the aforesaid provisions
shall be applicable notwithstanding that Landlord may elect to take building
materials upon the Demised Premises that may be required or utilized in
connection with such entry by Landlord.

Section 25.08. Landlord and Tenant stipulate and agree that
in the event of any breach or threatened breach of any covenant, duty or
obligation of Tenant contained in this Lease, damages would be inadequate and
speculative, and, therefore, Landlord shall be entitled, at Landlord's option,
to the appointment of a receiver, a temporary restraining order and/or a
temporary injunction, without the necessity of proving the inadequacy of any
legal remedy or irreparable harm. Tenant hereby waives any and all defenses to
the application for a receiver, temporary restraining order and/or temporary
injunction, and hereby consents to such action in the event of any breach or
threatened breach by Tenant. The foregoing provisions of this Section 25.08 are
express conditions which this Lease is entered into by Landlord. The remedies
of Landlord hereunder shall be deemed cumulative and no remedy of Landlord,
whether exercised by Landlord or not, shall be deemed to be in exclusion of any
other. Except as may be otherwise herein expressly provided, in all
circumstances under this Lease where prior consent or permission of one party
("first party") is required before the other party ("second party") is
authorized to take any particular type of acting, the matter of whether to
grant such consent or permission shall be within the sole and exclusive
judgment and discretion of the first party; and it shall not constitute any
nature of breach by the first party hereunder or any defense to the performance
of any covenant, duty or obligation of the second party hereunder that the
first party delayed or withheld the granting of such consent or permission,
whether or not the delay or withholding of such consent or permission was
prudent or reasonable or based on good cause.

Section 25.09. In all instances where Tenant is required
hereunder to pay any sum or do any act at a particular indicated time or within
an indicated period, it is understood that time is of the essence.

Section 25.10. The obligation of Tenant to pay all rent and
other sums hereunder provided to be paid by Tenant and the obligation of Tenant
to perform Tenant's other covenants and duties hereunder constitute
independent, unconditional obligations to be performed at all times provided
for hereunder, save and except only when an abatement thereof or reduction
therein is hereinabove expressly provided for and not otherwise. Tenant waives
and relinquishes all rights which Tenant might have to claim any nature of lien
against or withhold, or deduct from or

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<PAGE> 39

off-set against any rent and other sums provided hereunder to be paid Landlord
by Tenant. Tenant waives and relinquishes any right to assert, either as a
claim or as a defense, that Landlord is bound to perform or is liable for the
nonperformance of any implied covenant or implied duty of Landlord not
expressly herein set forth.

Section 25.11. All monetary obligations of Landlord and
Tenant (including, without limitation), any monetary obligation of Landlord or
Tenant for damages for any breach of the respective covenants, duties or
obligations of Landlord or Tenant hereunder) are performable exclusively in
Livermore, Alameda County, California.

Section 25.12. Reference is here made to that certain loan
commitment dated June 10, 1988, as amended by letters dated June 23 and July 8,
1988, issued by American General Investment Corporation to Triad Systems
Corporation (the "Commitment"). As part of the consideration for funding the
loan contemplated under the Commitment (the "Loan"), Triad Systems Corporation
has assigned the Commitment to 3055 Triad Dr. Corp., and it is contemplated
that 3055 Triad Dr. Corp., as maker, shall execute and deliver to The Variable
Annuity Life Insurance Company ("Beneficiary"), as payee, a promissory note in
the amount of $15,500,000.00, which promissory note shall be secured, inter
alia, by a First Deed of Trust and Assignment of Rents, Security Agreement and
Fixture Filing covering, inter alia, the Land (the "Deed of Trust"). Landlord
and Tenant hereby agree that this Lease may be terminated by Tenant upon the
occurrence of any of the following circumstances:

(1) Prior to foreclosure of the Deed of Trust, by payment in full
of all sums payable under the Note and the Deed of Trust
(subject to and in accordance with the terms thereof,
including, without limitation, any provisions thereof
limiting prepayment rights); or

(2) Following foreclosure of the Deed of Trust, by payment of all
sums payable under the Note and Deed of Trust (subject to and
in accordance with the terms thereof, including, without
limitation, any provisions thereof limiting prepayment
rights) as if such foreclosure had not occurred, together
with all costs and expenses incurred by the holder of the
Note in connection with any such foreclosure.

The provisions of this Section 25.12 are not meant to be, and do not
constitute, any amendment or modification of the rights of the holder of the
Note or the Beneficiary under the Deed of Trust. The affidavit by Beneficiary
of the amounts due under

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<PAGE> 40

items (1) or (2) preceding shall be conclusive and binding upon Tenant with
respect to such matters.

This Lease Agreement is hereby executed and delivered
effective as of the date and year first above written.

3055 TRIAD DR. CORP.

By: /s/ JEROME W. CARLSON
------------------------
Name: Jerome W. Carlson
----------------------
Title: Vice President
---------------------

"LANDLORD"

TRIAD SYSTEMS CORPORATION

By: /s/ JAMES R. PORTER
------------------------
Name: James R. Porter
----------------------
Title: President
---------------------

"TENANT"

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<PAGE> 1
EXHIBIT 10.2

FIRST AMENDMENT

PROJECT LEASE AGREEMENT

THIS FIRST AMENDMENT TO PROJECT LEASE AGREEMENT (this "AMENDMENT") is
effective as of the 26th day of February, 1997, by and between Triad Park, LLC,
a California limited liability company ("PARK"), intended successor in interest
to 3055 TRIAD DR. CORP., a California corporation ("3055 CORP") and TRIAD
SYSTEMS CORPORATION, a Delaware corporation ("TRIAD") in the following factual
context:

A. On August 1, 1988, Triad, as Tenant and 3055 Corp., as
Landlord, entered into that certain Project Lease Agreement (the "LEASE")
covering a tract of land containing 15.0633 acres, and being Parcel Two of
Parcel Map 5112, filed September 29, 1987 in Book 122 or Parcel Maps, Pages 11
through 14, inclusive, Alameda County Records (the "DEMISED LAND"), which Lease
also covered the improvements on the Demised Land Agreement consisting of three
(3) buildings containing approximately 219,818 square feet (the
"IMPROVEMENTS").

B. On August 23, 1988, 3055 Corp., as Trustor, and Mason-McDuffie
Financial Corporation, as Trustee, executed that certain First Deed of Trust
and Assignment of Rents, Security Agreement and Fixture Filing, for the benefit
of The Variable Annuity Life Insurance Company, as Beneficiary (the "VARIABLE
DEED OF TRUST"), pursuant to which 3055 Corp. agreed to obtain Beneficiary's
prior consent to any amendment to the Agreement; accordingly, Beneficiary joins
in this Amendment to acknowledge the terms and conditions of and to give its
consent to this Amendment.

C. On February 27, 1997, 3055 Corp. will merge up into its parent
Triad, who will succeed by operation of law to all of 3055 Corp.'s assets and
liabilities, including but not limited to all of its rights, title and interest
in and to the Demised Land and the Improvements, subject to the Variable Deed
of Trust, pursuant to the Real Estate Distribution Agreement entered into among
Triad Systems Corporation, 3055 Triad Dr. Corp. and Triad Park, LLC, dated as
of February 27, 1997 (the "REAL ESTATE DISTRIBUTION AGREEMENT").
<PAGE> 2

D. On February 27 1997, Triad will contribute certain designated
assets to Park, including but not limited to all of Triad's just acquired
rights, title and interest in and to the Demised Land and the Improvements,
subject to the Variable Deed of Trust pursuant to the Real Estate Distribution
Agreement.

E. Subject to all of the terms and conditions of this Amendment,
3055 Corp. and Triad desire to amend the Lease and to anticipate the
acquisition of the Landlord's interest by Park, as more particularly set forth
below.

In this factual context, the parties agree as follows:

SECTION 1. EFFECTIVE DATE.

This Amendment shall be effective on the date (the "EFFECTIVE DATE")
on which Triad contributes the Demised Land subject to the Variable Deed of
Trust to Park pursuant to the Real Estate Distribution Agreement.

SECTION 2. NO MERGER.

Upon the merger of 3055 Corp. into its parent Triad, the interests of
both the Landlord and the Tenant under the Lease shall be held by the same
entity, subject to the assignment for security purposes to The Variable Annuity
Life Insurance Company. The parties agree that the Lease shall not be effected
by Triad having title to both the estates of the Landlord and of the Tenant
under the Lease, that there shall be no merger and that the leasehold estate
shall continue to exist subject to the assignment for security purposes to The
Variable Annuity Life Insurance Company.

SECTION 3. NOVATION.

Upon the transfer by Triad to Park of all of Triad's rights, title and
interest in and to the Demised Land and the Improvements, there shall be a
automatic novation of the Lease resulting in Park being substituted for Triad
(who was the successor to 3055 Corp.) as the Landlord under the Lease and
thereafter Triad and 3055 Corp. shall have no further interest in or liability
for the interest of the Landlord under the Lease. Triad shall continue at all
times to be the Tenant under the Lease.

SECTION 4. TERM.

Subject to all of the terms and conditions as in the Lease, except as
hereinafter provided, the term of the Lease (the "PRIMARY TERM") is for a
period of five (5) years, commencing on the Effective Date and ending at
midnight on the date that is five (5) years after the Effective Date (the
"PRIMARY TERM ENDING DATE").

SECTION 5. RENEWAL OPTION.

Provided and on the condition that no Event of Default has occurred
and be continuing, and subject to all of the terms and conditions as in the
Lease, except as hereinafter provided, Tenant shall have an option (the
"RENEWAL OPTION") to renew the Lease for one (1) renewal term of five (5)
years. Tenant shall notify Landlord no less than two hundred seventy (270)
days prior to the Primary Term Ending Date of its intent to exercise the
Renewal Option. If Tenant so elects

2
<PAGE> 3
to exercise the Renewal Option, the Lease shall extend for a term (the "RENEWAL
TERM") commencing on the day after the Primary Term Ending Date and ending at
midnight on the day that is five (5) years after the Primary Term Ending Date.
Tenant shall have no further right to renew the Lease.

SECTION 6. RENT.

(a) During the first two (2) years of the Primary Term, the Annual
Base Rental payable to Landlord shall be $2,505,720.00, payable monthly in
advance in twelve (12) equal installments, one (1) such installment to be
payable on the first day of each month during the first two (2) years of the
Primary Term.

(b) During the final three (3) years of the Primary Term, the
Annual Base Rental payable to Landlord shall be an amount equal to the then
prevailing market rate ("MARKET RENTAL RATE") in the immediate Alameda County
market area as of the end of the second (2nd) year of the Primary Term (the
"ADJUSTMENT DATE"). At least one-hundred twenty (120) days prior to the end of
the second (2nd) year of the Primary Term, Tenant shall institute the Appraisal
Process (as hereinafter defined) to establish the Market Rate Rental for the
final three (3) years of the Primary Term. If the determination of the Market
Rental Rate is made after the start of the third (3rd) year of the Primary
Term, Tenant shall continue to pay rent at the rate applicable to the preceding
period until the Market Rental Rate is determined. Tenant shall, promptly
after the Market Rental Rate is determined, pay any difference for the period
affected by the adjustment. The Market Rental Rate shall be payable monthly in
advance in twelve (12) equal installments, one (1) such installment to be
payable on the first day of each month during the final three (3) years of the
Primary Term. The foregoing notwithstanding, in no event shall the Annual Base
Rental for the last three (3) years of the Primary Term be less than the rental
called for in Section 6(a) nor more than 1.2 times the rental called for in
Section 6(a).

(c) During the Renewal Term, the Annual Base Rental payable to
Landlord shall be an amount equal to the then prevailing market rate ("RENEWAL
RENTAL RATE") in the immediate Alameda County market area as of the
commencement of the Renewal Term. At least one-hundred twenty (120) days prior
to the end of the Primary Term, Tenant shall institute the Appraisal Process to
establish the Renewal Rental Rate for the Renewal Term. The Adjustment Date
for determining the Renewal Rental Rate shall be the Primary Term Ending Date.
If the determination of the Renewal Rental Rate is made after the start of the
Renewal Term, Tenant shall continue to pay rent at the rate applicable to the
preceding period until the Renewal Rental Rate is determined. Tenant shall,
promptly after the Renewal Rental Rate is determined, pay any difference for
the period affected by the adjustment. The Renewal Rental Rate shall be
payable monthly in advance in twelve (12) equal installments, one (1) such
installment to be payable on the first day of each month during the Renewal
Term.

3
<PAGE> 4
(d) The "Appraisal Process" is begun by Tenant's designation of an
appraiser (the "FIRST APPRAISER") to determine the Market Rental Rate or the
Renewal Rental Rate, as the case may be (collectively, the "APPRAISED RATE") of
the Demised Premises. The First Appraiser shall make and deliver to Tenant and
Landlord an appraisal of the Demised Premises Appraised Rate (the "FIRST
APPRAISED RATE") within twenty (20) business days of its appointment. At the
election of Landlord, an appraiser (the "SECOND APPRAISER") shall be appointed
within seven (7) days following delivery of the First Appraised Rate. The
Second Appraiser shall make and deliver to Tenant and Landlord a second
appraisal of the Demised Premises Appraised Rate (the "SECOND APPRAISED RATE")
within twenty (20) business days of its appointment. In the event that the
First Appraised Rate and the Second Appraised Rate do not differ by more than
ten percent (10%) of the lower value, the average of the First Appraised Rate
and Second Appraised Rate shall be deemed to be the Market Rental Rate or the
Renewal Rental Rate, as the case may be. In the event that the First Appraised
Rate and the Second Appraised Rate differ by more than ten percent (10%) of the
lower value, the First Appraiser and the Second Appraiser shall, within seven
(7) days following the delivery of the Second Appraised Rate, appoint a third
appraiser (the "THIRD APPRAISER" and together with the First Appraiser and the
Second Appraiser, the "APPRAISERS"), who shall deliver to Tenant and Landlord
an appraisal of the Demised Premises Appraised Rate (the "THIRD APPRAISED
RATE") within fifteen (15) business days following its appointment by the First
Appraiser and the Second Appraiser. The one, if any, of the First Appraised
Rate, the Second Appraised Rate or the Third Appraised Rate which differs the
most from the other two shall not be considered, and the average of the two
remaining values shall be the Market Rental Rate or the Renewal Rental Rate, as
the case may be. Each of the Appraisers shall make their respective appraisals
as of the Adjustment Date. Each appraisal shall reflect the gross fair market
rental value of the Demised Premises. The Appraisers shall be disinterested,
independent and shall be qualified to appraise premises of the nature of the
Demised Premises, and such Appraisers shall have been actively engaged in the
appraisal of premises of the nature of the Demised Premises for a period of not
less than five (5) years immediately preceding their appointment under this
Amendment. The expenses and fees, including without limitation the fees of the
Appraisers and any legal and accounting fees, incurred in connection with the
appraisal(s) conducted pursuant to this Section 6(d) shall be shared equally by
Tenant and Landlord.

(e) The determination of "gross fair market rental value" shall be
the reasonable good faith estimate of the market rental rate per square foot of
the Demised Premises for office type rental space of comparable size, age,
location and quality.

SECTION 7. ADDITIONAL RENT AND IMPOSITIONS.

In addition, during the Primary Term and the Renewal Term, Tenant
shall pay all other rent and other amounts due under the Lease, including
without limitation, additional rent and other charges described in Article 3 of
the Lease and the Impositions described under Article 4 of the Lease.

4
<PAGE> 5
SECTION 8. RIGHT TO SUBLEASE.

Article 10 of the Lease is amended by adding the following Section
10.05:

Section 10.05. In the event Landlord consents to a sublease
of any portion of the Demised Premises, which consent Landlord agrees shall not
be unreasonably withheld, Tenant agrees that if the rental rate agreed upon
between Tenant and its proposed sublessee is greater than the rental rate for
such allocable portion of the Demised Premises that Tenant must pay to Landlord
under this Amendment, all of such excess rent shall be considered additional
rent owed by Tenant to Landlord (less brokerage commissions, attorneys' fees
and other disbursements reasonably incurred by Tenant for such subletting) and
shall be paid by Tenant to Landlord as, if, and when received from such
sublessee in the same manner that Tenant pays Annual Base Rental.

SECTION 9. CONTINUING EFFECT/DEFINED TERMS.

Except as expressly modified herein, the Lease shall continue in full
force and effect in accordance with its terms. All defined terms used herein
without definition shall have the meaning ascribed to such terms as set forth
in the Lease.

SECTION 10. EFFECTIVENESS.

This Amendment does not become effective as an amendment to the Lease
until executed and delivered by both Landlord and Tenant.

The undersigned parties have executed this Amendment as of the day and
year first above written.

LANDLORD:

3055 CORP., a California corporation

By: /s/ JAMES R. PORTER
----------------------------------
Name: James R. Porter
-----------------------------
Title: President
----------------------------

5
<PAGE> 6
SUBSTITUTED LANDLORD

TRIAD PARK, LLC, a California limited
liability company

By 3055 MANAGEMENT CORP., a California
corporation; its sole manager

By: /s/ JAMES R. PORTER
----------------------------------
Name: James R. Porter
-----------------------------
Title: President
----------------------------

TENANT:

TRIAD SYSTEMS CORPORATION, a Delaware
corporation

By: /s/ JAMES R. PORTER
----------------------------------
Name: James R. Porter
-----------------------------
Title: President
----------------------------

Acknowledged and Consented to,
this day of , 1997.
----- ----------

THE VARIABLE ANNUITY LIFE
INSURANCE COMPANY, as Mortgagee

By:
- ----------------------------------
Name:
-----------------------------
Title:
----------------------------

<PAGE> 1
EXHIBIT 10.3

LEASE AGREEMENT

Between

COMPUTERIZED PROPERTIES, INC.

as Landlord,

and

COOPERATIVE COMPUTING, INC.

As Tenant,

Covering approximately 36,000 gross square feet
of the Building known (or to be known) as

DEERBROOK OFFICE BUILDING

located at

6207 Bee Cave Road

Austin, Texas 78746
<PAGE> 2
Approximately 36,000 gross square feet 6207 Bee Cave Road, Austin, Texas 78746

LEASE AGREEMENT

THIS LEASE AGREEMENT is made and entered into by and between Computerized
Properties, Inc., hereinafter referred to as "Landlord," and Cooperative
Computing, Inc., hereinafter referred to as "Tenant."

1. PREMISES AND TERM. In consideration of the mutual obligations of Landlord
and Tenant set forth herein, Landlord leases to Tenant, and Tenant hereby takes
from Landlord, certain leased premises situated within the County of Travis,
State of Texas, as more particularly described on -EXHIBIT "A" attached hereto
and incorporated herein by reference (the "Premises"), to have and to hold,
subject to the terms, covenants and conditions in this Lease. The term of this
Lease shall commence on the Commencement Date hereinafter set forth and shall
end on the last day of the month that is one hundred twenty (120) month after
the Commencement Date.

Existing Building and Improvements. If no material improvements are to be
constructed to the Premises, the "Commencement Date" shall be June 1, 1992. In
such event, Tenant acknowledges that (i) it has inspected and accepts the
Premises in its "as is" condition, (ii) the buildings and improvements
comprising the same are suitable for the purpose for which the Premises are
leased, (iii) the Premises are in good and satisfactory condition, and (iv) no
representations as to the repair of the Premises nor promises to alter, remodel
or improve the Premises have been made by Landlord (unless otherwise expressly
set forth in this Lease).

2. BASE RENT, SECURITY DEPOSIT AND ESCROW DEPOSITS.

A. Base Rent. Tenant agrees to pay Landlord rent for the Premises, in advance,
without demand, deduction or set off, at the rate set forth in Exhibit B during
the term hereof. One such monthly installment, plus the other monthly charges
set forth in Paragraph 2C below shall be due and payable on the date hereof,
and a monthly installment per Exhibit B shall be due and payable on or before
the first day of each calendar month succeeding the Commencement Date, except
that all payments due hereunder for any fractional calendar month shall be
prorated.

B. Security Deposit. In addition, Tenant agrees to deposit with Landlord on the
date hereof the sum of Twenty Four Thousand and 00/100 dollars ($24,000.00),
which shall be held by Landlord, without obligation for interest, as security
for the performance of Tenant's obligations under this Lease (the "Security
Deposit), it being expressly understood and agreed that the Security Deposit is
not an advance rental deposit or a measure of Landlord's damages in case of
Tenant's default. Upon occurrence of an Event of Default, Landlord may use All
or part of the Security Deposit to pay past due rent or other payments due
Landlord under this Lease or the cost of any other damage, injury, expense or
liability caused by such Event of Default, without prejudice to any other
remedy provided herein or provided by law. On demand, Tenant Shall pay Landlord
the amount that will restore the Security Deposit to its original amount. The
Security Deposit shall be deemed the property of Landlord, but any remaining
balance of the Security Deposit shall be returned by Landlord to Tenant when
all of Tenant's present and future obligations under this Lease have been
fulfilled.

C. Escrow deposits. Without limiting in any way Tenant's other obligations
under this Lease, Tenant agrees to pay to Landlord its Proportionate Share (as
defined in this Paragraph 2C below) of (i) Taxes (hereinafter defined) payable
by Landlord pursuant to Paragraph 3A below, (ii) the cost of utilities payable
by Landlord pursuant to Paragraph 8 below, (iii) Landlord's cost of maintaining
insurance pursuant to Paragraph 9A below, and (iv) Landlord's cost of
maintaining the Premises pursuant to paragraph SE below and any common area
charges payable by Tenant in accordance with Paragraph 4B below (collectively
the "Tenant Costs"). During each month of the term of thin Lease, on the same
day that rent is due hereunder, Tenant shall deposit in escrow with Landlord an
amount equal to one-twelfth (1/12) of the estimated amount of Tenant's
Proportionate Share of the Tenant Costs. Tenant authorize Landlord to use the
funds deposited with Landlord under this Paragraph 2C to pay such Tenant Costs.
The initial monthly escrow payments are based upon the estimated amounts for
the year in question and shall be increased or decreased annually to reflect
the projected actual amount of all Tenant Costs. If the Tenant's total escrow
deposits for any calendar year are less than Tenant's actual Proportionate
Share of the Tenant Costs for such calendar year, Tenant shall pay the
difference to Landlord within ten (10) days after demand. If the total escrow
deposits of Tenant for any calendar year are more than Tenant's actual
Proportionate Share of the Tenant Costs for such calendar year, Landlord shall
retain such excess and credit it against Tenant's escrow deposits next maturing
after such determination. In the event the Premises constitute a portion of a
multiple occupancy building (the "Building"), Tenant's "Proportionate Share"
with respect to the Building, as used in this Lease, shall mean a fraction, the
numerator of which is the gross rentable area contained in the Premises and the
denominator of which is the gross rentable area contained in the entire
Building. In the event the Premises or the Building is part of a project or
business park owned, managed or based by Landlord or an affiliate of Landlord
(the "Project), Tenant's "Proportionate Share" of the Project, as used in this
Lease, shall mean a fraction, the numerator of which is the gross rentable area
contained in the Premises and the denominator of which is the gross rentable
area contained in all of the buildings (including the Building) within the
Project.

3. TAXES

A. Real Property Taxes. Subject to reimbursement under Paragraph 2C herein,
Landlord agrees to pay All taxes assessments and governmental charges of any
kind and nature (collectively referred to herein as "Taxes) that accrue against
the Premises, the Building and/or the land of which the Premises or the
Building are a part. If at any time during the term of this Lease there Shall
be levied, assessed or imposed on Landlord a capital levy or other tax directly
on the rents received therefrom and/or a franchise tax, assessment, levy or
charge measured by or based, in whole or in part, upon such rents from the
Premises and/or the land and improvements of which the Premises are a part,
then all such taxes, assessments, levies or charges, or the part thereof so
measured or based shall be deemed to be included within the term "Taxes" for
the purposes hereof. The Landlord shall have the right to employ a tax
consulting firm to attempt to assure a fair tax burden on the real property
within the applicable taxing Jurisdiction. Tenant agrees to pay Its
Proportionate Share of the cost of such consultant.

B. Personal Property Taxes. Tenant Shall be liable for All taxes levied or
assessed against any personal property or fixtures placed in or on the
Premises. If any such taxes are levied or assessed against Landlord or
Landlord's property and (i) Landlord pays the same or (ii) the assessed value
of Landlord's property is increased by inclusion of such personal property and
fixtures and Landlord pays the increased taxes, then Tenant shall pay to
Landlord, upon demand, the amount of such taxes.

4. LANDLORD'S REPAIRS AND MAINTENANCE.

A. Structural Repairs. Landlord, at its own cost and expense, shall maintain
the roof, foundation and the structural soundness of the exterior walls of the
Building in good repair, reasonable wear and tear excluded. The term "walls" as
used herein shall not include windows, glass or plate glass, any doors, special
store fronts or office entries, and the term "foundation" as used herein shall
not include loading docks. Tenant shall immediately give Landlord written
notice of defect or need for repair, after which landlord shall have reasonable
opportunity to effect such repairs or cure such defect.

B. Tenant's Share of Common Area Charges. Tenant agrees to pay it's
Proportional Share of the cost of (i) maintenance and/or landscaping (including
both maintenance and replacement of landscaping) of any property that is a part
of the Building and/or the

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Project; (ii) operating, maintaining and repairing any property, facilities or
service. (including without limitation utilities and insurance therefore)
provided for the use or benefit of Tenant or the common use or benefit of
Tenant and other lessees of the Project or the building; and (iii) an
administrative fee of fifteen percent (15%) of all common area maintenance
charge.

5. TENANT'S REPAIRS.

A. Maintenance of Premise. and Appurtenances. Tenant, at its own cost and
expense, shall (i) maintain all parts of the Premises and promptly make all
necessary repairs and replacements to the Premises (except those for which
landlord is expressly responsible hereunder), and (ii) keep the parking' areas,
driveways and alleys surrounding the Premises in a clean and sanitary condition
Tenant's obligation align to maintain, repair and make replacements to the
Premises shall cover, but not be limited to, pest control (including termites),
trash removal and the maintenance, repair and replacement of all HVAC,
electrical, plumbing, sprinkler and other mechanical systems

B Parking Tenant and its employees customers and licensees shall have the right
to use only its Proportionate Share of any parking areas shall have been
designated for such use by Landlord in writing subject to (i) all rules and
regulations promulgated by Landlord and (ii) rights of ingress and engress of
other lessees I Landlord shall not be responsible for enforcing Tenant 's
parking rights against any third parties and Tenant expressly does not have the
right to tow or obstruct improperly parked vehicles. Tenant agrees not to park
on any public street or private roadways adjacent lot or in the vicinity of the
Premises.

C System Maintenance. Tenant at its own cost and expense shall enter into a
regularly schedule preventive maintenance/.service contract will a maintenance
contract approved by Landlord for servicing all hot water heating and air
conditioning systems and equipment within the Premises The service contract
must( include all services suggested by the equipment manufacturer in its
operations/maintenance manual and must become effective within thirty (30) days
of the date Tenant takes possession of the Premises.

D. Option to Maintain Premises. Landlord reserves the right to perform in whole
or in part and without notice to Tenant maintenance repairs and replacements to
the Premises paving common area landscape exterior painting common sewage line
plumbing and any other items that are otherwise Tenant s obligations under this
Paragraph 5 in which event Tenant shall be liable for a Proportionate Share of
the cost and expense of such repair replacement maintenance and other such
items

6. ALTERATIONS. Tenant shall not make any alterations additions or improvements
to the Premises without the prior written consent of Landlord Tenant at its own
cost and expense may erect such shelves, bins, machinery and trade fixtures as
it desires provided that (i) such items do not alter the basic character of the
Premises or the Building (ii) such items do not overload or damage same (iii)
such items may be removed without injury to the Premises and (iv) the
construction erection or installation thereof complies with all applicable e
governmental laws ordinances regulations and with Landlord specifications' and
requirements Tenant shall be responsible for compliance with The Americans With
[)disabilities Act of 1990 Without implying: any consent of landlord thereto
all alterations additions improvements and partitions erected by Tenant shall
he and remain the property of Tenant during the Lease of this Lease All shelves
bins machinery and trade fixtures installed by Tenant shall be removed on or
before the earlier to occur of the Jay of termination or expiration of this
Lease or vacating the Premises at which time Tenant shall restore the Premises
to their original condition All alterations installations removal and
restorations shall be performed in a good and workmanlike manner so as not to
Damage or alter the primary structure or structural qualities of the Building
or other improvements situated on the Premises or of which the Premises are a
part

7. SIGNS. Any sign Tenant desires for the Premises shall be subject to Landlord
written approval and shall be submitted to Landlord prior to (the Commencement
Date of this Lease Tenant shall repair paint and/ replace the building fascia
surface to which its signs are attached upon Tenant's vacating the Premises or
the removal or alteration of its signage Tenant shall not without landlord's
prior written consent (i) make any changes to the exterior of the Premises such
as painting (ii) install any exterior lights ht. decorations balloons flags
pennants or banners; or (iii) erect or install any signs windows or door
lettering placards decorations or advertising media of any type which can be
viewed from the exterior of the Premises All signs decorations advertising
media blinds draperies and other window treatment or bars or other security
installations visible from outside the Premises shall conform in all respects
to the criteria established by Landlord or shall be otherwise subject to
Landlord's prior written consent.

8. UTILITIES. Landlord agrees to provide normal water and electricity service
to the Premises Tenant shall pay for all water gas heat light power telephone
sewer sprinkler charges and other utilities and services used on or at the
Premises together with any taxes penalties surcharge or the like pertaining to
the Tenant's use of the Premises and any maintenance charges for utilities
Landlord shall have the right to cause any of said services to be separately
metered to Tenant at Tenant's expense Tenant shall pay its pro rata share as
reasonably determined by Landlord of all charges for jointly metered utilities.
Landlord shall not be liable for any interruption or failure of utility service
on the Premises and Tenant shall have no right, or claims as a rebuilt of any
such failure In the event water is not separately metered to Tenant, Tenant
agrees that it will not use water and sewer capacity for uses other than normal
domestic restroom and kitchen usage and Tenant funkier agrees to reimburse
Landlord for the entire amount of common water and sewer costs as additional
rents if in fact Tenant uses water or sewer capacity for uses other than normal
domestic restroom and kitchen uses without first obtaining Landlord's written
permission including but not limited to the cost for acquiring additional sewer
capacity to service Tenant's excess sewer use. Furthermore Tenant agrees in
such event to install al its own expense a submeter to determine Tenant's usage

9. INSURANCE:

A Landlord Insurance Subject to reimbursement under Paragraph C herein Landlord
shall maintain insurance covering the building in an amount not less than
eighty percent (80%) of the "replacement cost" through insuring a against the
perils of fire lightning extended coverage vandalism and malicious mischief

B Tenant's Insurance Tenant at its own cost shall maintain during the term of
Lease a policy or policies of worker's compensation and comprehensive general
liability insurance including personal injury and property damage with
contractual liability endorsement in the amount of Five Hundred thousand
Dollars ($500,000.00) for property damage and One Million Dollar per occurrence
and One million Dollars ($ 1, 000, 000 .00) in the aggregate for personal
injuries or deaths of persons occurring in or about the Premises Tenant at its
own expense, shall also maintain during the term of this Lease, fire and
extended coverage insurance covering the replacement cost of (i) all
alterations and additions partitions and improvements install or placed on the
Premises by Tenant or by Landlord on behalf of Tenant; and (ii) all of Tenant's
personal property contained within the Premises' said policies shall (i) name
the Landlord as an additional insured and inure Landlord's contingent liability
under or in connection with this Lease (except for the workers' compensation
policy which instead shall include a waiver of subrogation endorsement in favor
of Landlord) (ii) be issued by an insurance company; which is acceptable to
Landlord and (iii) ,provide that said insurance shall not be canceled unless
thirty (30) days prior written notice has been given to landlord said policy or
policies or certificates thereof shall be delivered to Landlord by Tenant on or
before the Commencement Date and upon each renewal of said insurance

C Prohibited Uses Tenant will not permit the Premises t be used for any purpose
or in any manner that would (i) void the insurance risk (ii) increase the
insurance risk or (iii) cause the disallowance of any sprinkler credits;
including without limitation, use of the Premises for the receipt, storage or
handling of any product, material or merchandise that is explosive highly

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inflammable. If any increase in the cost of any insurance on the Premises or
the Building is caused by Tenant's use of the Premises or because Tenant
vacates the Premises, then Tenant shall pay the amount of such increase due to
Landlord upon demand therefor.

10. FIRE AND CASUALTY DAMAGE.

A. Total or Substantial Damage and Destruction. If the Premises or the Building
should be damaged or destroyed by fire or other peel, Tenant shall immediately
give written notice to Landlord of such damage or construction If the Premises
or the Building should be totally destroyed by any peril covered by the
insurance to be provided by Landlord under Paragraph 9A above, or if they
should be so damaged thereby that in Landlord's estimation, rebuilding or
repairs cannot be completed within one hundred eighty (180) days after the date
of such damage or after such completion there would not be enough lime
remaining under the terms of this Lease to fully amortize such rebuilding or
repairs, then this Lease shall terminate and the rent shall be abated during
the unexpired portion of this Lease, effective upon the dale of the occurrence
of such damage.

B. Partial Damage or Destruction. If the Premises or the building should be
damaged by any peril covered by the insurance to be provided by Landlord under
Paragraph 9A above and, in Landlord's estimation, rebuilding or repairs can be
substantially completed within one hundred eighty (180) days after the sale of
such damage, then this Lease shall not terminate and Landlord shall
substantially restore the Premises to its previous condition, except that
Landlord shall not be required to rebuild repair or replace any part of the
partitions, fixtures, additions and other improvements that may have been
constructed, erected or installed in or about the Premises for the benefit of,
by or for Tenant.

C. Leinholders' Rights in Proceeds. Notwithstanding anything; herein to the
contrary in the event the holder of any indebtedness secured by a mortgage or
deed of trust covering the Premises requires that the insurance process be
applied to cover indebtedness then Landlord shall have the right to terminate
this Lease by delivering written notice of termination to Tenant within fifteen
(15) day after such requirement is made known to Landlord to any such holder
whereupon all rights and obligations hereunder shall cease and terminate.

D. Waiver of Subrogation Notwithstanding anything in this Lease to the contrary
Landlord and Tenant hereby waive and release each other of and from any and all
rights of recovery claims actions or causes of action against each other or
their respective agents, officers and employees for any loss or damage that may
occur to the Premises improvements, to the Building or personal property
(Building contents) within the Building and/or Premises for any reason
regardless of cause or origin. Each party to this Lease agrees immediately
after execution of this Lease to give written notice of the terms of the mutual
waivers contained in this sub paragraph to each insurance company that has
issued to such party policies of fire and extended coverage insurance and to
have the insurance policies properly endorsed to provide that the carriers of
such policies waive all rights of recovery under subrogation or otherwise
against the other party.

11. Liability and Indemnification. Except for any claims, rights of recovery
and causes of action that Landlord has released, Tenant shall hold Landlord
harmless from and defend Landlord against any and all claims or liability for
any injury or damage (i) to any person or property whatsoever occurring in, on
or about the Premises or any pan thereof, the Building and/or other common
areas the use of which Tenant may have in accordance with this Lease, if (and
only if) such injury or damage shall be caused in whole or in part by the act,
neglect, fault or omission of any duty by Tenant, its agents, servants,
employees or invitees; (ii) arising from the conduct or management of any work
done by the Tenant in or about the Premises; (iii) arising from transactions of
the Tenant; and (iv) all costs, counsel fees, expenses and liabilities incurred
in connection with any such claim or action or proceeding brought thereon. The
provisions of this Paragraph 11 shall survive the expiration or termination of
this Lease. Landlord shall not be liable in any event for personal injury or
loss of Tenant's property caused by fire, flood, water leaks, rain, hail, ice,
snow, smoke, lightning, wind, explosion, interruption of utilities or other
occurrences. Landlord strongly recommends that Tenant secure Tenant's own
insurance in excess of the amounts required elsewhere in this lease to protect
against the above occurrences if Tenant desires additional coverage for such
risks. Tenant shall give prompt notice to Landlord of any significant accidents
involving injury to persons or property. Furthermore, Landlord shall not be
responsible for lost or stolen personal property, equipment, money or jewelry
from the Premises or from the public area of the Building or the Project,
regardless of whether such loss occurs when the are is locked against entry.
Landlord shall not be liable to Tenant or Tenant's employees, customers or
invitees for any damages or losses to persons or property caused by any lessees
in the Building or the Project, or for any damages or losses caused by theft
burglary, assault, vandalism or other crimes. Landlord strongly recommends that
Tenant provide its own security systems and services and secure Tenant's own
insurance in excess of the amounts required elsewhere in this Lease to protect
against the above occurrences if Tenant desires additional protection or
coverage for such risks. Tenant shall give Landlord prompt notice of any
criminal or suspicious conduct within or about the Premises, the Building or
the Project and/or any personal injury or property damage caused thereby.
Landlord may, but is not obligated to, enter into agreements with third parties
for the provision, monitoring, maintenance and repair of any courtesy patrols
or similar services or fire protective systems and equipment and, to the extent
same is provided at Landlord's sole discretion. Landlord shall not be liable to
Tenant for any damages, costs or expenses which occur for any reason in the
event any such system or equipment - not properly installed, monitored or
maintained or any such services are not properly provided. Landlord shall use
reasonable diligence in the maintenance of existing lighting, if any, in the
parking garage or parking areas servicing the Premises, and Landlord shall not
be responsible for additional lighting or any security measures in the Project,
the Premises, the parking garage or other parking areas.

12. USE. The Premises shall be used only for the purpose of receiving, storing,
shipping and selling (other than retail), products, materials and merchandise
made and/or distributed by Tenant and for such other lawful purposes as may be
directly incidental thereto. Outside storage, including without limitation
storage of trucks and other vehicles, is prohibited without landlord's prior
written consent. Tenant shall comply with all governmental laws, ordinances and
regulations applicable to the use of the Premises and shall promptly comply
with all governmental orders and directives for the correction, prevention and
abatement of nuisances in, upon or connected with the Premises, all at Tenant's
sole expense. Tenant shall not permit any objectionable or unpleasant odors,
smoke, dust, gas, noise or vibrations to emanate from the Premises, nor take
any other action that would constitute a nuisance or would disturb,
unreasonably interfere with or endanger Landlord or any other lessees of the
Building or the Project.

13. HAZARDOUS WASTE. The term "Hazardous Substances," as used I this Lease,
shall mean pollutants, contaminants, toxic or hazardous wastes, radioactive
materials or any other substances, the use and/or the removal of which is
required or the use of which is restricted, prohibited or penalized by any
"Environmental Law," which term shall mean any federal, state or local statute,
ordinance, regulation or other law of a governmental or quasigovernmental
authority relating to pollution or protection of the environment or the
regulation of the storage or handling of Hazardous Substances. Tenant hereby
agrees that: (i) no activity will be conducted on the Premises that will
produce any Hazardous Substances, except for such activities that are part of
the ordinary course of Tenant's business activities (the "Permitted
Activities"), provided said Permitted Activities are conducted in accordance
with all Environmental Laws and have been approved in advance in writing by
Landlord and, in connection therewith, Tenant shall be responsible for
obtaining any required permits or authorizations and paying any fees and
providing any testing required by any governmental agency; (ii) the Premises
will not be used in any manner for the storage of any Hazardous Substances,
except for the temporary storage of such materials that are used in the
ordinary course of Tenant's business (the "Permitted Materials"), provided such
Permitted Materials are properly stored in a manner and location meeting all
Environmental Laws and have been approved in advance in writing by Landlord,
and, in connection therewith. Tenant shall be responsible for obtaining any
required permits or authorizations and paying any fees and providing any
testing required by any governmental agency; (iii) no portion of the Premises
will be used as a landfill or a dump; (iv) Tenant will not install any
underground tanks of any type; (v) Tenant will not allow any surface or
subsurface conditions to exist or come into existence that constitute, or with
the passage of time may constitute,

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a public or private nuisance; and (vi) Tenant will not permit any Hazardous
Substances to be brought onto the Premises, except for the Permitted Materials,
and if so brought or found located thereon, the same shall be immediately
removed, with proper disposal, and all required clean-up procedures shall be
diligently undertaken by Tenant at its sole cost pursuant to all Environmental
Laws. Landlord and Landlord's representatives shall have the right but not the
obligation to enter the Premises for the purpose of inspecting the storage, use
and disposal of any Permitted Materials to ensure compliance with all
Environmental Laws. Should it be determined, in Landlord's sole opinion, that
any Permitted Materials are being improperly stored, used or disposed of, then
Tenant shall immediately take such corrective action as requested by Landlord.
Should Tenant fail to take such corrective action within twenty-four (24)
hours, Landlord shall have the right to perform such work and Tenant shall
reimburse Landlord, on demand, for any and all costs associated with said work.

If at any time during or after the term of this Lease, the Premises is found to
be contaminated with Hazardous Substances Tenant shall diligently institute
proper and thorough cleanup procedures, at Tenant's sole cost. Tenant agrees to
indemnify and hold Landlord harmless from all claims, demands, actions,
liabilities, costs, expenses, damages, penalties and obligations of any nature
arising from or as a result of any contamination of the Premises with Hazardous
Substances, or otherwise arising from the use of the Premises by Tenant. The
foregoing indemnification and the responsibilities of Tenant shall survive the
termination or expiration of this Lease.

14. INSPECTION. Landlord's agents and representatives shall have the right to
enter the Premises at any reasonable time during business hours (or at any time
in case of emergency) (i) to inspect the Premises, (ii) to make such repairs as
may be required or permit pursuant to this Lease, and/or (ii) during the last
six (6) months of the Lease term, for the purpose of showing the Premises. In
addition, Landlord shall have the right to erect a suitable sign on the
Premises stating the Premises are available for lease. Tenant shall notify
Landlord in writing at least thirty (30) days prior to vacating the Premises
and shall arrange to meet with Landlord for a joint inspection of the Premises
prior to vacating. If Tenant fails to give such notice or to arrange for such
inspection, then Landlord's inspection of the Premises shall be deemed correct
for the purpose of determining Tenant's responsibility for repairs and
restoration of the Premises.

15. ASSIGNMENT AND SUBLETTING. Tenant shall not have the right to sublet,
assign or otherwise transfer or encumber this Lease, or any interest therein,
without the prior written consent of Landlord. Any attempted assignment,
subletting, transfer or encumbrance by Tenant in violation of the terms and
covenants of this paragraph shall be void. Any assignee, sublessee or
transferee of Tenant's interest in this Lease (all such assignees, sublesses
and transferees being hereinafter referred to as "Transferees") by assuming
Tenant's obligations hereunder, shall assume liability to Landlord for all
amounts paid to persons other than Landlord by such Transferees to which
Landlord is entitled or is otherwise in contravention of this Paragraph 15. No
assignment, subletting or other transfer, whether or not consented to by
Landlord or permitted hereunder, shall relieve Tenant of its liability under
this Lease. If an Event of Default occurs while the Premises or any part
thereof are assigned or sublet, then landlord, in addition to any other
remedies herein provided or provided by law, may collect directly from such
Transferee all rents payable to the Tenant and apply such rents against any
sums due to Landlord hereunder. No such collection shall be construed to
constitute a novation or a release of Tenant from the further performance of
Tenant's obligations hereunder. If Landlord consents to any subletting or
assignment by Tenant as hereinabove provided and any category of rent
subsequently received by Tenant under any such sublease is in excess of the
same category of rent payable under this Lease, or any additional consideration
is paid to Tenant by the assignee under any such assignment, then Landlord may,
at its option, declare such excess rents under any sublease or such additional
consideration for any assignment to be due and payable by Tenant to Landlord as
additional rent hereunder. The following shall additionally constitute an
assignment of this Lease by Tenant for the purposes of this Paragraph 15: (i)
if Tenant is a corporation, any merger, consolidation, dissolution or
liquidation, or any change in ownership or power to vote of thirty percent
(30%) or more of Tenant's outstanding voting stock; (ii) if Tenant is a
partnership, joint venture or other entity, any liquidation, dissolution or
transfer of ownership of any interests totaling thirty percent (30%) or more of
the total interests in such entity. (iii) tile sale, transfer, exchange,
liquidation or other distribution of more than thirty percent (30%) of Tenant's
assets, other than this Lease; or (iv) the mortgage, pledge, hypothecation or
other encumbrance of or grant of a security interest by Tenant in this Lease,
or of any of Tenant's rights hereafter.

16. CONDEMNATION If more than eighty percent (80%)of the Premises are taken for
any public or quasi-public use under governmental law, ordinance or regulation,
or by right of eminent domain or private purchase in lieu thereof and the
tacking materially interfere with the use of the remainder of the Premises for
the purpose for which they were leased to Tenant, then this Lease shall
terminate and the rent shall be abated during the unexplored portion of this
Lease, effective on the date of such taking. If less than eighty percent (80%)
of tile Premises are taken for any public or quasi-public use under any
governmental law, ordinance or regulation, or by right of eminent domain or for
private purchase in lieu thereof, or if the taking does not prevent or
materially interfere with the use of the remainder of the Premises for the
purpose for which they were leased to Tenant, then this lease shall not
terminate, but the rent but the rent payable hereunder during the unexpired
portion of this lease shall be reduced to such an extent as may be fair and
reasonable under all of the circumstances. All compensation awarded in
connection with as a result of any of the foregoing proceedings shall be the
property of Landlord, and tenant hereby assigns ant interest in any such award
to Landlord; provided, however Landlord shall have no interest in any ward made
to Tenant for loss of business or goodwill or for the taking of Tenant's trade
fixtures and personal property, is a separate award of such items is made to
Tenant.

17. HOLDING OVER. At the termination of this Lease by its expiration or
otherwise, Tenant shall immediately deliver possession of the Premises to
Landlord with all repairs and maintenance required herein to be performed by
Tenant completed. If for any reason, Tenant retains possession of the Premises
after the expiration or termination of this Lease, unless the parties hereto
otherwise agree in writing, such possessions shall be deemed a tenancy at will
only, and all of the other items and provisions of this Lease shall be
applicable during such period, except that Tenant shall pay Landlord from time
to time, upon demand, as rental for the period of such possession, an amount
equal to one and one-half (1 1/2) times the rent in effect on the date of such
termination of this Lease, computed on a daily basis for each day of such
period. No holding over by Tenant, whether with or without consent of Landlord,
shall operate to extend this as otherwise expressly provided. The preceding
provisions of this Paragraph 17 shall not be construed as content for Tenant to
retain possession of the Premises in the absence of written consent thereto by
Landlord.

18. QUIET ENJOYMENT. Landlord represents that it has the authority to enter
into this Lease and that, so long as Tenant pays all amounts due hereunder and
performs all other covenants and agreements herein set forth, Tenant shall
peaceably and quietly have, hold and enjoy the Premises for the term hereof
without hindrance or molestation from Landlord, subject to the terms and
provisions of this Lease.

19. EVENTS OF DEFAULT. The following events (herein individually referred to as
an 'Event of Default') each be deemed to be a default in or breach of Tenant's
obligation, under this Lease:

A. Tenant shall fail to pay any installment of the rent herein reserved when
due, or any other payment or reimbursement to Landlord required herein when
due, and such failure shall continue for a period of five (5) days from the
date such payment was due.

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<PAGE> 6
B. Tenant shall (i) vacate or abandon all or a substantial portion of the
Premises or (ii) fail to continuously operate its business d the Premises for
the permitted use set forth herein in either event whether or not Tenant is in
default of the rental payments due under this Lease.

C. Tenant shall fail to discharge any lien placed upon the Premises in
violation of Paragraph 22 lease within twenty (20) days after any such lien or
encumbrance is filed against the Premises.

D. Tenant shall default in the performance of any of its obligations under any
other lease to Tenant from Landlord, or from any person or entity affiliated
with or related to Landlord, and same shall remain uncured after the lapsing of
any applicable cured periods provided for under such other lease.

E. Tenant shall fail to comply with any term, provision or covenant of this
Lease (other than those listed above in this paragraph) and shall not cure such
failure within twenty (20) days after written notice thereof from Landlord.

20. REMEDIES. Upon each occurrence -f an Event of Default, Landlord shall have
the option to pursue any one or more of the following remedies without any
notice or demand;

(a) Terminate this Lease;

(b) Enter upon and take possession of the Premises without terminating Lease;

(c) Make such payments and/or take such action Landlord perform whatever Tenant
is obligated to pay or perform under the terms of this Lease, and Tenant agrees
that Landlord shall not in liable for any damages resulting from such action;
and/or

(d) After all Locks ad other security devices at the Premises, with or without
terminating this Lease, and pursue, at Landlord's option, one or more remedies
pursuant to this Lease, and Tenant hereby expressly agrees that Landlord shall
not be required to provide to Tenant the new key to the Premises, regardless of
hour, including Tenant's regular business hours; and in any such event Tenant
shall immediately vacate the Premises, and if Tenant fails to do so, Landlord,
without waiving any other remedy it may have, may enter upon and take
possession of the Premises and expel or remove Tenant and any other person who
may be occupying such Premises or any part thereof, without being liable for
prosecution or any claim of damages therefore. In the event of any violation of
Section 93.002 of the Texas Property Code by Landlord or by any agent or
employee of Landlord, Tenant hereby expressly waives any and all rights Tenant
may have under Paragraph (g) of such Section 93.002.

A. Damages Upon Termination. If Landlord terminated this Lease at Landlord's
option, Tenant shall be liable for and shall pay to Landlord the sum of all
rental and other payments owed to Landlord hereunder accrued to the date of
such termination, plus, as liquidated damages, an amount equal to (i) the
present value of the total rental and other payments owed hereunder for the
remaining portion of the Lease term, calculated as if such term expired on the
date set forth in Paragraph 1, less (ii) the present value of the then fair
market rental for the Premises for such period, provided that, because of the
difficulty of ascertaining such value and in order to achieve a reasonable
estimate of Liquidated damages hereunder, Landlord and Tenant stipulate and
agree, for the purposes hereof, that such fair market rental shall in no event
exceed seventy-five percent (75%) of the rental amount for such period act
forth in Paragraph 2 above.

B. Damages Upon Repossession. If Landlord repossesses the Premises without
terminating this Lease, Tenant, at Landlord's option, shall be liable for and
shall pay Landlord on demand all rental and other payments owed to Landlord
hereunder, accrued to the date of such repossession, plus all amounts required
to be paid by Tenant to Landlord until the date of expiration of the term as
stated in Paragraph 1, diminished by all amounts actually received by Landlord
through reletting the Premises during such remaining term (but only to the
extent of the rent herein reserved). Actions to collect amounts due by Tenant
to Landlord under this paragraph may be brought from time to time, on one or
more occasions, without the necessity of Landlord's waiting until expiration of
the Lease term.

C. Reletting, Removing, Repairs and Enforcement. Upon an Event of Default, in
addition to any sum provided to be paid under this Paragraph 20, Tenant also
shall be liable for and shall pay to Landlord (i) brokers' fees and all other
costs and expenses incurred by Landlord in connection with reletting the whole
or any part of the Premises; (ii) the costs of removing, storing or dis-sing of
Tenants or any other occupant's property; (iii) like cost. of repairing,
altering, remodeling or otherwise putting the Premises into condition
acceptable to a new tenant or tenants; (iv)any and all costs and expenses
incurred by Landlord in affecting compliance with Tenants obligations under
this Lease; (v) all reasonable expenses incurred by Landlord in enforcing or
defending Landlord's rights and/or remedies hereunder, including without
limitation all reasonable attorneys' fees and all court costs incurred ~n
connection with such enforcement or defense.

D. Late Charge. In the event Tenant fails to make any payment due hereunder
within five (5) days after such payment is due, including without Limitation
any rental escrow payment, in order to help defray the additional cost to
Landlord for processing such late payments and not as interest, Tenant shall
pay to Landlord on demand a late charge in an amount equal five percent (5 %)
of such payment. The provision for such late charge shall be in addition to all
of Landlord's other rights and remedies hereunder or at law, and shall not be
consted as liquidated damages or as limiting Landlord's remedies in any manner.

E. Interest on Past Due Amounts. If Tenant fails to pay any sum which at any
time becomes due to Landlord under any provision of this Lease as and when the
same becomes due thereunder, and such failure continues for ten (10) days after
the due date for such payment, then Tenant shall pay to Landlord interest on
such overdue amounts from the date due, until paid at an annual rate which
equals the lesser of (i) eighteen percent (18%) or (ii) the highest rate then
permitted by law.

F. No Implied Acceptances or Waivers. Exercise by Landlord of any one or more
remedies hereunder granted or otherwise available shall not be deemed to be an
acceptance by Landlord of Tenant's surrender of the Premises, it being
understood that such surrender can be effected only by the written agreement of
Landlord. Tenant and Landlord further agree that forbearance by Landlord to
enforce any of its rights under this Lease or at law or in equity shall not be
a waiver of Landlord's right to enforce any one or more of its rights,
including any right previously forborne, in connection with any existing or
subsequent default. No re-entry or taking possession of the Premises by
Landlord shall be construed as an election on its part to terminate this Lease,
unless a written notice of such intention is given to Tenant, and,
notwithstanding any such is reletting or re-entry or taking of the Premises,
Landlord may at any time thereafter elect to terminate this Lease for a
previous default. Pursuit of any remedies hereunder shall not preclude the
pursuit of any other remedy herein provided by any other remedies provided by
law, nor shall pursuit of any remedy herein provided or any other remedies
provided by law, nor shall pursuit of any remedy herein provided constitute a
forfeiture or waiver of any rent due to Landlord hereunder or of any damages
occurring to Landlord by reason of the violation of any of the terms,
provisions and covenants contained in this Lease. Landlord's acceptance of any
rent following an Event of Default shall not be construed as Landlord's waiver
of such Event of Default. No waiver by Landlord of any violation or breach of
any of the terms and provisions and covenants of this Lease shall be deemed or
construed to constitute a waiver of any other violation or default.

G. Reletting of Premises. In the event of any termination of this Lease and/or
repossession of the Premises for an Even of Default. Landlord shall use
reasonable efforts to relet the Premises and to collect rental after reletting,
with no obligation to accept any

5
<PAGE> 7
Lessee that Landlord deems undesirable or to expend any funds In connection
with such reletting or collection of rents therefrom. Tenant shall not be
entitled to credit for or reimbursements of any proceeds of such reaching in
excess of the rental owed hereunder for the period of such reletting. Landlord
may relet the whole or any portion of the Premises, for any Period, to any
tenant and for any use or purpose.

H. Landlord's Default. It Landlord fails to perform any of its obligations
hereunder within thirty (30) days after written notice from Tenant, specifying
such failure, Tenant's exclusive remedy shall be an action for damages. Unless
and until Landlord fails to cure any default after such notice, Tenant shall
not have any remedy or cause of action by reason thereof. All obligations of
Landlord hereunder will be construed as covenants, not conditions; and all such
obligations will be binding upon Landlord only during the period of its
possession of the premises and not thereafter. The term "Landlord" shall mean
only the owner, for the time being, of the Premises and, in the event of the
transfer by such owner of its interest in the Premises, such owner shall
thereupon be released and discharged from all covenants and obligations of the
Landlord thereafter accruing, provided that such covenants and obligations
shall be binding during the Lease term upon each new owner for the duration of
such owner's ownership. Notwithstanding any other provision of this Lease,
Landlord shall not have any personal liability hereunder. In the event of any
breach or default by Landlord in any term or provision of this Lease. Tenant
agrees to look solely to the equity or interest then owned by Landlord in the
Premises or the Building; however, in no event shall any deficiency judgment or
any money judgment of any kind be sought or obtained against any Landlord.

I. Tenant's Personal Property. If Landlord repossesses the Premises pursuant to
the authority herein granted, or if Tenant vacates or abandons all or any part
of the Premises, then, in addition to Landlord's rights under Paragraph 27
hereof, Landlord shall have the right to (i) keep in place and use, or (ii)
remove and store, all of the furniture, fixtures and equipment at the Premises,
including that which is owned by or leased to Tenant, at all times prior to any
foreclosure thereon by Landlord or repossession thereof by any lessor thereof
or third party having a lien thereon. In addition to the Landlord's other
rights hereunder, Landlord may dispose of the stored property if Tenant does
not claim the property within ten (10) days after the date the property is
stored. Landlord shall give Tenant at least ten (10) days prior written notice
of such intended disposition. Landlord shall also have the right to relinquish
possession of all or any of such furniture, fixtures, equipment and other
property to any person ("Claimant") who presents to Landlord a copy of any
instrument represented by Claimant to have been executed by Tenant (or any
predecessor of Tenant) granting Claimant the right under various circumstances
to take possession of such furniture, fixtures, equipment or other property,
without the necessity on the part of Landlord to inquire into the authenticity
or legality of said instrument. The rights of Landlord herein stated shall be
in addition to any, and all other rights that Landlord has or may hereafter
have at law or in equity, and Tenant stipulates and agrees that the rights
granted Landlord under this paragraph are commercially reasonable.

21. MORTGAGES. Tenant accepts this Lease subject and subordinate to any
mortgages and/or deeds of trust now or at any time hereafter constituting a
lien or charge upon the Premises or the improvements situated thereon to the
building, provided however, that n the mortgagee trustee or holder of any such
mortgage or deed of trust elects to have Tenant's interest in this Lease
superior to any such instrument, then by notice to Tenant from such mortgagee,
trustee or holder, this Lease shall be deemed superior to such lien, whether
this Lease was executed before or after said mortgage or deed of trust. Tenant,
at any time hereafter on demand, shall execute any instruments, releases or
other documents that may be required by any mortgagee, trustee or holder for
the purpose of subjecting and subordinating this Lease to the lien of any such
mortgage. Tenant shall not terminate this Lease or pursue any other remedy
available to Tenant hereunder for any default on the part of Landlord without
first giving written notice by certified or registered mail, return receipt
requested, to any mortgagee, trustee or holder of any such mortgage or deed of
trust, the name and post office address of which Tenant has received written
notice, specifying the default in reasonable detail and affording such
mortgagee, trustee or holder a reasonable opportunity (but in no event less
than thirty (30) days) to make performance, at its election, for and on behalf
of Landlord.

22. MECHANIC'S LIENS. Tenant has no authority, express or implied, to create or
place any lien or encumbrance of any kind or nature whatsoever upon or in any
manner to bind, the interest of Landlord or Tenant in the Premises. Tenant will
save and hold Landlord harmless from any and all loss, cost or expense,
including without limitation attorneys' fees, based on or arising out of
asserted claims or liens against the leasehold estate or against the right,
title and interest of the Landlord in the Premises or under the terms of this
Lease.

23. MISCELLANEOUS.

A. Interpretation. The captions inserted in this Lease are for convenience only
and in no way define, limit or otherwise describe the scope or intent of this
Lease, or any provision hereof, or in any way affect the interpretation of this
Lease. Any reference in this Lease to rentable area shall mean the gross
rentable area as determined by the roofline of the building in question.

B. Binding Effect. Except as otherwise herein expressly provided, the terms,
provisions and covenants and conditions in this Lease shall apply to, inure to
the benefit of and be binding upon the parties hereto, and upon their
respective heirs, executors, personal representatives, legal representatives,
successors and assigns. Landlord shall have the right to transfer and assign,
in whole or in part, its rights and obligations in the Premises and in the
Building and other property that are the subject of this Lease.

C. Evidence of Authority. Tenant agrees to furnish to Landlord, promptly upon
demand, a corporate resolution, proof of due authorization by partners or other
appropriate documentation evidencing the due authorization of such party to
enter into this Lease.

D. Force Majeure. Landlord shall not be held responsible for delays in the
performance of its obligations hereunder when caused by material shortages,
acts of God, labor disputes or other events beyond the control of Landlord.

E. Payments Constitute Rent. Notwithstanding anything in this Lease to the
contrary, all amounts payable by Tenant to or on behalf of Landlord under this
Lease, whether or not expressly denominated as rent shall constitute rent.

F. Estopel Certificates. -Tenant agrees, from time to time, within ten (10)
days after request of Landlord, to deliver to Landlord, or Landlord's designee,
an estoppel certificate stating that this Lease is in full force and effect,
the date to which rent has been paid, the unexpired term of this Lease, any
defaults existing under this Lease (or the absence thereof) and such other
factual or legal matters pertaining to this Lease as may be requested by
Landlord. It is understood and agreed that Tenant's obligation to furnish such
estoppel certificates in a timely fashion is a material inducement for
Landlord's execution of this Lease.

G. Entire Agreement. This Lease constitutes the entire understanding and
agreement of Landlord and Tenant with respect to the subject matter of this
Lease, and contains all of the covenants and agreements of Landlord and Tenant
with respect thereto, Landlord and Tenant each acknowledge that no
representations, inducements, promises or agreements oral or,written, have been
made by Landlord or Tenant, or anyone acting on behalf of Landlord or Tenant,
which are not contained herein, and any prior agreements, promises,
negotiations or representations not expressly set forth in this Lease are of no
force or effect. EXCEPT AS SPECIFICALLY PROVIDED IN THIS LEASE, TENANT HEREBY
WAIVES THE BENEFIT OF ALL WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE
PREMISES, INCLUDING WITHOUT LIMITATION ANY IMPLIED WARRANTY THAT THE PREMISES
ARE SUITABLE FOR ANY PARTICULAR PURPOSE. Landlord'S agents and employees do not
and will not have authority to make exceptions, changes or amendments to this
Lease, or factual representations not expressly contained in this Lease. Under
no circumstances shall Landlord or Tenant be considered an agent of the other.
This Lease may not be altered, changed or amended except by an instrument in
writing signed by both parties hereto.

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<PAGE> 8
H. Survival of Obligations. All obligations of Tenant hereunder not fully
performed as of the expiration or earlier termination of the term of this lease
shall survive the expiration or earlier termination of the term hereof,
including without limitation all payment obligations with respect to taxes and
insurance and all obligations concerning the condition and repair of the
Premises. Upon the expiration or earlier termination of the term hereof, and
prior to Tenant vacating the Premises, Tenant shall pay to Landlord any amount
reasonably estimated by Landlord as necessary to put the Premises in good
condition and repair, reasonable wear and tear excluded, including without
limitation the cost of repairs to and replacements of all heating and air
conditioning systems and equipment therein. Tenant shall also, prior to
vacating the Premises pay to Landlord the amount, as estimated by Landlord, of
Tenant's obligation hereunder for real estate taxes and insurance premiums for
the year in which the Lease expires or terminates. All such amounts shall be
used and held by Landlord for payment of such obligations of Tenant hereunder,
with Tenant being liable for any additional costs therefore upon demand by
Landlord, or with any excess to be returned to Tenant after all such
obligations have been determined and satisfied, as the case may be. Any
Security Deposit held by Landlord may, at Landlord's option, be credited
against any amounts due from Tenant under this Paragraph 23H.

I. Severability of Terms. If any clause or provision of this lease is illegal,
invalid or unenforceable under present or future laws effective during the term
of this Lease, then, in such event, it is the intention of parties hereto that
the remainder if this Lease shall not ne affected thereby, and it in also the
intention of the parties to this Lease that in lieu of each clause or provision
of this Lease that is ilegal, invalid, or unenforceable, there be added, as
part of this Lease, a clause or provision as similar in terms to such illegal,
invalid, unenforceable clause or provision as may be possible and be legal,
valid and enforceable.

J. Effective Date. All references in this Lease to "the date hereof" or similar
references shall be deemed to refer to the last date, in point of time, on
which all parties hereto have executed this Lease.

K. Broker's Commission. Tenant represents and warrants that it has dealt with
and will deal with no broker, agent or other person in connection with this
transaction or future related transactions and that no broker, agent or other
person brought about this transaction, and Tenet agrees to indemnify and hold
Landlord harmless from and against any claims by any broker, agent or other
person claiming a commission or other form of compensation by virtue of having
dealt with Tenant with regard to this leasing transaction.

L. Ambiguity. Landlord and Tenant hereby agree and acknowledge that this lease
has been fully reviewed and negotiated by both Landlord and Tenant, and that
Landlord and Tenant have each had the opportunity to have this Lease reviewed
by their respective legal counsel, and, accordingly, in the event of any
ambiguity herein, Tenant does hereby waive the rule of construction that such
ambiguity shall be resolved against the party who prepared this Lease.

M. Joint Several Liability. If there be more than one Tenant, the obligation
hereunder imposed upon Tenant shall be joint and several. If there be a
guarantor of Tenant's obligations hereunder, the obligation hereunder imposed
upon Tenant shall b joint and several obligations of Tenant and such guarantor,
and Landlord need not first proceed against Tenant before proceeding against
such guarantor, nor shall any such guarantor be released from its guaranty for
any reason whatsoever, including, without limitation, in case of any amendments
hereto, waivers hereof or failure to give such guarantor any notices hereunder.

N. Third Party Rights. Nothing herein expressed or implied is intended, or
shall be construed, to confer upon or give to any person or entity, other than
the parties hereto, any right or remedy under or by reason of this Lease.

0. Exhibits and Attachments. All exhibits, attachments, riders and addenda
referred to in this Lease, and the exhibits listed herein below are attached
hereto, are incorporated into this Lease and made a part hereof for all intents
and purposes as if fully set out herein. All capitalized terms used in such
documents shall, unless otherwise defined therein, have the same meanings as
are set forth herein.

P. Applicable Law. This Lease has been executed in the State of Texas and shall
be governed in all respects by the laws of the State of Texas. It is the intent
of Landlord and Tenant to conform strictly to all applicable state and federal
usury laws. All agreements between Landlord and Tenant, whether now existing or
hereafter arising and whether written or oral, are hereby expressly limited so
that in no contingency or event whatsoever shall the amount contracted for,
charged or received by Landlord for the use, forbearance or retention of money
hereunder or otherwise exceed the maximum amount which Landlord is legally
entitled to contract for, charge or collect under the applicable state or
federal law. If, from any circumstance whatsoever, fulfillment of any
provision hereof at the time performance of such provision shall be due shall
involve transcending the limit of validity prescribed by law, then the
obligation to be fulfilled shall be automatically reduced to the limit of such
validity, and if from any such circumstance Landlord shall ever receive as
interest or otherwise an amount in excess of the maximum that can be legally
collected, then such amount which would be excessive interest shall be applied
to shall be applied to the reduction of rent hereunder, and if such amount
which would be excessive interest exceeds such rent, then such additional
amount shall be refunded to Tenant.

24 NOTICES. Each provision of this instrument or of any applicable governmental
laws, ordinances, regulations and other requirements with reference to the
sending, mailing or delivering of notice or the making of any payment by
Landlord to Tenant or with reference to the sending, mailing or delivering of
any notice or the making of any payment by Tenant to Landlord shall be deemed
to be complied with when and if the following steps are taken:

(i) All rent and other payments required to be made by Tenant to Landlord
hereunder shall be payable to Landlord at the address for Landlord act forth
below or at such other address as Landlord may specify from time to time by
written notice delivered in accordance herewith. Tenant's obligation to pay
rent and any other amounts to Landlord under the terms of this Lease shall not
be deemed satisfied until such rent and other amounts have been actually
received by Landlord.

(ii) All payments required to be made by Landlord to Tenant hereunder shall be
payable to Tenant at the address set forth below, or at such other address
within the continental United States as Tenant may specify from time to time by
written notice delivered in accordance herewith.

(iii) Except as expressly provided herein, any written notice, document or
payment required or permitted to be delivered hereunder shall be deemed to be
delivered when received or, whether actually received or not, when deposited in
the United States Mail, postage prepaid, Certified or Registered Mail,
addressed to the parties hereto at the respective addresses set out below, or
at such other address as they have theretofore specified by written notice
delivered in accordance herewith.

25. SPECIAL CONDITIONS: Tenant reserves the right with 120 days notice to
Landlord to terminate the lease arrangements described herein for the following
limited occurrences:

A. Tenant moves its operations to a Tenant-owned building on Tenant-owned land.

B. Tenant's growth of employees exceeds the capacity of the Landlord's facility
computed at a minimum ratio of 200 rental square feet per employee.

26. LANDLORD'S LIEN. In addition to any statutory lien for rent in Landlords's
favor, Landlord shall have and Tenant hereby grants to Landlord a continuing
security interest in all rentals and other sums of money which may become due
under this Lease from Tenant, all goods, equipment, fixtures, furniture,
inventory, and other personal property of Tenant now or hereafter situated

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<PAGE> 9
at, on or within the real property described in EXHIBIT "A" attached hereto and
incorporated herein by reference, and such property shall not be removed
therefrom without the consent of Landlord, except in the ordinary course of
Tenant's business. In the event any of the foregoing described property is
removed from the Premises in violation of the covenant in the preceding
sentence, the security interest shall continue in such property and all
proceeds products, regardless of location. Upon an Event of Default hereunder
by Tenant, in addition to all of Landlord's other rights and remedies, Landlord
shall have all rights and remedies under the Uniform Commercial Code, including
without limitation the right to sell the property described in this paragraph
at public or provide sale at any time after ten (10) days prior notice by
Landlord. Tenant hereby agrees to execute such other instruments deemed by
Landlord as necessary or desirable under applicable law to perfect more fully
the security interest hereby created. Landlord and Tenant agree that this Lease
and security agreement and EXHIBIT "A" attached hereto serves as a financing
statement and that a copy, photograph or other reproduction of this potion of
this Lease may be filed of record by Landlord and have the same force and
effect as the original. This security agreement and financing statement also
covers fixtures located at the Premises subject to this Lease and legally
described in EXHIBIT "A" attached hereto, and all rents or other consideration
received by or on behalf of Tenant in connection with any assignment of
Tenant's interest in this Lease or any sublease of the Premises or any part
thereof, and, therefore, may also be filed for record in the appropriate real
estate records.

EXECUTED BY LANDLORD, this 11th day of January, 1992.

COMPUTERIZED PROPERTIES, INC.

Attest/Witness

- ------------------------------ ------------------------------

Title: /s/ PHILLIP WATERS
- ------------------------------ ------------------------------
Phillip Waters
- ------------------------------ ------------------------------

Managing Partner
------------------------------

EXECUTED BY TENANT, this 11th day of January, 1992.

COOPERATIVE COMPUTING, INC.

Attest/Witness /s/ SCOTT THOMPSON
------------------------------
Scott Thompson
- ------------------------------ ------------------------------
V.P. C.C.I.
- ------------------------------ ------------------------------

- ------------------------------

EXHIBIT "A" - Description of Premises
EXHIBIT "B" - Rent Schedule

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<PAGE> 10
EXHIBIT "A"

Computerized Properties, Inc. As Landlord

Property Description
"Premises"

Subject Property is described as Land and Improvements owned by Computerized
Properties, Inc.

6207 Bee Cave Road
Lot 2
Saint Michael's Episcopal Church Subdivision
Deerbrook Office Building
36,000 rentable square feet

Initials _______ ______
Date _______ ______

<PAGE> 1
EXHIBIT 10.4

================================================================================

CREDIT AGREEMENT

among

COOPERATIVE COMPUTING, INC. (FORMERLY NAMED
TRIAD SYSTEMS CORPORATION),

as Borrower,

COOPERATIVE COMPUTING HOLDING COMPANY, INC.
(FORMERLY NAMED COOPERATIVE COMPUTING, INC.),

as Guarantor,

THE SEVERAL LENDERS
FROM TIME TO TIME PARTIES HERETO

AND

THE CHASE MANHATTAN BANK,

as Administrative Agent

DATED AS OF FEBRUARY 27, 1997
AS AMENDED AND RESTATED AS OF FEBRUARY 10, 1998

================================================================================

CHASE SECURITIES INC.,
AS ARRANGER

<PAGE> 2

CREDIT AGREEMENT, dated as of February 27, 1997, as amended and restated as
of February 10, 1998, among COOPERATIVE COMPUTING, INC., a Delaware corporation
(the "Borrower"), COOPERATIVE COMPUTING HOLDING COMPANY, INC., a Texas
corporation ("CCI"), the several banks and other financial institutions from
time to time parties hereto (the "Lenders") and THE CHASE MANHATTAN BANK, a New
York banking corporation, as administrative agent for the Lenders hereunder (in
such capacity, the "Administrative Agent").

W I T N E S S E T H :

WHEREAS, the Borrower, CCI, certain lenders (the "Existing Lenders") and
the Administrative Agent are parties to the $170,000,000 Credit Agreement dated
as of February 27, 1997 (as in effect immediately prior to the effectiveness of
this Agreement, the "Existing Credit Agreement");

WHEREAS, the Borrower intends to issue its unsecured senior subordinated
notes due February 1, 2008 for net cash proceeds of at least $97,000,000 (the
"Senior Subordinated Notes");

WHEREAS, in order to refinance the Borrower's commitments and indebtedness
under the Existing Credit Agreement, and for other purposes described herein,
the Borrower has requested the Lenders to establish a $50,000,000 term loan
facility (the "Term Loan Facility") and a $50,000,000 revolving credit facility
(the "Revolving Credit Facility", with the Term Loan Facility, the "Facilities")
pursuant to which term loans and revolving credit loans may be made to the
Borrower and letters of credit may be issued under the Revolving Credit Facility
for the account of the Borrower;

WHEREAS, (i) the Existing Credit Agreement is being amended and restated
pursuant to this Agreement, (ii) all indebtedness and commitments under the
Existing Credit Agreement, as amended and restated in connection with this
Agreement, will be continued under this Agreement and (iii) all obligations of
the Credit Parties under the Loan Documents (as such terms are defined herein)
and all liens and security interests created under the Loan Documents will be
continued, amended and restated as provided herein and therein and will not be
cancelled or discharged;

NOW THEREFORE, in consideration of the premises and the mutual covenants
hereinafter set forth, the parties hereto hereby agree as follows:

ARTICLE 1. DEFINITIONS

1.1 Defined Terms. As used in this Agreement, the following terms shall
have the following meanings:

<PAGE> 3
2

"Administrative Agent": as defined in the preamble to this Agreement.

"Affected Eurodollar Loans": as defined in Section 2.10(h).

"Affiliate": as to any Person, any other Person (other than a
Subsidiary) which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person. For purposes of this
definition, "control" of a Person means the power, directly or indirectly,
either to (i) vote 51% or more of the securities having ordinary voting
power for the election of directors of such Person or (ii) direct or cause
the direction of the management and policies of such Person, whether by
contract or otherwise.

"Agreement": this Credit Agreement, as further amended, amended and
restated, supplemented or otherwise modified from time to time.

"Alternate Base Rate": for any day, a rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the greatest of (a) the
Prime Rate in effect on such day, (b) the Base CD Rate in effect on such
day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof: "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by Chase as its
prime rate in effect at its principal office in New York City; "Base CD
Rate" shall mean the sum of (a) the product of (i) the Three-Month
Secondary CD Rate and (ii) a fraction, the numerator of which is one and
the denominator of which is one minus the C/D Reserve Percentage and (b)
the C/D Assessment Rate; "Three-Month Secondary CD Rate" shall mean, for
any day, the secondary market rate for three-month certificates of deposit
reported as being in effect on such day (or, if such day shall not be a
Business Day, the next preceding Business Day) by the Board of Governors of
the Federal Reserve System (the "Board") through the public information
telephone line of the Federal Reserve Bank of New York (which rate will,
under the current practices of the Board, be published in Federal Reserve
Statistical Release H.15(519) during the week following such day), or, if
such rate shall not be so reported on such day or such next preceding
Business Day, the average of the secondary market quotations for
three-month certificates of deposit of major money center banks in New York
City received at approximately 10:00 A.M., New York City time, on such day
(or, if such day shall not be a Business Day, on the next preceding
Business Day) by the Administrative Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected
by it; and "Federal Funds Effective Rate" shall mean, for any day, the
weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published on the next succeeding Business Day by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for the day of such
transactions received by the Administrative Agent from three federal funds
brokers of recognized standing selected by it. If for any reason the
Administrative Agent shall have determined (which determination shall be
conclusive absent manifest error) that it is unable to ascertain the Base
CD Rate or the Federal

<PAGE> 4
3

Funds Effective Rate, or both, for any reason, including the inability or
failure of the Administrative Agent to obtain sufficient quotations in
accordance with the terms thereof, the Alternate Base Rate shall be
determined without regard to clause (b) or (c), or both, of the first
sentence of this definition, as appropriate, until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate Base
Rate due to a change in the Prime Rate, the Three-Month Secondary CD Rate
or the Federal Funds Effective Rate shall be effective on the effective day
of such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.

"Alternate Base Rate Loans": Loans the rate of interest applicable to
which is based upon the Alternate Base Rate.

"Applicable Margin": with respect to any Alternate Base Rate Loan,
1.25%; with respect to any Eurodollar Loan, 2.25%; and with respect to any
commitment fee, as provided in Section 2.4; provided that in the event that
the ratio of Consolidated Total Debt of the Borrower and its Subsidiaries
to Consolidated EBITDA of the Borrower and its Subsidiaries, as most
recently determined in accordance with Section 8.1(d), is as set forth in
the relevant column heading below for any quarterly period, any such
Applicable Margin (including in the case of Alternate Base Rate Loans,
Swing Line Loans) shall be as provided in the relevant column heading
below, but in no event shall any such reductions be effective prior to
February 10, 1999:

<TABLE>
<CAPTION>
Applicable
Relevant Ratio Applicable Margin Margin for
of Consolidated Total Debt to For Eurodollar Alternate Base Commitment
Consolidated EBITDA Loans Rate Loans Fee
---------------------------- ----------------- -------------- ----------
<S> <C> <C> <C>
3.75x and above 2.25% 1.25% 0.500%
3.25x to but excluding 3.75x 2.00% 1.00% 0.500%
2.75x to but excluding 3.25x 1.75% 0.75% 0.375%
Below 2.75x 1.50% 0.50% 0.375%
</TABLE>

if the financial statements required to be delivered pursuant to
Section 7.1(a) or 7.1(b), as applicable, and the related compliance
certificate required to be delivered pursuant to Section 7.2(b), are
delivered on or prior to the date when due (or, in the case of the
fourth quarterly period of each fiscal year of the Borrower, if
financial statements which satisfy the requirements of, and are
delivered within the time period specified in, Section 7.l(b) and a
related compliance certificate which satisfies the requirements of, and
is delivered within the time period specified in, Section 7.2(b), with
respect to any such quarterly period are so delivered within such time
periods), then the Applicable Margin during the period from the date
upon which such financial

<PAGE> 5
4

statements were delivered shall be the Applicable Margin as set forth
in the relevant column heading above; provided, however, that in the
event that the financial statements delivered pursuant to Section
7.1(a) or 7.1(b), as applicable, and the related compliance
certificate required to be delivered pursuant to Section 7.2(b), are
not delivered when due, then:

(a) if such financial statements and certificate are
delivered after the date such financial statements and
certificate were required to be delivered (without giving effect
to any applicable cure period) and the Applicable Margin
increases from that previously in effect as a result of the
delivery of such financial statements and certificate, then the
Applicable Margin (including in the case of Alternate Base Rate
Loans, Swing Line Loans) during the period from the date upon
which such financial statements and certificate were required to
be delivered (without giving effect to any applicable cure
period) until the date upon which they actually are delivered
shall, except as otherwise provided in clause (c) below, be the
Applicable Margin as so increased;

(b) if such financial statements and certificate are
delivered after the date such financial statements and
certificate were required to be delivered (without giving effect
to any applicable cure period) and the Applicable Margin
decreases from that previously in effect as a result of the
delivery of such financial statements and certificate, then such
decrease in the Applicable Margin shall not become applicable
until the date upon which such financial statements and
certificate actually are delivered; and

(c) if such financial statements and certificate are not
delivered prior to the expiration of the applicable cure period,
then, effective upon such expiration, for the period from the
date upon which such financial statements and certificate were
required to be delivered (after the expiration of the applicable
cure period) until two Business Days following the date upon
which they actually are delivered, the Applicable Margin
(including in the case of Alternate Base Rate Loans, Swing Line
Loans) shall be 2.25%, in the case of Eurodollar Loans, 1.25%, in
the case of Alternate Base Rate Loans and 0.50% in the case of
the commitment fee provided for in Section 2.4 (it being
understood that the foregoing shall not limit the rights of the
Administrative Agent and the Lenders set forth in Section 9).

"ARISB Acquisition": as defined in Section 8.9(k).

"Asset Sale": any sale, transfer or other disposition (including
any sale and leaseback of assets and any sale of accounts receivable
in connection with a receivable financing transaction) by the Borrower
or any of its Subsidiaries of any property of the Borrower or any such
Subsidiary (including property subject to any Lien under any Security
Document), other than as permitted pursuant to Section 8.6 (provided
that, except with respect to the loss or condemnation of all or
substantially all of the assets of the Borrower and its Subsidiaries,
the proceeds from such casualty or condemnation (including insurance)
are used to replace or rebuild the lost or condemned assets within the
time period specified in Section 2.10(f)).
<PAGE> 6
5

"Assignee": as defined in Section 12.6(c).

"Assignment and Acceptance": an assignment and acceptance entered
into by a Lender or an assignee, substantially in the form of Exhibit
E.

"Available Revolving Credit Commitment": as to any Revolving
Credit Lender at any time, an amount equal to the excess, if any, of
(a) the amount of such Revolving Credit Lender's Revolving Credit
Commitment over (b) the aggregate of (i) the aggregate unpaid
principal amount at such time of all Revolving Credit Loans made by
such Revolving Credit Lender, (ii) an amount equal to such Revolving
Credit Lender's Revolving Credit Commitment Percentage of the
aggregate unpaid principal amount at such time of all Swing Line
Loans, provided that for purposes of calculating Available Revolving
Credit Commitments pursuant to Section 2.4 such amount shall be zero,
and (iii) an amount equal to such Revolving Credit Lender's Revolving
Credit Commitment Percentage of the Letter of Credit Outstandings at
such time; collectively, as to all the Lenders, the "Available
Revolving Credit Commitments."

"Borrower": as defined in the preamble to this Agreement.

"Borrowing Date": any Business Day specified in a notice pursuant
to Section 2.3, 2.8, 2.13 or 3.2 as a date on which the Borrower
requests Lenders to make Loans hereunder or the Issuing Lender to
issue a Letter of Credit hereunder.

"Business": the collective reference to the businesses of CCI and
the Borrower and their respective Subsidiaries, as conducted on the
date hereof.

"Business Day": a day other than a Saturday, Sunday or other day
on which commercial banks in New York City are authorized or required
by law to close, provided that when used in connection with a
Eurodollar Loan, the term "Business Day" shall also exclude any day on
which commercial banks are not open for dealing in Dollar deposits in
the London interbank market.

"Capital Expenditures": expenditures (including, without
limitation, obligations created under Financing Leases but excluding
payments made thereon, capitalized software and database expenditures,
capitalized investments in service parts and purchase money
Indebtedness in the year in which created but excluding payments made
thereon) of the Borrower and its Subsidiaries (and, for any period
prior to the Closing Date, CCI and its Subsidiaries) in respect of the
purchase or other acquisition of fixed or capital assets (excluding
any such asset acquired (x) in connection with normal replacement and
maintenance programs properly expensed in accordance with GAAP, (y)
with the proceeds of any casualty insurance or condemnation award, or
(z) with the cash proceeds of any asset sale made pursuant to Section
8.6(d), applied or contractually committed to be applied within 180
days from receipt of such proceeds), provided that for purposes of
Section 8.8, Investments made pursuant to Section 8.9 (k) or (l) shall
not be a Capital Expenditure.

<PAGE> 7
6

"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person
(other than a corporation) and any and all warrants or options to
purchase any of the foregoing.

"Cash Equivalents": (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or
insured by the United States Government or any agency thereof, (b)
certificates of deposit, time deposits, overnight bank deposits,
bankers acceptances and repurchase agreements of any commercial bank
which has capital and surplus in excess of $100,000,000 having
maturities of one year or less from the date of acquisition, (c)
commercial paper of an issuer rated at least A-2 by Standard & Poor's
Ratings Group or P-2 by Moody's Investors Service, Inc., or carrying
an equivalent rating by a nationally recognized rating agency if both
of the two named rating agencies cease publishing ratings of
investments, (d) money market accounts or funds with or issued by
Qualified Issuers, (e) repurchase obligations with a term of not more
than 90 days for underlying securities of the types described in
clause (a) above entered into with any bank meeting the qualifications
specified in clause (b) above and (f) demand deposit accounts
maintained in the ordinary course of business with any bank that is
not a Lender not in excess of $100,000 in the aggregate on deposit
with any such bank or any Lender.

"CCI": as defined in the preamble to this Agreement.

"CCI Asset Contribution": the contribution by CCI, immediately
after the consummation of the Merger, of its assets (other than the
stock of the Borrower) and certain other assets to the Borrower the
contribution of which was permitted by CCI's then existing Contractual
Obligations.

"C/D Assessment Rate": for any day as applied to the Base CD
Rate, the net annual assessment rate (rounded upward to the nearest
1/100th of 1%) determined by Chase to be payable on such day to the
Federal Deposit Insurance Corporation or any successor ("FDIC") for
FDIC's insuring time deposits made in Dollars at offices of Chase in
the United States.

"C/D Reserve Percentage": for any day as applied to the CD Base
Rate, that percentage (expressed as a decimal) which is in effect on
such day, as prescribed by the Board of Governors of the Federal
Reserve System (or any successor), for determining the maximum reserve
requirement for a member bank of the Federal Reserve System in New
York City with deposits exceeding one billion Dollars in respect of
new non-personal time deposits in Dollars in New York City having a
three month maturity and in an amount of $100,000 or more.
<PAGE> 8
7

"Change of Control": HMTF, its principals and Affiliates, Glenn
Staats, Preston Staats and management ("HMTFS") shall cease to have
the power, directly or indirectly, to vote or direct the voting of
securities having a majority of the ordinary voting power for the
election of directors of CCI, provided that the occurrence of the
foregoing events shall not be deemed a Change of Control if (a) at any
time prior to the consummation of an Initial Public Offering, and for
any reason whatever, (i) HMTFS otherwise has the right to designate
(and does so designate) a majority of the board of directors of CCI or
(ii) HMTFS and their employees, directors and officers (the "HMTFS
Group") owns of record and beneficially an amount of common stock of
CCI equal to at least 50% of the amount of common stock of CCI
(adjusted for stock splits, stock dividends and other similar events
on an equitable basis) owned by the HMTFS Group of record and
beneficially as of the Closing Date and such ownership by the HMTFS
Group represents the largest single block of voting securities of CCI
held by any Person or related group for purposes of Section 13(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or (b) at any time after the consummation of an Initial Public
Offering, and for any reason whatever, (i) no "Person" or "group" (as
such terms are used in Sections 13(d) and 14(d) of the Exchange Act),
excluding the HMTFS Group, shall become the "beneficial owner" (as
defined in Rules 13(d)-3 and 13(d)-5 under such Act), directly or
indirectly, of more than the greater of (x) 15% of the voting shares
then outstanding and (y) the percentage of the then outstanding voting
stock of CCI owned by the HMTFS Group and (ii) the board of directors
of CCI shall consist of a majority of Continuing Directors.

"Chase": The Chase Manhattan Bank, a New York banking
corporation.

"Chattel Paper: as defined in ss.9-105 of the Uniform Commercial
Code of the State of New York.

"Closing Date": the date on which this Agreement becomes
effective in accordance with Section 6.1.

"Code": the Internal Revenue Code of 1986, as amended from time
to time.

"Collateral": the collective reference to all collateral in which
the Collateral Agent purports to have a security interest pursuant to
the Security Documents.

"Collateral Agent": Chase in its capacity as collateral agent
under the Security Documents.

"Commitment Letter": the commitment letter relating, among other
things, to the Loans made hereunder, dated January 9, 1998, addressed
to the Borrower from Chase and CSI and all exhibits thereto, as the
same may be amended, supplemented or otherwise modified from time to
time.
<PAGE> 9
8

"Commitment Percentage": as to any Lender, at any time, the
percentage of the aggregate Revolving Credit Commitments and Term Loan
Commitments constituted by such Lender's Revolving Credit Commitment
and Term Loan Commitment.

"Commitments": the collective reference to the Revolving Credit
Commitments, the Swing Line Commitment, the Term Loan Commitments and
the L/C Commitment; individually, a "Commitment."

"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Borrower within
the meaning of Section 4001 of ERISA or is part of a group which
includes the Borrower and which is treated as a single employer under
Section 414 of the Code.

"Consolidated Assets": at any date, the amount which, in
conformity with GAAP, would be set forth opposite the caption "Total
Assets" (or any like caption) on a consolidated balance sheet of the
Borrower and its Subsidiaries at such date, except that there shall be
excluded therefrom cash and Cash Equivalents and equipment and other
fixed assets held for sale.

"Consolidated Cash Interest Expense": for any period, for any
Person on a consolidated basis, the amount of interest paid in cash
during such period on the aggregate principal amount of its
Indebtedness, which amount shall include any such cash interest
expense in respect of Indebtedness under Financing Leases and purchase
money Indebtedness permitted under Section 8.2(e) of such Person net
of cash interest income (such consolidated cash interest expense to
include fees payable on account of letters of credit but to exclude
amortization of debt discount (including discount of liabilities and
reserves established under Accounting Principles Board Opinion No. 16
as in effect on the date hereof) and costs of debt issuance; provided
that for purposes of paragraph (a) of Section 8.1, Consolidated Cash
Interest Expense of such Person for the four consecutive fiscal
quarters ending on or about December 31, 1997 shall be deemed to be
Consolidated Cash Interest Expense of such Person for the three
consecutive fiscal quarters ending on or about December 31, 1997
multiplied by 4/3.

"Consolidated Current Assets": at any date, with respect to any
Person, the amount which, in conformity with GAAP, would be set forth
opposite the caption "Total Current Assets" (or any like caption) on a
consolidated balance sheet of such Person at such date, except that
there shall be excluded therefrom cash and Cash Equivalents and
equipment and other fixed assets held for sale.

"Consolidated Current Liabilities": at any date, with respect to
any Person, the amount which, in conformity with GAAP, would be set
forth opposite the caption "Total Current Liabilities" (or any like
caption) on a consolidated balance sheet of such Person at such date,
except that there shall be excluded therefrom the current portion of
(a) all Loans and, (b) all long-term Indebtedness for borrowed money
(including Financing Leases) in each case, to the extent included
therein.

<PAGE> 10
9

"Consolidated EBITDA": for any period, with respect to any
Person, Consolidated Net Income of such Person for such period (A)
plus, without duplication and to the extent reflected as a charge in
the statement of such Consolidated Net Income for such period, the sum
of (i) total income and franchise tax expense, (ii) interest expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions and discounts and other fees and charges associated with
Indebtedness, (iii) depreciation and amortization expense, (iv)
amortization of intangibles including, but not limited to, goodwill
and organization costs (including, with respect to the Borrower, costs
associated with the Offer to Purchase dated October 23, 1996 made by a
subsidiary of CCI to purchase the common stock of the Borrower); (v)
other extraordinary noncash charges (in accordance with GAAP)
(including non-cash currency exchange losses) and (vi) any
extraordinary and unusual losses (including losses on sales of assets
other than inventory sold in the ordinary course of business) and (B)
minus, without duplication and to the extent reflected as a credit or
gain in the statement of such Consolidated Net Income for such period,
the sum of (i) any extraordinary and unusual gains (including gains on
the sales of assets, other than inventory sold in the ordinary course
of business) and (ii) other extraordinary noncash credits or gains (in
accordance with GAAP) (including non-cash currency exchange gains).

"Consolidated Net Income": for any period, with respect to any
Person, the amount which, in conformity with GAAP, would be set forth
opposite the caption "Net Income/(Loss)" (or any like caption) on a
consolidated statement of operations of such Person and its
Subsidiaries for such period.

"Consolidated Senior Debt": at a particular date, with respect to
the Borrower, Consolidated Total Debt less the aggregate outstanding
principal amount of the Senior Subordinated Notes.

"Consolidated Total Debt": at a particular date, with respect to
the Borrower, the aggregate principal amount of Indebtedness
outstanding under this Agreement, Financing Leases, purchase money
Indebtedness and any other Indebtedness for borrowed money of the
Borrower and its Subsidiaries at such date other than Lease
Transaction Obligations.

"Consolidated Working Capital": at any date, for any Person, the
excess of Consolidated Current Assets of such Person at such date over
Consolidated Current Liabilities of such Person at such date.

"Continuing Directors": the directors of CCI on the Closing Date
and each other director, if, in each case, such other director's
nomination for election to the board of directors of CCI is
recommended by a majority of the then Continuing Directors or such
other director receives the vote of HMTFS in his or her election by
the shareholders.
<PAGE> 11
10

"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or
other undertaking to which such Person is a party or by which it or
any of its property is bound.

"Credit Parties": the collective reference to CCI, the Borrower
and each of their respective Subsidiaries which from time to time is a
party to any Loan Document.

"CSI": Chase Securities Inc.

"Customer Partnerships": certain partnerships with customers of
CCI, in existence on the date hereof or, if created after the date
hereof, which engage in substantially the same business as is engaged
in by such partnerships on the date hereof and entered into subject to
the provisions hereof, of which CCI or its Subsidiaries is a general
partner.

"Default": any of the events specified in Article 9, whether or
not any requirement for the giving of notice, the lapse of time, or
both, or any other condition, has been satisfied.

"Departing Lender": as defined in Section 6.1(b)(iv).

"Dollars" and "$": dollars in lawful currency of the United
States of America.

"Domestic Subsidiary": any Subsidiary of the Borrower or CCI
other than a Foreign Subsidiary.

"Environmental Laws": any applicable foreign, Federal, state,
local or municipal laws, rules, orders, regulations, statutes,
ordinances, codes, decrees, legally binding requirements of any
Governmental Authority or other Requirements of Law (including common
law) regulating, relating to or imposing liability or standards of
conduct concerning protection of human health or the environment, as
now or may at any time hereafter be in effect.

"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.

"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum
rates (expressed as a decimal) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal
and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of such Board) maintained
by a member bank of such System.
<PAGE> 12
11

"Eurodollar Base Rate": with respect to each day during each
Interest Period pertaining to a Eurodollar Loan, the rate per annum
equal to the rate at which Chase is offered Dollar deposits at or
about 10:00 A.M., New York City time, two Business Days prior to the
beginning of such Interest Period in the interbank eurodollar market
where the eurodollar and foreign currency and exchange operations in
respect of its Eurodollar Loans are then being conducted for delivery
on the first day of such Interest Period for the number of days
comprised therein and in an amount comparable to the amount of its
Eurodollar Loan to be outstanding during such Interest Period.

"Eurodollar Loans": Loans the rate of interest applicable to
which is based upon the Eurodollar Rate.

"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, a rate per annum determined
for such day in accordance with the following formula (rounded upward
to the nearest 1/100th of 1%):

Eurodollar Base Rate
----------------------------------------
1.00 - Eurocurrency Reserve Requirements

"Event of Default": any of the events specified in Article 9,
provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.

"Excess Cash Flow": for any fiscal year of the Borrower, the
excess of (a) the sum, without duplication, of (i) Consolidated EBITDA
of the Borrower and its Subsidiaries for such fiscal year, (ii) the
amount of returned surplus assets of any Plan during such fiscal year
to the extent not included in Consolidated Net Income to determine
Consolidated EBITDA of the Borrower and its Subsidiaries for such
fiscal year, (iii) decreases in Consolidated Working Capital of the
Borrower and its Subsidiaries for such fiscal year, (iv) the amount of
any refund received by the Borrower and its Subsidiaries on taxes paid
by the Borrower and its Subsidiaries, (v) cash dividends, cash
interest and other similar cash payments received by the Borrower in
respect of investments to the extent not included in Consolidated Net
Income to determine Consolidated EBITDA of the Borrower and its
Subsidiaries for such fiscal year, (vi) extraordinary cash gains to
the extent subtracted or otherwise not included in Consolidated Net
Income to determine Consolidated EBITDA of the Borrower and its
Subsidiaries for such fiscal year and (vii) decreases in "long-term
investments in leases" (or any like caption) (calculated in accordance
with GAAP) over (b) the sum, without duplication, of (i) the aggregate
amount of cash Capital Expenditures made by the Borrower and its
Subsidiaries during such fiscal year and permitted hereunder (other
than Capital Expenditures permitted under Section 8.8(b)), (ii)
payments or prepayments of the Term Loans during such fiscal year
other than pursuant to Section 2.10(a), (b) or (c), (iii) the
aggregate amount of payments of principal in respect of any
Indebtedness (other than revolving credit Indebtedness to the extent
the related commitment is not permanently reduced) permitted hereunder
during such fiscal year (other than under this Agreement),

<PAGE> 13
12

(iv) increases in Consolidated Working Capital of the Borrower
and its Subsidiaries for such fiscal year, (v) cash interest expense
of the Borrower and its Subsidiaries for such fiscal year, (vi) taxes
actually paid in such fiscal year or to be paid in the subsequent
fiscal year on account of such fiscal year to the extent added to
Consolidated Net Income to determine Consolidated EBITDA of the
Borrower and its Subsidiaries for such fiscal year, (vii)
extraordinary cash losses to the extent added to Consolidated Net
Income to determine Consolidated EBITDA of the Borrower and its
Subsidiaries for such fiscal year, (viii) the amount of all
Investments made in such fiscal year as permitted by clauses (d), (h),
(j) and (k) of Section 8.9, (ix) Investments made pursuant to Section
8.9(l) actually made in such fiscal year or agreed pursuant to a
letter of intent or other definitive agreement to make such Investment
during such fiscal year to be made in the subsequent fiscal year,
provided such Investments shall not be deducted in calculating Excess
Cash Flow in any subsequent year and, for purposes of payments under
Section 2.10(c), shall be added back in the calculation thereof for
such year or any subsequent year (a) if such Investment is terminated
or otherwise not consummated within 270 days of execution of such
letter of intent or other agreement or (b) to the extent such
Investment is not fully made, (x) dividends or other direct payments
paid by the Borrower to or for the benefit of CCI to the extent
permitted by Section 8.7(a) to the extent not subtracted in the
determination of Consolidated Net Income of the Borrower for such
fiscal year and (xi) increases in "long-term investments in leases"
(or any like caption) (calculated in accordance with GAAP).

"Existing Credit Agreement": as defined in the recitals hereto.

"Existing Lenders": as defined in the recitals hereto.

"Facilities": as defined in the recitals in this Agreement.

"Fee Properties": the collective reference to the real properties
owned in fee by the Borrower described on Part I of Schedule 5.8,
including all buildings, improvements, structures and fixtures now or
subsequently located thereon.

"FinanceCo": CCI/Triad Financial Holding Corporation, a
California corporation.

"Financing Lease": any lease of property, real or personal, the
obligations of the lessee in respect of which are required in
accordance with GAAP to be capitalized on a balance sheet of the
lessee.

"Foreign Lease Subsidiaries": Tridex Leasing Limited, a United
Kingdom company and TSC Leasing, a division of Triad Systems Canada
Ltd., an Ontario corporation.

"Foreign Subsidiary": any Subsidiary of the Borrower or CCI which
is organized under the laws of any jurisdiction outside of the United
States of America.

<PAGE> 14
13

"GAAP": the generally accepted accounting principles in the
United States of America as in effect from time to time set forth in
the opinions and pronouncements of the Accounting Principles Board and
the American Institute of Certified Public Accountants and the
statements and pronouncements of the Financial Accounting Standards
Board and the rules and regulations of the Securities and Exchange
Commission, or in such other statements by such other entity as may be
in general use by significant segments of the accounting profession,
which are applicable to the circumstances of the Borrower as of the
date of determination except that for purposes of Section 8.1, GAAP
shall be determined on the basis of such principles in effect on the
date hereof and consistent with those used in the preparation of the
audited financial statements referred to in Section 5.1. In the event
that any "Accounting Change" (as defined below) shall occur and such
change results in a change in the method of calculation of financial
covenants, standards or terms in this Agreement, then the Borrower and
the Administrative Agent agree to enter into negotiations in order to
amend such provisions of this Agreement so as to equitably reflect
such Accounting Changes with the desired result that the criteria for
evaluating the Borrower's financial condition shall be the same after
such Accounting Changes as if such Accounting Changes had not been
made. Until such time as such an amendment shall have been executed
and delivered by the Borrower, the Administrative Agent and the
Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such
Accounting Changes had not occurred. "Accounting Changes" means:
changes in accounting principles required by the promulgation of any
rule, regulation, pronouncement or opinion by the Financial Accounting
Standards Board of the American Institute of Certified Public
Accountants or, if applicable, the Securities and Exchange Commission
(or successors thereto or agencies with similar functions).

"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.

"Guarantee and Collateral Agreement": the Guarantee and
Collateral Agreement made by CCI, the Borrower and the Domestic
Subsidiaries (except FinanceCo) in favor of the Collateral Agent for
the ratable benefit of the Lenders, substantially in the form of
Exhibit B, as the same may be amended, supplemented or otherwise
modified from time to time.

"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has
issued a reimbursement, counterindemnity or similar obligation, in
either case guaranteeing or in effect guaranteeing any Indebtedness,
leases, dividends or other obligations (the "primary obligations") of
any other third Person (the "primary obligor") in any manner, whether
directly or indirectly, including, without limitation, any obligation
of the guaranteeing person, whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct

<PAGE> 15
14

or indirect security therefor, (ii) to advance or supply funds (1) for
the purchase or payment of any such primary obligation or (2) to
maintain working capital or equity capital of the primary obligor or
otherwise to maintain the net worth or solvency of the primary
obligor, (iii) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor to make payment of such primary
obligation or (iv) otherwise to assure or hold harmless the owner of
any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include
endorsements of instruments for deposit or collection in the ordinary
course of business. The amount of any Guarantee Obligation of any
guaranteeing person shall be deemed to be the lower of (a) an amount
equal to the stated or determinable amount of the primary obligation
in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable
pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such primary obligation and the maximum amount for
which such guaranteeing person may be liable are not stated or
determinable, in which case the amount of such Guarantee Obligation
shall be such guaranteeing person's maximum reasonably anticipated
liability in respect thereof as determined by the board of directors
of such Person in good faith.

"HMTF": Hicks, Muse, Tate & Furst Incorporated, a Texas
corporation.

"HMTFS": as defined in the definition of "Change of Control".

"HMTFS Group": as defined in the definition of "Change of
Control".

"Indebtedness": of any Person at any date, (a) all indebtedness
of such Person for borrowed money or for the deferred purchase price
of property or services (other than current trade liabilities incurred
in the ordinary course of business and payable in accordance with
customary practices and accrued expenses incurred in the ordinary
course of business) or which is evidenced by a note, bond, debenture
or similar instrument, (b) all obligations under Interest Rate
Agreements, (c) all obligations of such Person under Financing Leases,
(d) all obligations of such Person in respect of bankers' acceptances
or similar instruments issued or created for the account of such
Person, and (e) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof, provided, however,
that the amount of such Indebtedness of any Person described in this
clause (e) shall, for purposes of this Agreement, be deemed to be
equal to the lesser of (i) the aggregate unpaid amount of such
Indebtedness and (ii) the fair market value of the property or asset
encumbered, as determined by such Person in good faith; provided,
further, that solely for purposes of Section 8.2(m) and (n), Lease
Transaction Obligations shall be deemed to be Indebtedness of the
Borrower and its Subsidiaries.

"Initial Public Offering": means an underwritten public offering
of Capital Stock of CCI pursuant to a registration statement filed
with the Securities and Exchange Commission in accordance with the
Securities Exchange Act of 1933, as amended.
<PAGE> 16
15

"Insolvency": with respect to any Multiemployer Plan, the
condition that such Plan is insolvent within the meaning of Section
4245 of ERISA.

"Insolvent": pertaining to a condition of Insolvency.

"Instrument": as defined in ss.9-105 of the Uniform Commercial
Code of the State of New York.

"Intellectual Property": as defined in Section 5.9.

"Interest Payment Date": (a) as to any Alternate Base Rate Loan,
the last day of each March, June, September and December to occur
while such Loan is outstanding and, if such Alternate Base Rate Loan
is a Term Loan, the date of each payment of principal thereof, (b) as
to any Eurodollar Loan having an Interest Period of three months or
less, the last day of such Interest Period and (c) as to any
Eurodollar Loan having an Interest Period longer than three months,
each day which is three months or a whole multiple thereof, after the
first day of such Interest Period as well as the last day of such
Interest Period.

"Interest Period": (a) with respect to any Eurodollar Loan:

(i) initially, the period commencing on the borrowing or
conversion date, as the case may be, with respect to such
Eurodollar Loan and ending one, two, three, six or, to the extent
available to all Lenders, nine or twelve months, thereafter, as
selected by the Borrower in its notice of borrowing or notice of
conversion, as the case may be, given with respect thereto; and

(ii) thereafter, each period commencing on the last day of
the immediately preceding Interest Period applicable to such
Eurodollar Loan and ending one, two, three or six or, to the
extent available to all Lenders, nine or twelve months
thereafter, as selected by the Borrower by irrevocable notice to
the Administrative Agent not less than three Business Days prior
to the last day of the then current Interest Period with respect
thereto;

provided that all of the foregoing provisions relating to Interest
Periods are subject to the following:

(1) if any Interest Period pertaining to a Eurodollar Loan
would otherwise end on a day that is not a Business Day, such
Interest Period shall be extended to the next succeeding Business
Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such
Interest Period shall end on the immediately preceding Business
Day;

<PAGE> 17

(2) no Interest Period shall extend beyond the Revolving
Credit Commitment Termination Date in the case of Revolving
Credit Loans or the date final payment is due on the Term Loans
in the case of Term Loans;

(3) no Interest Period with respect to the Term Loans shall
extend beyond any date upon which repayment of principal thereof
is required to be made pursuant to Section 2.7 if, after giving
effect to the selection of such Interest Period, the aggregate
principal amount of Term Loans with Interest Periods ending after
such date would exceed the aggregate principal amount of Term
Loans permitted to be outstanding after such scheduled repayment;
and

(4) any Interest Period pertaining to a Eurodollar Loan that
begins on the last Business Day of a calendar month (or on a day
for which there is no numerically corresponding day in the
calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month.

"Interest Rate Agreement": any interest rate protection
agreement, interest rate future, interest rate option, interest rate
cap or other interest rate hedge arrangement, to or under which the
Borrower is a party or a beneficiary on the date hereof or becomes a
party or a beneficiary after the date hereof, which is entered into in
the ordinary course of business and which is not entered into for
speculative purposes.

"Investments": as defined in Section 8.9.

"Issuer": as defined in the Guarantee and Collateral Agreement.

"Issuing Lender": Chase or any of its Affiliates, each in its
capacity as issuer of each Letter of Credit.

"L/C Commitment": the Issuing Lender's obligation to open Letters
of Credit pursuant to Article 3 of this Agreement.

"L/C Obligation": the obligation of the Borrower to reimburse the
Issuing Lender in accordance with the terms of this Agreement and the
related Letter of Credit Application for any payment made by the
Issuing Lender under any Letter of Credit.

"L/C Participating Interest": with respect to any Letter of
Credit (a) in the case of the Issuing Lender with respect thereto, its
interest in such Letter of Credit and any Letter of Credit Application
relating thereto after giving effect to the granting of participating
interests therein, if any, pursuant hereto and (b) in the case of each
Participating Lender, its undivided participating interest in such
Letter of Credit and any Letter of Credit Application relating
thereto.

"L/C Participation Certificate": a certificate in substantially
the form of Exhibit C.
<PAGE> 18
17

"Leased Equipment": computer systems, software, accessories,
upgrades and support, maintenance and data software subscriptions and
third party equipment and/or trade fixtures owned by Triad Financial
and the Foreign Lease Subsidiaries.

"Lease Transaction": leases of Leased Equipment by Triad
Financial and the Foreign Lease Subsidiaries as lessors to third party
customers in the ordinary course of business and the sale of the lease
payments thereon to FinanceCo in exchange for a security interest in
the lease payments, the Chattel Paper and the Leased Equipment;
together, the "Lease Transactions".

"Lease Transaction Obligations": obligations of Triad Financial,
the Foreign Lease Subsidiaries and FinanceCo incurred to finance Lease
Transactions (a) the principal amount of which is computed based upon
a discount of the lease payments due under such Lease Transactions,
(b) which are unsecured or secured solely by Leased Equipment, Chattel
Paper and/or lease payments due under such Lease Transactions that are
not presented on CCI's consolidated balance sheet and (c) which are
treated as "off-balance sheet financing" under GAAP; provided that
obligations of FinanceCo shall be deemed to be Lease Transaction
Obligations only to the extent that the proceeds of such obligations
are used to purchase from Triad Financial lease payments arising in
Lease Transactions. It is the intention of the parties that a Lease
Transaction Obligation may be created by FinanceCo only to the extent
that it is created on a back-to-back basis with a corresponding Lease
Transaction Obligation created by Triad Financial and that any such
Lease Transaction Obligation created by FinanceCo is recourse to
FinanceCo only to the extent that the corresponding Lease Transaction
Obligation created by Triad Financial is recourse to Triad Financial.

"Leased Properties": the collective reference to the real
properties leased by the Borrower and its Subsidiaries described on
Part II of Schedule 5.20 including all buildings, improvements,
structures and fixtures now or subsequently located thereon and owned
or leased by the Borrower.

"Lenders": as defined in the recitals to this Agreement.

"Letter of Credit": any Standby L/C or Trade L/C, collectively,
the "Letters of Credit".

"Letter of Credit Application": with respect to (a) a Standby
L/C, a Standby L/C Application and (b) a Trade L/C, a Trade L/C
Application; collectively, the "Letter of Credit Applications."

"Letter of Credit Outstandings": at any date, the sum of (a) the
aggregate amount then available to be drawn under all outstanding
Letters of Credit and (b) the aggregate amount of drawings under
Letters of Credit which have not then been reimbursed pursuant to
Section 3.5.
<PAGE> 19
18

"Lien": any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever
(including, without limitation, any conditional sale or other title
retention agreement and any Financing Lease having substantially the
same economic effect as any of the foregoing).

"Loan": any loan made by any Lender pursuant to this Agreement.

"Loan Documents": the collective reference to this Agreement, any
Notes, the Letters of Credit, the Letter of Credit Applications and
the Guarantee and Collateral Agreement.

"Material Adverse Effect": any event, development or circumstance
that has had or could reasonably be expected to have a material
adverse effect on (a) the business, assets, property, condition
(financial or otherwise) or prospects of CCI, the Borrower and their
Subsidiaries taken as a whole, (b) the ability of CCI, the Borrower
and their Subsidiaries taken as a whole to perform their respective
obligations under any of the Loan Documents or the Transaction
Documents or (c) the validity or enforceability of this Agreement or
any of the other Loan Documents, the Transaction Documents or the
rights or remedies of the Administrative Agent or the Lenders
hereunder or thereunder.

"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products or
any hazardous or toxic substances, materials or wastes, defined or
regulated as such in or under any Environmental Law, including,
without limitation, friable asbestos, polychlorinated biphenyls and
urea-formaldehyde insulation.

"Merger": the merger of CCI Acquisition Co., a Wholly-Owned
Subsidiary of CCI, with and into the Borrower, as of February 27,
1997, pursuant to the Agreement and Plan of Merger, dated as of
October 17, 1996, among CCI, the Borrower, and CCI Acquisition Co.

"Mortgages": the collective reference to each of the mortgages
and deeds of trust to be executed and delivered by the Borrower and
its Subsidiaries pursuant to Sections 7.9 and 7.10, in a form
determined by Administrative Agent as necessary or desirable to create
a valid and enforceable first mortgage Lien securing the obligations
and liabilities of the Borrower or any guarantor under the Loan
Documents, as the same may be amended, supplemented, replaced,
restated, or otherwise modified from time to time.

"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
<PAGE> 20
19

"Net Cash Proceeds": (a) in connection with any Asset Sale
(including any sale and leaseback of assets and any sale of accounts
receivable in connection with a receivables financing transaction) the
cash proceeds (including any cash payments received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and
when received) of such Asset Sale net of all reasonable attorneys'
fees, accountants' fees, investment banking fees, survey costs, title
insurance premiums, required debt payments (other than pursuant
hereto) and other customary fees actually incurred and satisfactorily
documented in connection therewith and net of taxes paid or reasonably
expected to be payable as a result thereof and net of purchase price
adjustments reasonably expected to be payable in connection therewith
and (b) in connection with any issuance by CCI or any of its
Subsidiaries of equity or debt securities or instruments or any
Permitted Issuance or the incurrence of loans other than Indebtedness
permitted by Section 8.2 or Section 11.6(i), the cash proceeds
received from such issuance, net of all reasonable investment banking
fees, legal fees, accountants fees, underwriting discounts and
commissions and other customary fees and expenses, actually incurred
and satisfactorily documented in connection therewith; provided
however that, with respect to any issuance of debt instruments or
securities as described in clause (b) above, only in the event that
such net cash proceeds are used to refinance any Indebtedness
permitted by this Agreement, then such net cash proceeds shall not
constitute "Net Cash Proceeds" for the purpose of this Agreement.

"Nonconsenting Lender": as defined in Section 4.9.

"Non-Excluded Taxes": as defined in Section 4.7(a).

"Non-Funding Lender": as defined in Section 4.4(c).

"Notes": the collective reference to the Revolving Credit Notes,
the Swing Line Note and the Term Notes.

"Obligations": the unpaid principal of and interest on
(including, without limitation, interest accruing after the maturity
of the Loans and interest accruing after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or
like proceeding, relating to the Borrower, whether or not a claim for
post-filing or post-petition interest is allowed in such proceeding)
the Loans and all other obligations and liabilities of the Borrower to
the Administrative Agent or to the Lenders, whether direct or
indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of, or in
connection with, this Agreement, any Notes, any other Loan Documents
or any Interest Rate Agreement entered into with a Lender pursuant to
Section 7.11 and any other document made, delivered or given in
connection therewith or herewith, whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs,
expenses (including, without limitation, all fees and disbursements of
counsel to the Administrative Agent or to the Lenders that are
required to be paid by the Borrower pursuant to the terms of this
Agreement) or otherwise.
<PAGE> 21
20

"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA.

"Participant": as defined in Section 12.6(b).

"Participating Lender": any Revolving Credit Lender (other than
the Issuing Lender) with respect to its L/C Participating Interest in
a Letter of Credit.

"Perfection Certificate": a certificate substantially in the form
of Exhibit H.

"Permitted Acquisition": the acquisition by the Borrower and its
Subsidiaries of businesses related to their respective Businesses, as
approved by the board of directors of the Borrower.

"Permitted Issuance": (a) the issuance by CCI of shares of
Capital Stock as dividends on issued and outstanding Capital Stock of
the same class of CCI or pursuant to any dividend reinvestment plan,
(b) the issuance by CCI of options or other equity securities of CCI
to outside directors, members of management or employees of CCI, the
Borrower or any Subsidiary of the Borrower, (c) the issuance of
securities as interest or dividends on pay-in-kind debt or preferred
equity securities permitted hereunder and under the Security
Documents, (d) the issuance by CCI of shares of Capital Stock in
connection with Permitted Acquisitions, (e) the issuance to CCI by the
Borrower of its Capital Stock or the issuance to the Borrower or any
Subsidiary (or any director, with respect to directors' qualifying
shares) by any Subsidiary of the Borrower of any of their respective
Capital Stock, in each case with respect to this clause (e) to the
extent such Capital Stock is pledged to the Administrative Agent
pursuant to the Guarantee and Collateral Agreement (provided that only
65% of the Capital Stock of a Foreign Subsidiary is required to be so
pledged), (f) cash payments made in lieu of issuing fractional shares
of CCI Capital Stock in an aggregate amount not to exceed $100,000,
(g) the issuance by CCI of shares of Capital Stock of CCI to infuse
additional capital into CCI in an aggregate amount not to exceed
$10,000,000 and (h) the issuance by CCI of the CCI common stock
pursuant to the terms and conditions of the HMTF Securities Purchase
Agreement as in effect on the date hereof.

"Person": an individual, partnership, corporation, business
trust, joint stock company, trust, unincorporated association, joint
venture, Governmental Authority or other entity of whatever nature.

"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Borrower or a Commonly
Controlled Entity is (or, if such plan were terminated at such time,
would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.

"Pledged Notes": as defined in the Guarantee and Collateral
Agreement.
<PAGE> 22
21

"Pledged Stock": as defined in the Guarantee and Collateral
Agreement.

"Pro Forma Balance Sheet": as defined in Section 5.1(d).

"Properties": as defined in Section 5.16.

"Qualified Issuer": any commercial bank (a) which has capital and
surplus in excess of $100,000,000 and (b) the outstanding long-term
debt securities of which are rated at least A-2 by Standard & Poor's
Ratings Group or at least P-2 by Moody's Investors Service, Inc., or
carry an equivalent rating by a nationally recognized rating agency if
both of the two named rating agencies cease publishing ratings of
investments.

"Refunded Swing Line Loans": as defined in Section 2.13(c).

"Register": as defined in Section 12.6(d).

"Regulation G": Regulation G of the Board of Governors of the
Federal Reserve System as in effect from time to time.

"Regulation U": Regulation U of the Board of Governors of the
Federal Reserve System as in effect from time to time.

"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.

"Reportable Event": any of the events set forth in Section
4043(b) of ERISA and the regulations thereunder, other than those
events as to which the thirty day notice period is waived under
subsections .13, .14, .16, .18, .19 or .20 of PBGC Reg. ss. 2615.

"Required Lenders": at any time, Lenders the Total Credit
Percentages of which aggregate at least a majority.

"Requirement of Law": as to any Person, the certificate of
incorporation and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon such Person or
any of its property or to which such Person or any of its property is
subject.

"Responsible Officer": as to any Person, the chief executive
officer, the president, the chief financial officer, any vice
president, the treasurer, any assistant treasurer, the secretary or
any assistant secretary of such Person.

"Restricted Payments": as defined in Section 8.7.
<PAGE> 23
22

"Revolving Credit Commitment": as to any Revolving Credit Lender,
its obligation to make Revolving Credit Loans to the Borrower pursuant
to Section 2.1 and to participate in Swing Line Loans and Letters of
Credit in an aggregate amount not to exceed at any one time
outstanding the amount set forth opposite such Revolving Credit
Lender's name in Schedule 1.1 under the heading "Revolving Credit
Commitment", as such amount may be reduced from time to time as
provided herein; collectively, as to all the Revolving Credit Lenders,
the "Revolving Credit Commitments."

"Revolving Credit Commitment Percentage": as to any Revolving
Credit Lender, the percentage of the aggregate Revolving Credit
Commitments constituted by its Revolving Credit Commitment.

"Revolving Credit Commitment Period": the period from and
including the Closing Date to but not including the Revolving Credit
Commitment Termination Date.

"Revolving Credit Commitment Termination Date": the earliest of
(a) March 31, 2003, (b) the date upon which the Term Loans shall be
paid in full and (c) the date upon which the Revolving Credit
Commitments shall be terminated pursuant hereto (including any
termination pursuant to Article 9).

"Revolving Credit Facility": as defined in the recitals to this
Agreement.

"Revolving Credit Lender": any Lender having a Revolving Credit
Commitment or that holds outstanding Revolving Credit Loans or L/C
Participating Interests hereunder.

"Revolving Credit Loan" and "Revolving Credit Loans": as defined
in Section 2.1.

"Revolving Credit Note" and "Revolving Credit Notes": as defined
in Section 2.2.

"Security Documents": the Guarantee and Collateral Agreement and
any other collateral security document delivered to the Administrative
Agent pursuant to Section 7.9, 7.10 or 7.12; individually a "Security
Document."

"Senior Subordinated Indebtedness": unsecured senior subordinated
Indebtedness of the Borrower (including the Senior Subordinated Notes
and any permanent refinancing thereof); provided that such
indebtedness has (i) no maturity, amortization, mandatory redemption
or purchase option (other than with asset sale proceeds, subject to
the provisions of this Agreement, or following a change of control) or
sinking fund payment prior to the tenth anniversary of the Closing
Date, (ii) no financial maintenance covenants, (iii) such other terms
and conditions (including, without limitation, interest rate, events
of default, subordination and
<PAGE> 24
23

covenants) as shall be reasonably satisfactory to the Administrative
Agent and (iv) any permanent refinancing shall not be less favorable
to the Borrower and the Lenders as the Senior Subordinated Notes
financing taken as a whole.

"Senior Subordinated Note Indenture": the Indenture dated as of
February 10, 1998 entered into by the Borrower in connection with the
issuance of the Senior Subordinated Notes, together with all
instruments and other agreements entered into by the Borrower or such
Subsidiaries in connection therewith, as the same may be amended,
supplemented or otherwise modified from time to time in accordance
with Section 8.18.

"Senior Subordinated Notes": as defined in the recitals hereto.

"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.

"Solvent" and "Solvency": with respect to any Person on a
particular date, that on such date, (a) the fair value of the property
of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person,
(b) the present fair saleable value of the assets of such Person is
not less than the amount that will be required to pay the probable
liability of such Person on its debts as they become absolute and
matured, (c) such Person does not intend to, and does not believe that
it will, incur debts or liabilities beyond such Person's ability to
pay as such debts and liabilities mature, and (d) such Person is not
engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's property would
constitute an unreasonably small capital.

"Standby L/C": an irrevocable letter of credit issued by the
Issuing Lender pursuant to this Agreement for the account of the
Borrower in respect of obligations of the type described in Section
3.1.

"Standby L/C Application": as defined in Section 3.2.

"Subsidiary": as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership
interests having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation, partnership or other entity are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person; provided that the Customer Partnerships shall be deemed
Subsidiaries of the Borrower solely for purposes of Sections 8.2, 8.4
and 8.9 only. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a
Subsidiary or Subsidiaries of the Borrower.
<PAGE> 25
24

"Swing Line Commitment": the Swing Line Lender's obligation to
make Swing Line Loans pursuant to Section 2.13.

"Swing Line Lender": Chase in its capacity as provider of the
Swing Line Loans.

"Swing Line Loan Participation Certificate": a certificate in
substantially the form of Exhibit D.

"Swing Line Loans": as defined in Section 2.13.

"Swing Line Note": as defined in Section 2.13(b).

"Term Loan Facility": as defined in the recitals to this
Agreement.

"Term Loan" and "Term Loans": as defined in Section 2.6.

"Term Loan Commitment": as to any Term Loan Lender, its
obligation to make a Term Loan to the Borrower pursuant to Section 2.6
of this Agreement in an aggregate amount not to exceed the amount set
forth opposite such Term Loan Lender's name in Schedule 1.1 under the
heading "Term Loan Commitment."

"Term Loan Commitment Percentage": as to any Term Loan Lender,
the percentage of the aggregate Term Loan Commitments constituted by
its Term Loan Commitment or, following the Closing Date, the
percentage of the aggregate outstanding Term Loans constituted by its
Term Loan.

"Term Loan Lender": any Lender having a Term Loan Commitment
hereunder or that holds outstanding Term Loans.

"Term Note" and "Term Notes": as defined in Section 2.7(a).

"Total Credit Percentage": as to any Lender at any time, the
percentage of the aggregate Revolving Credit Commitments and
outstanding Term Loans then constituted by its Revolving Credit
Commitment and outstanding Term Loans (or, if the Revolving Credit
Commitments have terminated or expired, the percentage of the
aggregate outstanding Revolving Credit Loans, outstanding Term Loans
and risk interests in the Letter of Credit Outstandings and Swing Line
Loans then constituted by its outstanding Revolving Credit Loans,
outstanding Term Loans and risk interest in Letter of Credit
Outstandings and Swing Line Loans).

"Trade L/C": a commercial documentary letter of credit issued by
the Issuing Lender pursuant to Section 3.1 for the account of the
Borrower for the purchase of goods in the ordinary course of business.

"Trade L/C Application": as defined in Section 3.2.
<PAGE> 26
25

"Tranche": the reference to Eurodollar Loans the Interest Periods
with respect to all of which begin on the same date and end on the
same later date (whether or not such Loans shall originally have been
made on the same day); Tranches may be identified as "Eurodollar
Tranches".

"Transaction Documents": the collective reference to this
Agreement, the Senior Subordinated Notes and the Senior Subordinated
Note Indenture, and all other agreements, instruments or certificates
executed in connection with the Transactions, as the same may be
amended, supplemented or otherwise modified from time to time in
accordance with Section 8.17.

"Transactions": the collective reference to the amendment and
restatement of the Existing Credit Agreement pursuant to this
Agreement and the issuance of the Senior Subordinated Notes.

"Transferee": as defined in Section 12.6(f).

"Triad Financial": Triad Systems Financial Corporation, a
California corporation.

"Type": as to any Loan, its nature as an Alternate Base Rate Loan
or a Eurodollar Loan.

"Uniform Customs": the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500, and any revisions thereof.

"U.S. Tax Compliance Certificate": as defined in Section
4.7(b)(ii).

"Wholly Owned Subsidiary": as to any Person, any Subsidiary of
which such Person owns, directly or indirectly, all of the Capital
Stock of such Subsidiary other than directors' qualifying shares or
any shares held by nominees.

1.2 Other Definitional Provisions. (a) Unless otherwise specified therein,
all terms defined in this Agreement shall have the defined meanings when used in
any Note or any certificate or other document made or delivered pursuant hereto.

(b) As used herein and in any Note, and any certificate or other document
made or delivered pursuant hereto, accounting terms relating to CCI and its
Subsidiaries not defined in Section 1.1 and accounting terms partly defined in
Section 1.1, to the extent not defined, shall have the respective meanings given
to them under GAAP.

(c) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Article, Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.

(d) The meanings given to terms defined herein shall be equally applicable
to both the singular and plural forms of such terms.
<PAGE> 27
26

ARTICLE 2. AMOUNT AND TERMS OF COMMITMENTS

2.1 Revolving Credit Commitments. (a) Subject to the terms and conditions
hereof, each Revolving Credit Lender severally agrees to make revolving credit
loans (each, a "Revolving Credit Loan", collectively, "Revolving Credit Loans")
to the Borrower from time to time during the Revolving Credit Commitment Period
in an aggregate principal amount at any one time outstanding, when added to such
Revolving Credit Lender's Revolving Credit Commitment Percentage of all Letter
of Credit Outstandings and outstanding Swing Line Loans, not to exceed the
amount of such Revolving Credit Lender's Revolving Credit Commitment. During the
Revolving Credit Commitment Period the Borrower may use the Revolving Credit
Commitments by borrowing, prepaying the Revolving Credit Loans in whole or in
part, and reborrowing, all in accordance with the terms and conditions hereof.

(b) The Revolving Credit Loans may from time to time be (i) Eurodollar
Loans, (ii) Alternate Base Rate Loans or (iii) a combination thereof, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.3 and 2.11.

(c) On the Closing Date the Revolving Credit Loans and Revolving Credit
Commitments under the Existing Credit Agreement, as amended and restated hereby,
shall be continued hereunder.

2.2 Revolving Credit Notes. The Borrower agrees that, upon the request to
the Administrative Agent by any Revolving Credit Lender, in order to evidence
such Lender's Revolving Credit Loans the Borrower will execute and deliver to
such Lender a promissory note substantially in the form of Exhibit A-1, with
appropriate insertions as to payee, date and principal amount (each, as amended,
supplemented, replaced or otherwise modified from time to time, a "Revolving
Credit Note"), payable to the order of such Revolving Credit Lender and in a
principal amount equal to the lesser of (a) the amount of the initial Revolving
Credit Commitment of such Revolving Credit Lender and (b) the aggregate unpaid
principal amount of all Revolving Credit Loans made by such Revolving Credit
Lender. Each Revolving Credit Lender is hereby authorized to record the date,
Type and amount of each Revolving Credit Loan made by such Revolving Credit
Lender, each continuation thereof, each conversion of all or a portion thereof
to another Type, the date and amount of each payment or prepayment of principal
thereof and, in the case of Eurodollar Loans, the length of each Interest Period
with respect thereto, on the schedules annexed to and constituting a part of its
Revolving Credit Note, and any such recordation shall, in the absence of
manifest error and to the extent permitted by applicable law, constitute prima
facie evidence of the accuracy of the information so recorded, provided that the
failure by any Revolving Credit Lender to make any such recordation, or any
error therein, shall not affect any of the obligations of the Borrower under
such Revolving Credit Note or this Agreement. Any Revolving Credit Note shall
(x) be dated the Closing Date, (y) be stated to mature on the Revolving Credit
Commitment Termination Date and (z) provide for the payment of interest in
accordance with Section 4.1.

<PAGE> 28
27

2.3 Procedure for Revolving Credit Borrowing. The Borrower may borrow under
the Revolving Credit Commitments during the Revolving Credit Commitment Period
on any Business Day, provided that the Borrower shall give the Administrative
Agent irrevocable notice (which notice may be telephonic and must be received by
the Administrative Agent prior to 12:00 Noon, New York City time, (a) three
Business Days prior to the requested Borrowing Date, if all or any part of the
requested Revolving Credit Loans are to be Eurodollar Loans, or (b) one Business
Day prior to the requested Borrowing Date, otherwise), specifying (i) the amount
to be borrowed, (ii) the requested Borrowing Date, (iii) whether the borrowing
is to be of Eurodollar Loans, Alternate Base Rate Loans or a combination thereof
and (iv) if the borrowing is to be entirely or partly of Eurodollar Loans, the
respective amounts of each such Type of Loan and the respective lengths of the
initial Interest Periods therefor. Any such telephonic borrowing notice shall be
confirmed promptly by a written borrowing notice to the Administrative Agent,
delivered by hand or by telecopy. Each borrowing under the Revolving Credit
Commitments shall be in an amount equal to (A) in the case of Alternate Base
Rate Loans, $500,000 or a whole multiple of $100,000 in excess thereof (or, if
the then Available Revolving Credit Commitments are less than $500,000, such
lesser amount) and (B) in the case of Eurodollar Loans, $1,000,000 or a whole
multiple of $250,000 in excess thereof. Upon receipt of any such notice from the
Borrower, the Administrative Agent shall promptly notify each Revolving Credit
Lender thereof. Each Revolving Credit Lender will make the amount of its pro
rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the office of the Administrative Agent specified in
Section 12.2 prior to 12:30 P.M., New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower by the
Administrative Agent crediting the account of the Borrower on the books of such
office with the aggregate of the amounts made available to the Administrative
Agent by the Revolving Credit Lenders and in like funds as received by the
Administrative Agent.

2.4 Commitment Fee; Administrative Agent Fees. (a) The Borrower agrees to
pay to the Administrative Agent for the account of each Revolving Credit Lender
a commitment fee for the period from and including the first day of the
Revolving Credit Commitment Period to the Revolving Credit Commitment
Termination Date, computed at the rate of 1/2 of 1% per annum on the average
daily Available Revolving Credit Commitment of such Revolving Credit Lender
during the period for which payment is made, payable quarterly in arrears on the
last day of each March, June, September and December and on the Revolving Credit
Commitment Termination Date; provided that such commitment fee shall be subject
to reduction in accordance with the definition of "Applicable Margin".

(b) The Borrower shall pay to Chase, for its account, such fees as have
been agreed to in writing by the Borrower and Chase, in the amounts and on the
dates set forth in such writing.

<PAGE> 29
28

2.5 Termination or Reduction of Revolving Credit Commitments. (a) The
Borrower shall have the right, upon not less than five Business Days' notice to
the Administrative Agent, to terminate the Revolving Credit Commitments or, from
time to time, reduce the unutilized portion of the amount of the Revolving
Credit Commitments, provided that (i) the Revolving Credit Commitments shall not
be terminated if any Letters of Credit or Swing Line Loans are outstanding and
(ii) any such termination of the Revolving Credit Commitments shall be
accompanied by prepayment in full of the Revolving Credit Loans, Swing Line
Loans and L/C Obligations then outstanding, together with accrued interest
thereon to the date of such prepayment, cancellation of all Letters of Credit
(unless cash collateralized in accordance with the last sentence of this
paragraph) and the payment of any unpaid commitment fee then accrued hereunder.
Any such partial reduction shall be in an amount of $500,000, or a whole
multiple of $100,000 in excess thereof, and shall reduce permanently the amount
of the Revolving Credit Commitments then in effect and shall further include any
amounts due in respect thereof under Section 4.8. Upon termination of the
Revolving Credit Commitments, any Letter of Credit then outstanding which has
been fully cash collateralized upon terms reasonably satisfactory to the
Administrative Agent and the Issuing Lender shall no longer be considered a
"Letter of Credit" as defined in Section 1.1, and any L/C Participating Interest
heretofore granted by the Issuing Lender to the Revolving Credit Lenders in such
Letter of Credit shall, at the election of the Issuing Lender, be deemed
terminated but the letter of credit fees payable under Section 3.3 shall
continue to accrue to the Issuing Lender with respect to such Letter of Credit
until the expiry thereof.

(b) In the case of any reduction of the Revolving Credit Commitments
hereunder, to the extent, if any, that the sum of the Revolving Credit Loans,
Swing Line Loans and the Letter of Credit Outstandings exceeds the Revolving
Credit Commitments as so reduced, the Borrower shall make a prepayment equal to
such excess amount, the proceeds of which shall be applied first, to payment of
the Swing Line Loans then outstanding, second, to payment of the Revolving
Credit Loans then outstanding, third, to payment of any L/C Obligations then
outstanding and last, to cash collateralize any outstanding Letter of Credit on
terms reasonably satisfactory to the Administrative Agent and the Issuing
Lender.

2.6 Term Loans. (a) Subject to the terms and conditions hereof, each Term
Loan Lender severally agrees to make a term loan (a "Term Loan", together the
"Term Loans"), through the amendment, restatement and continuation described in
paragraph (b) below, on the Closing Date in an aggregate principal amount set
forth opposite such Lender's name in Schedule 1.1 under the heading "Term Loan
Commitment". The Term Loans may from time to time be (i) Eurodollar Loans, (ii)
Alternate Base Rate Loans or (iii) a combination thereof, as determined by the
Borrower and notified to the Administrative Agent in accordance with Section
2.8.

(b) On the Closing Date, the Term Loans outstanding under the Existing
Credit Agreement, after giving effect to the repayment described in Section
6.1(b) hereunder, as amended and restated hereby, shall continue outstanding.

<PAGE> 30
29

2.7 Term Notes. (a) The Borrower agrees that, upon the request to the
Administrative Agent by any Term Loan Lender, in order to evidence such Lender's
Term Loan the Borrower will execute and deliver to such Lender a promissory note
substantially in the form of Exhibit A-2 (each, as amended, supplemented,
replaced or otherwise modified from time to time, a "Term Note"), with
appropriate insertions therein as to payee, date and principal amount, payable
to the order of such Term Loan Lender and in a principal amount equal to the
amount set forth opposite such Term Loan Lender's name on Schedule 1.1 under the
heading "Term Loan Commitment." Each Term Loan Lender is hereby authorized to
record the date, Type and amount of its Term Loan, each continuation thereof,
each conversion of all or a portion thereof to another Type, the date and amount
of each payment or prepayment of principal of its Term Loan and, in the case of
Eurodollar Loans, the length of each Interest Period with respect thereto, on
the schedules annexed to and constituting a part of its Term Note, and any such
recordation shall, in the absence of manifest error and to the extent permitted
by applicable law, constitute prima facie evidence of the accuracy of the
information so recorded, provided that the failure by any Term Loan Lender to
make any such recordation, or any error therein, shall not affect any of the
obligations of the Borrower under such Term Note or this Agreement. Any Term
Note shall (i) be dated the Closing Date, (ii) be payable as provided in Section
2.7(b) and (iii) provide for the payment of interest in accordance with Section
4.1.

(b) The aggregate Term Loans of all the Term Loan Lenders shall be payable
in 17 consecutive quarterly installments on the dates and in a principal amount
equal to the amount set forth below (together with all accrued interest thereon)
opposite the applicable installment date (or, if less, the aggregate amount of
the Term Loans then outstanding):

<TABLE>
<CAPTION>
Installment Amount
----------- -------
<S> <C>
March 31, 1999 $2,000,000
June 30, 1999 2,000,000
September 30, 1999 2,000,000
December 31, 1999 2,500,000

March 31, 2000 2,500,000
June 30, 2000 2,500,000
September 30, 2000 2,500,000
December 31, 2000 3,000,000

March 31, 2001 3,000,000
June 30, 2001 3,000,000
September 30, 2001 3,000,000
December 31, 2001 3,500,000

March 31, 2002 3,500,000
June 30, 2002 3,500,000
September 30, 2002 3,500,000
December 31, 2002 4,000,000

March 31, 2003 4,000,000
</TABLE>

<PAGE> 31
30

2.8 Procedure for Term Loan Borrowing; Repayment of Loans. (a) The Borrower
shall give the Administrative Agent irrevocable notice (which notice must be
received by the Administrative Agent prior to 12:00 Noon, New York City time,
one Business Day prior to the Closing Date) requesting that the Term Loan
Lenders make the Term Loans on the Closing Date and specifying the amount to be
borrowed. Upon receipt of such notice the Administrative Agent shall promptly
notify each Term Loan Lender thereof. On the Closing Date each Term Loan Lender
shall make available to the Administrative Agent at its office specified in
Section 12.2 an amount in immediately available funds equal to the Term Loan to
be made by such Term Loan Lender. The Administrative Agent shall on such date
credit the account of the Borrower on the books of such office of the
Administrative Agent with the aggregate of the amounts made available to the
Administrative Agent by the Term Loan Lenders.

(b) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of: (i) each Revolving Credit Lender, the
then unpaid principal amount of each Revolving Credit Loan of such Lender, on
the Revolving Credit Commitment Termination Date; (ii) the Swing Line Lender,
the then unpaid principal amount of the Swing Line Loans, on the Revolving
Credit Commitment Termination Date; and (iii) each Term Loan Lender, such Term
Loan Lender's Term Loan Commitment Percentage of the amounts specified in
Section 2.7(b) (or, if less, the aggregate amount of the Term Loans of such Term
Loan Lender then outstanding), on the dates specified in Section 2.7(b) (or such
earlier date on which the Term Loans become due and payable pursuant to Article
9). The Borrower hereby further agrees to pay interest on the unpaid principal
amount of the Loans from time to time outstanding from the date hereof until
payment in full thereof at the rates per annum, and on the dates, set forth in
Section 4.1.

(c) Each Lender (including the Swing Line Lender) shall maintain in
accordance with its usual practice an account or accounts evidencing
indebtedness of the Borrower to such Lender resulting from each Loan of such
Lender from time to time, including the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.

(d) The Administrative Agent shall maintain the Register pursuant to
Section 12.6(d), and a subaccount therein for each Lender, in which shall be
recorded (i) the amount of each Loan made hereunder, the Type thereof and each
Interest Period, if any, applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) both the amount of any sum received by the
Administrative Agent hereunder from the Borrower and each Lender's share
thereof.

(e) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(c) shall, in the absence of manifest error
and to the extent permitted by applicable law, be prima facie evidence of the
existence and amounts of the obligations of the Borrower therein recorded;
provided, however, that the failure of any
<PAGE> 32
31

Lender or the Administrative Agent to maintain the Register or any such account,
or any error therein, shall not in any manner affect the obligation of the
Borrower to repay (with applicable interest) the Loans made to the Borrower by
such Lender in accordance with the terms of this Agreement.

2.9 Optional Prepayments. (a) The Borrower may, at any time and from time
to time, prepay the Loans, in whole or in part, without premium or penalty, upon
at least three Business Days' (or one Business Day in the case of the payment of
Alternate Base Rate Loans) irrevocable notice (no later than 12:00 noon, New
York City time, on such day) to the Administrative Agent, specifying the date
and amount of prepayment and whether the prepayment is of (i) Eurodollar Loans,
Alternate Base Rate Loans or a combination thereof, and, if of a combination
thereof, the amount allocable to each and (ii) Term Loans, Revolving Credit
Loans or a combination thereof, and if of a combination thereof, the amount
allocable to each. Upon receipt of any such notice the Administrative Agent
shall promptly notify each Term Loan Lender or Revolving Credit Lender, as the
case may be, thereof. If any such notice is given, the amount specified in such
notice shall be due and payable on the date specified therein, together with, in
the case of prepayments of the Term Loans only, accrued interest to such date on
the amount prepaid.

(b) With respect to optional prepayments of the Term Loans the first
$10,000,000 of such optional prepayments of the Term Loans shall be applied in
such order as the Borrower may elect and, with respect to optional prepayments
in excess of such $10,000,000 shall be applied to reduce the then remaining
installments of the Term Loans, pro rata based upon the then remaining number of
installments of such Term Loans, after giving effect to all prior reductions
thereto (i.e., each then remaining installment of the Term Loans shall be
reduced by an amount equal to the aggregate amount to be applied to the Term
Loans divided by the number of the then remaining installments for such Term
Loans); provided, that if the amount to be applied to any installment as
required by this Agreement would exceed the then remaining amount of such
installment, then an amount equal to such excess shall be applied to the next
succeeding installment after giving effect to all prior reductions thereto
(including the amount of prepayments theretofore allocated pursuant to the
preceding portion of this sentence). Amounts prepaid on account of the Term
Loans may not be reborrowed. Partial prepayments shall be in an aggregate
principal amount of $500,000 or a whole multiple of $100,000 in excess thereof
and shall include any amounts due in respect thereof under Section 4.8.

2.10 Mandatory Prepayments and Revolving Credit Commitment Reductions. (a)
If, subsequent to the Closing Date, unless the Required Lenders and the Borrower
shall otherwise agree, CCI or any of its Subsidiaries (including the Borrower)
shall issue any class of Capital Stock other than a Permitted Issuance or incur
any Indebtedness other than any Indebtedness permitted pursuant to Section 8.2
(excluding Indebtedness to refinance the Senior Subordinated Notes unless there
are any Net Cash Proceeds after giving effect to such refinancing) or 11.6(i),
100% of the Net Cash Proceeds thereof shall on the first Business Day after
receipt, be applied toward the prepayment of the Loans and reduction of
Commitments as set forth in paragraph (d) of this Section 2.10.

<PAGE> 33
32

(b) Unless the Required Lenders and the Borrower shall otherwise agree, if
CCI or any of its Subsidiaries (including the Borrower) shall receive Net Cash
Proceeds from any Asset Sale (including the sale and leaseback of assets) such
Net Cash Proceeds shall, on the first Business Day after receipt, be applied
toward the prepayment of the Loans and reduction of Commitments as set forth in
paragraph (d) of this Section 2.10.

(c) Unless the Required Lenders and the Borrower shall otherwise agree, if
for any fiscal year, commencing with the fiscal year ending September 30, 1998
there shall be Excess Cash Flow for such fiscal year (or, with respect to the
first such fiscal year only, for the period from the Closing Date to the end of
such fiscal year), 50% of such Excess Cash Flow shall be applied toward
prepayment of the Loans and reduction of the Commitments as set forth in
paragraph (d) of this Section 2.10. Each such prepayment shall be made on or
before the date which is seven Business Days after the earlier of (A) the date
on which the financial statements referred to in Section 7.1(a) are required to
be delivered to the Lenders and (B) the date on which said financial statements
are actually delivered. In addition, no later than three Business Days following
the date that any amount deducted from Excess Cash Flow is required to be
returned to Excess Cash Flow as a result of the proviso to clause (b)(ix) of the
definition of "Excess Cash Flow", 50% of such amount shall be applied toward
payment of the Loans and reduction of the Commitments as set forth in paragraph
(d). Notwithstanding the foregoing, the Borrower shall not be required to make
any prepayment pursuant to this paragraph (c) in respect of Excess Cash Flow for
any fiscal year if the ratio of Consolidated Total Debt of the Borrower and its
Subsidiaries on the last day of such fiscal year to Consolidated EBITDA of the
Borrower and its Subsidiaries for such fiscal year is less than 2.50 to 1.00.

(d) All mandatory prepayments shall be applied first to the Term Loans and
second to the permanent reduction of the Revolving Credit Commitments. The
application of prepayments referred to in the preceding sentence shall be made
first to Alternate Base Rate Loans and second to Eurodollar Loans. The amount of
each principal prepayment of Term Loans shall be applied to reduce the then
remaining installments of the Term Loans, pro rata based upon the then remaining
number of installments of such Term Loans after giving effect to all prior
reductions thereto (i.e., each then remaining installment of the Term Loans
shall be reduced by an amount equal to the aggregate amount to be applied to the
Term Loans divided by the number of the then remaining installments for such
Term Loans); provided, that if the amount to be applied to any installment as
required by this Agreement would exceed the then remaining amount of such
installment, then an amount equal to such excess shall be applied to the next
succeeding installment after giving effect to all prior reductions thereto
(including the amount of prepayments theretofore allocated pursuant to the
preceding portion of this sentence). Amounts prepaid on account of the Term
Loans may not be reborrowed.

(e) If at any time the sum of the Revolving Credit Loans, Swing Line Loans
and the Letter of Credit Outstandings exceeds the Revolving Credit Commitments
(including at any time after any reduction of the Revolving Credit Commitments
pursuant to Section 2.5 or this Section 2.10), the Borrower shall make a payment
in the amount of such excess which payment shall be applied in the order set
forth in Section 2.5(b). To the extent that after

<PAGE> 34
33

giving effect to any prepayment of the Loans required by the preceding sentence,
the sum of the Revolving Credit Loans, Swing Line Loans and Letter of Credit
Outstandings exceed the Revolving Credit Commitments, the Borrower shall,
without notice or demand, immediately cash collateralize the then outstanding
L/C Obligations in an amount equal to such excess upon terms reasonably
satisfactory to the Administrative Agent.

(f) If at any time the Borrower or any Subsidiary shall receive any cash
proceeds of any casualty or condemnation in excess of $2,000,000 permitted by
Section 8.6(c), such proceeds shall be deposited with the Administrative Agent
who shall hold such proceeds in a cash collateral account reasonably
satisfactory to it. From time to time upon request, the Administrative Agent
will release such proceeds to the Borrower or such Subsidiary, as necessary, to
pay for replacement or rebuilding of the assets lost or condemned. If such
assets are not replaced or rebuilt within one year (subject to reasonable
extension for force majeure or weather delays) following the condemnation or
casualty or if the Borrower fails to notify the Administrative Agent in writing
on or before 180 days after such casualty or condemnation that the Borrower
shall commence the replacement or rebuilding of such asset, then, in either
case, the Administrative Agent may apply any amounts in the cash collateral
account to the repayment of the Loans in accordance with Section 2.10(d).

(g) The provisions of this Section 2.10 shall not be in derogation of any
other covenant or obligation of the Borrower and its Subsidiaries under the Loan
Documents and shall not be construed as a waiver of, or a consent to departure
from, any such covenant or obligation.

(h) Notwithstanding the foregoing provisions of this Section 2.10, if at
any time the mandatory prepayment of the Term Loans pursuant to this Agreement
would result, after giving effect to the procedures set forth in this Agreement,
in the Borrower incurring breakage costs and other Eurodollar Loans related
costs under Section 4.5, 4.6 or 4.7 as a result of Eurodollar Loans being
prepaid other than on the last day of an Interest Period applicable thereto
("Affected Eurodollar Loans") which breakage costs are required to be paid
pursuant to Section 4.8, then, the Borrower may so long as no Default or Event
of Default shall have occurred and be continuing, in its sole discretion,
initially deposit a portion (up to 100%) of the amounts that otherwise would
have been paid in respect to the Affected Eurodollar Loans with the
Administrative Agent (which deposit must be equal in amount to the amount of
Affected Eurodollar Loans not immediately prepaid) to be held as security for
the obligations of the Borrower to make such mandatory prepayment pursuant to a
cash collateral agreement to be entered into in form and substance reasonably
satisfactory to the Administrative Agent, with such cash collateral to be
directly applied upon the first occurrence (or occurrences) thereafter of the
last day of an Interest Period applicable to the relevant Term Loan that is a
Eurodollar Loan (or such earlier date or dates as shall be requested by the
Borrower), to repay an aggregate principal amount of such Term Loan equal to the
Affected Eurodollar Loans not initially repaid pursuant to this sentence.

<PAGE> 35
34

2.11 Conversion and Continuation Options. (a) The Borrower may elect from
time to time to convert Eurodollar Loans to Alternate Base Rate Loans, by giving
the Administrative Agent at least two Business Days' prior irrevocable notice of
such election, provided that, unless the Borrower elects to deposit with the
Administrative Agent the amount of any breakage costs and other Eurodollar Loan
related costs to be incurred by the Borrower under this Agreement with respect
to the prepayment or conversion of such Eurodollar Loan prior to the end of an
Interest Period, any such conversion of Eurodollar Loans may only be made on the
last day of an Interest Period with respect thereto. The Borrower may elect from
time to time to convert Alternate Base Rate Loans to Eurodollar Loans by giving
the Administrative Agent at least three Business Days' prior irrevocable notice
of such election. Any such notice of conversion to Eurodollar Loans shall
specify the length of the initial Interest Period or Interest Periods therefor.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each Term Loan Lender or Revolving Credit Lender, as the case may be, thereof.
All or any part of outstanding Eurodollar Loans and Alternate Base Rate Loans
may be converted as provided herein, provided that (i) no Alternate Base Rate
Loan may be converted into a Eurodollar Loan when any Default or Event of
Default has occurred and is continuing and the Administrative Agent has or the
Required Lenders have determined that such a conversion is not appropriate and
(ii) any such conversion may only be made if, after giving effect thereto,
Section 2.12 shall not have been contravened.

(b) Any Eurodollar Loans may be continued as such upon the expiration of
the then current Interest Period with respect thereto by the Borrower giving
notice to the Administrative Agent, in accordance with the applicable provisions
of the term "Interest Period" set forth in Section 1.1, of the length of the
next Interest Period to be applicable to such Loans, provided that no Eurodollar
Loan may be continued as such (i) when any Event of Default has occurred and is
continuing and the Administrative Agent has or the Required Lenders have
determined that such a continuation is not appropriate or (ii) if, after giving
effect thereto, Section 2.12 would be contravened and provided, further, that if
the Borrower shall fail to give any required notice as described above in this
paragraph or if such continuation is not permitted pursuant to the preceding
proviso such Eurodollar Loans shall be automatically converted to Alternate Base
Rate Loans on the last day of such then expiring Interest Period.

2.12 Minimum Amounts of Tranches. All borrowings, conversions and
continuations of Loans hereunder and all selections of Interest Periods
hereunder shall be in such amounts and be made pursuant to such elections so
that, after giving effect thereto, the aggregate principal amount of the Loans
comprising each Eurodollar Tranche shall be equal to $1,000,000 or a whole
multiple of $250,000 in excess thereof and so that there shall not be more than
10 Eurodollar Tranches at any one time outstanding.

2.13 Swing Line Commitment. (a) Subject to the terms and conditions hereof,
the Swing Line Lender agrees to make swing line loans (individually, a "Swing
Line Loan"; collectively, the "Swing Line Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding not to exceed $10,000,000, provided that at
no time may the sum of the Swing Line Loans, the Revolving Credit Loans and
Letter of Credit Outstandings exceed the Revolving Credit Commitments. During
the Revolving Credit Commitment Period, the Borrower may use the Swing Line
Commitment by borrowing, prepaying the Swing Line

<PAGE> 36
35

Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. All Swing Line Loans shall be made as Alternate Base Rate
Loans and shall not be entitled to be converted into Eurodollar Loans. The
Borrower shall give the Swing Line Lender irrevocable notice (which notice may
be telephonic and must be received by the Swing Line Lender prior to 1:00 p.m.,
New York City time) on the requested Borrowing Date specifying the amount of the
requested Swing Line Loan which shall be in an aggregate minimum amount of
$150,000 or a whole multiple of $25,000 in excess thereof. Any such telephonic
borrowing notice shall be confirmed promptly by a written borrowing notice to
the Administrative Agent, delivered by hand or by telecopy. The proceeds of the
Swing Line Loan will be made available by the Swing Line Lender to the Borrower
at the office of the Swing Line Lender by 3:00 p.m. on the Borrowing Date by
crediting the account of the Borrower at such office with such proceeds. The
Borrower may at any time and from time to time, prepay the Swing Line Loans, in
whole or in part, without premium or penalty, by notifying the Swing Line Lender
prior to 1:00 p.m. on any Business Day of the date and amount of prepayment. If
any such notice is given, the amount specified in such notice shall be due and
payable on the date specified therein. Partial prepayments shall be in an
aggregate principal amount of $150,000 or a whole multiple of $25,000 in excess
thereof.

(b) The Borrower agrees that, upon the request to the Administrative Agent
by the Swing Line Lender, in order to evidence the Swing Line Loans the Borrower
will execute and deliver to the Swing Line Lender a promissory note
substantially in the form of Exhibit A-3, with appropriate insertions (as the
same may be amended, supplemented, replaced or otherwise modified from time to
time, the "Swing Line Note"), payable to the order of the Swing Line Lender and
representing the obligation of the Borrower to pay the amount of the Swing Line
Commitment or, if less, the unpaid principal amount of the Swing Line Loans,
with interest thereon as prescribed in Section 4.1. The Swing Line Lender is
hereby authorized to record the Borrowing Date, the amount of each Swing Line
Loan and the date and amount of each payment or prepayment of principal thereof,
on the schedule annexed to and constituting a part of the Swing Line Note and
any such recordation shall, in the absence of manifest error and to the extent
permitted by applicable law, constitute prima facie evidence of the accuracy of
the information so recorded, provided that the failure by the Swing Line Lender
to make any such recordation shall not affect any of the obligations of the
Borrower under such Swing Line Note or this Agreement. Any Swing Line Note shall
(a) be dated the Closing Date, (b) be stated to mature on the Revolving Credit
Commitment Termination Date and (c) bear interest for the period from the date
thereof until paid in full on the unpaid principal amount thereof from time to
time outstanding at the applicable interest rate per annum determined as
provided in, and payable as specified in, Section 4.1.

(c) The Swing Line Lender, at any time in its sole and absolute discretion
may, on behalf of the Borrower (which hereby irrevocably directs the Swing Line
Lender to act on its behalf) request each Revolving Credit Lender including the
Swing Line Lender, to make a Revolving Credit Loan in an amount equal to such
Lender's Revolving Credit Commitment Percentage of the amount of the Swing Line
Loans outstanding on the date such notice is given (the "Refunded Swing Line
Loans"). Unless any of the events described in paragraph (f) of Article 9 shall
have occurred with respect to the Borrower (in which event the procedures of
paragraph (e) of this Section 2.13 shall apply) each Revolving Credit

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36

Lender shall make the proceeds of its Revolving Credit Loan available to the
Administrative Agent for the account of the Swing Line Lender at the office of
the Administrative Agent specified in Section 12.2 prior to 12:00 Noon (New York
City time) in funds immediately available on the Business Day next succeeding
the date such notice is given. The proceeds of such Revolving Credit Loans shall
be immediately applied to repay the Refunded Swing Line Loans. Effective on the
day such Revolving Credit Loans are made, the portion of the Swing Line Loans so
paid shall no longer be outstanding as Swing Line Loans, shall no longer be due
under any Swing Line Note and shall be due under the respective Revolving Credit
Loans of the Revolving Credit Lenders in accordance with their respective
Revolving Credit Commitment Percentages. The Borrower authorizes the Swing Line
Lender to charge the Borrower's accounts with the Administrative Agent (up to
the amount available in each such account) in order to immediately pay the
amount of such Refunded Swing Line Loans to the extent amounts received from the
Revolving Credit Lenders are not sufficient to repay in full such Refunded Swing
Line Loans.

(d) Notwithstanding anything herein to the contrary, the Swing Line Lender
shall not be obligated to make any Swing Line Loans if the conditions set forth
in Section 6.2 have not been satisfied.

(e) If prior to the making of a Revolving Credit Loan pursuant to paragraph
(c) of Section 2.13 one of the events described in paragraph (f) of Article 9
shall have occurred and be continuing with respect to the Borrower, each
Revolving Credit Lender will, on the date such Revolving Credit Loan was to have
been made pursuant to the notice in Section 2.13(c), purchase an undivided
participating interest in the Swing Line Loans in an amount equal to (i) its
Revolving Credit Commitment Percentage times (ii) the Swing Line Loans
outstanding as of such date. Each Revolving Credit Lender will immediately
transfer to the Swing Line Lender, in immediately available funds, the amount of
its participation, and upon receipt thereof the Swing Line Lender will deliver
to such Revolving Credit Lender a Swing Line Loan Participation Certificate
dated the date of receipt of such funds and in such amount.

(f) Whenever, at any time after any Revolving Credit Lender has purchased a
participating interest in a Swing Line Loan, the Swing Line Lender receives any
payment on account thereof, the Swing Line Lender will distribute to such
Revolving Credit Lender its participating interest in such amount (appropriately
adjusted, in the case of interest payments, to reflect the period of time during
which such Revolving Credit Lender's participating interest was outstanding and
funded); provided, however, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Revolving Credit Lender will
return to the Swing Line Lender any portion thereof previously distributed by
the Swing Line Lender to it.

(g) Each Revolving Credit Lender's obligation to make the Loans referred to
in Section 2.13(c) and to purchase participating interests pursuant to Section
2.13(e) shall be absolute and unconditional and shall not be affected by any
circumstance, including, without limitation, (i) any set-off, counterclaim,
recoupment, defense or other right which such Revolving Credit Lender or the
Borrower may have against the Swing Line Lender, the
<PAGE> 38
37

Borrower or any other Person for any reason whatsoever; (ii) the occurrence or
continuance of a Default or an Event of Default; (iii) any adverse change in the
condition (financial or otherwise) of the Borrower; (iv) any breach of this
Agreement or any other Loan Document by the Borrower, CCI, any of their
Subsidiaries or any other Lender; or (v) any other circumstance, happening or
event whatsoever, whether or not similar to any of the foregoing.

ARTICLE 3. LETTERS OF CREDIT

3.1 The L/C Commitment. (a) Subject to the terms and conditions hereof, the
Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue Letters of Credit for the
account of the Borrower on any Business Day during the Revolving Credit
Commitment Period in such form as may be approved from time to time by the
Issuing Lender; provided that no Issuing Lender shall issue any Letter of Credit
if, after giving effect to such issuance, (i) the L/C Obligations would exceed
$15,000,000 or (ii) the sum of the Revolving Credit Loans, Swing Line Loans and
Letter of Credit Outstandings of all the Revolving Credit Lenders would exceed
the Revolving Credit Commitments of all the Revolving Credit Lenders. Each
Letter of Credit shall (i) be either (x) a Standby L/C issued to provide credit
support for insurance and other general corporate requirements of the Borrower
and its Subsidiaries, or (y) a Trade L/C in respect of the purchase of goods or
services by the Borrower and its Subsidiaries in the ordinary course of business
and (ii) expire no later than the Revolving Credit Commitment Termination Date.
No Standby L/C shall have an expiry date more than 360 days after its date of
issuance, and no Trade L/C shall have an expiry date more than 120 days after
its issuance and no later than five Business Days prior to the Revolving Credit
Commitment Termination Date, provided that Standby L/C's may provide for the
renewal thereof for additional periods not to exceed one year, but in any event
no later than the Revolving Credit Commitment Termination Date. Each Letter of
Credit shall be denominated in Dollars.

(b) Each Letter of Credit shall be subject to the Uniform Customs and, to
the extent not inconsistent therewith, the laws of the State of New York.

(c) The Issuing Lender shall not at any time be obligated to issue any
Letter of Credit hereunder if such issuance would conflict with, or cause the
Issuing Lender or any Participating Lender to exceed any limits imposed by, any
applicable Requirement of Law.

(d) Any Letter of Credit issued and outstanding as of the Closing Date
pursuant to the Existing Credit Agreement shall be deemed to be a Letter of
Credit issued under this Agreement on the Closing Date.

3.2 Procedure for Issuance of Letters of Credit. The Borrower may from time
to time request that the Issuing Lender issue a Letter of Credit by delivering
to the Issuing Lender and the Administrative Agent at their respective addresses
for notices specified herein a commercial letter of credit application in the
Issuing Lender's then customary form (a "Trade L/C Application") or a standby
letter of credit application in the Issuing Lender's then customary form (a
"Standby L/C Application"), as the case may be, in each case completed to
<PAGE> 39
38

the satisfaction of the Issuing Lender, and such other certificates, documents
and other papers and information as may be customary for letters of credit of
the kind being requested and as the Issuing Lender may reasonably request. Upon
receipt of any Letter of Credit Application, the Issuing Lender will process
such Letter of Credit Application and the certificates, documents and other
papers and information delivered to it in connection therewith in accordance
with its customary procedures and, upon receipt by the Issuing Lender of
confirmation from the Administrative Agent that issuance of such Letter of
Credit will not contravene Section 3.1, the Issuing Lender shall promptly issue
the Letter of Credit requested thereby (but in no event shall the Issuing Lender
be required to issue any Letter of Credit earlier than three Business Days after
its receipt of the Letter of Credit Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Lender and the Borrower. The Issuing
Lender shall furnish a copy of such Letter of Credit to the Borrower and the
Administrative Agent promptly following the issuance thereof and to each
Revolving Credit Lender promptly following the end of each month.

3.3 Fees, Commissions and Other Charges. (a) The Borrower shall pay to the
Administrative Agent, for the account of the Issuing Lender and the
Participating Lenders, a letter of credit commission with respect to each Letter
of Credit for each day at a per annum rate equal to the Applicable Margin
applicable to Revolving Credit Loans bearing interest at the Eurodollar Rate of
the daily face amount of such Letter of Credit, payable quarterly in arrears on
the last day of each of March, June, September and December and on the Revolving
Credit Commitment Termination Date. A portion of such commission equal to 1/4 of
1% of the average daily face amount of such Letter of Credit shall be payable to
the Issuing Lender for its own account, and the remaining portion of such
commission shall be payable to the Issuing Lender and the Revolving Credit
Lenders to be shared ratably among them in accordance with their respective
Revolving Credit Commitment Percentages. Such commissions shall be
nonrefundable.

(b) In addition to the foregoing fees and commissions, the Borrower shall
pay or reimburse the Issuing Lender for such normal and customary costs and
expenses as are incurred or charged by the Issuing Lender in issuing, effecting
payment under, amending or otherwise administering any Letter of Credit.

(c) The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the Participating Lenders all fees and
commissions received by the Administrative Agent for their respective accounts
pursuant to this Section 3.3.

3.4 L/C Participations. (a) Effective on the date of issuance of each
Letter of Credit, the Issuing Lender irrevocably agrees to grant and hereby
grants to each Participating Lender, and each Participating Lender irrevocably
agrees to accept and purchase and hereby accepts and purchases from the Issuing
Lender, on the terms and conditions hereinafter stated, for such Participating
Lender's own account and risk an undivided interest equal to such Participating
Lender's Revolving Credit Commitment Percentage in the Issuing Lender's
<PAGE> 40
39

obligations and rights under each Letter of Credit issued by the Issuing Lender
and the amount of each draft paid by the Issuing Lender thereunder. Each
Participating Lender unconditionally and irrevocably agrees with the Issuing
Lender that, if a draft is paid under any Letter of Credit for which such
Issuing Lender is not reimbursed in full by the Borrower in accordance with the
terms of this Agreement, such Participating Lender shall pay to the
Administrative Agent, for the account of the Issuing Lender, upon demand at the
Administrative Agent's address specified in Section 12.2, an amount equal to
such Participating Lender's Revolving Credit Commitment Percentage of the amount
of such draft, or any part thereof, which is not so reimbursed. On the date that
any Assignee becomes a Revolving Credit Lender party to this Agreement in
accordance with Section 12.6, participating interests in any outstanding Letters
of Credit held by the transferor Lender from which such Assignee acquired its
interest hereunder shall be proportionately reallotted between such Assignee and
such transferor Lender. Each Participating Lender hereby agrees that its
obligation to participate in each Letter of Credit, and to pay or to reimburse
the Issuing Lender for its participating share of the drafts drawn or amounts
otherwise paid thereunder, is absolute, irrevocable and unconditional and shall
not be affected by any circumstances whatsoever (including, without limitation,
the occurrence or continuance of any Default or Event of Default), and that each
such payment shall be made without offset, abatement, withholding or other
reduction whatsoever.

(b) If any amount required to be paid by any Participating Lender to the
Issuing Lender pursuant to Section 3.4(a) in respect of any unreimbursed portion
of any draft paid by the Issuing Lender under any Letter of Credit is paid to
the Issuing Lender within three Business Days after the date such payment is
due, such Participating Lender shall pay to the Administrative Agent, for the
account of the Issuing Lender, on demand, an amount equal to the product of (i)
such amount, times (ii) the daily average Federal Funds Effective Rate during
the period from and including the date such payment is required to the date on
which such payment is immediately available to the Issuing Lender, times (iii) a
fraction the numerator of which is the number of days that elapse during such
period and the denominator of which is 360. If any such amount required to be
paid by any Participating Lender pursuant to Section 3.4(a) is not in fact made
available to the Administrative Agent, for the account of the Issuing Lender, by
such Participating Lender within three Business Days after the date such payment
is due, the Issuing Lender shall be entitled to recover from such Participating
Lender, on demand, such amount with interest thereon calculated from such due
date at the rate per annum applicable to Alternate Base Rate Loans hereunder. An
L/C Participation Certificate of the Issuing Lender submitted to any
Participating Lender with respect to any amounts owing under this Section shall
be conclusive in the absence of manifest error.

(c) Whenever, at any time after the Issuing Lender has paid a draft under
any Letter of Credit and has received from any Participating Lender its pro rata
share of such payment in accordance with Section 3.4(a), the Issuing Lender
receives any reimbursement on account of such unreimbursed portion, or any
payment of interest on account thereof, the Issuing Lender will pay to the
Administrative Agent, for the account of such Participating Lender, its pro rata
share thereof; provided, however, that in the event that any such payment
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such Participating Lender shall return to the Administrative Agent for
the account of the Issuing Lender, the portion thereof previously distributed to
it.
<PAGE> 41
40

3.5 Reimbursement Obligation of the Borrower. The Borrower agrees to
reimburse the Issuing Lender on each date on which the Issuing Lender notifies
the Borrower of the date and amount of a draft presented under any Letter of
Credit and paid by the Issuing Lender for the amount of (a) such draft so paid
and (b) any taxes, fees, charges or other costs or expenses incurred by the
Issuing Lender in connection with such payment. Each such payment shall be made
to the Issuing Lender at its address for notices specified herein in Dollars and
in immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrower under this Section 3.5 from the date such
amounts become payable in accordance with the first sentence of this Section 3.5
until payment in full, at the rate which would be payable on Alternate Base Rate
Loans at such time.

3.6 Obligations Absolute. The Borrower's Obligations under this Article 3
shall be absolute and unconditional under any and all circumstances and
irrespective of any set-off, counterclaim or defense to payment which the
Borrower or any other Person may have or have had against the Issuing Lender or
any other Lender or any beneficiary of a Letter of Credit. The Borrower also
agrees with the Issuing Lender that the Issuing Lender shall not be responsible
for, and the Borrower's obligations under Section 3.5 shall not be affected by,
among other things, the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or any dispute between or among the Borrower and
any beneficiary of any Letter of Credit or any other party to which such Letter
of Credit may be transferred or any claims whatsoever of the Borrower against
any beneficiary of such Letter of Credit or any such transferee. The Issuing
Lender shall not be liable for any error, omission, interruption or delay in
transmission, dispatch or delivery of any message or advice, however
transmitted, in connection with any Letter of Credit, except for errors or
omissions caused by the Issuing Lender's gross negligence or wilful misconduct.
The Borrower agrees that any action taken or omitted by the Issuing Lender under
or in connection with any Letter of Credit or the related drafts or documents,
if done in the absence of gross negligence or wilful misconduct and in
accordance with the standards of care specified in the Uniform Commercial Code
of the State of New York, including, without limitation, Article 5 thereof,
shall be binding on the Borrower and shall not result in any liability of such
Issuing Lender to the Borrower.

3.7 Letter of Credit Payments. If any draft shall be presented for payment
under any Letter of Credit, the Issuing Lender shall promptly notify the
Borrower and the Administrative Agent of the date and amount thereof. The
responsibility of the Issuing Lender to the Borrower in connection with any
draft presented for payment under any Letter of Credit shall, in addition to any
payment obligation expressly provided for in such Letter of Credit, be limited
to determining that the documents (including each draft) delivered under such
Letter of Credit in connection with such presentment are in conformity with such
Letter of Credit.

3.8 Letter of Credit Applications. To the extent that any
provision of any Letter of Credit Application, including any reimbursement
provisions contained therein, related to any Letter of Credit is inconsistent
with the provisions of this Article 3, the provisions of this Article 3 shall
prevail.
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ARTICLE 4. GENERAL PROVISIONS

4.1 Interest Rates and Payment Dates. (a) Each Eurodollar Loan shall bear
interest for each day during each Interest Period with respect thereto at a rate
per annum equal to the Eurodollar Rate determined for such day plus the
Applicable Margin.

(b) Each Alternate Base Rate Loan shall bear interest at a rate per annum
equal to the Alternate Base Rate plus the Applicable Margin.

(c) Upon the occurrence and during the continuance of any Event of Default
specified in Section 9(a), the Loans and any overdue amounts hereunder shall
bear interest at a rate per annum which is (x) in the case of the Loans, the
rate that would otherwise be applicable thereto pursuant to the foregoing
provisions of this Section 4.1 plus 2% or (y) in the case of overdue interest,
commitment fee or other amount, the rate described in paragraph (b) of this
Section 4.1 plus 2%.

(d) Interest shall be payable in arrears on each Interest Payment Date,
provided that interest accruing pursuant to paragraph (c) of this Section 4.1
shall be payable from time to time on demand.

4.2 Computation of Interest and Fees. (a) Interest on Alternate Base Rate
Loans, Eurodollar Loans, commitment fees, interest on overdue interest and other
amounts payable hereunder shall be calculated on the basis of a 360-day year
except interest on Alternate Base Rate Loans (when based on the Prime Rate)
shall be calculated on the basis of a year of 365/366, in either case for the
actual days elapsed. The Administrative Agent shall as soon as practicable
notify the Borrower and the Revolving Credit Lenders or the Term Loan Lenders,
as the case may be, of each determination of a Eurodollar Rate. Any change in
the interest rate on a Loan resulting from a change in the Alternate Base Rate
or the Eurocurrency Reserve Requirements shall become effective as of the
opening of business on the day on which such change becomes effective. The
Administrative Agent shall as soon as practicable notify the Borrower and the
Revolving Credit Lenders or the Term Loan Lenders, as the case may be, of the
effective date and the amount of each such change in interest rate.

(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding on
the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 4.1(a), (b) or (c).
<PAGE> 43
42

4.3 Inability to Determine Interest Rate. If prior to the first day of any
Interest Period:

(a) the Administrative Agent shall have determined (which
determination, absent manifest error, shall be conclusive and binding upon
the Borrower) that, by reason of circumstances affecting the relevant
market, adequate and reasonable means do not exist for ascertaining the
Eurodollar Rate for such Interest Period, or

(b) the Administrative Agent shall have received notice from the
Required Lenders that the Eurodollar Rate determined or to be determined
for such Interest Period will not adequately and fairly reflect the cost to
such Lenders (as conclusively certified by such Lenders) of making or
maintaining their affected Loans during such Interest Period,

the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the Lenders as soon as practicable thereafter. If such notice is
given (x) any Eurodollar Loans requested to be made on the first day of such
Interest Period shall be made as Alternate Base Rate Loans, (y) any Loans that
were to have been converted on the first day of such Interest Period to
Eurodollar Loans shall be converted to or continued as Alternate Base Rate Loans
and (z) any outstanding Eurodollar Loans shall be converted, on the first day of
such Interest Period, to Alternate Base Rate Loans. Until such notice has been
withdrawn by the Administrative Agent (which the Administrative Agent agrees to
do when the circumstances that prompted the delivery of such notice no longer
exist), no further Eurodollar Loans shall be made or continued as such, nor
shall the Borrower have the right to convert Loans to Eurodollar Loans.

4.4 Pro Rata Treatment and Payments. (a) Each borrowing and each conversion
or continuation pursuant to Section 2.11, of Loans (other than Swing Line Loans)
by the Borrower from the Lenders and any reduction of the Commitments of the
Lenders hereunder shall be made pro rata according to the respective principal
amounts of such Loans held by the Lenders or the respective Commitment
Percentages of the Lenders, as the case may be.

(b) Whenever (i) any payment received by the Administrative Agent under
this Agreement or any Note or (ii) any other amounts received by the
Administrative Agent for or on behalf of the Borrower (including, without
limitation, proceeds of collateral or payments under any guarantee) is
insufficient to pay in full all amounts then due and payable to the
Administrative Agent and the Lenders under this Agreement and any Note, such
payment shall be distributed by the Administrative Agent and applied by the
Administrative Agent and the Lenders in the following order: First, to the
payment of fees and expenses due and payable to the Administrative Agent under
and in connection with this Agreement; Second, to the payment of all expenses
due and payable under Section 12.5, ratably among the Administrative Agent and
the Lenders in accordance with the aggregate amount of such payments owed to the
Administrative Agent and each such Lender; Third, to the payment of fees due and
payable under Sections 2.4 and 3.3(a), ratably among the Revolving Credit
Lenders in accordance with the Revolving Credit Commitment Percentage of each
Revolving Credit Lender and, in the case of the Issuing Lender, the amount
retained by the Issuing Lender for its own account pursuant to Section 3.3(a);
Fourth, to the payment of interest then due and payable under the Loans, ratably
in accordance with the aggregate amount of interest

<PAGE> 44
43

owed to each such Lender; and Fifth, to the payment of the principal amount of
the Loans and the L/C Obligations then due and payable and, in the case of
proceeds of collateral or payments under any guarantee, to the payment of any
other obligations to any Lender not covered in First through Fourth above
ratably secured by such collateral or ratably guaranteed under any such
guarantee, ratably among the Lenders in accordance with the aggregate principal
amount and, in the case of proceeds of collateral or payments under any
guarantee, the obligations secured or guaranteed thereby owed to each such
Lender.

(c) If any Revolving Credit Lender (a "Non-Funding Lender") has (x) failed
to make a Revolving Credit Loan required to be made by it hereunder, and the
Administrative Agent has determined that such Revolving Credit Lender is not
likely to make such Revolving Credit Loan or (y) given notice to the Borrower or
the Administrative Agent that it will not make, or that it has disaffirmed or
repudiated any obligation to make, any Revolving Credit Loans, in each case by
reason of the provisions of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, as amended, or otherwise, any payment made on account
of the principal of the Revolving Credit Loans outstanding shall be made as
follows:

(i) in the case of any such payment made on any date when and to the
extent that, in the determination of the Administrative Agent, the Borrower
would be able, under the terms and conditions hereof, to reborrow the
amount of such payment under the Revolving Credit Commitments and to
satisfy any applicable conditions precedent set forth in Section 6.2 to
such reborrowing, such payment shall be made on account of the outstanding
Revolving Credit Loans held by the Revolving Credit Lenders other than the
Non-Funding Lender pro rata according to the respective outstanding
principal amounts of the Revolving Credit Loans of such Revolving Credit
Lenders;

(ii) otherwise, such payment shall be made on account of the
outstanding Revolving Credit Loans held by the Revolving Credit Lenders pro
rata according to the respective outstanding principal amounts of such
Revolving Credit Loans; and

(iii) any payment made on account of interest on the Revolving Credit
Loans shall be made pro rata according to the respective amounts of accrued
and unpaid interest due and payable on the Revolving Credit Loans with
respect to which such payment is being made.

The Borrower agrees to give the Administrative Agent such assistance in making
any determination pursuant to this paragraph as the Administrative Agent may
reasonably request. Any such determination by the Administrative Agent shall be
conclusive and binding on the Lenders.

(d) All payments (including prepayments) to be made by the Borrower on
account of principal, interest and fees shall be made without set-off or
counterclaim and shall be made to the Administrative Agent, for the account of
the Lenders at the Administrative Agent's office located at 270 Park Avenue, New
York, New York 10017, in Dollars and in immediately available funds. The
Administrative Agent shall promptly distribute such payments in accordance with
the provisions of Section 4.4(b) promptly upon receipt in like

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44

funds as received. If any payment hereunder would become due and payable on a
day other than a Business Day, such payment shall become due and payable on the
next succeeding Business Day (except, in the case of Eurodollar Loans, as
otherwise provided in clause (1) of the definition of "Interest Period") and,
with respect to payments of principal, interest thereon shall be payable at the
applicable rate during such extension.

(e) Unless the Administrative Agent shall have been notified in writing by
any Lender prior to a Borrowing Date that such Lender will not make the amount
that would constitute its relevant Commitment Percentage of the borrowing on
such date available to the Administrative Agent, the Administrative Agent may
assume that such Lender has made such amount available to the Administrative
Agent on such Borrowing Date, and the Administrative Agent may, in reliance upon
such assumption, make available to the Borrower a corresponding amount. If such
amount is made available to the Administrative Agent on a date after such
Borrowing Date, such Lender shall pay to the Administrative Agent on demand an
amount equal to the product of (i) the daily average Federal Funds Effective
Rate during such period, times (ii) the amount of such Lender's relevant
Commitment Percentage of such borrowing, times (iii) a fraction the numerator of
which is the number of days that elapse from and including such Borrowing Date
to the date on which such Lender's relevant Commitment Percentage of such
borrowing shall have become immediately available to the Administrative Agent
and the denominator of which is 360. A certificate of the Administrative Agent
submitted to any Lender with respect to any amounts owing under this Section
4.4(e) shall be conclusive in the absence of manifest error. If such Lender's
relevant Commitment Percentage of such borrowing is not in fact made available
to the Administrative Agent by such Lender within three Business Days of such
Borrowing Date, the Administrative Agent shall be entitled to recover such
amount with interest thereon at the rate per annum applicable to Alternate Base
Rate Loans hereunder, on demand, from the Borrower. The failure of any Lender to
make any Loan to be made by it shall not relieve any other Lender of its
obligation, if any, hereunder to make its Loan on such Borrowing Date, but no
Lender shall be responsible for the failure of any other Lender to make the Loan
to be made by such other Lender on such Borrowing Date.

4.5 Illegality. Notwithstanding any other provision herein, if the adoption
of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Alternate Base Rate Loans to Eurodollar Loans shall forthwith be
cancelled and (b) such Lender's Loans then outstanding as Eurodollar Loans, if
any, shall be converted automatically to Alternate Base Rate Loans on the
respective last days of the then current Interest Periods with respect to such
Loans or within such earlier period as required by law; provided that before
making any such demand, each Lender agrees to use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions and so long as
such efforts would not be disadvantageous to it, in its reasonable discretion,
in any legal, economic or regulatory manner) to designate a different lending
office if the making of such a designation would allow the Lender or its lending
office to continue to perform its obligations to make Eurodollar Loans and avoid
the need for, or materially reduce the amount of, such increased cost. If any
such conversion of a

<PAGE> 46
45

Eurodollar Loan occurs on a day which is not the last day of the then current
Interest Period with respect thereto, the Borrower shall pay to such Lender such
amounts, if any, as may be required pursuant to Section 4.8. If circumstances
subsequently change so that any affected Lender shall determine that it is no
longer so affected, such Lender will promptly notify the Borrower and the
Administrative Agent, and upon receipt of such notice, the obligations of such
Lender to make or continue Eurodollar Loans or to convert Alternate Base Rate
Loans into Eurodollar Loans shall be reinstated.

4.6 Requirements of Law. (a) If the adoption of or any change in any
Requirement of Law or in the interpretation or application thereof or compliance
by any Lender with any request or directive (whether or not having the force of
law) from any central bank or other Governmental Authority made subsequent to
the date hereof:

(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement, any Loan, any Note, any Letter of Credit or any
Letter of Credit Application or change the basis of taxation of payments to
such Lender in respect thereof (except for taxes covered by Section 4.7 and
the establishment of a tax based on the net income of such Lender or
changes in the rate of tax on the net income of such Lender);

(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit (including, without limitation, letters of
credit) by, or any other acquisition of funds by, any office of such
Lender; or

(iii) shall impose on such Lender any other condition;

and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans or to increase the cost to such
Lender, by an amount which such Lender deems to be material, of issuing or
maintaining any Letter of Credit or participation therein or to reduce any
amount receivable hereunder in respect thereof, then, in any such case, the
Borrower shall promptly pay such Lender, upon its demand, any additional amounts
necessary to compensate such Lender for such increased cost or reduced amount
receivable, provided that before making any such demand, each Lender agrees to
use reasonable efforts (consistent with its internal policy and legal and
regulatory restrictions and so long as such efforts would not be disadvantageous
to it, in its reasonable discretion, in any legal, economic or regulatory
manner) to designate a different Eurodollar lending office if the making of such
designation would allow the Lender or its Eurodollar lending office to continue
to perform its obligations to make Eurodollar Loans or to continue to fund or
maintain Eurodollar Loans and avoid the need for, or materially reduce the
amount of, such increased cost. If any Lender becomes entitled to claim any
additional amounts pursuant to this Section 4.6, it shall promptly notify (in
any event no later than 90 days after such Lender becomes entitled to make such
claim) the Borrower, through the Administrative Agent, of the event by reason of
which it has become so entitled. If the Borrower so notifies the Administrative
Agent within

<PAGE> 47
46

five Business Days after any Lender notifies the Borrower of any increased cost
pursuant to the foregoing provisions of this Section 4.6, the Borrower may
convert all Eurodollar Loans of such Lender then outstanding into Alternate Base
Rate Loans in accordance with Section 2.11 and, additionally, reimburse such
Lender for any cost in accordance with Section 4.8. This covenant shall survive
the termination of this Agreement and the payment of the Notes and all other
amounts payable hereunder for nine months following such termination and
repayment.

(b) If any Lender shall have determined that the adoption of or any change
in any Requirement of Law regarding capital adequacy or in the interpretation or
application thereof or compliance by such Lender or any corporation controlling
such Lender with any request or directive regarding capital adequacy (whether or
not having the force of law) from any Governmental Authority made subsequent to
the date hereof does or shall have the effect of reducing the rate of return on
such Lender's or such corporation's capital as a consequence of its obligations
hereunder or under any Letter of Credit to a level below that which such Lender
or such corporation could have achieved but for such change or compliance
(taking into consideration such Lender's or such corporation's policies with
respect to capital adequacy) by an amount deemed by such Lender to be material,
then from time to time, after submission by such Lender to the Borrower (with a
copy to the Administrative Agent) of a prompt written request therefor, the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender for such reduction; provided that the Borrower shall not
be required to compensate a Lender pursuant to this paragraph for any amounts
incurred more than ninety days prior to the date that such lender notifies the
Borrower of such Lender's intention to claim compensation therefor; and
provided, further that, if the circumstances giving rise to such claim have a
retroactive effect, then such ninety day period shall be extended to include the
period of such retroactive effect. This covenant shall survive the termination
of this Agreement and the payment of any Notes and all other amounts payable
hereunder for nine months following such termination and repayment.

(c) A certificate as to any additional amounts payable pursuant to this
Section 4.6 showing in reasonable detail the calculation thereof and certifying
that the applicable Lender is generally charging such costs to other similarly
situated borrowers under similar credit facilities, submitted by such Lender,
through the Administrative Agent, to the Borrower shall be conclusive in the
absence of manifest error.

4.7 Taxes. (a) Except as provided below in this Section, all payments made
by the Borrower under this Agreement and any Notes shall be made free and clear
of, and without deduction or withholding for or on account of, any present or
future income, stamp or other taxes, levies, imposts, duties, charges, fees,
deductions or withholdings, now or hereafter imposed, levied, collected,
withheld or assessed by any Governmental Authority, excluding net income taxes
and franchise taxes imposed in lieu of net income taxes. If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to the Administrative Agent or any Lender hereunder or under any Notes,
the amounts so payable to the Administrative Agent or such Lender shall be
increased to the extent necessary to yield to the Administrative Agent or such
Lender (after payment of all Non-Excluded Taxes) interest or

<PAGE> 48
47

any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement and any Notes, provided, however, that the Borrower
shall be entitled to deduct and withhold any Non-Excluded Taxes and shall not be
required to increase any such amounts payable to any Lender if such Lender fails
or is unable to comply with the requirements of paragraph (b) or (c) of this
Section 4.7. Whenever any Non-Excluded Taxes are payable by the Borrower, as
promptly as possible thereafter the Borrower shall send to the Administrative
Agent for its own account or for the account of such Lender, as the case may be,
a certified copy of an original official receipt received by the Borrower
showing payment thereof. If the Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other required documentary
evidence, the Borrower shall indemnify the Administrative Agent and the Lenders
for any incremental taxes, interest or penalties that may become payable by the
Administrative Agent or any Lender as a result of any such failure. The
agreements in this Section 4.7 shall survive the termination of this Agreement
and the payment of the Loans and all other amounts payable hereunder for a
period of nine months thereafter.

(b) Each Lender that is not incorporated under the laws of the United
States of America or a state thereof shall:

(i) (x) on or before the date of any payment by the Borrower under
this Agreement or any Notes to such Lender, deliver to the Borrower and the
Administrative Agent (A) two duly completed copies of United States
Internal Revenue Service Form 1001 or 4224, or successor applicable form,
as the case may be, certifying that it is entitled to receive payments
under this Agreement and any Notes without any deduction or withholding of
any United States federal income taxes and (B) a duly completed Internal
Revenue Service Form W-8 or W-9, or successor applicable form, as the case
may be, certifying that it is entitled to an exemption from United States
backup withholding tax;

(y) deliver to the Borrower and the Administrative Agent two further
copies of any such form or certification on or before the date that any
such form or certification expires or becomes obsolete and after the
occurrence of any event requiring a change in the most recent form
previously delivered by it to the Borrower; and

(z) obtain such extensions of time for filing and complete such forms
or certifications as may reasonably be requested by the Borrower or the
Administrative Agent; or

(ii) in the case of any such Lender that is not a "bank" within the
meaning of Section 881(c)(3)(A) of the Code and that does not comply with
sub-paragraph (i) of this paragraph (b), (x) represent to the Borrower (for
the benefit of the Borrower and the Administrative Agent) that it is not a
bank within the meaning of Section 881(c)(3)(A) of the Code, (y) deliver to
the Borrower on or before the date of any payment by the Borrower, with a
copy to the Administrative Agent, (A) a certificate stating that such
Lender (1) is not a "bank" under Section 881(c)(3)(A) of the Code, is

<PAGE> 49
48

not subject to regulatory or other legal requirements as a bank in any
jurisdiction, and has not been treated as a bank for purposes of any tax,
securities law or other filing or submission made to any Governmental
Authority, any application made to a rating agency or qualification for any
exemption from tax, securities law or other legal requirements, (2) is not
a 10-percent shareholder within the meaning of Section 881(c)(3)(B) of the
Code and (3) is not a controlled foreign corporation receiving interest
from a related person within the meaning of Section 881(c)(3)(C) of the
Code (any such certificate a "U.S. Tax Compliance Certificate") and (B) two
duly completed copies of Internal Revenue Service Form W-8, or successor
applicable form, certifying to such Lender's legal entitlement at the date
of such certificate to an exemption from U.S. withholding tax under the
provisions of Section 881(c) of the Code with respect to payments to be
made under this Agreement and any Notes (and to deliver to the Borrower and
the Administrative Agent two further copies of Form W-8 on or before the
date it expires or becomes obsolete and after the occurrence of any event
requiring a change in the most recently provided form and, if necessary,
obtain any extensions of time reasonably requested by the Borrower or the
Administrative Agent for filing and completing such forms), and (z) agree,
to the extent legally entitled to do so, upon reasonable request by the
Borrower, to provide to the Borrower and the Administrative Agent such
other forms as may be reasonably required in order to establish the legal
entitlement of such Lender to an exemption from withholding with respect to
payments under this Agreement and any Notes;

unless in any such case any change in treaty, law or regulation has occurred
after the date such Person becomes a Lender hereunder which renders any such
forms and certificates previously delivered by such Lender inapplicable or which
would prevent such Lender from duly completing and delivering such form or
certificate with respect to it and such Lender so advises the Borrower and the
Administrative Agent. Each Person that shall become a Lender or a Participant
pursuant to Section 12.6 shall, upon the effectiveness of the related transfer,
be required to provide all of the forms, certifications and statements required
pursuant to this Section; provided that in the case of a Participant the
obligations of such Participant pursuant to this paragraph (b) shall be
determined as if such Participant were a Lender except that such Participant
shall furnish all such required forms, certifications and statements to the
Lender from which the related participation shall have been purchased.

(c) Each Lender shall, upon request by the Borrower, deliver to the
Borrower or the applicable Governmental Authority, as the case may be, any form
or certificate required in order that any payment by the Borrower under this
Agreement or any Notes may be made free and clear of, and without deduction or
withholding for or on account of any Non-Excluded Taxes (or to allow any such
deduction or withholding to be at a reduced rate) imposed on such payment under
the laws of any jurisdiction, provided that such Lender is legally entitled to
complete, execute and deliver such form or certificate and such completion,
execution or submission would not materially prejudice the legal position of
such Lender.

4.8 Indemnity. The Borrower agrees to indemnify each Lender and to hold
each Lender harmless from any loss (excluding loss of profit) or expense which
such Lender may sustain or incur as a consequence of (a) default by the Borrower
in payment when due of

<PAGE> 50
49

the principal amount of or interest on any Eurodollar Loan, (b) default by the
Borrower in making a borrowing of, conversion into or continuation of Eurodollar
Loans after the Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (c) default by the Borrower in making any
prepayment after the Borrower has given a notice thereof in accordance with the
provisions of this Agreement or (d) the making of a prepayment of Eurodollar
Loans on a day which is not the last day of an Interest Period with respect
thereto, including, without limitation, in each case, any such loss or expense
(but excluding loss of margin) arising from the reemployment of funds obtained
by it or from fees payable to terminate the deposits from which such funds were
obtained. Calculation of all amounts payable to a Lender under this Section 4.8
shall be made as though such Lender had actually funded its relevant Eurodollar
Loan through the purchase of a deposit bearing interest at the Eurodollar Rate
in an amount equal to the amount of such Eurodollar Loan and having a maturity
comparable to the relevant Interest Period; provided, however, that each Lender
may fund each of its Eurodollar Loans in any manner it sees fit, and the
foregoing assumption shall be utilized only for the calculation of amounts
payable under this Section 4.8. This covenant shall survive the termination of
this Agreement and the payment of any Notes and all other amounts payable
hereunder for a period of nine months thereafter.

4.9 Replacement of Lender. If at any time (a) the Borrower becomes
obligated to pay additional amounts described in Sections 4.5, 4.6 or 4.7 as a
result of any condition described in such Sections or any Lender ceases to make
Eurodollar Loans pursuant to Section 4.5, (b) any Lender becomes insolvent and
its assets become subject to a receiver, liquidator, trustee, custodian or other
Person having similar powers, (c) any Lender becomes a "Nonconsenting Lender" or
(d) any Lender becomes a "Non-Funding Lender", then the Borrower may, on ten
Business Days' prior written notice to the Administrative Agent and such Lender,
replace such Lender by causing such Lender to (and such Lender shall) assign
pursuant to Section 12.6(c) all of its rights and obligations under this
Agreement to a Lender or other entity selected by the Borrower and acceptable to
the Administrative Agent for a purchase price equal to the outstanding principal
amount of such Lender's Loans and all accrued interest and fees and other
amounts payable hereunder (including amounts payable under Section 4.8 as though
such Loans were being paid instead of being purchased); provided that (i) the
Borrower shall have no right to replace the Administrative Agent, (ii) neither
the Administrative Agent nor any Lender shall have any obligation to the
Borrower to find a replacement Lender or other such entity, (iii) in the event
of a replacement of a Nonconsenting Lender or a Lender to which the Borrower
becomes obligated to pay additional amounts pursuant to clause (a) of this
Section 4.9, in order for the Borrower to be entitled to replace such a Lender,
such replacement must take place no later than 180 days after (A) the date the
Nonconsenting Lender shall have notified the Borrower and the Administrative
Agent of its failure to agree to any requested consent, waiver or amendment or
(B) the Lender shall have demanded payment of additional amounts under one of
the Sections described in clause (a) of this Section 4.9, as the case may be,
and (iv) in no event shall the Lender hereby replaced be required to pay or
surrender to such replacement Lender or other entity any of the fees received by
such Lender hereby replaced pursuant to this Agreement. In the case of a
replacement of a Lender to which the Borrower becomes obligated to pay
additional amounts pursuant to clause (a) of this Section 4.9, the Borrower
shall pay such additional amounts to such Lender prior to such Lender being
replaced and the payment of
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50

such additional amounts shall be a condition to the replacement of such Lender.
In the event that (x) the Borrower or the Administrative Agent has requested the
Lenders to consent to a departure or waiver of any provisions of the Loan
Documents or to agree to any amendment thereto, (y) the consent, waiver or
amendment in question requires the agreement of all Lenders in accordance with
the terms of Section 12.1 and (z) Required Lenders have agreed to such consent,
waiver or amendment, then any Lender who does not agree to such consent, waiver
or amendment shall be deemed a "Nonconsenting Lender." The Borrower's right to
replace a Non-Funding Lender pursuant to this Section 4.9 is, and shall be, in
addition to, and not in lieu of, all other rights and remedies available to the
Borrower against such Non-Funding Lender under this Agreement, at law, in
equity, or by statute.

ARTICLE 5. REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans and to issue and participate in Letters of
Credit, CCI and the Borrower hereby represent and warrant to the Administrative
Agent and each Lender (it being understood that on the Closing Date such
representations and warranties shall be deemed to be made both immediately
before and immediately after the issuance of the Senior Subordinated Notes),
that:

5.1 Financial Condition. (a) The audited consolidated financial statements
of the Borrower for the fiscal years ended September 30, 1994, 1995 and 1996,
reported on by Coopers & Lybrand L.L.P., copies of which have heretofore been
furnished to each Lender, to the knowledge of CCI and the Borrower, present
fairly in all material respects the consolidated financial position of the
Borrower as at such dates, and the consolidated results of the Borrower's
operations and the Borrower's cash flows for the fiscal periods then ended. The
unaudited consolidated financial statements of the Borrower for the two-month
period ended November 30, 1997, certified by a Responsible Officer of the
Borrower, copies of which have heretofore been furnished to each Lender, to the
knowledge of CCI and the Borrower, present fairly in all material respects the
consolidated financial position of the Borrower as of such date, and the
consolidated results of the Borrower's operations and the Borrower's cash flow
for the two-month period then ended. All such financial statements and the
related schedules and notes thereto have been prepared, to the knowledge of CCI
and the Borrower, in accordance with GAAP applied consistently throughout the
periods involved (except as approved by such accountants or Responsible Officer,
as the case may be, and as disclosed therein). Neither the Borrower nor any of
its Subsidiaries had, to the knowledge of CCI and the Borrower, as at the date
of the most recent balance sheet referred to above, any material Guarantee
Obligation, contingent liability or liability for taxes, or any long-term lease
or unusual forward or long-term commitment, including, without limitation, any
interest rate or foreign currency swap or exchange transaction, which is not
reflected in the foregoing statements or in the notes thereto and which, to the
knowledge of CCI and the Borrower, has any reasonable likelihood of resulting in
a material cost or loss.

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(b) The unaudited consolidated financial statements of CCI and its
Subsidiaries for the fiscal years ended November 30, 1994 and 1995, copies of
which have heretofore been furnished to each Lender, present fairly in all
material respects the consolidated financial position of CCI as at such date,
and the consolidated results of CCI's operations and CCI's cash flows for the
periods then ended. All such financial statements and the related schedules and
notes thereto have been prepared, to the knowledge of CCI and the Borrower, in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by such Responsible Officer and as disclosed therein).
Neither CCI nor any of its Subsidiaries had, as at the date of the most recent
balance sheet referred to above, any material Guarantee Obligation, contingent
liability or liability for taxes, or any long-term lease or unusual forward or
long-term commitment, including, without limitation, any interest rate or
foreign currency swap or exchange transaction, which is not reflected in the
foregoing statements or in the notes thereto and which, has any reasonable
likelihood of resulting in a material cost or loss.

(c) The audited consolidated financial statements of CCI and its
Subsidiaries for the fiscal year ended November 30, 1996, reported on by Coopers
& Lybrand L.L.P., copies of which have heretofore been furnished to each Lender,
to the knowledge of CCI and the Borrower, present fairly in all material
respects the consolidated financial position of CCI as at such date, and the
consolidated results of CCI's operations and CCI's cash flows for the period
then ended. All such financial statements and the related schedules and notes
thereto have been prepared in accordance with GAAP applied consistently
throughout the periods involved (except as approved by such accountants and as
disclosed therein). Neither CCI nor any of its Subsidiaries had, as at the date
of the balance sheet referred to above, any material Guarantee Obligation,
contingent liability or liability for taxes or any long-term lease or unusual
forward or long-term commitment, including, without limitation, any interest
rate or foreign currency swap or exchange transaction, which is not reflected in
the foregoing statements or in the notes thereto and which has any reasonable
likelihood of resulting in a material cost or loss.

(d) The pro forma balance sheet of the Borrower and its Subsidiaries (the
"Pro Forma Balance Sheet") and the pro forma condensed consolidated statement of
operations of the Borrower and its Subsidiaries (the "Pro Forma Statement of
Operations"), certified by a Responsible Officer of CCI and the Borrower, copies
of which have been heretofore furnished to each Lender, are, to the knowledge of
CCI and the Borrower, the unaudited balance sheet of the Borrower and its
consolidated Subsidiaries as at September 30, 1997, and the unaudited condensed
consolidated statement of operations of the Borrower and its consolidated
Subsidiaries for the twelve months ended September 30, 1997, adjusted to give
effect (as if such events had occurred on October 1, 1996) to (i) the making of
the Term Loans, (ii) the making of Revolving Credit Loans in an aggregate
principal amount not to exceed $25,000,000 and the issuance of the Letters of
Credit to be issued on the Closing Date, (iii) the payment of fees, expenses and
financing costs related to the Transactions, (iv) the issuance of the Senior
Subordinated Notes and the consummation of the other Transactions in accordance
with the Transaction Documents, and (v) the acquisition by CCI of the Borrower.
The Pro Forma Balance Sheet and the Pro Forma Statement of Operations, together
with the notes thereto, were prepared based on good faith assumptions as of the
date of delivery thereof, and reflect on a pro forma basis the financial
position of the Borrower and its Subsidiaries as at September 30, 1997 and for
the twelve-month period ending September 30, 1997, as adjusted, as described
above, assuming that the events specified in the preceding sentence had actually
occurred at October 1, 1996.

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52

5.2 No Change. Since September 30, 1997 (a) there has been no development
or event which has had or could reasonably be expected to have a Material
Adverse Effect and (b) no dividends or other distributions have been declared,
paid or made upon the Capital Stock of CCI or the Borrower except as listed on
Schedule 5.2 or otherwise permitted hereby nor has any of the Capital Stock
(other than in connection with the Transactions) of CCI or the Borrower been
redeemed, retired, purchased or otherwise acquired for value by CCI or Borrower
or any of their Subsidiaries.

5.3 Corporate Existence; Compliance with Law. CCI and each of its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, (b) has the corporate power
and authority, and the legal right, to own and operate its property, to lease
the property it operates as lessee and to conduct the business in which it is
currently engaged, (c) is duly qualified as a foreign corporation and in good
standing under the laws of each jurisdiction where its ownership, lease or
operation of property or the conduct of its business requires such
qualification, except to the extent that the failure to so qualify could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect and (d)
is in compliance with all Requirements of Law except to the extent that the
failure to comply therewith could not, in the aggregate, reasonably be expected
to have a Material Adverse Affect.

5.4 Corporate Power; Authorization; Enforceable Obligations. Each Credit
Party has the corporate power and authority, and the legal right, to make,
deliver and perform this Agreement, any of the Notes, the other Loan Documents
and the Transaction Documents to which it is a party and, with respect to the
Borrower, to borrow hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of, or the granting of any
security interests under, this Agreement, any of the Notes and the other Loan
Documents and to authorize the execution, delivery and performance of this
Agreement, any of the Notes, other Loan Documents and the Transaction Documents
to which it is a party. No consent or authorization of, filing with, notice to
or other act by or in respect of, any Governmental Authority or any other Person
is required in connection with the borrowings hereunder or with the execution,
delivery, performance, validity or enforceability of, or the granting of any
security interests under, this Agreement, any of the Notes or the other Loan
Documents to which any Credit Party is a party or to the Transaction Documents
to which it is a party, except for (i) those set forth on Schedule 5.4, each of
which have been made or taken and are in full force and effect, (ii) consents
under immaterial Contractual Obligations and (iii) those referred to in Section
5.20. This Agreement, any Note, each of the other Loan Documents and each of the
Transaction Documents has been duly executed and delivered on behalf of each
Credit Party thereto. This Agreement, any Note, each of the other Loan Documents
and each of the Transaction Documents constitutes a legal, valid and binding
obligation of each Credit Party thereto enforceable against such Credit Party in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).

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53

5.5 No Legal Bar. The execution, delivery and performance of this
Agreement, the Notes, the other Loan Documents and the Transaction Documents,
the borrowings hereunder and the use of the proceeds thereof will not violate
any Requirement of Law or material Contractual Obligation of any Credit Party or
of any of its Subsidiaries.

5.6 No Material Litigation. Except as set forth in Schedule 5.6, no
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of CCI and the Borrower,
threatened by or against any of the Credit Parties or any of their Subsidiaries
or against any of its or their respective properties or revenues (a) with
respect to this Agreement, any Notes, the other Loan Documents or any of the
transactions contemplated hereby or thereby, (b) with respect to any of the
Transaction Documents or any of the transactions contemplated thereby on the
Closing Date, or thereafter, any material provision of any material transaction
contemplated thereby, or (c) which could reasonably be expected to have a
Material Adverse Effect.

5.7 No Default. None of the Credit Parties or any of their Subsidiaries is
in default under or with respect to any of its Contractual Obligations in any
respect which could reasonably be expected to have a Material Adverse Effect. No
Default or Event of Default has occurred and is continuing.

5.8 Ownership of Property; Liens. Each of the Credit Parties and their
Subsidiaries has good record and indefeasible title in fee simple to, or a valid
leasehold interest in, all its material real property, and good title to, or a
valid leasehold interest in, all its other material property, and none of such
property is subject to any Lien except as permitted by Section 8.3. Such real
and other properties comprise all of the properties the use of which is
necessary for the conduct of such Credit Party's or such Subsidiaries' business
as presently conducted and as proposed to be conducted by it. As of the date
hereof, the Fee Properties listed on Part I of Schedule 5.8 constitute all the
real properties owned in fee by the Borrower or its Subsidiaries and the Leased
Properties listed on Part II of Schedule 5.8 constitute all of the real
properties leased by the Borrower or its Subsidiaries. As of the date hereof,
each of the leases with respect to material Leased Properties listed on Part II
of Schedule 5.8 is in full force and effect.

5.9 Intellectual Property. Each of the Credit Parties and their
Subsidiaries owns, or is validly licensed to use, all trademarks, tradenames,
copyrights, technology, know-how and processes necessary for the conduct of its
business as currently conducted except for those the failure of which to own or
license could not reasonably be expected to have a Material Adverse Effect (the
"Intellectual Property"). To the knowledge of CCI and the Borrower, and except
as set forth on Schedule 5.9, no claim has been asserted and is pending by any
Person challenging or questioning the use of any such Intellectual Property or
the validity or effectiveness of any such Intellectual Property, nor does CCI or
the Borrower know of any valid basis for any such claim which could reasonably
be expected to have a Material Adverse Effect. The use of such Intellectual
Property by the Credit Parties and their

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54

Subsidiaries does not infringe on the rights of any Person, except for such
claims and infringements that, in the aggregate, could not reasonably be
expected to have a Material Adverse Effect.

5.10 Taxes. Except as set forth on Schedule 5.10, each of the Credit
Parties and their Subsidiaries has filed or caused to be filed all federal and
all other material tax returns which, to the knowledge of CCI and the Borrower,
are required to be filed and has paid all taxes shown to be due and payable on
said returns or on any assessments made against it or any of its property and
all other material taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority (other than (i) any such taxes,
assessments, fees or other charges the amount or validity of which are currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on the books of the
Credit Parties or their Subsidiaries, as the case may be, and (ii) taxes,
assessments, fees or other charges imposed by any Governmental Authority, other
than income taxes imposed by the United States of America, with respect to which
the failure to make payments could not, by reason of the amount thereof or of
remedies available to such Governmental Authorities, reasonably be expected to
have a Material Adverse Effect); no tax Lien has been filed, and, to the
knowledge of the Borrower, no claim is being asserted, with respect to any such
tax, fee or other charge.

5.11 Federal Regulations. No part of the proceeds of any Loans will be used
for "purchasing" or "carrying" any "margin stock" within the respective meanings
of each of the quoted terms under Regulation U of the Board of Governors of the
Federal Reserve System as now and from time to time hereafter in effect or for
any purpose which violates the provisions of the Regulations of such Board of
Governors. If requested by any Lender or the Administrative Agent, the Borrower
will furnish to the Administrative Agent and each Lender a statement to the
foregoing effect in conformity with the requirements of FR Form U-1 referred to
in said Regulation U.

5.12 ERISA. Except where the liability, individually or in the
aggregate, which could reasonably be expected to result has not had or could not
reasonably be expected to have a Material Adverse Effect: (i) neither a
Reportable Event nor an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Single Employer Plan; (ii) each Plan (other than
a Multiemployer Plan) has complied in all material respects with the applicable
provisions of ERISA and the Code; (iii) no termination of a Single Employer Plan
has occurred, and no Lien in favor of the PBGC or a Single Employer Plan has
arisen and remains outstanding, during such five-year period; (iv) the present
value of all accrued benefits under each Single Employer Plan (based on those
assumptions used to fund such Plans) did not, as of the last annual valuation
date prior to the date on which this representation is made or deemed made,
exceed the value of the assets of such Plan allocable to such accrued benefits
by an amount which could reasonably be expected to have a Material Adverse
Effect; (v) none of the Credit Parties nor any Commonly Controlled Entity has
had a complete or partial withdrawal from any Multiemployer Plan, and, to the
best knowledge of the Credit Parties, none of the Credit

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55

Parties nor any Commonly Controlled Entity would become subject to any liability
under ERISA if the Credit Parties or any such Commonly Controlled Entity were to
withdraw completely from all Multiemployer Plans as of the valuation date most
closely preceding the date on which this representation is made or deemed made;
(vi) no such Multiemployer Plan is in Reorganization or Insolvent; (vii) the
present value (determined using actuarial and other assumptions which are
reasonable in respect of the benefits provided and the employees participating)
of the liability of the Borrower and each Commonly Controlled Entity for post
retirement benefits to be provided to their current and former employees under
Plans which are welfare benefit plans (as defined in Section 3(1) of ERISA) does
not, in the aggregate, exceed the assets under all such Plans allocable to such
benefits.

5.13 Investment Company Act; Other Regulations. Neither CCI nor any of its
Subsidiaries is an "investment company", or a company "controlled" by an
"investment company", within the meaning of the Investment Company Act of 1940,
as amended. Neither CCI nor any of its Subsidiaries is subject to regulation
under any Requirement of Law which limits its ability to incur Indebtedness.

5.14 Subsidiaries, Etc. As of the date hereof, the only Subsidiaries of
CCI, and the only partnerships or joint ventures in which CCI or any of its
Subsidiaries has an interest are those listed on Schedule 5.14. As of the date
hereof, CCI owns the percentage of the Capital Stock or other evidences of the
ownership of each Subsidiary, partnership or joint venture listed on Schedule
5.14 as set forth on such Schedule. As of the date hereof, no such Subsidiary,
partnership or joint venture has issued any securities convertible into shares
of its Capital Stock, and the outstanding stock and securities (or other
evidence of ownership) of such Subsidiaries, partnerships or joint ventures
owned by the Borrower and its Subsidiaries are so owned free and clear of all
Liens, warrants, options or rights of others of any kind except as set forth in
Schedule 5.14.

5.15 Purpose of Loans. The proceeds of the Revolving Loans and Term Loans
shall be used to (i) refinance the Existing Credit Agreement and (ii) pay the
fees and expenses of the transactions contemplated hereby. The proceeds of the
Revolving Credit Loans shall be used for working capital purposes and other
general corporate purposes of the Borrower and the Subsidiaries, provided,
however that the Borrower may not borrow more than $25,000,000 of Revolving
Credit Loans on the Closing Date.

5.16 Environmental Matters. (a) The facilities and properties owned, leased
or operated by CCI or any of its Subsidiaries (the "Properties") do not contain,
and have not previously contained, any Materials of Environmental Concern in
amounts or concentrations or under such conditions which (i) constitute or
constituted a violation of, or could reasonably be expected to give rise to
liability under, any Environmental Law in effect at the time of the making of
this representation, or (ii) could materially and adversely interfere with the
continued operation of the Properties, or (iii) materially impair the fair
saleable value thereof except in each case insofar as such violation, liability,
interference, or reduction in fair market value, or any aggregation thereof, is
not reasonably likely to result in a Material Adverse Effect.

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56

(b) The Business, Properties and all operations at the Properties are, and
to the knowledge of CCI and the Borrower have been, in compliance in all
material respects with all applicable Environmental Laws except for
noncompliance which is not reasonably likely to result in a Material Adverse
Effect.

(c) Neither CCI nor any of its Subsidiaries has received any written notice
of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of the Properties or the Business, nor does CCI or the
Borrower have knowledge or reason to believe that any such notice will be
received or is being threatened except insofar as such notice or threatened
notice, or any aggregation thereof, does not involve a matter or matters that is
or are reasonably likely to result in a Material Adverse Effect.

(d) Materials of Environmental Concern have not been transported or
disposed of from the Properties in violation of, or in a manner or to a location
which could reasonably be expected to give rise to liability under, any
Environmental Law in effect at the time of the making of this representation,
nor have any Materials of Environmental Concern been generated, treated, stored
or disposed of at, on or under any of the Properties in violation of, or in a
manner that could reasonably be expected to give rise to liability under, any
applicable Environmental Law in effect at the time of the making of this
representation except insofar as any such violation or liability referred to in
this paragraph, or any aggregation thereof, is not reasonably likely to result
in a Material Adverse Effect.

(e) No judicial proceeding or governmental or administrative action is
pending or, to the knowledge of CCI or the Borrower, threatened, under any
Environmental Law to which CCI or any Subsidiary is or will be named as a party
with respect to the Properties or the Business, nor are there any consent
decrees or other decrees, consent orders, administrative orders or other orders,
or other administrative or judicial requirements outstanding under any
Environmental Law with respect to the Properties or the Business except insofar
as such proceeding, action, decree, order or other requirement, or any
aggregation thereof, is not reasonably likely to result in a Material Adverse
Effect.

(f) There has been no release or, to the best knowledge of CCI or the
Borrower, threat of release of Materials of Environmental Concern at or from the
Properties, or arising from or related to the operations of CCI or any
Subsidiary in connection with the Properties or otherwise in connection with the
Business, in violation of or in amounts or in a manner that could reasonably
give rise to liability under Environmental Laws in effect at the time of making
this representation except insofar as any such violation or liability referred
to in this paragraph, or any aggregation thereof, is not reasonably likely to
result in a Material Adverse Effect.

5.17 Delivery of the Transaction Documents. The Administrative Agent has
received for itself and for each Lender a complete copy of each of the
Transaction Documents (including all exhibits, schedules and disclosure letters
referred to therein or delivered pursuant thereto, if any) and all amendments
thereto, waivers relating thereto and other side letters or agreements affecting
the terms thereof.

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57

5.18 Representations and Warranties Contained in the Transaction Documents.
Each of the Transaction Documents has been duly executed and delivered by the
Credit Parties thereto and, to the best knowledge of CCI and the Borrower, all
other parties thereto and is in full force and effect. As of the date hereof,
the representations and warranties of the Credit Parties to the Transaction
Documents and, to the best knowledge of the Credit Parties, the representations
and warranties of the other parties thereto are true and correct in all material
respects.

5.19 Disclosure. No information, financial statement, report, certificate
or other document prepared or furnished by or on behalf of any Credit Party to
the Administrative Agent or any Lender in connection with this Agreement, any
other Loan Document or any of the Transaction Documents (but excluding all
projections and pro forma financial statements covered by the next succeeding
sentence) contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements herein or therein not misleading.
The projections and pro forma financial information and other estimates and
opinions contained in the materials referenced above are based upon good faith
estimates and assumptions believed by management of CCI and the Borrower to be
reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. As of the Closing Date, there is no fact known to any Credit
Party (other than general economic conditions, which conditions are commonly
known and affect businesses generally) which has, or which could reasonably be
expected to have, in the reasonable judgment of such Credit Party, a Material
Adverse Effect.

5.20 Guarantee and Collateral Agreement. (a) The Guarantee and Collateral
Agreement is effective to create in favor of the Administrative Agent, for the
ratable benefit of the Lenders, a legal, valid and enforceable security interest
in the Pledged Stock or the Pledged Notes, as the case may be, described therein
and proceeds thereof and all actions have been taken to cause the Guarantee and
Collateral Agreement to constitute a fully perfected first Lien on, and security
interest in, all right, title and interest of CCI, the Borrower and their
Domestic Subsidiaries party thereto in such Pledged Stock or Pledged Notes, as
the case may be, described therein and in proceeds thereof superior in right to
any other Person.

(b) The Guarantee and Collateral Agreement is effective to create in favor
of the Administrative Agent, for the benefit of the Lenders, a legal, valid and
enforceable security interest in the respective collateral described therein and
proceeds thereof, and when financing statements in appropriate form are filed in
the offices specified on Schedule 5.8 or in the Guarantee and Collateral
Agreement, and the other actions required to be taken by the Guarantee and
Collateral Agreement have been taken, the Guarantee and Collateral Agreement
shall constitute fully perfected, first priority Liens on, and security
interests in, all right, title and interest of CCI, the Borrower and their
Subsidiaries party thereto in such collateral and the proceeds thereof superior
in right to any other Person other than Liens permitted hereby.

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58

5.21 Solvency. Each of CCI and the Borrower is, individually and together
with its Subsidiaries, Solvent.

5.22 No Fees. None of the Credit Parties nor any of their Subsidiaries is
under any obligation to pay any broker's fees, finder's fee, commission,
transaction fee or expenses in connection with the transactions contemplated by
this Agreement or the Transaction Documents other than fees and expenses listed
on Schedule 5.22.

5.23 Insurance. The insurance maintained by or reserved against on the
books of CCI, the Borrower and their Subsidiaries is sufficient to protect CCI,
the Borrower and their Subsidiaries against such risks as are usually insured
against in the same general area by companies engaged in the same or similar
business. None of CCI, the Borrower or any of their Subsidiaries is in default
under any provisions of any such policy of insurance or has received notice of
cancellation of any such insurance (other than in connection with the
replacement of any such policy). None of CCI, the Borrower or any of their
Subsidiaries has made any material claims under any policy of insurance with
respect to which the insurance carrier has denied liability.

5.24 Labor Matters. There are no strikes pending or, to the best knowledge
of CCI or the Borrower, threatened against CCI or any of its Subsidiaries which,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect. The hours worked and payments made to employees of CCI
and each of its Subsidiaries have not been in violation of any applicable United
States labor laws, rules or regulations or any other applicable laws, rules or
regulations, except where such violations could not reasonably be expected to
have a Material Adverse Effect. The consummation of the Transactions will not
give rise to a right of termination or right of renegotiation on the part of any
union under any collective bargaining agreement to which CCI or any of its
Subsidiaries (or any predecessor) is a party or by which CCI or any of its
Subsidiaries (or any predecessor) is bound.

5.25 Lease Transactions; Lease Transaction Obligations. As of the Closing
Date, none of the Credit Parties nor any of their Subsidiaries is a party to any
Lease Transaction Obligations other than as listed on Schedule 5.25 hereto.

5.26 Senior Indebtedness. The Obligations constitute "Senior Indebtedness"
of the Borrower under and as defined in the Senior Subordinated Note Indenture
and any other document evidencing Senior Subordinated Indebtedness or guarantees
thereof. The obligations of each Subsidiary which is a Guarantor under the
Guarantee and Collateral Agreement constitute "Guarantor Senior Indebtedness" of
such Subsidiary under and as defined in the Senior Subordinated Note Indenture
and any other document evidencing Senior Subordinated Indebtedness or guarantees
thereof, to the extent, if any, such subsidiary has guaranteed payment of the
Senior Subordinated Indebtedness.

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ARTICLE 6. CONDITIONS PRECEDENT

6.1 Conditions to Initial Loans. The agreement of each Lender to make the
initial Loan requested to be made by it and of the Issuing Lender and each
Revolving Credit Lender to issue and participate in Letters of Credit is subject
to the satisfaction, immediately prior to or concurrently with the making of
such Loan or issuance of such Letter of Credit on the Closing Date (which shall
in no event occur later than March 31, 1998), of the following conditions
precedent:

(a) Agreement; Notes. The Administrative Agent shall have received (i)
this Agreement, executed and delivered by a duly authorized Responsible
Officer of each of CCI and the Borrower with a counterpart for each Lender
and (ii) for the account of each of the Lenders which has requested a Note
pursuant to Section 2.2, 2.7(a) or 2.13(b), a Revolving Credit Note, a Term
Note or a Swing Line Note, as the case may be, conforming to the
requirements hereof and executed and delivered by a duly authorized
Responsible Officer of the Borrower and (iii) the Guarantee and Collateral
Agreement, executed and delivered by a duly authorized Responsible Officer
of each appropriate Credit Party.

(b) Existing Credit Agreement. (i) All accrued unpaid interest, fees,
commissions and other amounts (other than principal) owing under the
Existing Credit Agreement shall have been paid.

(ii) $85,000,000 principal of the Term Loans shall have been
paid, with the result that $50,000,000 of principal of the Term Loans
remains outstanding.

(iii) The Revolving Credit Loans outstanding under the Existing
Credit Agreement shall be reallocated as directed by the
Administrative Agent, with the result that the Revolving Credit Loans
will be held by the Revolving Credit Lenders in accordance with their
respective Revolving Credit Commitment.

(iv) Each Existing Lender which will not continue as a Lender
hereunder (a "Departing Lender") shall deliver to the Administrative
Agent an acknowledgment that its Commitments and Loans under the
Existing Credit Agreement are being assigned and reallocated as set
forth herein.

(v) The Lenders and Departing Lenders will make such payments
among themselves as directed by the Administrative Agent so that,
after giving effect thereto, the outstanding Revolving Credit Loans
and Term Loans will be held by the Lenders in accordance with their
respective Revolving Credit Commitment Percentages and Term Loan
Commitment Percentages.

(c) Corporate Proceedings of the Credit Parties. The Administrative
Agent shall have received, with a copy for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors or duly authorized
committee of each of CCI, the Borrower and each of their
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Domestic Subsidiaries authorizing (i) the execution, delivery and
performance of this Agreement, the other Loan Documents and the Transaction
Documents to which it is a party, (ii) the borrowings contemplated
hereunder and (iii) the transactions contemplated by the Transactions (to
the extent applicable to such Person), certified by the Secretary or an
Assistant Secretary of each of CCI, the Borrower and each of their Domestic
Subsidiaries as of the Closing Date, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded and shall be in form and substance reasonably satisfactory to the
Administrative Agent.

(d) Incumbency Certificates. The Administrative Agent shall have
received, with a copy for each Lender, a certificate of the Secretary or an
Assistant Secretary (or comparable officer) of each of CCI, the Borrower
and each of their Domestic Subsidiaries, dated the Closing Date, as to the
incumbency and signature of the Responsible Officers of such Person
executing each Loan Document and Transaction Document to which it is a
party and any certificate or other document to be delivered by it pursuant
hereto and thereto, together with evidence of the incumbency of such
Secretary or Assistant Secretary.

(e) Corporate Documents. The Administrative Agent shall have received,
with a counterpart for each Lender, true and complete copies of the
certificate of incorporation and by-laws of each of the Credit Parties,
certified as of the Closing Date as complete and correct copies thereof by
the Secretary or an Assistant Secretary of each of the Credit Parties.

(f) Consents, Licenses and Approvals. (i) All governmental and
material third party approvals (including debtholders', landlords' and
other consents) necessary or advisable in connection with the Transactions
and execution, delivery and performance of the Loan Documents and the
Transaction Documents and the continuing operation of the Business shall
have been obtained and be in full force and effect, (ii) all applicable
waiting periods shall have expired without any action being taken or
threatened by any competent Governmental Authority which would restrain,
prevent or otherwise impose adverse conditions on CCI, any of its
Subsidiaries or the Transactions and (iii) the Administrative Agent shall
have received, with a counterpart for each Lender, a certificate of a
Responsible Officer of each of the Credit Parties (A) attaching copies of
all consents, authorizations and filings referred to in Section 5.4, and
(B) stating that such consents, licenses and filings are in full force and
effect, and each such consent, authorization and filing shall be in form
and substance reasonably satisfactory to the Administrative Agent.

(g) Fees. Chase shall have received the fees referred to in Section
2.4 to be received on the Closing Date and the Administrative Agent shall
have received a certificate in a form acceptable to it from a Responsible
Officer certifying that the total aggregate amount of all fees and expenses
incurred or to be incurred in connection with the Transactions shall not
exceed an amount usual for transactions of this type.

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61

(h) Borrowing Certificate. The Administrative Agent shall have
received, with a copy for each Lender, a borrowing certificate
substantially in the form of Exhibit G hereto and dated the Closing Date,
executed by a Responsible Officer of each of the Borrower and the
Guarantor.

(i) Senior Subordinated Notes. The Borrower shall have received at
least $97,000,000 in net cash proceeds from the issuance of the Senior
Subordinated Notes on terms and conditions reasonably satisfactory to the
Administrative Agent.

(j) [Reserved]

(k) [Reserved]

(l) No Defaults. There shall exist no breach of or default (or
condition which would constitute a default with the giving of notice or the
passage of time) under any capital stock, financing agreements, lease
agreements or other Contractual Obligation of CCI, the Borrower or any of
their Subsidiaries which, in any case or in the aggregate, would have a
Material Adverse Effect.

(m) Legal Opinions. The Lenders shall have received, with a copy for
each Lender, from (i) Weil, Gotshal & Manges LLP, special counsel to CCI
and the Borrower, substantially in the form of Exhibit F, and (ii) such
special and local counsel as may be required by the Administrative Agent,
such legal opinions as are customary for transactions of this type or as it
may reasonably request.

(n) Perfection. All filings and other actions required to create and
perfect a first priority security interest in all collateral granted to the
Administrative Agent pursuant to the Security Documents shall have been
duly made or taken, and all such collateral shall be free and clear of
other Liens except as permitted hereby or as provided in Section 7.15(c).
The Administrative Agent shall have received evidence satisfactory to it
that UCC-3 termination statements and other Lien release documentation
shall have been duly executed and properly filed, and all other necessary
actions shall have been duly taken, to the extent necessary to effect the
complete and irrevocable release of all Liens other than those permitted
pursuant to Section 8.3 on the assets of CCI and its Subsidiaries.

(o) Insurance. The Administrative Agent shall have received an
insurance certificate from Aon Risk Services, dated the Closing Date, and
other evidence satisfactory to it that CCI, the Borrower and their
Subsidiaries have obtained the insurance policies required by this
Agreement and by the Security Documents.

(p) Perfection Certificate. The Administrative Agent shall have
received, with a counterpart for each Lender, a Perfection Certificate,
dated the Closing Date, substantially in the form of Exhibit H, duly
completed by the Borrower.

(q) [Reserved]

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(r) Financial Statements. The Lenders shall have received (i) the
financial statements referred to in Section 5.1 and (ii) unaudited interim
financial statements of the Borrower and its Subsidiaries for each fiscal
quarterly period ended subsequent to September 30, 1997 as to which such
financial statements are available, and such financial statements shall
not, in the reasonable judgment of the Lenders, reflect any material
adverse change in the financial condition of any of them as reflected in
the financial statements or projections previously furnished to the
Lenders.

(s) Post-Transaction Financial Position. The Administrative Agent
shall have received, with a copy for each Lender, a certificate of a
Responsible Officer of CCI and the Borrower to the effect that on the
Closing Date after giving effect to the Transactions, there shall exist no
Indebtedness of CCI and its consolidated Subsidiaries (including the
Borrower) (excluding Indebtedness incurred pursuant to this Agreement and
any Notes and Indebtedness permitted by Section 8.2 and Section 11.6(i)).

(t) Guarantee and Collateral Agreement. The Administrative Agent shall
have received the Pledged Stock to be pledged pursuant to the Guarantee and
Collateral Agreement, together with undated stock powers endorsed in blank
for each stock certificate representing such Pledged Stock, or, as
applicable, such other documents or modifications required by the Guarantee
and Collateral Agreement, except as provided in Section 7.15(c). The
Administrative Agent shall have received, on behalf of the Lenders, each
Pledged Note to be pledged pursuant to the Guarantee and Collateral
Agreement, endorsed as required by the Guarantee and Collateral Agreement,
and the acknowledgement and consent of the maker of each such Pledged Note.

(u) [Reserved]

(v) Litigation. No litigation, inquiry, injunction or restraining
order shall be pending, entered or threatened (including, without
limitation, any proposed statute, rule or regulation) which, in the
reasonable opinion of the Lenders, could have a Material Adverse Effect.

(w) No Adverse Change. There shall not have occurred any change, or
development or event involving a prospective change, which in either case
in the reasonable opinion of the Lenders, could have a Material Adverse
Effect. The Lenders shall not have become aware of any previously
undisclosed materially adverse information with respect to (i) the
Transactions or the business, assets, operations, condition (financial or
otherwise) or prospects of CCI, the Borrower and their Subsidiaries, taken
as a whole, (ii) their ability to perform their obligations under this
Agreement, any Note or the other Loan Documents or (iii) the rights and
remedies of the Lenders.

(x) Revolving Credit Loans. On the Closing Date the aggregate
principal amount of all outstanding Revolving Credit Loans shall not exceed
$25,000,000.

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63

(y) Other Documentation. All other documentation, including, without
limitation, any tax sharing agreement, employment agreement, management
compensation arrangement or other financing arrangement of CCI or any of
its Subsidiaries shall be reasonably satisfactory in form and substance to
the Lenders.

6.2 Conditions to Each Loan. The agreement of each Lender to make any Loan
requested to be made by it on any date (including, without limitation, its
initial Loan) or of the Revolving Credit Lenders and the Issuing Lender to issue
or participate in any Letter of Credit is subject to the satisfaction of the
following conditions precedent:

(a) Representations and Warranties. Each of the representations and
warranties made by the Credit Parties and their Subsidiaries in or pursuant
to the Loan Documents shall be true and correct in all material respects on
and as of such date as if made on and as of such date, except for any
representation and warranty which is expressly made as of an earlier date,
which representation and warranty shall have been true and correct in all
material respects as of such earlier date.

(b) No Default. No Default or Event of Default shall have occurred and
be continuing on such date or after giving effect to the Loans requested to
be made, or Letters of Credit requested to be issued, on such date.

(c) Letter of Credit Application. With respect to the issuance of any
Letter of Credit, the Issuing Lender shall have received a Letter of Credit
Application, completed to its reasonable satisfaction and duly executed by
a Responsible Officer of the Borrower; provided that if such Letter of
Credit is being issued to support the repayment of any Indebtedness of any
Subsidiary of the Borrower, such Subsidiary shall also execute such Letter
of Credit Application and shall agree to be jointly and severally liable
with the Borrower for any and all obligations arising under or in
connection with such Letter of Credit or the Letter of Credit Application
related thereto.

Each borrowing by the Borrower hereunder and issuance of any Letter of
Credit shall constitute a representation and warranty by the Credit Parties as
of the date of such Loan or issuance, as the case may be, that the conditions
contained in this Section 6.2 have been satisfied.

ARTICLE 7. AFFIRMATIVE COVENANTS

Each of CCI and the Borrower hereby agrees that, so long as the Commitments
remain in effect, any Note remains outstanding and unpaid, any Letter of Credit
is outstanding or any other Obligations are owing to any Lender or the
Administrative Agent hereunder, CCI and the Borrower shall and (except in the
case of delivery of financial information, reports and notices) shall cause each
of its Subsidiaries to:

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64

7.1 Furnish to each Lender:

(a) as soon as available, but in any event within 110 days after the
end of each fiscal year of the Borrower and CCI, a copy of the consolidated
balance sheet of the Borrower and its consolidated Subsidiaries and of CCI
and its consolidated Subsidiaries as at the end of such year and the
consolidated statements of income and retained earnings and consolidated
statement of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, reported on without a
"going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by independent certified public
accountants of nationally recognized standing;

(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year of the Borrower and CCI, the unaudited consolidating and consolidated
balance sheet of the Borrower and its consolidated Subsidiaries and of CCI
and its consolidated Subsidiaries as at the end of such quarter and the
related unaudited consolidating and consolidated statements of income and
retained earnings and consolidated statement of cash flows of the Borrower
and its consolidated Subsidiaries and of CCI and its consolidated
Subsidiaries for such quarter and the portion of the fiscal year through
the end of such quarter, setting forth in each case in comparative form (i)
the figures for the previous year commencing with the quarter ending March
31, 1998 and (ii) the figures set forth in the relevant budgets required to
be delivered in accordance with Section 7.2(c), certified by a Responsible
Officer as being fairly stated in all material respects when considered in
relation to the consolidated financial statements of the Borrower and its
consolidated Subsidiaries (subject to normal year-end audit adjustments);

(c) as soon as available, but in any event not later than 30 days
after the end of each month (other than a month the last day of which
coincides with the last day of any fiscal quarter) of each fiscal year of
the Borrower, monthly operating reports of the Borrower and its
consolidated Subsidiaries in the form of Exhibit I as at the end of such
month, setting forth in each case in comparative form (i) the figures for
the previous year commencing with the 1998 fiscal year and (ii) the figures
set forth in the relevant budgets required to be delivered in accordance
with Section 7.2(c); provided that the provisions of this paragraph (c)
shall be inapplicable for so long as the ratio of Consolidated Total Debt
of the Borrower and its Subsidiaries to Consolidated EBITDA of the Borrower
and its Subsidiaries is below 2.00 to 1.00, as most recently determined in
accordance with Section 8.1(d);

all such financial statements shall fairly present in all material respects the
consolidated financial position or the consolidating financial position, as the
case may be, of the Borrower and its Subsidiaries as of such date and shall be
prepared in reasonable detail and, except with respect to financial statements
delivered pursuant to paragraph (c) above, in accordance with GAAP applied
consistently throughout the periods reflected therein and with prior periods
(except as approved by such accountants or officer, as the case may be, and
disclosed therein).

<PAGE> 66
65

7.2 Certificates; Other Information. Furnish to each Lender:

(a) concurrently with the delivery of the financial statements
referred to in Section 7.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating that in
making the examination necessary therefor no knowledge was obtained of any
Default or Event of Default relating to the covenants contained in Section
8.1, except as specified in such certificate;

(b) concurrently with the delivery of the financial statements
referred to in Sections 7.1(a) and 7.1(b), a certificate of a Responsible
Officer of the Borrower (i) stating that, to the best of such Responsible
Officer's knowledge, the Credit Parties during such period have observed or
performed all of their covenants and other agreements, and satisfied every
condition, contained in this Agreement and in the Notes and the other Loan
Documents to which they are parties to be observed, performed or satisfied
by it, in all material respects, and that such Officer has obtained no
knowledge of any Default or Event of Default except as specified in such
certificate, (ii) stating that all such financial statements fairly present
in all material respects (subject, in the case of interim statements, to
normal year-end audit adjustments) and have been prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the
periods reflected therein (except as disclosed therein) and (iii) showing
in detail the calculations supporting such statement in respect of Sections
8.1, 8.8 and 8.9;

(c) as soon as available but not later than 45 days subsequent to the
end of each fiscal year of the Borrower, a copy of the projections by the
Borrower of the operating budget and cash flow budget of the Borrower and
its Subsidiaries for the succeeding fiscal year (showing the operating
budget and cash flow budget for each quarter within such fiscal year), such
projections to be accompanied by a certificate of a Responsible Officer of
the Borrower to the effect that such projections have been prepared in good
faith and based upon reasonable assumptions;

(d) within five days after the same are filed, copies of all financial
statements and reports which CCI, the Borrower or any of their Subsidiaries
may make to, or file with, the Securities and Exchange Commission or any
successor or analogous Governmental Authority; and

(e) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.

7.3 Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
material obligations of whatever nature, except where the amount or validity
thereof is currently being contested in good faith by appropriate proceedings
and reserves in conformity with GAAP with respect thereto have been provided on
the books of CCI or its Subsidiaries, as the case may be; provided that,
notwithstanding the foregoing, CCI and each of its Subsidiaries shall have the
right to pay any such obligation and in good faith contest, by proper legal
actions or proceedings, the validity or amount of such claims.

<PAGE> 67
66

7.4 Conduct of Business and Maintenance of Existence. Except as provided in
Section 8.5, continue to engage in business of the same general type as now
conducted by it and businesses reasonably related thereto and to preserve, renew
and keep in full force and effect its corporate existence and take all
reasonable action to maintain all rights, privileges and franchises necessary or
desirable in the normal conduct of its business except if (i) in the reasonable
business judgment of CCI or such Subsidiary, as the case may be, it is in its
best economic interest not to preserve and maintain such rights or franchises,
and (ii) such failure to preserve and maintain such privileges, rights or
franchises would not materially adversely affect the rights of the Lenders
hereunder or the value of the collateral security for the Loans, and as
otherwise permitted pursuant to Section 8.5; comply with all Contractual
Obligations and Requirements of Law except to the extent that failure to comply
therewith could not, in the aggregate, be reasonably expected to have a Material
Adverse Effect.

7.5 Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and condition; maintain with
financially sound and reputable insurance companies insurance on all its
property in at least such amounts and against at least such risks (but including
in any event public liability, product liability and business interruption) as
are usually insured against in the same general area by companies engaged in the
same or a similar business or as otherwise reasonably requested by the
Administrative Agent; and furnish to each Lender, upon written request, full
information as to the insurance carried except to the extent that the failure to
do any of the foregoing with respect to any such property could not reasonably
be expected to materially adversely affect the value or usefulness of such
property.

7.6 Inspection of Property; Books and Records; Discussions. Keep proper
books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives of any Lender to visit and inspect any of its properties and
examine and make abstracts from any of its books and records upon reasonable
advance notice at any reasonable time on any Business Day and as often as may
reasonably be desired and to discuss the business, operations, properties and
financial and other condition of CCI and its Subsidiaries with officers and
employees of CCI and its Subsidiaries and with its independent certified public
accountants; provided that the Administrative Agent or such Lender shall notify
the Borrower prior to any contact with such accountants and give the Borrower
the opportunity to participate in such discussions.

7.7 Notices. Promptly give notice to the Administrative Agent and each
Lender of:

(a) the occurrence of any Default or Event of Default;

(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between CCI or any
of its Subsidiaries and any Governmental Authority, which in either case,
if not cured or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;

<PAGE> 68
67

(c) any litigation or proceeding affecting any of the Credit Parties
or any of their Subsidiaries in which the amount involved is $1,000,000 or
more and not covered by insurance or in which injunctive or similar relief
is sought;

(d) the following events: (i) the occurrence or expected occurrence of
any Reportable Event with respect to any Plan (other than a Multiemployer
Plan), a failure to make any required contribution to a Plan, the creation
of any Lien in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or
(ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the terminating,
Reorganization or Insolvency of, any Plan;

(e) any development or event which has had, or could reasonably be
expected to have, a Material Adverse Effect; and

(f) the receipt by CCI or any Subsidiary of any complaint, order,
citation, notice or other written communication from any Person with
respect to the existence or alleged existence of a violation of any
Environmental Laws or Materials of Environmental Concern or any other
environmental, health or safety matter, including, without limitation, the
occurrence of any spill, discharge or release in a quantity that is
reportable under any Environmental Law on property owned, leased or
utilized by CCI or any Subsidiary of CCI but only to the extent that such
complaint, order, citation, notice or written communication individually or
in the aggregate could reasonably be expected to result in material
liability or a material obligation under any Environmental Law.

Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower, CCI or the applicable
Commonly Controlled Entity proposes to take with respect thereto.

7.8 Environmental Laws.

(a) Comply in all material respects with, and will use reasonable best
efforts to ensure compliance in all material respects by all tenants and
subtenants, if any, with, all applicable Environmental Laws;

(b) conduct and complete (or cause to be conducted and completed) all
investigations, studies, sampling and testing, and all remedial, removal
and other actions required under Environmental Laws and in a timely fashion
comply in all material respects with all lawful orders and directives of
all Governmental Authorities regarding Environmental Laws except to the
extent that the same are being contested in good faith by appropriate
proceedings and the pendency of such proceedings could not be reasonably
expected to have a Material Adverse Effect; and

<PAGE> 69
68

(c) defend, indemnify and hold harmless the Administrative Agent and
the Lenders, and their respective employees, agents, officers, directors
and controlling persons, from and against any and all claims, demands,
penalties, fines, liabilities, settlements, damages, costs and expenses of
whatever kind or nature known or unknown, contingent or otherwise, arising
out of, or in any way relating to the violation of, noncompliance with or
liability under, any Environmental Law applicable to the operations of CCI
or its Subsidiaries or the Properties, or any orders, requirements or
demands of Governmental Authorities related thereto, including, without
limitation, reasonable attorney's and consultant's fees, investigation and
laboratory fees, response costs, court costs and litigation expenses,
except to the extent that any of the foregoing arise out of or relate to
the gross negligence or wilful misconduct of, or any post-foreclosure
actions not taken in accordance with the Asset Conservation, Lender
Liability and Deposit Insurance Protection Act of 1996 and analogous lender
liability laws. The agreements in this paragraph shall survive repayment of
all Loans and all other amounts payable hereunder.

7.9 Pledge of After Acquired Property. If at any time following the Closing
Date the aggregate monetary value (as determined by aggregating the monetary
value of each item or items of property so acquired on the date of the
acquisition thereof) of all property (to the extent not already secured) of any
nature whatsoever acquired by CCI and/or any Domestic Subsidiary after the
Closing Date is in excess of $1,000,000 (including for this purpose fee owned
real estate having a monetary value of $1,000,000 or less), CCI and any such
Domestic Subsidiary shall grant to the Administrative Agent for the ratable
benefit of the Lenders a first priority Lien on and security interest in such
property, as collateral security for the Obligations, pursuant to documentation
reasonably satisfactory to the Administrative Agent and take such actions as the
Administrative Agent shall reasonably require to ensure the priority and
perfection of such Lien, provided that (i) only 65% of the voting Capital Stock
of any Foreign Subsidiary need be so pledged, (ii) with respect to real
property, only fee owned real estate with a value in excess of $1,000,000 need
be mortgaged, (iii) property to the extent subject to a Lien permitted by
Section 8.3(h) or to the extent that creating such Lien on any item of property
is prohibited by any agreement of the type described in clause (ii) or (iii) of
Section 8.14 to which such property is subject such property need not be so
pledged and (iv) Chattel Paper owned by CCI or any Subsidiary (A) need not be so
pledged to the extent that it is used to secure Lease Transaction Obligations
and (B) shall not be required to be delivered to the Administrative Agent prior
to 180 days after the creation thereof unless an Event of Default exists, in
which case such Chattel Paper shall be delivered to the Administrative Agent
promptly following its request.

7.10 Pledge During Event of Default. At any time during the continuance of
an Event of Default, upon the request of the Administrative Agent or the
Required Lenders, grant to the Administrative Agent for the ratable benefit of
the Lenders a first priority Lien on and security interest in any unencumbered
property of CCI and its Domestic Subsidiaries of any nature whatsoever, as
collateral security for the Obligations, pursuant to documentation reasonably
satisfactory to the Administrative Agent and take such actions as the
Administrative Agent shall reasonably require to ensure the priority and
perfection of such Lien, provided, however, that if the grant of such Lien would
be reasonably likely to result in
<PAGE> 70
69

CCI incurring income tax liability (as determined by the Borrower and agreed to
by the Administrative Agent) pursuant to Subpart F of the Code, the property
pledged pursuant hereto will be that property which can be pledged without
incurring such liability; provided, further, that (i) only 65% of the voting
Capital Stock of any Foreign Subsidiary need be so pledged, (ii) no Foreign
Subsidiary shall be required to pledge its assets, (iii) assets to the extent
subject to Liens permitted by Section 8.3(g) or (h) or to the extent that
creating such Lien on any item of property is prohibited by any agreement of the
type described in clause (ii) or (iii) of Section 8.14 such property need not be
so pledged and (iv) Chattel Paper owned by CCI or any Subsidiary (A) need not be
so pledged to the extent that it is used to secure Lease Transaction Obligations
and (B) shall not be required to be delivered to the Administrative Agent unless
an Event of Default lasts, in which case such Chattel Paper shall be delivered
to the Administrative Agent promptly following its request.

7.11 Interest Rate Agreements. Not later than 120 days after the Closing
Date, enter into or purchase or otherwise acquire, with or from financially
responsible parties, Interest Rate Agreements, or otherwise fix the rate of
Indebtedness, which assure the net interest cost to the Borrower on at least 50%
of its Indebtedness for a period (of at least two years from the date on which
such Interest Rate Agreements are entered into, purchased or otherwise acquired
or such interest rate is otherwise fixed) and at a rate reasonably satisfactory
to the Administrative Agent and otherwise upon terms and conditions reasonably
satisfactory to the Administrative Agent. The Borrower shall use its
commercially reasonable efforts to maintain in full force and effect Interest
Rate Agreements reasonably satisfactory to the Administrative Agent in order to
ensure compliance with the terms of this Section 7.11 and shall not default
(beyond any applicable grace period) in the performance of any of its material
obligations thereunder. A security interest in all right, title and interest of
the Borrower in and to each Interest Rate Agreement shall be granted in favor of
the Administrative Agent for the benefit of the Lenders.

7.12 Additional Subsidiaries. If, at any time, either the Borrower or any
of its Domestic Subsidiaries shall form any new Subsidiary after the date of
this Agreement (this Section 7.12 not constituting authority to form a new
Subsidiary), the Borrower or such Domestic Subsidiary, as the case may be, shall
(i) cause such new Subsidiary (other than a Foreign Subsidiary) to execute and
deliver a supplement to the Guarantee and Collateral Agreement and become a
party thereto, and (ii) cause each holder of any Capital Stock of such
Subsidiary to pledge 100% of such Capital Stock to the Administrative Agent
pursuant to a supplement to the Guarantee and Collateral Agreement; provided
that in the event such Subsidiary is a Foreign Subsidiary only 65% of the voting
Capital Stock of such Foreign Subsidiary need be pledged to the Collateral
Agent; and provided, further that each such supplement shall be accompanied by
such resolutions, incumbency certificates and legal opinions as are reasonably
requested by the Administrative Agent.

7.13 Substantive Consolidation. The Borrower shall maintain a separate and
distinct existence from CCI and cause each of its Subsidiaries to maintain a
separate and distinct existence from CCI, the Borrower and each other Subsidiary
of the Borrower in order to avoid substantive consolidation of the assets and
liabilities of CCI, the Borrower and each Subsidiary of the Borrower under title
11 of the United States Bankruptcy Code, as amended,
<PAGE> 71
70

through the honoring of all formalities which shall include, without limitation,
no commingling of assets, sufficient and independent capitalization, and
separate books and records.

7.14 Intellectual Property. Whenever any Credit Party, either by itself or
through any agent, employee, licensee or designee, shall file an application for
the registration of any Copyright, Patent or Trademark with the United States
Patent and Trademark Office or any similar office or agency in any other country
or any political subdivision thereof, cause such Credit Party to report such
filing to the Collateral Agent within five Business Days after the last day of
the fiscal quarter in which such filing occurs. Upon request of the Collateral
Agent, such Credit Party shall execute and deliver any and all agreements,
instruments, documents, and papers as the Collateral Agent may reasonably
request to evidence the Collateral Agent's and the Secured Parties' (as defined
in the Guarantee and Collateral Agreement) security interest in any Copyright,
Patent or Trademark of such Intellectual Property and the goodwill and general
intangibles of such Credit Party relating thereto or represented thereby.

7.15 Covenants Relating to Collateral. (a) Whenever any Credit Party shall
receive any Instrument or Chattel Paper which is intended to be Collateral under
the Guarantee and the Collateral Agreement, CCI shall cause such Credit Party to
comply with the provisions of Section 5.2 of the Guarantee and Collateral
Agreement.

(b) Whenever any Credit Party shall change its name or the location of any
collateral or its place of business, CCI shall cause such Credit Party to comply
with the provisions of Section 5.6 of the Guarantee and Collateral Agreement.
Whenever any Credit Party receives additional securities of any of its
Subsidiaries, CCI shall cause such Credit Party to comply with the provisions of
Section 5.7 of the Guarantee and Collateral Agreement.

(c) Within 60 days of the Closing Date, cause 65% of the voting Capital
Stock of Triad Systems Ireland Limited to be pledged pursuant to the Guarantee
and Collateral Agreement, provided that if the pledge pursuant to this clause
(c) violates any contractual obligations, laws or other restrictions applicable
to Triad Systems Ireland Limited, then such pledge shall be deferred until such
pledge would not result in any such violation.

ARTICLE 8. NEGATIVE COVENANTS

The Borrower hereby agrees that, so long as the Commitments remain in
effect, any Note remains outstanding and unpaid, any Letter of Credit remains
outstanding or any other Obligations are owing to any Lender or the
Administrative Agent hereunder, the Borrower shall not, and (except with respect
to Section 8.1) shall not permit any of its Subsidiaries to, directly or
indirectly:

<PAGE> 72
71

8.1 Financial Conditions Covenants. (a) Maintenance of Consolidated
EBITDA to Consolidated Cash Interest Expense. Permit the ratio of (i)
Consolidated EBITDA of the Borrower and its Subsidiaries to (ii) Consolidated
Cash Interest Expense of the Borrower and its Subsidiaries for the period of
four consecutive fiscal quarters ending on the last day of each of the fiscal
quarters set forth below to be less than the ratio set forth opposite such
fiscal quarter below:

<TABLE>
<CAPTION>
Quarter Ending Ratio
-------------- ------------
<S> <C> <C>
1997 December 31 1.85 to 1.00

1998 March 31 1.85 to 1.00
June 30 2.00 to 1.00
September 30 2.25 to 1.00
December 31 2.25 to 1.00

1999 March 31 2.25 to 1.00
June 30 2.25 to 1.00
September 30 3.00 to 1.00
December 31 3.00 to 1.00

2000 March 31 3.00 to 1.00
June 30 3.00 to 1.00
September 30 and each quarter thereafter 3.50 to 1.00
</TABLE>

(b) [Reserved]

(c) Maintenance of Consolidated EBITDA. Permit Consolidated EBITDA of
the Borrower and its Subsidiaries for the period of four consecutive fiscal
quarters ending on the last day of each of the fiscal quarters set forth
below to be less than the amount set forth opposite such fiscal quarter
below:

<TABLE>
<CAPTION>
Quarter Ending Amount
-------------- -----------
<S> <C> <C>
1998 March 31 $28,000,000
June 30 30,000,000
September 30 32,500,000
December 31 35,000,000

1999 March 31 37,500,000
June 30 40,000,000
September 30 45,000,000
December 31 47,500,000

2000 March 31 50,000,000
June 30 52,500,000
September 30 and each quarter thereafter 55,000,000

</TABLE>

<PAGE> 73
72

(d) Maintenance of Consolidated Total Debt to Consolidated EBITDA.
Permit the ratio of Consolidated Total Debt of the Borrower and its
Subsidiaries to Consolidated EBITDA of the Borrower and its Subsidiaries
for the period of four consecutive fiscal quarters ending on the last day
of each of the fiscal quarters set forth below to be greater than the ratio
set forth opposite such fiscal quarter below:

<TABLE>
<CAPTION>
Quarter Ending Ratio
-------------- ------------
<S> <C> <C>
1997 December 31 5.75 to 1.00

1998 March 31 5.50 to 1.00
June 30 5.25 to 1.00
September 30 5.00 to 1.00
December 31 5.00 to 1.00

1999 March 31 5.00 to 1.00
June 30 5.00 to 1.00
September 30 4.00 to 1.00
December 31 4.00 to 1.00

2000 March 31 3.50 to 1.00
June 30 3.50 to 1.00
September 30 and each quarter thereafter 3.00 to 1.00
</TABLE>

(e) Maintenance of Consolidated Senior Debt to Consolidated EBITDA.
Permit the ratio of Consolidated Senior Debt of the Borrower and its
Subsidiaries to Consolidated EBITDA of the Borrower and its Subsidiaries
for the period of four consecutive fiscal quarters ending on the last day
of each of the fiscal quarters set forth below to be greater than the ratio
set forth opposite such fiscal quarter below:

<TABLE>
<CAPTION>
Quarter Ending Ratio
-------------- ------------
<S> <C> <C>
1997 December 31 2.25 to 1.00

1998 March 31 2.25 to 1.00
June 30 2.25 to 1.00
September 30 2.25 to 1.00
December 31 2.25 to 1.00

1999 March 31 2.25 to 1.00
June 30 2.25 to 1.00
September 30 1.75 to 1.00
December 31 1.75 to 1.00

2000 March 31 1.75 to 1.00
June 30 1.75 to 1.00
September 30 and each quarter thereafter 1.50 to 1.00
</TABLE>
<PAGE> 74
73

8.2 Limitation on Indebtedness. Create, incur, assume or suffer to exist
any Indebtedness, except:

(a) Indebtedness of the Credit Parties under the Loan Documents;

(b) Indebtedness of the Borrower or any Domestic Subsidiary, including
any new Domestic Subsidiary, to the Borrower or any Domestic Subsidiary
arising as a result of intercompany loans;

(c) Indebtedness outstanding on the Closing Date and listed on
Schedule 8.2 and extensions, renewals or replacements thereof provided that
no such extension, renewal or replacement shall increase the principal
amount of the original Indebtedness;

(d) Indebtedness resulting from the endorsement of negotiable
instruments in the ordinary course of business;

(e) Indebtedness in respect of obligations under Financing Leases and
purchase money Indebtedness not to exceed $5,000,000 in the aggregate at
any one time outstanding;

(f) Indebtedness in respect of Interest Rate Agreements;

(g) Indebtedness of any Domestic Subsidiary or the Borrower, as the
case may be, to the Borrower or another Domestic Subsidiary from
intercompany transfers of assets made in the ordinary course of business or
to the extent permitted under Sections 8.6 and 8.9;

(h) Guarantee Obligations permitted by Section 8.4;

(i) Indebtedness (i) of any Foreign Subsidiary of the Borrower to the
Borrower or any Domestic Subsidiary of the Borrower and (ii) of any Foreign
Subsidiary of the Borrower to local financial institutions for working
capital purposes; provided that the aggregate principal amount of such
Indebtedness described in clause (i) above plus the aggregate commitments
of all working capital facilities described in clause (ii) above plus the
aggregate amount of investments made pursuant to clause (c) (iii) of
Section 8.9 shall in no event exceed $10,000,000 at any one time;

(j) Indebtedness subject to Liens permitted under Sections 8.3(b),
(c), (d), and (e);
<PAGE> 75
74

(k) additional Indebtedness of the Borrower and its Subsidiaries which
are guarantors under the Guarantee and Collateral Agreement not exceeding
$5,000,000 in aggregate principal amount at any one time outstanding, which
Indebtedness may be secured to the extent permitted by Section 8.3(n);

(l) Indebtedness of the Borrower or any of its Subsidiaries (i) to the
seller representing the purchase price in a Permitted Acquisition, (ii)
assumed in connection with any Permitted Acquisition or (iii) assumed in
connection with the ARISB Acquisition; provided that (A) such assumed
Indebtedness under clause (ii) was not created in contemplation of such
acquisition, (B) the aggregate amount of such Indebtedness in clauses (i)
and (ii) shall not exceed $10,000,000 and the aggregate amount of such
Indebtedness in clause (iii) shall not exceed $250,000 (provided that
Indebtedness assumed in connection with the ARISB Acquisition which is in
excess of $250,000 shall be subject to the $10,000,000 limit imposed in
connection with Permitted Acquisitions) and (C) at the time of incurrence
the requirements of Section 8.9(l) shall be satisfied;

(m) Lease Transaction Obligations of Triad Financial and the Foreign
Lease Subsidiaries, having terms similar to those applicable to such
Indebtedness on the date hereof; provided that (i) the aggregate of such
Indebtedness for which there is recourse to Triad Financial and the Foreign
Lease Subsidiaries in excess of 20% of the aggregate principal amount of
such Lease Transaction Obligations shall not exceed $10,000,000 (less the
aggregate amount of Indebtedness for which there is recourse to FinanceCo),
(ii) the aggregate portion of such Indebtedness for which there is recourse
to Triad Financial and the Foreign Lease Subsidiaries at any time shall not
exceed the greater of (A) $35,000,000 and (B) an amount equal to
Consolidated EBITDA of CCI and its consolidated Subsidiaries for the period
of four consecutive fiscal quarters most recently ended (in the case of
both (A) and (B), less the aggregate amount of Indebtedness for which there
is recourse to FinanceCo) and (iii) the aggregate portion of such
Indebtedness for which there is recourse to Triad Financial and the Foreign
Lease Subsidiaries shall not exceed $60,000,000 (less the aggregate amount
of Indebtedness for which there is recourse to FinanceCo) in any event;

(n) Lease Transaction Obligations of FinanceCo, having terms similar
to those applicable to such Indebtedness on the date hereof; provided that
(i) the aggregate of such Indebtedness for which there is recourse to
FinanceCo in excess of 20% of the aggregate principal amount of such Lease
Transaction Obligations shall not exceed $10,000,000 (less the aggregate
amount of Indebtedness for which there is recourse to Triad Financial and
the Foreign Lease Subsidiaries), (ii) the aggregate portion of such
Indebtedness for which there is recourse to FinanceCo at any time shall not
exceed the greater of (A) $35,000,000 and (B) an amount equal to
Consolidated EBITDA of CCI and its consolidated Subsidiaries for the period
of four consecutive fiscal quarters most recently ended (in the case of
both (A) and (B), less the aggregate amount of Indebtedness for which there
is recourse to Triad Financial and the Foreign Lease Subsidiaries), (iii)
the aggregate portion of such Indebtedness for which there is recourse to
FinanceCo shall not exceed $60,000,000 (less the
<PAGE> 76
75

aggregate amount of Indebtedness for which there is recourse to Triad
Financial and the Foreign Lease Subsidiaries) in any event and (iv) such
Lease Transaction Obligations are incurred solely to finance the purchase
from Triad Financial of lease payments which have been or will be financed
in the same quarter by Lease Transaction Obligations of Triad Financial;

(o) Indebtedness of Customer Partnerships in an aggregate principal
amount not to exceed $5,000,000; and

(p) Indebtedness of the Borrower in respect of the Senior Subordinated
Indebtedness, including any permanent refinancing thereof so long as any
Net Cash Proceeds of such refinancing after giving effect thereto are
applied in accordance with Section 2.10, in an aggregate principal amount
not to exceed $100,000,000.

8.3 Limitation on Liens. Create, incur, assume or suffer to exist any Lien
upon any of its property, assets or revenues, whether now owned or hereafter
acquired, except for:

(a) Liens created by the Security Documents in favor of the
Administrative Agent for the benefit of the Lenders and the Administrative
Agent;

(b) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect to contested taxes are maintained on the books of CCI or the
Borrower or their respective Subsidiaries, as the case may be, in
conformity with GAAP (or, in the case of Foreign Subsidiaries, generally
accepted accounting principles in effect from time to time in their
respective jurisdictions of incorporation);

(c) carriers', landlord's, warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;

(d) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation;

(e) deposits to secure the performance of bids, trade contracts (other
than for borrowed money), leases, Intellectual Property, statutory
obligations, insurance contracts, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;

(f) easements, rights-of-way, zoning restrictions, restrictions and
other similar encumbrances (i) previously or hereinafter incurred in the
ordinary course of business which, in the aggregate, are not material in
amount and, in the case of such encumbrances on any property, do not
materially interfere with the ordinary conduct of the business of the
Borrower or such Subsidiary or (ii) which are set forth in any "marked up"
commitments for title insurance delivered to the Administrative Agent after
the Closing Date;
<PAGE> 77
76

(g) Liens in existence on the Closing Date listed on Schedule 8.3,
securing Indebtedness permitted by Section 8.2(c) (including extensions,
renewals and replacements of such Indebtedness as permitted under Section
8.2(c)), provided that no such Lien is spread to cover any additional
property (other than after acquired title in or on such property and
proceeds of the existing collateral in accordance with the instrument
creating such Lien) after the Closing Date and that the amount of
Indebtedness secured thereby is not increased except pursuant to the
instrument creating such Lien (without any modification thereof);

(h) purchase money Liens and Liens in respect of Financing Leases upon
or in any property acquired or held by the Borrower or any of its
Subsidiaries to secure Indebtedness permitted under Section 8.2(e) incurred
solely for the purpose of financing the acquisition of such property, and
Liens existing on such property at the time of its acquisition or existing
on property of any Person that becomes a Subsidiary after the date hereof
at the time such Person becomes a Subsidiary (other than any such Lien
created in contemplation of such acquisition);

(i) Liens on the property of the Borrower or any of its Subsidiaries
in favor of landlords securing licenses, subleases or leases permitted
hereunder;

(j) licenses, leases or subleases permitted hereunder granted to
others not interfering in any material respect in the business of the
Borrower or any of its Subsidiaries;

(k) attachment or judgment Liens (other than judgment Liens paid or
fully covered by insurance which are not outstanding for more than sixty
days) in an aggregate amount outstanding at any one time not in excess of
$3,000,000;

(l) Liens arising from precautionary Uniform Commercial Code financing
statement filings with respect to operating leases or consignment
arrangements entered into by the Borrower or any of its Subsidiaries in the
ordinary course of business;

(m) Liens in favor of a banking institution arising by operation of
law encumbering deposits (including the right of set-off) held by such
banking institutions incurred in the ordinary course of business and which
are within the general parameters customary in the banking industry;

(n) Liens (not otherwise permitted hereunder) which secure obligations
not exceeding (as to the Borrower and all of its Subsidiaries) $2,000,000
in aggregate amount at any time outstanding;

<PAGE> 78
77

(o) Liens on Leased Equipment and Chattel Paper of Triad Financial,
FinanceCo and the Foreign Lease Subsidiaries securing Lease Transaction
Obligations; and

(p) Liens securing Indebtedness permitted by clauses (ii) and (iii) of
Section 8.2(l) provided that (i) such Liens existed at the time of the
relevant Permitted Acquisition or the ARISB Acquisition, as the case may
be, and were not created in anticipation thereof, (ii) any such Lien is not
spread to cover any other property or assets upon or following consummation
of such Permitted Acquisition or the ARISB Acquisition, as the case may be
and (iii) the amount of Indebtedness secured thereby is not increased.

8.4 Limitation on Guarantee Obligations. Create, incur, assume or suffer to
exist any Guarantee Obligation except:

(a) Guarantee Obligations pursuant to the Loan Documents;

(b) guarantees of Indebtedness permitted pursuant to Section 8.2(c) in
existence on the Closing Date and set forth on Schedule 8.4 and extensions,
renewals and replacements thereof, provided, however, that no such
extension, renewal or replacement shall (i) amend or modify the
subordination provisions, if any, contained in the original guarantee, (ii)
increase the principal amount of such indebtedness guaranteed by the
original guarantee, or (iii) adversely affect the interests of the Lenders
under this Agreement or any other Loan Document in any material respect;

(d) indemnities in favor of the companies issuing title insurance
policies insuring the title to any property;

(e) surety bonds issued in respect of the type of obligations
described in Section 8.3(e);

(f) indemnities made in the Commitment Letter, the Loan Documents and
the Transaction Documents and in the monitoring and oversight agreement and
the financial advisory agreement described in Section 8.7(a)(iv) and in the
corporate charter and/or bylaws of the Borrower and its Subsidiaries;

(g) indemnities and guarantees of Indebtedness expressly permitted
hereunder made in the ordinary course of business, provided that such
indemnities or guarantees could not individually or in the aggregate have a
Material Adverse Effect;

(h) agreements by the Borrower (and Triad Financial, in the case of
FinanceCo) to make equity contributions and or subordinated loans to Triad
Financial, FinanceCo and the Foreign Lease Subsidiaries to support payment
of their obligations in respect of Lease Transaction Obligations comparable
to those made under operating and support agreements to which the Borrower
and Triad Financial are parties in effect on the date hereof as listed on
Schedule 5.25 hereto; and
<PAGE> 79
78

(i) contingent obligations in respect of Indebtedness permitted under
Section 8.2(o) arising solely as a result of the status of the Borrower as
a general partner in Customer Partnerships;

(j) guarantees by the Borrower and its Subsidiaries which are
guarantors under the Guarantee and Collateral Agreement of Indebtedness
permitted by Section 8.2(k);

(k) guarantees by the Borrower and its domestic Subsidiaries of
Indebtedness of Foreign Subsidiaries permitted by clause (ii) of Section
8.2(i); and

(l) Guarantee Obligations of any Subsidiary which is a Guarantor in
respect of the Senior Subordinated Indebtedness; provided that such
Guarantee Obligations are subordinated to the obligations of such
Subsidiary under the Loan Documents to the same extent as are the
obligations of the Borrower in respect of the Senior Subordinated
Indebtedness.

8.5 Limitation on Fundamental Changes. Enter into any merger, consolidation
or amalgamation, or liquidate, wind up or dissolve itself (or suffer any
liquidation or dissolution), or convey, sell, lease, assign, transfer or
otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business, except (i) any Subsidiary of the Borrower may be merged or
consolidated with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any one or more Wholly
Owned Subsidiaries of the Borrower (provided that no Domestic Subsidiary may be
merged or consolidated with or into any Foreign Subsidiary unless the Domestic
Subsidiary shall be the surviving corporation) and (ii) any Subsidiary of the
Borrower may liquidate or dissolve if in connection therewith all of its assets
are transferred to the Borrower or any Wholly Owned Subsidiary of the Borrower
(provided that no Domestic Subsidiary may transfer its assets to a Foreign
Subsidiary).

8.6 Limitation on Sale of Assets. Convey, sell, lease, assign, transfer or
otherwise dispose of any of its property, business or assets (including, without
limitation, receivables and leasehold interests), whether now owned or hereafter
acquired, except:

(a) obsolete or worn out property disposed of in the ordinary course
of business or property that is no longer useful in the conduct of the
Borrower's business disposed of in the ordinary course of business;

(b) the sale, transfer or exchange of inventory in the ordinary course
of business;

(d) any sale or other transfer of any property or assets constituting
fixed assets for at least 75% cash, provided that the aggregate net cash
proceeds of the sales and transfers made pursuant to this paragraph (d) in
the aggregate do not exceed $1,000,000 in any fiscal year;

(e) intercompany sales or transfers of assets made in the ordinary
course of business; provided that in no event may the Borrower or its
Domestic Subsidiaries transfer assets to any Foreign Subsidiaries having a
value in excess of $5,000,000;

(f) licenses or sublicenses of intellectual property and general
intangibles and licenses, leases or subleases of other property in the
ordinary course of business and which do not materially interfere with the
business of CCI and its Subsidiaries;

(g) any consignment arrangements or similar arrangements for the sale
of assets in the ordinary course of business;

(h) the sale or discount of overdue accounts receivable arising in the
ordinary course of business, but only in connection with the compromise or
collection thereof;

(i) leases and sales of Leased Equipment and Chattel Paper in
connection with any Lease Transaction and discounting programs and any
refinancings thereof;

(j) dispositions permitted by Section 8.5(ii); and

(k) the sale of property at Halsey Myrtle Grove Road, Newton, New
Jersey 07860.

8.7 Limitation on Dividends. Declare or pay any dividend (other than
dividends payable solely in common stock of the Borrower) on, or make any
payment on account of, or set apart assets for a sinking or other analogous fund
for, the purchase, redemption, defeasance, retirement or other acquisition of,
any class of Capital Stock of the Borrower or any Subsidiary or any warrants or
options to purchase any such Capital Stock, whether now or hereafter
outstanding, or make any other distribution in respect thereof, either directly
or indirectly, whether in cash or property, obligations of the Borrower or any
Subsidiary or otherwise (such declarations, payments, setting apart, purchases,
redemptions, defeasances, retirements, acquisitions and distributions being
herein called "Restricted Payments"), except that:

(a) the Borrower may make Restricted Payments to CCI, so long as
(except with respect to clause (iii) below) no Event of Default (or, in the
case of clause (iv) below an Event of Default which relates to a payment
default under Section 9(a)) has occurred and is continuing or would occur
and be continuing after giving effect to any such Restricted Payment:

<PAGE> 81
80

(i) the proceeds of which shall be used to repurchase the Capital
Stock or other securities of CCI from outside directors, employees or
members of the management of CCI, the Borrower or any Subsidiary, in
an aggregate amount not in excess of $8,000,000, net of the proceeds
received by CCI as a result of any resales of any such Capital Stock
or other securities (and subject to the proviso set forth in clause
(v) below);

(ii) the proceeds of which shall be applied by CCI directly to
pay out of pocket expenses for administrative, legal and accounting
services provided by third parties which are reasonable and customary
and incurred in the ordinary course of business, to pay outside
directors' fees and to pay franchise fees and similar costs; provided,
however that any such administrative expenses shall not exceed an
aggregate amount of $1,000,000 in each fiscal year;

(iii) the proceeds of which shall be used to pay taxes which are
due and payable of CCI and the Borrower as part of a consolidated
group;

(iv) the proceeds of which shall be used to pay management fees
to HMTF and its Affiliates in accordance with the terms of its
monitoring and oversight agreement and financial advisory agreement;
or

(v) if such Restricted Payment is a purchase by CCI of its
Capital Stock or a distribution to CCI to permit CCI to purchase its
Capital Stock, in either case, made in order to fulfil the obligations
of CCI, the Borrower or any of its Subsidiaries under an employee
stock purchase plan or similar plan covering employees of CCI or any
Subsidiary as from time to time in effect in an aggregate net amount
not to exceed $8,000,000 and provided that the aggregate amount of
Restricted Payments made pursuant to clause (i) above and this clause
(v) shall not exceed $8,000,000 in the aggregate, net of the proceeds
received by CCI as a result of resale of any Capital Stock or
securities of CCI of the types contemplated by such clause (i) and
this clause (v).

(b) any Subsidiary of the Borrower may make Restricted Payments to the
Borrower or any Subsidiary that is a "Grantor" under the Guarantee and
Collateral Agreement;

(d) the Borrower may make Restricted Payments to CCI, and CCI may
simultaneously make corresponding Restricted Payments to its shareholders,
in any fiscal year in an aggregate amount of up to 50% of Consolidated Net
Income for the
<PAGE> 82
81

immediately preceding fiscal year as long as (i) no Default or Event of
Default has occurred or would result therefrom and (ii) the ratio of
Consolidated Total Debt on the last day of the most recent fiscal quarter
preceding the date of making such Restricted Payments to Consolidated
EBITDA for the period of four consecutive fiscal quarters ending on such
day is no greater than 2.50 to 1.00 after giving effect thereto.

8.8 Limitation on Capital Expenditures. (a) Make or commit to make any
Capital Expenditure, except for expenditures in the ordinary course of business
not exceeding, in the aggregate for the Borrower and its Subsidiaries during any
of the fiscal years of the Borrower set forth below (or, with respect to the
first such fiscal year only, the period from the Closing Date to the end of such
fiscal year) the amount set forth opposite such fiscal year below:

<TABLE>
<CAPTION>
Fiscal Year Amount
----------- ------
<S> <C>
1997 $21,000,000
1998 21,500,000
1999 22,000,000
2000 and thereafter 22,500,000
</TABLE>

; provided that (i) each year after the year 2000, the limitation set forth in
this clause (a) shall increase by $500,000 per year and (ii) the lesser of (A)
100% of any amount not used in any fiscal year and (B) $10,000,000 may be
carried forward only into the next succeeding fiscal year.

(b) In addition to the Capital Expenditures permitted pursuant to paragraph
(a) of this Section 8.8, to the extent such proceeds are not otherwise utilized
pursuant to the last paragraph of Section 8.9 or 8.9(l), the Borrower and its
Subsidiaries may make additional Capital Expenditures (which shall not be
counted in the limitations set forth in paragraph (a) of this Section 8.8) as
follows: (i) Capital Expenditures consisting of the investment of Net Cash
Proceeds not required to be applied to prepay the Loans pursuant to Section
2.10, and (ii) Capital Expenditures consisting of the investment of Excess Cash
Flow generated during prior fiscal years (beginning with Excess Cash Flow
generated in the fiscal year ended in September 1997 but, in each case,
including the retained portion of Excess Cash Flow for only those periods where
the Excess Cash Flow payment has theretofore occurred) and not required to be
applied to prepay the Loans pursuant to Section 2.10.

8.9 Limitation on Investments, Loans and Advances. Make any advance, loan,
extension of credit or capital contribution to, or purchase any stock, bonds,
notes, debentures or other securities of or any assets constituting a business
unit of, or make any other investment in, any Person ("Investments"), except:

(a) extensions of trade credit and investments in leases in the
ordinary course of business;
<PAGE> 83
82

(b) Investments in Cash Equivalents;

(c) (i) Investments by the Borrower in any Domestic Subsidiary,
including any new Subsidiary, (ii) intercompany loans to the extent
permitted by Section 8.2 and (iii) Investments by the Borrower in any
Foreign Subsidiary (it being agreed for purposes of this clause (iii) that
receivables arising solely from actual bona fide intercompany transactions
entered into in the ordinary course of business shall not constitute
Investments) in an amount not to exceed $10,000,000 minus the amount of any
Indebtedness of Foreign Subsidiaries permitted by Section 8.2(i);

(d) loans and advances by the Borrower or its Subsidiaries to their
respective directors, officers and employees in an aggregate principal
amount not exceeding $2,000,000 at any one time outstanding;

(e) loans, advances or Investments in existence on the Closing Date
and listed on Schedule 8.9, and extensions, renewals, modifications or
restatements or replacements thereof, provided that no such extension,
renewal, modification or restatement shall (i) increase the amount of the
original loan, advance or investment, or (ii) adversely affect the
interests of the Lenders with respect to such original loan, advance or
investment or the interests of the Lenders under this Agreement or any
other Loan Document in any material respect;

(f) Investments permitted by Sections 8.2(b), 8.4(a), (b), (g), (h),
(i), (j), (k) and (l) and 8.8;

(g) promissory notes and other similar non-cash consideration received
by the Borrower and its Subsidiaries in connection with the dispositions
permitted by Section 8.6;

(h) Investments consisting of Interest Rate Agreements;

(i) Investments (including debt obligations and Capital Stock)
received in connection with the bankruptcy or reorganization of suppliers
and customers and in settlement of delinquent obligations of, and other
disputes with, customers and suppliers arising in the ordinary course of
business; and

(j) in addition to the foregoing, Investments by the Borrower or its
Subsidiaries in an aggregate amount (at cost, without regard to any write
down or write up thereof) at any one time outstanding not to exceed
$5,000,000;

(k) the Borrower may purchase certain assets and liabilities of ADP
Claims Solutions Group, Inc. utilized in the automotive recycling
information service business (the "ARISB Acquisition"), provided that (i)
to the extent that the cash consideration therefor exceeds $9,000,000 or
the assumed debt in connection therewith exceeds $250,000, such excess(es)
shall be a utilization of paragraph (j) above or paragraph (l)

<PAGE> 84
83

below to the extent permitted thereunder, (ii) the Administrative Agent
shall have received, with copies for each Lender a reasonable time prior to
the ARISB Acquisition, a certificate of a Responsible Officer of the
Borrower after giving effect to the ARISB Acquisition showing the aggregate
purchase price (including the assumption of any Indebtedness) for the ARISB
Acquisition and Permitted Acquisitions under paragraph (l) below made by
the Borrower and its Subsidiaries since the Closing Date, (iii) such
actions as may be required or reasonably requested to ensure that the
Collateral Agent, for the ratable benefit of the Secured Parties, has a
perfected first priority security interest in any assets acquired, subject
to Liens permitted by Section 8.3, shall have been taken and (iv) (I) on a
pro forma basis for the period of four consecutive fiscal quarters most
recently ended (assuming the consummation of the ARISB Acquisition and the
incurrence or assumption of any Indebtedness in connection therewith
occurred on the first day of such period of four consecutive fiscal
quarters), the Borrower shall be in compliance with the covenants contained
in Section 8.1 and (II) the Administrative Agent shall have received
calculations in reasonable detail reasonably satisfactory to it showing
compliance with the requirements of this clause (iv) certified by a
Responsible Officer of the Borrower; and

(l) so long as after giving effect thereto no Default or Event of
Default shall have occurred and be continuing, Investments by the Borrower
and its Subsidiaries resulting from Permitted Acquisitions in an aggregate
amount which may include Indebtedness permitted by Section 8.2(l) not to
exceed the sum of (A) the amount of $40,000,000 and (B) the amount of
common stock of CCI issued subsequent to the Closing Date in connection
with Permitted Acquisitions and (C) the portion of Excess Cash Flow for all
prior fiscal years commencing with 1997 retained by the Borrower and not
utilized pursuant to Section 8.8(b) or the last sentence of this Section
8.9, provided, that (i) the Administrative Agent shall have received, with
copies for each Lender at least 15 days prior to such Permitted
Acquisition, (I) such opinions (including with respect to environmental
matters), certificates and copies of agreements (including any Permitted
Acquisition documents) as it shall reasonably request and (II) a
certificate of a Responsible Officer of the Borrower after giving effect to
such Permitted Acquisition showing the aggregate purchase price (including
the assumption of any Indebtedness) for Permitted Acquisitions made by the
Borrower and its Subsidiaries since the Closing Date, (ii) such actions as
may be required or reasonably requested to ensure that the Collateral
Agent, for the ratable benefit of the Secured Parties, has a perfected
first priority security interest in any assets acquired, subject to Liens
permitted by Section 8.3, shall have been taken and (iii) (I) on a pro
forma basis for the period of four consecutive fiscal quarters most
recently ended (assuming the consummation of such Permitted Acquisition and
the incurrence or assumption of any Indebtedness in connection therewith
occurred on the first day of such period of four consecutive fiscal
quarters), the Borrower shall be in compliance with the covenants contained
in Section 8.1 and (II) the Administrative Agent shall have received
calculations in reasonable detail reasonably satisfactory to it showing
compliance with the requirements of this clause (iii) certified by a
Responsible Officer of the Borrower.

<PAGE> 85
84

In addition to the Investments permitted pursuant to this Section 8.9, to
the extent such proceeds are not otherwise utilized pursuant to Section 8.8(b)
or 8.9(l), the Borrower and its Subsidiaries may make additional Investments
(which shall not be counted in the limitations set forth above) as follows: (i)
Investments consisting of the investment of Net Cash Proceeds not required to be
applied to prepay the Loans pursuant to Section 2.10, including (x) with respect
to the investment of proceeds of the insurance and condemnation proceeds not
required to prepay the Loans pursuant to Section 2.10 and (y) with respect to
the investment of proceeds of the sale of assets which are permitted pursuant to
Section 8.6; and (ii) Investments consisting of the investment of Excess Cash
Flow generated during prior fiscal years (beginning with Excess Cash Flow
generated in the fiscal year ended in September 1997 but, in each case,
including the retained portion of the Excess Cash Flow for only those periods
where the Excess Cash Flow payment has theretofore occurred) and not required to
be applied to prepay the Loans pursuant to Section 2.10.

8.10 Modifications of Lease Transaction Obligations. Amend, supplement or
otherwise modify any of the provisions of any Lease Transaction Obligations in a
manner that adversely affects the interests of the Lenders under this Agreement
or any other Loan Document in any material respect.

8.11 Limitation on Transactions with Affiliates. (a) Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate (other
than a wholly owned Subsidiary) unless such transaction is (i) otherwise
permitted under this Agreement, or (ii) (x) in the ordinary course of the
Borrower's or such Subsidiary's business and (y) upon fair and reasonable terms
no less favorable to the Borrower or such Subsidiary, as the case may be, than
it would obtain in a comparable arm's length transaction with a Person which is
not an Affiliate.

(b) In addition, notwithstanding the foregoing, the Borrower and its
Subsidiaries shall be entitled to make the following payments and/or to enter
into the following transactions:

(i) the payment of reasonable and customary fees and reimbursement of
expenses payable to directors of the Borrower;

(ii) the payment to HMTF and its Affiliates of fees and expenses
pursuant to a monitoring and oversight agreement and financial advisory
agreement approved by the board of directors of the Borrower; and

(iii) the employment arrangements with respect to the procurement of
services of directors, officers and employees in the ordinary course of
business and the payment of reasonable fees in connection therewith.

8.12 Limitation on Sales and Leasebacks. Enter into any arrangement with
any Person providing for the leasing by the Borrower or any Subsidiary of real
or personal property which has been or is to be sold or transferred by the
Borrower or such Subsidiary to such

<PAGE> 86
85

Person or to any other Person to whom funds have been or are to be advanced by
such Person on the security of such property or rental obligations of the
Borrower or such Subsidiary; provided that this Section 8.12 shall not prohibit
any sale and leaseback resulting from the incurrence of any lease in respect of
any capital asset entered into within 120 days of the acquisition of such
capital asset for the purpose of providing permanent financing for such capital
asset.

8.13 Limitation on Changes in Fiscal Year. Permit the fiscal year of the
Borrower to end on a day other than September 30; provided that the Borrower may
change such fiscal year upon the approval of the Administrative Agent.

8.14 Restrictions Affecting Subsidiaries. Enter into with any Person, or
suffer to exist any agreement which prohibits or limits the ability of the
Borrower or any of its Subsidiaries to (a) create, incur, assume or suffer to
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, other than (i) this Agreement, (ii) any industrial
revenue bonds, purchase money mortgages or Financing Leases or any other
agreement or transaction permitted by this Agreement (in which cases, any
prohibition or limitation shall only be effective against the assets financed
thereby), (iii) as required pursuant to financing arrangements entered into by
Triad Systems Ireland Limited with the Industrial Development Authority of
Ireland as in effect on the date hereof or such other similar financing
arrangements entered into in furtherance of the development of CCI and its
Subsidiaries' business outside of the United States provided that the aggregate
amount of assets of CCI or any Subsidiary of CCI subject to such restrictions
shall not exceed 5% of Consolidated Assets and (iv) restrictions with respect to
maintaining the special purpose entity treatment of FinanceCo or (b) pay
dividends or make other distributions or pay any Indebtedness owed to the
Borrower or any of its Subsidiaries except as permitted by this Agreement and
the other Loan Documents, as required pursuant to financing arrangements entered
into by Triad Systems Ireland Limited with the Industrial Development Authority
of Ireland as in effect on the date hereof or such other similar financing
arrangements entered into in furtherance of the development of CCI and its
Subsidiaries' business outside of the United States provided that the aggregate
amount of assets of CCI or any Subsidiary of CCI subject to such restrictions
shall not exceed 5% of Consolidated Assets, and pursuant to restrictions imposed
with respect to maintaining the special purpose entity treatment of FinanceCo.

8.15 Limitation on Lines of Business. Enter into any business, either
directly or through any Subsidiary, except for those businesses in which the
Borrower and its Subsidiaries are engaged on the date of this Agreement or which
are reasonably related thereto.

8.16 CCI Holding Company Status; Ownership of Borrower. Suffer to exist any
change in the passive holding company status of CCI after the CCI Asset
Contribution except as otherwise permitted by Section 11.6.

8.17 Amendments to Corporate Documents; Transaction Documents; Licenses.
(a) Amend its certificate of incorporation or by-laws unless such amendment does
not adversely affect the interests of any Lender in any material respect, (b)
amend, supplement or

<PAGE> 87
86

otherwise modify the terms and conditions of the indemnities and licenses
furnished to the Borrower or any of its Subsidiaries pursuant to any of the
Transaction Documents such that after giving effect thereto such indemnities or
licenses shall be materially less favorable to the interests of the Credit
Parties or the Lenders with respect thereto or (c) otherwise amend, supplement
or otherwise modify the terms and conditions of any of the Transaction Documents
except to the extent that any such amendment, supplement or modification could
not reasonably be expected to have a Material Adverse Effect.

8.18 Limitation on Optional Payments and Modifications of Debt Instruments,
etc. (a) Make or offer to make any payment, prepayment, repurchase or redemption
of (except pursuant to a permanent refinancing of the Senior Subordinated Notes
with other Senior Subordinated Indebtedness) or otherwise defease or segregate
funds with respect to the Senior Subordinated Indebtedness or any guarantee
thereof (except mandatory payments of interest, fees and expenses required by
the terms of the agreement governing or instruments evidencing such
indebtedness, but only to the extent permitted under the subordination
provisions applicable thereto);

(b) amend, modify, waive or otherwise change, or consent or agree to any
amendment, modification, waiver or other change to, any of the terms of the
Senior Subordinated Indebtedness or any guarantee thereof or the Senior
Subordinated Note Indenture or other agreement evidencing Senior Subordinated
Indebtedness or any guarantee thereof:

(i) which amends or modifies the subordination provisions contained
therein;

(ii) which shortens the fixed maturity, or increases the rate or
shortens the time of payment of interest on, or increases the amount or
shortens the time of payment of any principal or premium payable whether at
maturity, at a date fixed for prepayment or by acceleration or otherwise of
such Indebtedness, or increases the amount of, or accelerates the time of
payment of, any fees payable in connection therewith;

(iii) which relates to the affirmative or negative covenants, events
of default or remedies under the documents or instruments evidencing such
Indebtedness and the effect of which is to subject the Borrower or any of
its Subsidiaries to any more onerous or more restrictive provisions; or

(iv) which otherwise adversely affects the interests of the Lenders as
senior creditors or the interests of the Lenders under this Agreement or
any other Loan Document in any respect.

(c) make any payment in cash on any equity or debt security that may be
made under the terms thereof by the issuance of any security of the same nature;
or
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(d) designate any Indebtedness as "Designated Senior Indebtedness" for the
purposes of the Senior Subordinated Note Indenture or any other agreement
evidencing the Senior Subordinated Indebtedness.

ARTICLE 9. EVENTS OF DEFAULT

If any of the following events shall occur and be continuing:

(a) The Borrower shall fail to pay any principal of any Loan and/or
Note or any L/C Obligation when due in accordance with the terms thereof or
hereof; or the Borrower shall fail to pay any interest on any Loan and/or
Note, or any other amount payable hereunder, within five days after any
such interest or other amount becomes due in accordance with the terms
thereof or hereof; or

(b) Any representation or warranty made or deemed made by the
Borrower, CCI or any of their Subsidiaries herein or in any other Loan
Document or which is contained in any certificate, document or financial or
other statement furnished at any time under or in connection with this
Agreement shall prove to have been incorrect in any material respect on or
as of the date made or deemed made; or

(c) The Borrower, CCI or any of their Subsidiaries shall default in
the performance or observance of any agreement contained in Article 8 or
11; or

(d) The Borrower, CCI or any of their Subsidiaries shall default in
the observance or performance of any other agreement contained in this
Agreement or in any other Loan Document (other than as provided in
paragraphs (a) through (c) of this Article), and such default shall
continue unremedied for a period of 30 days; or

(e) The Borrower, CCI or any of their Subsidiaries shall (i) default
(x) in any payment of principal of or interest on any Indebtedness (other
than the Loans) or (y) in the payment of any Guarantee Obligation (other
than Guarantee Obligations pursuant to the Loan Documents), having an
outstanding principal amount individually or in the aggregate for both of
clauses (x) and (y) in excess of $3,000,000 beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness
or Guarantee Obligation was created; or (ii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or Guarantee Obligation or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or holders of such
Indebtedness or beneficiary or beneficiaries of such Guarantee Obligation
(or a trustee or agent on behalf of such holder or holders or beneficiary
or beneficiaries) to cause, with the giving of notice if required, such
Indebtedness to become due prior to its stated maturity or such Guarantee
Obligation to become payable; or

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(f) (i) The Borrower, CCI or any of their Subsidiaries shall commence
any case, proceeding or other action (A) under any existing or future law
of any jurisdiction, domestic or foreign, relating to bankruptcy,
insolvency, reorganization or relief of debtors, seeking to have an order
for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all
or any substantial part of its assets, or any of the Borrower, CCI or any
of their Subsidiaries shall make a general assignment for the benefit of
its creditors; or (ii) there shall be commenced against the Borrower, CCI
or any of their Subsidiaries any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii)
there shall be commenced against the Borrower, CCI or any of their
Subsidiaries any case, proceeding or other action seeking issuance of a
warrant of attachment, execution, distraint or similar process against all
or any substantial part of its assets which results in the entry of an
order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(iv) the Borrower, CCI or any of their Subsidiaries shall take any action
in furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the acts set forth in clause (i), (ii), or (iii)
above; or (v) the Borrower, CCI or any of their Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts (other than intercompany debts) as they become
due; or

(g) (i) Any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with respect
to a Plan; and in each case in clauses (i) through (vi) above, such event
or condition, together with all other such events or conditions, if any,
could reasonably be expected to result in a Material Adverse Effect; or
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89

(h) One or more judgments or decrees shall be entered against the
Borrower or any of their Subsidiaries involving in the aggregate a
liability (not paid or fully covered by insurance) of $3,000,000 or more,
and all such judgments or decrees shall not have been vacated, discharged,
stayed or bonded pending appeal within 60 days from the entry thereof; or

(i) The Borrower, CCI or any of their Subsidiaries shall incur any
liability (not paid or fully covered by insurance) under any Environmental
Law in an amount which would result in a Material Adverse Effect; or

(j) Any Loan Document shall, at any time, cease to be in full force
and effect (unless released by the Administrative Agent at the direction of
the Required Lenders or as otherwise permitted under this Agreement or the
other Loan Documents) or shall be declared null and void (and, if such
invalidity is such so as to be amenable to cure without materially
disadvantaging the position of the Administrative Agent and the Lenders
thereunder, the applicable Credit Party shall have failed to cure such
invalidity within 30 days after notice from the Administrative Agent or
such shorter time period as is specified by the Administrative Agent in
such notice and is reasonable in the circumstances), or the validity or
enforceability thereof shall be contested by any Credit Party, or any of
the Liens intended to be created by any Security Document shall cease to be
or shall not be a valid and perfected Lien having the priority contemplated
thereby (and, if such invalidity is such so as to be amenable to cure
without materially disadvantaging the position of the Administrative Agent
and the Lenders, as secured parties thereunder, the applicable Credit Party
shall have failed to cure such invalidity within 30 days after notice from
the Administrative Agent or such shorter time period as specified by the
Administrative Agent in such notice and is reasonable in the
circumstances); or

(k) A Change of Control shall occur; or

(l) The Senior Subordinated Notes or the guarantees thereof shall
cease, for any reason, to be validly subordinated to the Obligations or the
obligations of the Subsidiaries which are Guarantors under the Guarantee
and Collateral Agreement, as the case may be, as provided in the Senior
Subordinated Note Indenture, or any Credit Party, or any Affiliate of any
Credit Party shall so assert;

then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon), the maximum amount available to be
drawn under all outstanding Letters of Credit and all other amounts owing under
this Agreement and any Notes shall immediately become due and payable, and (B)
if such event is any other Event of Default, either or both of the following
actions may be taken: (i) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower declare the Commitments to
be terminated forthwith, whereupon the Commitments shall immediately terminate;
and (ii) with the consent of the Required Lenders, the Administrative Agent may,
or upon the request of the Required Lenders, the Administrative Agent shall, by
notice to the Borrower, declare the Loans hereunder (with accrued interest
<PAGE> 91
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thereon), the maximum amount available to be drawn under all outstanding Letters
of Credit and all other amounts owing under this Agreement and any Notes to be
due and payable forthwith, whereupon the same shall immediately become due and
payable. All payments under this Article 9 on account of undrawn Letters of
Credit shall be made by the Borrower directly to a cash collateral account
established for such purpose for application to the Borrower's obligations with
respect thereto as drafts are presented under the Letters of Credit. Any
remaining amounts paid by the Borrower in respect of such undrawn Letters of
Credit shall be returned to the Borrower after the last expiry date of the
Letters of Credit and after the Obligations have been paid in full. Except as
expressly provided above in this Section, presentment, demand, protest and all
other notices of any kind are hereby expressly waived.

ARTICLE 10. THE ADMINISTRATIVE AGENT

10.1 Appointment. Each Lender hereby irrevocably designates and appoints
Chase as the Administrative Agent of such Lender under this Agreement and the
other Loan Documents, and each such Lender irrevocably authorizes Chase, as the
Administrative Agent for such Lender, to take such action on its behalf under
the provisions of this Agreement and the other Loan Documents and to exercise
such powers and perform such duties as are expressly delegated to the
Administrative Agent by the terms of this Agreement and the other Loan
Documents, together with such other powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary elsewhere in this Agreement, the
Administrative Agent shall not have any duties or responsibilities, except those
expressly set forth herein, or any fiduciary relationship with any Lender, and
no implied covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan Document or
otherwise exist against the Administrative Agent.

10.2 Delegation of Duties. The Administrative Agent may execute any of its
duties under this Agreement and the other Loan Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Administrative Agent shall not be
responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by it with reasonable care.

10.3 Exculpatory Provisions. Neither the Administrative Agent nor any of
its officers, directors, controlling persons, employees, agents,
attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its or such Person's own
gross negligence or wilful misconduct) or (ii) responsible in any manner to any
of the Lenders for any recitals, statements, representations or warranties made
by the Borrower or any officer thereof contained in this Agreement or any other
Loan Document or in any certificate, report, statement or other document
referred to or provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or any other Loan Document or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or any Notes or any other Loan Document or for any failure of any
Credit Party to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the
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observance or performance of any of the agreements contained in, or conditions
of, this Agreement, any Notes or any other Loan Document, or to inspect the
properties, books or records of any Credit Party.

10.4 Reliance by Administrative Agent. The Administrative Agent shall be
entitled to rely, and shall be fully protected in relying, upon any Note,
writing, resolution, notice, consent, certificate, affidavit, letter, telecopy,
telex or teletype message, statement, order or other document or conversation
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to the Borrower), independent
accountants and other experts selected by the Administrative Agent. The
Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders as it deems
appropriate or it shall first be indemnified to its satisfaction by the Lenders
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. The Administrative Agent shall
in all cases be fully protected in acting, or in refraining from acting, under
this Agreement and any Notes and the other Loan Documents in accordance with a
request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders and all
future holders of the Notes.

10.5 Notice of Default. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or Event of Default
hereunder unless the Administrative Agent has received written notice from a
Lender or the Borrower referring to this Agreement, describing such Default or
Event of Default and stating that such notice is a "notice of default". In the
event that the Administrative Agent receives such a notice, the Administrative
Agent shall give notice thereof to the Lenders. The Administrative Agent shall
take such action with respect to such Default or Event of Default as shall be
reasonably directed by the Required Lenders; provided that unless and until the
Administrative Agent shall have received such directions, the Administrative
Agent may (but shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of Default as it shall
deem advisable in the best interests of the Lenders.

10.6 Non-Reliance on Administrative Agent and Other Lenders. Each Lender
expressly acknowledges that neither the Administrative Agent nor any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates has made
any representations or warranties to it and that no act by the Administrative
Agent hereinafter taken, including any review of the affairs of any Credit
Party, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the Administrative
Agent that it has, independently and without reliance upon the Administrative
Agent or any other Lender, and based on such documents and information as it has
deemed appropriate, made its own appraisal of and investigation into the
business, operations, property, financial and other condition and
creditworthiness of the Credit Parties and made its

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own decision to make its Loans hereunder and enter into this Agreement. Each
Lender also represents that it will, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigation as
it deems necessary to inform itself as to the business, operations, property,
financial and other condition and creditworthiness of the Credit Parties. Except
for notices, reports and other documents expressly required to be furnished to
the Lenders by the Administrative Agent hereunder, the Administrative Agent
shall not have any duty or responsibility to provide any Lender with any credit
or other information concerning the business, operations, property, condition
(financial or otherwise), prospects or creditworthiness of the Credit Parties
which may come into the possession of the Administrative Agent or any of its
officers, directors, employees, agents, attorneys-in-fact or Affiliates.

10.7 Indemnification. The Lenders agree to indemnify the Administrative
Agent in its capacity as such (to the extent not reimbursed by the Borrower and
without limiting the obligation of the Borrower to do so), ratably according to
their respective Commitment Percentages in effect on the date on which
indemnification is sought under this Section, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of this Agreement, any of the other Loan
Documents or any documents contemplated by or referred to herein or therein or
the transactions contemplated hereby or thereby or any action taken or omitted
by the Administrative Agent under or in connection with any of the foregoing;
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or wilful misconduct or, in the case of indemnified
liabilities arising under this Agreement, any Notes and the other Loan
Documents, from material breach by the Administrative Agent of this Agreement,
any Notes or the other Loan Documents, as the case may be. The agreements in
this Section shall survive the payment of the Loans and all other amounts
payable hereunder.

10.8 Administrative Agent in Its Individual Capacity. The Administrative
Agent and its Affiliates may make loans to, accept deposits from and generally
engage in any kind of business with the Credit Parties as though the
Administrative Agent was not the Administrative Agent hereunder and under the
other Loan Documents. With respect to their Loans made or renewed by it and any
Note issued to it, the Administrative Agent shall have the same rights and
powers under this Agreement and the other Loan Documents as any Lender and may
exercise the same as though it were not the Administrative Agent, and the terms
"Lender" and "Lenders" shall include the Administrative Agent in its individual
capacity.

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10.9 Successor Administrative Agent. The Administrative Agent may resign as
Administrative Agent upon 30 days' notice to the Lenders. If the Administrative
Agent shall resign as Administrative Agent under this Agreement and the other
Loan Documents, then the Required Lenders shall appoint from among the Lenders a
successor agent for the Lenders, which successor agent shall be approved by the
Borrower (which approval shall not be unreasonably withheld), whereupon such
successor agent shall succeed to the rights, powers and duties of the
Administrative Agent, and the term "Administrative Agent" shall mean such
successor agent effective upon such appointment and approval, and the former
Administrative Agent's rights, powers and duties as Administrative Agent shall
be terminated, without any other or further act or deed on the part of such
former Administrative Agent or any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent, the provisions of this Section shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Administrative
Agent under this Agreement and the other Loan Documents.

10.10 Additional Ministerial Powers of Administrative Agent. The
Administrative Agent is hereby irrevocably authorized by each of the Lenders to
release any Lien covering any asset of CCI or any of its Subsidiaries
(including, without limitation, any Properties, accounts receivable or
inventory) that is the subject of a disposition, sale or assignment which is
permitted under this Agreement or, subject to Section 12.1, which has been
consented to by the Required Lenders.

ARTICLE 11. GUARANTEE

11.1 Guarantee. To induce the Lenders to execute and deliver this Agreement
to make Loans and to issue and participate in Letters of Credit for the account
of the Borrower, and in consideration thereof, CCI hereby unconditionally and
irrevocably guarantees to the Administrative Agent, the Lenders and their
successors, indorsees, transferees and assigns, the prompt and complete payment
and performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Obligations, and CCI further agrees to pay the expenses which
may be paid or incurred by the Administrative Agent or the Lenders in collecting
any or all of the Obligations and/or enforcing any rights under this Article 11
or under the Obligations in accordance with Section 12.5. The guarantee
contained in this Article 11 shall remain in full force and effect until the
Obligations are paid in full and the Commitments are terminated, notwithstanding
that from time to time prior thereto the Borrower may be free from any
Obligations.

11.2 Waiver of Subrogation. Notwithstanding any payment or payments made by
CCI in respect of the Obligations or any setoff or application of funds of CCI
by the Administrative Agent or the Lenders, until payment in full of the
Obligations and the termination of the Commitments and the Letters of Credit,
CCI shall not be entitled to be subrogated to any of the rights of the
Administrative Agent or the Lenders against the Borrower or any collateral
security or guarantee or right of offset held by the Administrative Agent or the
Lenders for the payment of the Obligations, nor shall CCI seek any reimbursement
from the Borrower in respect of payments made by CCI hereunder until the
Obligations are paid in full.

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11.3 Modification of Obligations. CCI hereby consents that, without the
necessity of any reservation of rights against CCI and without notice to or
further assent by CCI, any demand for payment of the Obligations made by the
Administrative Agent, the Issuing Lender or the Lenders may be rescinded by the
Administrative Agent, the Issuing Lender or the Lenders and the Obligations
continued, and the Obligations, or the liability of any other party upon or for
any part thereof, or any collateral security or guarantee therefor or right of
offset with respect thereto, may, from time to time, in whole or in part, be
renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent, the Issuing Lender or the
Lenders and that this Agreement, any Notes and the other Loan Documents,
including, without limitation, any Letter of Credit Application, any collateral
security document or other guarantee or document in connection therewith may be
amended, modified, supplemented or terminated, in whole or in part, as the
Administrative Agent, the Issuing Lender or the Lenders may deem advisable from
time to time, and, to the extent permitted by applicable law, any collateral
security or guarantee or right of offset at any time held by the Administrative
Agent, the Issuing Lender or the Lenders for the payment of the Obligations may
be sold, exchanged, waived, surrendered or released, all without the necessity
of any reservation of rights against CCI and without notice to or further assent
by CCI which will remain bound hereunder notwithstanding any such renewal,
extension, modification, acceleration, compromise, amendment, supplement,
termination, sale, exchange, waiver, surrender or release. The Administrative
Agent, the Issuing Lender and the Lenders shall not have any obligation to
protect, secure, perfect or insure any collateral security document or property
subject thereto at any time held as security for the Obligations. When making
any demand hereunder against CCI, the Administrative Agent, the Issuing Lender
or the Lenders may, but shall be under no obligation to, make a similar demand
on any other party or any other guarantor, and any failure by the Administrative
Agent, the Issuing Lender or the Lenders to make any such demand or to collect
any payments from the Borrower or any such other guarantor shall not relieve CCI
of its obligations or liabilities hereunder, and shall not impair or affect the
rights and remedies, express or implied, or as a matter of law, of the
Administrative Agent, the Issuing Lender or the Lenders against CCI. For the
purposes of this Section "demand" shall include the commencement and continuance
of any legal proceedings.

11.4 Waiver by CCI. CCI waives any and all notice of the creation, renewal,
extension or accrual of the Obligations and notice of or proof of reliance by
the Administrative Agent, the Issuing Lender and the Lenders upon the guarantee
contained in this Article 11 or acceptance of the guarantee contained in this
Article 11, and the Obligations, and any of them, shall conclusively be deemed
to have been created, contracted, continued or incurred in reliance upon the
guarantee contained in this Article 11, and all dealings between CCI and the
Administrative Agent, the Issuing Lender or the Lenders shall likewise be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Article 11. CCI waives diligence, presentment,
protest, demand for payment and notice of default or nonpayment to or upon the
Borrower or CCI with respect to any Obligations. This guarantee shall be
construed as a continuing absolute and unconditional guarantee of payment
without regard to the validity, regularity or enforceability of the Credit
Agreement, any Note or any other Loan Document, including, without limitation,
any Letter of Credit Application or any collateral security or guarantee
therefor or
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right of offset with respect thereto at any time or from time to time held by
the Administrative Agent, the Issuing Lender or the Lenders and without regard
to any defense, setoff or counterclaim which may at any time be available to or
be asserted by the Borrower against the Administrative Agent, the Issuing
Lender, the Lenders or any other Person, or by any other circumstance whatsoever
(with or without notice to or knowledge of the Borrower or CCI) which
constitutes, or might be construed to constitute, an equitable or legal
discharge of the Borrower for any of its Obligations, or of CCI under the
guarantee contained in this Article 11 in bankruptcy or in any other instance,
and the obligations and liabilities of CCI hereunder shall not be conditioned or
contingent upon the pursuit by the Administrative Agent, the Issuing Lender or
the Lenders or any other Person at any time of any right or remedy against the
Borrower or against any other Person which may be or become liable in respect of
any Obligations or against any collateral security or guarantee therefor or
right of offset with respect thereto. The guarantee contained in this Article 11
shall remain in full force and effect and be binding in accordance with and to
the extent of its terms upon CCI and the successors and assigns thereof, and
shall inure to the benefit of the Lenders and their successors, indorsees,
transferees and assigns, until the Obligations shall have been paid in full and
the Commitments shall be terminated, notwithstanding that from time to time
during the term of this Agreement the Borrower may be free from any Obligations.

11.5 Reinstatement. The guarantee contained in this Article 11 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any Obligations is rescinded or must otherwise
be restored or returned by the Administrative Agent, the Issuing Lender or the
Lenders upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of CCI or the Borrower or upon or as a result of the appointment
of a receiver, intervenor or conservator of, or trustee or similar officer for,
CCI, the Borrower or any substantial part of their respective property, or
otherwise, all as though such payments had not been made.

11.6 Negative Covenants. From and after the Closing Date until the
Obligations shall have been paid in full, the Letters of Credit shall have
expired or been terminated and the Commitments shall have been terminated, CCI
hereby agrees that it shall not (i) assume or otherwise incur or suffer to exist
any Indebtedness (other than Indebtedness in the nature of Indebtedness
specified in Section 8.2(d) or (j)) or Guarantee Obligation (other than (A) the
Guarantee Obligations of CCI pursuant to the Guarantee and Security Agreement,
(B) Guarantee Obligations in the nature of the Guarantee Obligations specified
in Section 8.4(d), 8.4(e) and 8.4(f), (C) Guarantee Obligations of CCI in
respect of real property leases and/or personal property operating leases of the
Borrower and its Subsidiaries in ordinary course of business, but in any event
not in excess of an aggregate amount of $5,000,000 at any one time outstanding
or (D) indemnities in favor of officers, directors and employees of CCI in the
ordinary course of business and in the connection with the ownership of the
Borrower's capital stock), (ii) create, incur, assume or suffer to exist any
Lien upon any of its assets (other than pursuant to the Security Documents and
other than Liens in the nature of the Liens specified in Section 8.3(b), (d) or
(e)), (iii) cease to own, directly or indirectly, 100% of the Capital Stock of
the Borrower, (iv) amend its certificate of incorporation or by-laws or any of
the Transaction Documents to which it is a party unless such amendment does not
adversely affect the interests of any Lender in any material respect,
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(v) engage in any activities other than (A) owning the stock of the Borrower,
(B) its activities incident to the performance of (x) the Loan Documents and (y)
the issuance and/or sale of its common stock or options or warrants in respect
of its Capital Stock, provided that the proceeds thereof are applied as set
forth in Section 2.10, (C) transactions pursuant to or in connection with the
Transactions and (D) activities contemplated by this Article 11 or (vi) make any
Restricted Payment except as permitted by Sections 8.7(a)(i), 8.7(a)(v), 8.7(c)
and 8.7(d). Notwithstanding any provision of clause (v) of the preceding
sentence to the contrary, CCI may continue to own and perform its obligations in
respect of assets owned by it on the Closing Date until all required consents
under applicable Contractual Obligations to the contribution of such assets to
the Borrower are obtained. CCI agrees to use its best efforts to (I) obtain all
such consents as promptly as possible following the Closing Date and (II) cause
its customer contracts to be assigned to the Borrower and all payments made and
receivables due thereunder to be payable to, and invoiced in the name of, the
Borrower. CCI will cause all business arising after the Closing Date (other than
business existing on the Closing Date which it is not able to transfer to the
Borrower because of applicable Contractual Obligations) to be conducted through
the Borrower and its Subsidiaries.

ARTICLE 12. MISCELLANEOUS

12.1 Amendments and Waivers. Neither this Agreement, any Note, any other
Loan Document, nor any terms hereof or thereof may be waived, amended,
supplemented or otherwise modified except in accordance with the provisions of
this Section. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent may, from time to time, (a) enter
into with the applicable Credit Parties written amendments, supplements or
modifications hereto and to any Notes and the other Loan Documents for the
purpose of adding any provisions to this Agreement or any Notes or the other
Loan Documents or changing in any manner the rights of the Lenders or of the
Borrower or CCI or any other Person hereunder or thereunder or (b) waive, on
such terms and conditions as the Required Lenders or the Administrative Agent,
as the case may be, may specify in such instrument, any of the requirements of
this Agreement or any Notes or the other Loan Documents or any Default or Event
of Default and its consequences; provided, however, that no such waiver and no
such amendment, supplement or modification shall (i) reduce the aggregate amount
or extend the scheduled date of maturity of any Loan or of any installment
thereof or any L/C Obligation reimbursement obligation in respect of any Letter
of Credit, or reduce the stated rate of any interest or fee payable hereunder or
extend the scheduled date of any payment thereof or increase the aggregate
amount or extend the expiration date of any Lender's Commitment, in each case
without the consent of each Lender affected thereby, or (ii) amend, modify or
waive any provision of this Section 12.1 or reduce the percentage specified in
the definition of Required Lenders or consent to the assignment or transfer by
the Borrower of any of its rights and obligations under this Agreement and the
other Loan Documents or release all or substantially all of the Collateral or
release the Guarantee Obligations of CCI under this Agreement or the Guarantee
Obligations of any other guarantors under the Guarantee and Collateral
Agreement, in each case, without the written consent of all the Lenders, (iii)
amend, modify or waive any provision of (x) Section 2.6, 4.4(a) or 2.7 without
the written consent of Term Loan Lenders the Term Loan Percentages
<PAGE> 98
97

of which aggregate at least a majority, (iv) amend, modify or waive any
provision of Section 2.1, 2.2, 2.3, 2.4, 2.5, 2.10(e) or Article 3 without the
written consent of the Revolving Credit Lenders the Revolving Credit Commitment
Percentages of which aggregate at least a majority, (v) amend, modify or waive
any provision of Article 10 without the written consent of the Administrative
Agent, (vi) amend, modify or waive the order of application of prepayments
specified in Section 2.10(d) or 4.4(b) without the consent of the Revolving
Credit Lenders and the Term Loan Lenders the Total Credit Percentages of which
aggregate at least a majority, (vii) amend, modify or waive any provision of
Section 2.13 or the Swing Line Note (if any) without the written consent of the
then Swing Line Lender and each other Lender, if any, which holds a
participation in the Swing Line Loan pursuant to Section 2.13(e), (viii) amend,
modify or waive the provisions of Article 3 or any Letter of Credit without the
written consent of the applicable Issuing Lender, or (ix) amend, modify or waive
any provision of any Security Document that provides for the ratable sharing by
the Lenders of the proceeds of any realization on the security for the Loans to
provide for a non-ratable sharing thereof, without the consent of the Revolving
Credit Lenders and the Term Loan Lenders the Total Credit Percentages of which
aggregate at least a majority. Any such waiver and any such amendment,
supplement or modification shall apply equally to each of the Lenders and shall
be binding upon the Borrower, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, the Borrower, the
Lenders and the Administrative Agent shall be restored to their former position
and rights hereunder and under the outstanding Loans and the other Loan
Documents, and any Default or Event of Default waived shall be deemed to be
cured and not continuing; but no such waiver shall extend to any subsequent or
other Default or Event of Default, or impair any right consequent thereon.

12.2 Notices. All notices, requests and demands to or upon the respective
parties hereto to be effective shall be in writing (including by telecopy), and,
unless otherwise expressly provided herein, shall be deemed to have been duly
given or made when delivered by hand, or two days after being deposited in the
mail, postage prepaid, or, in the case of telecopy notice, when received,
addressed as follows in the case of the Borrower, CCI and the Administrative
Agent, the Issuing Lender and the Swing Line Lender, and as set forth in
Schedule 1.1 in the case of the other parties hereto, or to such other address
as may be hereafter notified by the respective parties hereto and any future
holders of the Loans or any Notes:

The Borrower: Cooperative Computing, Inc.
6207 Bee Cave Road
Austin, TX 78746-5146
Attention: Glenn Staats and Matthew Hale
Telecopy: (512) 329-6746

with copies to: Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attention: Lawrence D. Stuart, Jr.
Telecopy: (214) 740-7313
<PAGE> 99
98

The Administrative The Chase Manhattan Bank
Agent, the 270 Park Avenue, 37th Floor
Issuing Lender New York, NY 10017
or the Swing Attention: Mitchell Gervis
Line Lender: Telecopy: (212) 270-4584

with copies to: The Chase Manhattan Bank Agent Services
One Chase Manhattan Plaza
New York, New York 10081
Attention: Janet Belden
Telecopy: (212) 552-5658

provided that any notice, request or demand to or upon the Administrative Agent
or the Lenders pursuant to Section 2.3, 2.5, 2.8, 2.10, 2.11, 2.13, 3.2 or 4.4
shall not be effective until received.

12.3 No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and not exclusive of any rights,
remedies, powers and privileges provided by law.

12.4 Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the making of the Loans hereunder.

12.5 Payment of Expenses and Taxes. The Borrower agrees (a) to pay or
reimburse the Administrative Agent and CSI for all their reasonable
out-of-pocket costs and expenses incurred in connection with the syndication of
the Commitments and the development, preparation and execution of, and any
amendment, supplement or modification to, this Agreement and any Notes and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Administrative Agent, (b) to pay or
reimburse each Lender, the Administrative Agent and CSI for all of their
reasonable out-of-pocket costs and expenses incurred in connection with the
enforcement or preservation of any rights under this Agreement, any Notes, the
other Loan Documents and any such other documents, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent and, at any time after and during the continuance of an
Event of Default, of one counsel to all of the Lenders, (c) to pay, indemnify,
and hold each Lender, the Administrative Agent and CSI harmless from, any and
all recording and filing fees and any and all liabilities
<PAGE> 100
99

with respect to, or resulting from any delay in paying, stamp, excise,
documentary, property and other similar taxes, if any, which may be payable or
determined to be payable in connection with the execution and delivery of, or
consummation or administration of any of the transactions contemplated by, or
any amendment, supplement or modification of, or any waiver or consent under or
in respect of, this Agreement, any Notes, the other Loan Documents and any such
other documents, and (d) to pay, indemnify, and hold each Lender, the
Administrative Agent and CSI and their respective officers, directors,
employees, agents and controlling persons harmless from and against any and all
other liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements of any kind or nature whatsoever with
respect to the execution, delivery, enforcement, performance and administration
of this Agreement, any Notes, the other Loan Documents, the Transaction
Documents, or the use of the proceeds of the Loans in connection with the
Transactions and any such other documents (all the foregoing in this clause (d),
collectively, the "indemnified liabilities"), provided that the Borrower shall
have no obligation hereunder to the Administrative Agent, CSI or any Lender or
their respective officers, directors, employees, agents and controlling persons
with respect to indemnified liabilities arising from the gross negligence or
wilful misconduct of the Administrative Agent, CSI or such Lender, as the case
may be, or, in the case of indemnified liabilities arising under this Agreement,
any Notes and the other Loan Documents, from material breach by the
Administrative Agent or such Lender, as the case may be, or its respective
officers, directors, employees, agents and controlling persons of this
Agreement, any Notes or the other Loan Documents, as the case may be. The
agreements in this Section shall survive repayment of the Loans and all other
amounts payable hereunder.

12.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Borrower, the
Lenders, the Administrative Agent, all future holders of the Loans and their
respective successors and assigns, except that the Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of each Lender.

(b) Any Lender may, in the ordinary course of its commercial lending or
investing business and in accordance with applicable law, at any time sell to
one or more banks, insurance companies or other financial institutions or other
entities ("Participants") participating interests in any Loan owing to such
Lender, any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Loan Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Loan Documents, and the
Borrower and the Administrative Agent shall continue to deal solely and directly
with such Lender in connection with such Lender's rights and obligations under
this Agreement and the other Loan Documents. No Lender shall permit any
Participant to have the right to consent to any amendment or waiver in respect
of this Agreement or any of the other Loan Documents, except that such Lender
may grant such Participant the right to consent to any amendment or waiver in
respect of this Agreement or the other Loan Documents that requires the consent
of
<PAGE> 101
100

such Lender pursuant to Section 12.1. The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall be deemed to have the right of setoff
in respect of its participating interest in amounts owing under this Agreement
and any Note to the same extent as if the amount of its participating interest
were owing directly to it as a Lender under this Agreement or any Note, provided
that in purchasing such participating interest, such Participant shall be deemed
to have agreed to share with the Lenders the proceeds thereof as provided in
Section 12.7(a) as fully as if it were a Lender hereunder. The Borrower also
agrees that each Participant shall be entitled to the benefits of Sections 4.5,
4.6 and 4.7 with respect to its participation in the Commitments and the Loans
and Letters of Credit outstanding from time to time as if it was a Lender;
provided that in the case of Section 4.6 or 4.7, such Participant shall have
complied with the requirements of such Section and provided, further, that no
Participant shall be entitled to receive any greater amount pursuant to any such
Section than the transferor Lender would have been entitled to receive in
respect of the amount of the participation transferred by such transferor Lender
to such Participant had no such transfer occurred.

(c) Any Lender may, in the ordinary course of its commercial lending
business or investing business and in accordance with applicable law, at any
time and from time to time assign to any Lender or any affiliate thereof or,
with the consent of the Administrative Agent (such consent not to be
unreasonably withheld), to an additional bank or financial or lending
institution or other entity (an "Assignee") all or any part of its rights and
obligations under this Agreement and any Notes pursuant to an Assignment and
Acceptance, executed by such Assignee, such assigning Lender (and, in the case
of an Assignee that is not then a Lender or an affiliate thereof, by the
Administrative Agent) and delivered to the Administrative Agent for its
acceptance and recording in the Register; provided that (x) each such transfer
(if such transfer relates to less than all of such Lenders' rights and
obligations under this Agreement and any Notes) shall be in respect of a portion
of its rights and obligations under this Agreement and any Notes not less than
$5,000,000 (or such other amount as may be agreed by both the Borrower and the
Administrative Agent) if such assignment is to a bank or financial or lending
institution or other entity that is not then a Lender or an affiliate thereof
and (y) the Swing Line Lender may not transfer any portion of the Swing Line
Commitment without the consent of the Borrower (such consent not to be
unreasonably withheld). Upon such execution, delivery, acceptance and recording,
from and after the effective date determined pursuant to such Assignment and
Acceptance, (x) the Assignee thereunder shall be a party hereto and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder with Commitments as set forth therein, and (y)
the assigning Lender thereunder shall, to the extent provided in such Assignment
and Acceptance, be released from its obligations under this Agreement (and, in
the case of an Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this Agreement, such
assigning Lender shall cease to be a party hereto; provided that such assigning
Lender shall continue to have the benefit of Sections 4.5, 4.6, 4.7 and 12.5(a),
(b) and (c) (to the extent of rights accruing prior to the date of such
assignment only) and 12.5(d).
<PAGE> 102
101

(d) The Administrative Agent, acting for this purpose as agent for the
Borrower, shall maintain at its address referred to in Section 12.2 a copy of
each Assignment and Acceptance delivered to it and a register (the "Register")
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender from
time to time. The entries in the Register shall be conclusive, in the absence of
manifest error, and the Borrower, the Administrative Agent and the Lenders may
treat each Person whose name is recorded in the Register as the owner of the
Loan recorded therein for all purposes of this Agreement. No assignment or
transfer of a Note and the obligation(s) evidenced thereby shall be effective
unless it has been recorded in the Register as provided in this Section 12.6(d).
The Register shall be available for inspection by the Borrower or any Lender at
any reasonable time and from time to time upon reasonable prior notice.

(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is not
then a Lender or an affiliate thereof, by the Administrative Agent) together
with payment, by the Assignee, to the Administrative Agent of a registration and
processing fee of $4,000 if the Assignee is not a Lender or affiliate of a
Lender prior to the execution of the Assignment and Acceptance and $1,000
otherwise, the Administrative Agent shall (i) promptly accept such Assignment
and Acceptance and (ii) on the effective date determined pursuant thereto record
the information contained therein in the Register and give notice of such
acceptance and recordation to the Lenders and the Borrower. On or prior to such
effective date, the Borrower, at its own expense, shall execute and deliver to
the Administrative Agent (in exchange for any Revolving Credit Note, Swing Line
Note or Term Note of the assigning Lender) a new Revolving Credit Note, Swing
Line Note or Term Note, as the case may be, to the order of such Assignee in an
amount equal to the Revolving Credit Commitment, Swing Line Commitment or
portion of the Term Loan, as the case may be, assumed by it pursuant to such
Assignment and Acceptance and, if the assigning Lender has retained a Revolving
Credit Commitment, Swing Line Commitment or portion of a Term Loan hereunder, a
new Revolving Credit Note, Swing Line Note or Term Note, as the case may be, to
the order of the assigning Lender in an amount equal to the Revolving Credit
Commitment, Swing Line Commitment or Term Loan, as the case may be, retained by
it hereunder. Such new Notes shall be dated the Closing Date and shall otherwise
be in the form of the Note replaced thereby.

(f) The Borrower authorizes each Lender to disclose to any Participant or
Assignee (each, a "Transferee") and any prospective Transferee any and all
information in such Lender's possession concerning the Borrower and its
Affiliates which has been delivered to such Lender by or on behalf of the
Borrower pursuant to this Agreement or which has been delivered to such Lender
by or on behalf of the Borrower in connection with such Lender's credit
evaluation of the Borrower and its Affiliates prior to becoming a party to this
Agreement, under the condition such Transferee or prospective Transferee agrees
to comply with the provisions of Section 12.15.

<PAGE> 103
102

(g) Any Lender may at any time pledge or assign a security interest in all
or any portion of its rights under this Agreement to secure obligations of such
Lender, including any pledge or assignment to secure obligations to a Federal
Reserve Bank; provided that no such pledge or assignment of a security interest
shall release a Lender from any of its obligations hereunder or substitute any
such pledgee or assignee for such Lender as a party hereto.

12.7 Adjustments; Set-off. (a) If any Lender (a "benefitted Lender") shall
at any time receive any payment of all or part of the Obligations owing to it or
receive any collateral in respect thereof (whether voluntarily or involuntarily,
by set-off, pursuant to events or proceedings of the nature referred to in
Section 9(f), or otherwise), in a greater proportion than any such payment to or
collateral received by any other Lender, if any, in respect of the Obligations
owing to such other Lender, such benefitted Lender shall purchase for cash from
the other Lenders an interest in such portion of the Obligations owing to each
such other Lender, or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause such
benefitted Lender to share the excess payment or benefits of such collateral or
proceeds ratably with each of the Lenders; provided, however, that if all or any
portion of such excess payment or benefits is thereafter recovered from such
benefitted Lender, such purchase shall be rescinded, and the purchase price and
benefits returned, to the extent of such recovery, but without interest.

(b) In addition to any rights and remedies of the Lenders provided by law,
each Lender shall have the right, without prior notice to the Borrower, any such
notice being expressly waived by the Borrower to the extent permitted by
applicable law, upon any amount becoming due and payable by the Borrower
hereunder or under any Notes (whether at the stated maturity, by acceleration or
otherwise) to set-off and appropriate and apply against such amount any and all
deposits (general or special, time or demand, provisional or final), in any
currency, and any other credits, indebtedness or claims, in any currency, in
each case whether direct or indirect, absolute or contingent, matured or
unmatured, at any time held or owing by such Lender or any branch or agency
thereof to or for the credit or the account of the Borrower. Each Lender agrees
promptly to notify the Borrower and the Administrative Agent after any such
set-off and application made by such Lender, provided that the failure to give
such notice shall not affect the validity of such set-off and application.

12.8 Counterparts. This Agreement may be executed by one or more of the
parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. A set of the copies of this Agreement signed by all the parties
shall be lodged with the Borrower and the Administrative Agent.

12.9 Severability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any
other jurisdiction.
<PAGE> 104
103

12.10 Integration. This Agreement and the other Loan Documents represent
the agreement of the Credit Parties, the Administrative Agent and the Lenders
with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to the subject matter hereof not expressly set forth or referred
to herein or in the other Loan Documents.

12.11 GOVERNING LAW. THIS AGREEMENT AND ANY NOTES AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES UNDER THIS AGREEMENT AND ANY NOTES SHALL BE GOVERNED
BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF
NEW YORK.

12.12 Submission To Jurisdiction; Waivers. Each of CCI and the Borrower
hereby irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to which
it is a party, or for recognition and enforcement of any judgement in
respect thereof, to the non-exclusive general jurisdiction of the courts of
the State of New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any thereof;

(b) consents that any such action or proceeding may be brought in such
courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not to
plead or claim the same;

(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the Credit
Parties at their respective addresses set forth in Section 12.2 or at such
other address of which the Administrative Agent shall have been notified
pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any right it
may have to claim or recover in any legal action or proceeding referred to
in this Section any special, exemplary, punitive or consequential damages.

12.13 Acknowledgements. Each of CCI and the Borrower hereby acknowledges
that:

(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and any Notes and the other Loan Documents;
<PAGE> 105
104

(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Credit Parties arising out of or in
connection with this Agreement or any of the other Loan Documents, and the
relationship between Administrative Agent and Lenders, on one hand, and the
Credit Parties, on the other hand, in connection herewith or therewith is
solely that of debtor and creditor; and

12.14 WAIVERS OF JURY TRIAL. CCI, THE BORROWER, THE ADMINISTRATIVE AGENT
AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY IN
ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY NOTES OR ANY
OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

12.15 Confidentiality. Each Lender agrees to keep information obtained by
it pursuant hereto and the other Loan Documents identified as confidential in
writing at the time of delivery confidential in accordance with such Lender's
customary practices and agrees that it will only use such information in
connection with the transactions contemplated by this Agreement and not disclose
any of such information other than (a) to such Lender's employees,
representatives, directors, attorneys, auditors, agents or affiliates who are
advised of the confidential nature of such information, (b) to the extent such
information presently is or hereafter becomes available to such Lender on a
non-confidential basis from any source or such information that is in the public
domain at the time of disclosure, (c) to the extent disclosure is required by
law (including applicable securities laws), regulation, subpoena or judicial
order or process (provided that notice of such requirement or order shall be
promptly furnished to the Borrower unless such notice is legally prohibited) or
requested or required by bank, securities or investment company regulations or
auditors or any administrative body or commission to whose jurisdiction such
Lender may be subject, (d) to assignees or participants or potential assignees
or participants or to professional advisors or direct or indirect contractual
counterparties in swap agreements provided in each case such Person agrees to be
bound by the provisions of this Section 12.15, (e) to the extent required in
connection with any litigation between any Credit Party and any Lender with
respect to the Loans or this Agreement and the other Loan Documents, (f) to
rating agencies, their employees, representatives, attorneys, agents or
affiliates who are advised of the confidential nature of such information and
agree to be bound by provisions of this Section 12.15, (g) to the National
Association of Insurance Commissioners and (h) with the Borrower's prior written
consent. The agreements in this Section shall survive repayment of the Loans and
all other amounts payable hereunder.

<PAGE> 106

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.

COOPERATIVE COMPUTING, INC.

By /s/ MATTHEW HALE
-------------------------------
Name: Matthew Hale
Title: Chief Financial Officer

COOPERATIVE COMPUTING HOLDING
COMPANY, INC.,
as a Guarantor

By /s/ MATTHEW HALE
-------------------------------
Name: Matthew Hale
Title: Chief Financial Officer

THE CHASE MANHATTAN BANK,
as Administrative Agent,
a Lender and Issuing Lender

By /s/ MARIAN N. SCHULMAN
-------------------------------
Name: Marian N. Schulman
Title: Attorney-in-fact

<PAGE> 107
106

BANK UNITED

By /s/ MARIE CHIADETTI
-------------------------------
Name: Marie Chiadetti
Title: Director

<PAGE> 108
107
BANKBOSTON, N.A.

By /s/ TIMOTHY M. BARNS
-------------------------------
Name: Timothy M. Barns
Title: Division Executive

<PAGE> 109
108

COMERICA BANK - CALIFORNIA

By /s/ LORI EDWARDS
-------------------------------
Name: Lori Edwards
Title: First Vice President

<PAGE> 110
109

CREDITANSTALT AG

By /s/ JACK R. BERTGES
-------------------------------
Name: Jack R. Bertges
Title: Senior Vice President

By /s/ JOHN P. MACUKAS
-------------------------------
Name: John P. Macukas
Title: Senior Vice President

<PAGE> 111
110

NATIONSBANK OF TEXAS, N.A.

By /s/ TIMOTHY M. O'CONNOR
-------------------------------
Name: Timothy M. O'Connor
Title: Vice President

<PAGE> 112
111

UNION BANK OF CALIFORNIA, N.A.

By /s/ PATRICIA A. SAMSON
-------------------------------
Name: Patricia A. Samson
Title: Assistant Vice President

<PAGE> 113
112

VAN KAMPEN CLO I, LIMITED

By: Van Kampen American Capital
Management, Inc., as Collateral Manager

By
-------------------------------
Name:
Title:

<PAGE> 114
113

IMPERIAL BANK

By /s/ RAY VADALMA
-------------------------------
Name: Ray Vadalma
Title: Senior Vice President

<PAGE> 115
114

COMMERCIAL LOAN FUNDING TRUST I
By: Lehman Commercial Paper Inc., not in
its individual capacity but solely as
administrative agent

By /s/ MICHELE SWANSON
-------------------------------
Name: Michele Swanson
Title: Authorized Signatory

<PAGE> 116
115

ROYALTON COMPANY
By: Pacific Investment Management
Company, as its investment adviser

By /s/ RAYMOND KENNEDY
-------------------------------
Name: Raymond Kennedy
Title: Vice President

<PAGE> 1
EXHIBIT 10.5

GUARANTEE AND COLLATERAL AGREEMENT

GUARANTEE AND COLLATERAL AGREEMENT, dated as of February 27, 1997
(the "Existing Collateral Agreement"), as amended and restated as of February
6, 1998 (the "Collateral Agreement"), made by each of the signatories hereto
(together with any other entity that may become a party hereto as provided
herein, the "Grantors"), in favor of THE CHASE MANHATTAN BANK, as
Administrative Agent (in such capacity, the "Administrative Agent") for the
banks and other financial institutions (the "Lenders") from time to time
parties to the Credit Agreement, dated as of February 27, 1997 (the "Existing
Credit Agreement"), as amended and restated as of February 10, 1998 (as further
amended, amended and restated, supplemented or otherwise modified from time to
time, the "Credit Agreement"), among Cooperative Computing Holding Company,
Inc. ("CCI"), Cooperative Computing, Inc. (the "Borrower"), the Lenders and the
Administrative Agent.

W I T N E S S E T H:

WHEREAS, pursuant to the Existing Credit Agreement, the Lenders
have severally made extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;

WHEREAS, the obligations of the Borrower under the Existing Credit
Agreement have been amended, restated and continued under the Credit Agreement;

WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;

WHEREAS, the proceeds of the extensions of credit have been and
will be used in part to enable the Borrower to make valuable transfers to one
or more of the other Grantors in connection with the operation of their
respective businesses;

WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each such Grantor has derived and will derive substantial
direct and indirect benefit from the making of the extensions of credit under
the Credit Agreement;

WHEREAS, all obligations, Liens and security interests created
under the Existing Collateral Agreement will be continued, amended and restated
pursuant to this Collateral Agreement, having the same perfected status and
priority;

WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have amended and restated the Existing
Collateral Agreement pursuant to this Collateral Agreement;
<PAGE> 2
2

NOW, THEREFORE, in consideration of the premises and to induce the
Administrative Agent and the Lenders to amend and restate the Existing Credit
Agreement pursuant to the Credit Agreement and to induce the Lenders to
continue and make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:

SECTION 1. DEFINED TERMS

1.1 Definitions. (a) Unless otherwise defined herein, terms
defined in the Credit Agreement and used herein shall have the meanings given
to them in the Credit Agreement, and the following terms which are defined in
the Uniform Commercial Code in effect in the State of New York on the date
hereof are used herein as so defined: Accounts, Chattel Paper, Documents,
Equipment, Farm Products, Instruments and Inventory.

(b) The following terms shall have the following meanings:

"Agreement": this Guarantee and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.

"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans and Reimbursement Obligations and
all other obligations and liabilities of the Borrower (including, without
limitation, interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans and Reimbursement
Obligations and interest accruing at the then applicable rate provided in
the Credit Agreement after the filing of any petition in bankruptcy, or
the commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or post-
petition interest is allowed in such proceeding) to the Administrative
Agent or any Lender (or, in the case of any Interest Rate Agreement
referred to below, any Affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing
or hereafter incurred, which may arise under, out of, or in connection
with, the Credit Agreement, this Agreement, the other Loan Documents, any
Letter of Credit or any Interest Rate Agreement entered into by the
Borrower with any Lender (or any Affiliate of any Lender) or any other
document made, delivered or given in connection therewith, in each case
whether on account of principal, interest, reimbursement obligations,
fees, indemnities, costs, expenses or otherwise (including, without
limitation, all fees and disbursements of counsel to the Administrative
Agent or to the Lenders that are required to be paid by the Borrower
pursuant to the terms of any of the foregoing agreements).

"Code": the Uniform Commercial Code as from time to time in effect
in the State of New York.

"Collateral": as defined in Section 3.
<PAGE> 3
3

"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.

"Copyrights": (i) all copyrights, whether published or unpublished
(including, without limitation, those listed in Schedule 6), all
registration and recordings thereof, and all applications in connection
therewith, including, without limitation, all registrations, recordings
and applications in the United States Copyright Office, and (ii) all
renewals thereof.

"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in
Schedule 6), granting any right under any Copyright, including, without
limitation, the grant of rights to manufacture, distribute, exploit and
sell materials derived from any Copyright.

"General Intangibles": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the
State of New York on the date hereof and, in any event, shall include,
without limitation, with respect to any Grantor, all contracts,
agreements, instruments and indentures in any form, and portions thereof,
to which such Grantor is a party or under which such Grantor has any
right, title or interest or to which such Grantor or any property of such
Grantor is subject, as the same may from time to time be amended,
supplemented or otherwise modified, including, without limitation, (i)
all rights of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (ii) all rights of such Grantor to
damages arising thereunder and (iii) all rights of such Grantor to
perform and to exercise all remedies thereunder, in each case to the
extent the grant by such Grantor of a security interest pursuant to this
Agreement in its right, title and interest in such contract, agreement,
instrument or indenture is not prohibited by such contract, agreement,
instrument or indenture without the consent of any other party thereto,
would not give any other party to such contract, agreement, instrument or
indenture the right to terminate its obligations thereunder, or is
permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto (it
being understood that the foregoing shall not be deemed to obligate such
Grantor to obtain such consents); provided, that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of
a security interest pursuant to this Agreement in any Receivable or any
money or other amounts due or to become due under any such contract,
agreement, instrument or indenture.

"Guarantor Obligations": with respect to any Guarantor, the
collective reference to (i) the Borrower Obligations and (ii) all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement or any other Loan Document to which such
Guarantor is a party, in each case whether on account of guarantee
obligations, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and
disbursements of counsel to
<PAGE> 4
4

the Administrative Agent or to the Lenders that are required to be paid
by such Guarantor pursuant to the terms of this Agreement or any other
Loan Document).

"Guarantors": the collective reference to each Grantor other than
the Borrower and CCI.

"Intellectual Property": the collective reference to the
Copyrights, the Copyright Licenses, the Patents, the Patent Licenses, the
Trademarks and the Trademark Licenses.

"Intercompany Note": any promissory note evidencing loans made by
any Grantor to CCI or any of its Subsidiaries.

"Interest Rate Agreements": as to any Person, all interest rate
swaps, caps or collar agreements or similar arrangements entered into by
such Person providing for protection against fluctuations in interest
rates or currency exchange rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.

"Investment Property": as defined in Section 9-115 of the Code as
in effect on the Closing Date.

"Issuers": the collective reference to the Persons identified on
Schedule 2 as the issuers of the Pledged Securities.

"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor
Obligations.

"Patents": (i) all letters patent of the United States or any other
country, all reissues and extensions thereof and all goodwill associated
therewith, including, without limitation, any of the foregoing referred
to in Schedule 6, and (ii) all applications for letters patent of the
United States or any other country and all divisions, continuations and
continuations-in-part thereof, including, without limitation, any of the
foregoing referred to in Schedule 6.

"Patent License": all agreements, whether written or oral,
providing for the grant by or to any Grantor of any right to manufacture,
use or sell any invention covered by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.

"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor, if any, and all
other promissory notes issued to or held by any Grantor (other than
promissory notes issued in connection with extensions of trade credit by
any Grantor in the ordinary course of business).
<PAGE> 5
5

"Pledged Securities": the collective reference to the Pledged Notes
and the Pledged Stock.

"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options or rights of
any nature whatsoever in respect of the Capital Stock of any Issuer that
may be issued or granted to, or held by, any Grantor while this Agreement
is in effect.

"Proceeds": all "proceeds" as such term is defined in Section 9-
306(1) of the Uniform Commercial Code in effect in the State of New York
on the date hereof and, in any event, shall include, without limitation,
all dividends or other income from the Pledged Securities, collections
thereon or distributions or payments with respect thereto.

"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an
Instrument or Chattel Paper and whether or not it has been earned by
performance (including, without limitation, any Account).

"Reimbursement Obligations": the obligation of CCI to reimburse the
Issuing Lender pursuant to Section 3.5 of the Credit Agreement for
amounts drawn under Letters of Credit.

"Securities Act": the Securities Act of 1933, as amended.

"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles,
service marks, logos and other source or business identifiers, and all
goodwill associated therewith, now existing or hereafter adopted or
acquired, all registrations and recordings thereof, and all applications
in connection therewith, whether in the United States Patent and
Trademark Office or in any similar office or agency of the United States,
any State thereof or any other country or any political subdivision
thereof, or otherwise, including, without limitation, any of the
foregoing referred to in Schedule 6, and (ii) all renewals thereof.

"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any
Trademark, including, without limitation, any of the foregoing referred
to in Schedule 6.

1.2 Other Definitional Provisions. (a) The words "hereof,"
"herein", "hereto" and "hereunder" and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section and Schedule references are
to this Agreement unless otherwise specified.
<PAGE> 6
6

(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.

(c) Where the context requires, terms relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.

SECTION 2. GUARANTEE

2.1 Guarantee. (a) Each of the Guarantors hereby, jointly and
severally, unconditionally and irrevocably, guarantees to the Administrative
Agent, for the ratable benefit of the Lenders and their respective successors,
indorsees, transferees and assigns, the prompt and complete payment and
performance by the Borrower when due (whether at the stated maturity, by
acceleration or otherwise) of the Borrower Obligations.

(b) Anything herein or in any other Loan Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Loan Documents shall in no event exceed the amount which can be
guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).

(c) Each Guarantor agrees that the Borrower Obligations may at
any time and from time to time exceed the amount of the liability of such
Guarantor hereunder without impairing the guarantee contained in this Section 2
or affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.

(d) The guarantee contained in this Section 2 shall remain in
full force and effect until all the Borrower Obligations and the obligations of
each Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.

(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the Borrower, any of the Guarantors,
any other guarantor or any other Person by virtue of any action or proceeding
or any set-off or appropriation or application at any time or from time to time
in reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations
<PAGE> 7
7

up to the maximum liability of such Guarantor hereunder until the Borrower
Obligations are paid in full, no Letter of Credit shall be outstanding and the
Commitments are terminated.

2.2 Right of Contribution. Each Guarantor hereby agrees that to
the extent that a Guarantor shall have paid more than its proportionate share
of any payment made hereunder, such Guarantor shall be entitled to seek and
receive contribution from and against any other Guarantor hereunder which has
not paid its proportionate share of such payment. Each Guarantor's right of
contribution shall be subject to the terms and conditions of Section 2.3. The
provisions of this Section 2.2 shall in no respect limit the obligations and
liabilities of any Guarantor to the Administrative Agent and the Lenders, and
each Guarantor shall remain liable to the Administrative Agent and the Lenders
for the full amount guaranteed by such Guarantor hereunder.

2.3 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower, CCI or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower, CCI or
any other Guarantor in respect of payments made by such Guarantor hereunder,
until all amounts owing to the Administrative Agent and the Lenders by the
Borrower on account of the Borrower Obligations are paid in full, no Letter of
Credit shall be outstanding and the Commitments are terminated. If any amount
shall be paid to any Guarantor on account of such subrogation rights at any
time when all of the Borrower Obligations shall not have been paid in full,
such amount shall be held by such Guarantor in trust for the Administrative
Agent and the Lenders, segregated from other funds of such Guarantor, and
shall, forthwith upon receipt by such Guarantor, be turned over to the
Administrative Agent in the exact form received by such Guarantor (duly
indorsed by such Guarantor to the Administrative Agent, if required), to be
applied against the Borrower Obligations, whether matured or unmatured, in such
order as the Administrative Agent may determine.

2.4 Amendments, etc. with respect to the Borrower Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or
further assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised,
waived, surrendered or released by the Administrative Agent or any Lender, and
the Credit Agreement and the other Loan Documents and any other documents
executed and delivered in connection therewith may be amended, modified,
supplemented or terminated, in whole or in part, as the Administrative
<PAGE> 8
8

Agent (or the Required Lenders, as the case may be) may deem advisable from
time to time, and any collateral security, guarantee or right of offset at any
time held by the Administrative Agent or any Lender for the payment of the
Borrower Obligations may be sold, exchanged, waived, surrendered or released.
Neither the Administrative Agent nor any Lender shall have any obligation to
protect, secure, perfect or insure any Lien at any time held by it as security
for the Borrower Obligations or for the guarantee contained in this Section 2
or any property subject thereto.

2.5 Guarantee Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 2 or
acceptance of the guarantee contained in this Section 2; the Borrower
Obligations, and any of them, shall conclusively be deemed to have been
created, contracted or incurred, or renewed, extended, amended or waived, in
reliance upon the guarantee contained in this Section 2; and all dealings
between the Borrower and any of the Guarantors, on the one hand, and the
Administrative Agent and the Lenders, on the other hand, likewise shall be
conclusively presumed to have been had or consummated in reliance upon the
guarantee contained in this Section 2. Each Guarantor waives diligence,
presentment, protest, demand for payment and notice of default or nonpayment to
or upon the Borrower or any of the Guarantors with respect to the Borrower
Obligations. Each Guarantor understands and agrees that the guarantee contained
in this Section 2 shall be construed as a continuing, absolute and
unconditional guarantee of payment without regard to (a) the validity or
enforceability of the Credit Agreement or any other Loan Document, any of the
Borrower Obligations or any other collateral security therefor or guarantee or
right of offset with respect thereto at any time or from time to time held by
the Administrative Agent or any Lender, (b) any defense, set-off or
counterclaim (other than a defense of payment or performance) which may at any
time be available to or be asserted by the Borrower against the Administrative
Agent or any Lender, or (c) any other circumstance whatsoever (with or without
notice to or knowledge of the Borrower or such Guarantor) which constitutes, or
might be construed to constitute, an equitable or legal discharge of the
Borrower for the Borrower Obligations, or of such Guarantor under the guarantee
contained in this Section 2, in bankruptcy or in any other instance. When
making any demand hereunder or otherwise pursuing its rights and remedies
hereunder against any Guarantor, the Administrative Agent or any Lender may,
but shall be under no obligation to, make a similar demand on or otherwise
pursue such rights and remedies as it may have against the Borrower, any other
Guarantor or any other Person or against any collateral security or guarantee
for the Borrower Obligations or any right of offset with respect thereto, and
any failure by the Administrative Agent or any Lender to make any such demand,
to pursue such other rights or remedies or to collect any payments from the
Borrower, any other Guarantor or any other Person or to realize upon any such
collateral security or guarantee or to exercise any such right of offset, or
any release of the Borrower, any other Guarantor or any other Person or any
such collateral security, guarantee or right of offset, shall not relieve any
Guarantor of any obligation or liability hereunder, and shall not impair or
affect the rights and remedies, whether express, implied or available as a
matter of
<PAGE> 9
9

law, of the Administrative Agent or any Lender against any Guarantor. For the
purposes hereof "demand" shall include the commencement and continuance of any
legal proceedings.

2.6 Reinstatement. The guarantee contained in this Section 2
shall continue to be effective, or be reinstated, as the case may be, if at any
time payment, or any part thereof, of any of the Borrower Obligations is
rescinded or must otherwise be restored or returned by the Administrative Agent
or any Lender upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of the Borrower, CCI or any Guarantor, or upon or as a result of
the appointment of a receiver, intervenor or conservator of, or trustee or
similar officer for, the Borrower, CCI or any Guarantor or any substantial part
of its property, or otherwise, all as though such payments had not been made.

2.7 Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at
270 Park Avenue, New York, New York 10017.

SECTION 3. GRANT OF SECURITY INTEREST

Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit
of the Lenders, a security interest in, all of the following property now owned
or at any time hereafter acquired by such Grantor or in which such Grantor now
has or at any time in the future may acquire any right, title or interest
(collectively, the "Collateral"), as collateral security for the prompt and
complete payment and performance when due (whether at the stated maturity, by
acceleration or otherwise) of such Grantor's Obligations:

(a) all Accounts;

(b) all Chattel Paper;

(d) all Equipment;

(e) all General Intangibles;

(f) all Instruments;

(g) all Intellectual Property;

(h) all Inventory;

(i) all Pledged Securities;
<PAGE> 10
10

(j) all Investment Property

(k) all books and records pertaining to the Collateral; and

(l) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and
guarantees given by any Person with respect to any of the foregoing.

Notwithstanding the foregoing, "Collateral" shall not include (a)
with respect to any Grantor, any General Intangible or Intellectual Property to
the extent that grant by such Grantor of a security interest pursuant to this
Agreement in its rights under such General Intangible or Intellectual Property,
as the case may be, is prohibited by such General Intangible or Intellectual
Property, as the case may be, and the consent of applicable Persons has not
been obtained, provided that the foregoing limitation shall not affect, limit,
restrict or impair the grant by such Grantor of a security interest pursuant to
this Agreement in any Account or any money or other amounts due or to become
due under any such General Intangible or Intellectual Property, as the case may
be, to the extent provided in Section 9-318 of the Code as in effect on the
date hereof or (b) Chattel Paper, Equipment, Inventory and the Proceeds thereof
owned by Triad Financial that secures Lease Transaction Obligations.

SECTION 4. REPRESENTATIONS AND WARRANTIES

To induce the Administrative Agent and the Lenders to enter into
the Credit Agreement and to induce the Lenders to make their respective
extensions of credit to the Borrower thereunder, each Grantor hereby represents
and warrants to the Administrative Agent and each Lender that:

4.1 Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Article 5 of the
Credit Agreement as they relate to such Guarantor or to the Loan Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Administrative Agent and each Lender
shall be entitled to rely on each of them as if they were fully set forth
herein, provided that each reference in each such representation and warranty
to the Borrower's knowledge shall, for the purposes of this Section 4.1, be
deemed to be a reference to such Guarantor's knowledge.

4.2 Title; No Other Liens. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Lenders
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No
financing statement or other public notice with respect to all or any part of
the Collateral is on file or of record in any public office, except such as
have been filed in favor of the
<PAGE> 11
11

Administrative Agent, for the ratable benefit of the Lenders, pursuant to this
Agreement or as are permitted by the Credit Agreement.

4.3 Perfected First Priority Liens. The security interests
granted pursuant to this Agreement (a) that are capable of perfection pursuant
to the Code upon completion of the filings and other actions specified on
Schedule 3 (which, in the case of all filings and other documents referred to
on said Schedule, have been delivered to the Administrative Agent in completed
and duly executed form) will constitute valid perfected security interests in
all of the Collateral in favor of the Administrative Agent, for the ratable
benefit of the Lenders, as collateral security for such Grantor's Obligations,
enforceable in accordance with the terms hereof against all creditors of such
Grantor and any Persons purporting to purchase any Collateral from such Grantor
and (b) are prior to all other Liens on the Collateral in existence on the date
hereof except for Liens permitted by the Credit Agreement.

4.4 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.

4.5 Inventory and Equipment. On the date hereof, the Inventory
and the Equipment (other than mobile goods and Inventory and Equipment relating
to Chattel Paper which secures Lease Transaction Obligations) are kept at the
locations listed on Schedule 5.

4.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.

4.7 Pledged Securities. (a) The shares of Pledged Stock pledged
by each such Grantor hereunder constitute (i) with respect to any Issuer that
is not a Foreign Subsidiary, all the issued and outstanding shares of all
classes of the Capital Stock of such Issuer owned by such Grantor and (ii) with
respect to any Issuer that is a Foreign Subsidiary, 65% of the issued and
outstanding voting shares of the Capital Stock of such Issuer owned by such
Grantor.

(b) All the shares of the Pledged Stock have been duly and
validly issued and are fully paid and nonassessable.

(c) Each of the Pledged Notes constitutes, to the knowledge of
the Grantor that is the payee thereof, the legal, valid and binding obligation
of the obligor with respect thereto, enforceable in accordance with its terms,
subject to the effects of bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally, general equitable principles (whether considered
in a proceeding in equity or at law) and an implied covenant of good faith and
fair dealing.

(d) Such Grantor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Securities pledged by it hereunder,
free of any and all Liens
<PAGE> 12
12

or options in favor of, or claims of, any other Person, except the security
interest created by this Agreement.

4.8 Receivables. No amount payable to such Grantor under or in
connection with any Receivable is evidenced by any Instrument in excess of
$500,000 or Chattel Paper which has not been delivered to the Administrative
Agent except, with respect to Chattel Paper owned by Triad Financial, as
permitted by Sections 7.9 and 7.10 of the Credit Agreement.

4.9 Intellectual Property. (a) Schedule 6 lists all Intellectual
Property owned by such Grantor in its own name on the date hereof.

(b) To the best of such Grantor's knowledge, each material
Copyright, Patent and Trademark is on the date hereof valid, subsisting,
unexpired, enforceable and has not been abandoned.

(c) Except as set forth in Schedule 6, none of the Copyrights,
Patents or Trademarks is on the date hereof the subject of any licensing or
franchise agreement.

(d) No holding, decision or judgment has been rendered by any
Governmental Authority which would limit, cancel or question the validity of
any Copyright, Patent or Trademark in any respect that could reasonably be
expected to have a Material Adverse Effect.

(e) No action or proceeding is pending on the date hereof (i)
seeking to limit, cancel or question the validity of any material Copyright,
Patent or Trademark, or (ii) which, if adversely determined, would have a
material adverse effect on the value of any material Patent or Trademark.

SECTION 5. COVENANTS

Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:

5.1 Covenants in Credit Agreement. In the case of each
Guarantor, such Guarantor shall take, or shall refrain from taking, as the case
may be, each action that is necessary to be taken or not taken, as the case may
be, so that no Default or Event of Default is caused by the failure to take
such action or to refrain from taking such action by such Guarantor or any of
its Subsidiaries.
<PAGE> 13
13

5.2 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument in excess of $500,000 or any Chattel Paper, such
Instrument or Chattel Paper shall be immediately delivered to the
Administrative Agent, duly indorsed in a manner reasonably satisfactory to the
Administrative Agent, to be held as Collateral pursuant to this Agreement,
except, with respect to Chattel Paper owned by Triad Financial, as permitted by
Sections 7.9 and 7.10 of the Credit Agreement.

5.3 Maintenance of Insurance. (a) Such Grantor will maintain
insurance policies insuring the Inventory and Equipment pursuant to and in
accordance with the Credit Agreement.

5.4 Payment of Obligations. Such Grantor will pay and discharge
or otherwise satisfy at or before maturity or before they become delinquent, as
the case may be, all taxes, assessments and governmental charges or levies
imposed upon the Collateral or in respect of income or profits therefrom, as
well as all claims of any kind (including, without limitation, claims for
labor, materials and supplies) against or with respect to the Collateral,
except that no such charge need be paid if the amount or validity thereof is
currently being contested in good faith by appropriate proceedings, reserves in
conformity with GAAP with respect thereto have been provided on the books of
such Grantor and such proceedings could not reasonably be expected to result in
the sale, forfeiture or loss of any material portion of the Collateral or any
interest therein.

5.5 Maintenance of Perfected Security Interest; Further
Documentation. (a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.

(b) Such Grantor will furnish to the Administrative Agent and
the Lenders from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in
reasonable detail.

(c) At any time and from time to time, upon the written request
of the Administrative Agent, and at the sole expense of such Grantor, such
Grantor will promptly and duly execute and deliver such further instruments and
documents and take such further actions as the Administrative Agent may
reasonably request for the purpose of obtaining or preserving the full benefits
of this Agreement and of the rights and powers herein granted, including,
without limitation, the filing of any financing or continuation statements
under the Uniform Commercial Code (or other similar laws) in effect in any
jurisdiction with respect to the security interests created hereby.

5.6 Changes in Locations, Name, etc. Such Grantor will not,
except upon not less than 15 days' prior written notice to the Administrative
Agent and delivery to the
<PAGE> 14
14

Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Administrative Agent to maintain
the validity, perfection and priority of the security interests provided for
herein and (b) if applicable, a written supplement to Schedule 5 showing any
additional location at which Inventory or Equipment shall be kept:

(i) permit any of the Inventory or Equipment to be kept at
a location other than those listed on Schedule 5;

(ii) change the location of its chief executive office
or sole place of business from that referred to in Section 4.4; or

(iii) change its name, identity or corporate structure
to such an extent that any financing statement filed by the
Administrative Agent in connection with this Agreement would become
misleading.

5.7 Pledged Securities. (a) If such Grantor shall become
entitled to receive or shall receive any stock certificate (including, without
limitation, any certificate representing a stock dividend or a distribution in
connection with any reclassification, increase or reduction of capital or any
certificate issued in connection with any reorganization), option or rights in
respect of the Capital Stock of any Issuer, whether in addition to, in
substitution of, as a conversion of, or in exchange for, any shares of the
Pledged Stock, or otherwise in respect thereof, such Grantor shall accept the
same as the agent of the Administrative Agent and the Lenders, hold the same in
trust for the Administrative Agent and deliver the same forthwith to the
Administrative Agent in the exact form received, duly indorsed by such Grantor
to the Administrative Agent, if required, together with an undated stock power
covering such certificate duly executed in blank by such Grantor to be held by
the Administrative Agent, subject to the terms hereof, as additional collateral
security for the Obligations. Any sums paid upon or in respect of the Pledged
Securities upon the liquidation or dissolution of any Issuer shall be paid over
to the Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations, and in case any distribution of capital shall be
made on or in respect of the Pledged Securities or any property shall be
distributed upon or with respect to the Pledged Securities pursuant to the
recapitalization or reclassification of the capital of any Issuer or pursuant
to the reorganization thereof, the property so distributed shall, unless
otherwise subject to a perfected security interest in favor of the
Administrative Agent, be delivered to the Administrative Agent to be held by it
hereunder as additional collateral security for the Obligations. If any sums of
money or property so paid or distributed in respect of the Pledged Securities
shall be received by such Grantor, such Grantor shall, until such money or
property is paid or delivered to the Administrative Agent, hold such money or
property in trust for the Lenders, segregated from other funds of such Grantor,
as additional collateral security for the Obligations.

(b) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it
<PAGE> 15
15

and will comply with such terms insofar as such terms are applicable to it,
(ii) it will notify the Administrative Agent promptly in writing of the
occurrence of any of the events described in Section 5.7(a) with respect to the
Pledged Securities issued by it and (iii) the terms of Sections 6.3(c) and 6.7
shall apply to it, mutatis mutandis, with respect to all actions that may be
required of it pursuant to Section 6.3(c) or 6.7 with respect to the Pledged
Securities issued by it.

5.8 Receivables. (a) Other than in the ordinary course of
business, or as otherwise permitted by the Loan Documents, such Grantor will
not (i) grant any extension of the time of payment of any Receivable, (ii)
compromise or settle any Receivable for less than the full amount thereof,
(iii) release, wholly or partially, any Person liable for the payment of any
Receivable, (iv) allow any credit or discount whatsoever on any Receivable or
(v) amend, supplement or modify any Receivable in any manner that could
materially and adversely affect the value thereof.

(b) Such Grantor will take all actions necessary to give notice
pursuant to the U.S. Assignment of Claims Act or such other analogous law if a
material portion of the total amount of the Receivables is owing to
Governmental Authorities.

5.9 Intellectual Property. (a) Such Grantor (either itself or
through licensees) will (i) continue to use each material Trademark on each and
every trademark class of goods applicable to its current line as reflected in
its current catalogs, brochures and price lists in order to maintain such
Trademark in full force free from any claim of abandonment for non-use, (ii)
maintain as in the past the quality of products and services offered under such
Trademark, (iii) employ such Trademark with the appropriate notice of
registration, (iv) not adopt or use any mark which is confusingly similar or a
colorable imitation of such Trademark unless the Administrative Agent, for the
ratable benefit of the Lenders, shall obtain a perfected security interest in
such mark pursuant to this Agreement, and (v) not (and not permit any licensee
or sublicensee thereof to) do any act or knowingly omit to do any act whereby
such material Trademark may become invalidated.

(b) Such Grantor will not do any act, or omit to do any act,
whereby any material Patent may become abandoned or dedicated.

(c) Such Grantor (either itself or through licensees) (i) will
employ each material Copyright and (ii) will not (and will not permit any
licensee or sublicensee thereof to) do any act or knowingly omit to do any act
whereby any material portion of the Copyrights may become invalidated. Such
Grantor will not (either itself or through licensees) do any act whereby any
material portion of the Copyrights may become injected into the public domain.

(d) Such Grantor will notify the Administrative Agent and the
Lenders immediately if it knows, or has reason to know, that any application or
registration relating to any material Patent or Trademark may become abandoned
or dedicated, or of any adverse
<PAGE> 16
16

determination or development (including, without limitation, the institution
of, or any such determination or development in, any proceeding in the United
States Patent and Trademark Office or any court or tribunal in any country)
regarding such Grantor's ownership of any material Patent or Trademark or its
right to register the same or to keep and maintain the same.

(e) Whenever such Grantor, either by itself or through any
agent, employee, licensee or designee, shall file an application for the
registration of any Patent or Trademark with the United States Patent and
Trademark Office or any similar office or agency in any other country or any
political subdivision thereof, such Grantor shall report such filing to the
Administrative Agent and the Lenders within five Business Days after the last
day of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver any and all
agreements, instruments, documents, and papers as the Administrative Agent may
request to evidence the Administrative Agent's and the Lenders' security
interest in any Copyright, Patent or Trademark and the goodwill and general
intangibles of such Grantor relating thereto or represented thereby.

(f) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States
Patent and Trademark Office, or any similar office or agency in any other
country or any political subdivision thereof, to maintain and pursue each
application (and to obtain the relevant registration) and to maintain each
registration of the material Patents and Trademarks, including, without
limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.

(g) In the event that any material Patent or Trademark is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such Grantor shall reasonably deem appropriate under the
circumstances to protect such Patent or Trademark and (ii) if such Patent or
Trademark is of material economic value, promptly notify the Administrative
Agent and the Lenders after it learns thereof and sue for infringement,
misappropriation or dilution, to seek injunctive relief where appropriate and
to recover any and all damages for such infringement, misappropriation or
dilution.

SECTION 6. REMEDIAL PROVISIONS

6.1 Certain Matters Relating to Receivables. (a) The
Administrative Agent hereby authorizes each Grantor to collect such Grantor's
Receivables, subject to the Administrative Agent's direction and control, and
the Administrative Agent may curtail or terminate said authority at any time
after the occurrence and during the continuance of an Event of Default. If
required by the Administrative Agent at any time after the occurrence and
during the continuance of an Event of Default, any payments of Receivables,
when collected by any Grantor, (i) shall be forthwith (and, in any event,
within two Business Days) deposited by such Grantor in the exact form received,
duly indorsed by such Grantor to the Administrative Agent if required, in a
Collateral Account maintained under the sole dominion
<PAGE> 17
17

and control of the Administrative Agent, subject to withdrawal by the
Administrative Agent for the account of the Lenders only as provided in Section
6.5, and (ii) until so turned over, shall be held by such Grantor in trust for
the Administrative Agent and the Lenders, segregated from other funds of such
Grantor. Each such deposit of Proceeds of Receivables shall be accompanied by a
report identifying in reasonable detail the nature and source of the payments
included in the deposit.

(b) At the Administrative Agent's request, each Grantor shall
deliver to the Administrative Agent all original and other documents
evidencing, and relating to, the agreements and transactions which gave rise to
the Receivables, including, without limitation, all original orders, invoices
and shipping receipts.

6.2 Communications with Obligors; Grantors Remain. (a) The
Administrative Agent in its own name or in the name of others may at any time
after the occurrence and during the continuance of an Event of Default
communicate with obligors under the Receivables to verify with them to the
Administrative Agent's satisfaction the existence, amount and terms of any
Receivables.

(b) Upon the request of the Administrative Agent at any time
after the occurrence and during the continuance of an Event of Default, each
Grantor shall notify obligors on the Receivables that the Receivables have been
assigned to the Administrative Agent for the ratable benefit of the Lenders and
that payments in respect thereof shall be made directly to the Administrative
Agent.

(c) Anything herein to the contrary notwithstanding, each
Grantor shall remain liable under each of the Receivables to observe and
perform all the conditions and obligations to be observed and performed by it
thereunder, all in accordance with the terms of any agreement giving rise
thereto. Neither the Administrative Agent nor any Lender shall have any
obligation or liability under any Receivable (or any agreement giving rise
thereto) by reason of or arising out of this Agreement or the receipt by the
Administrative Agent or any Lender of any payment relating thereto, nor shall
the Administrative Agent or any Lender be obligated in any manner to perform
any of the obligations of any Grantor under or pursuant to any Receivable (or
any agreement giving rise thereto), to make any payment, to make any inquiry as
to the nature or the sufficiency of any payment received by it or as to the
sufficiency of any performance by any party thereunder, to present or file any
claim, to take any action to enforce any performance or to collect the payment
of any amounts which may have been assigned to it or to which it may be
entitled at any time or times.

6.3 Pledged Stock. (a) Unless an Event of Default shall have
occurred and be continuing and the Administrative Agent shall have exercised
its rights under Section 6.3(b), each Grantor shall be permitted to receive all
cash dividends paid in respect of the Pledged Stock and all payments made in
respect of the Pledged Notes, to the extent permitted in the Credit Agreement,
and to exercise all voting and corporate rights with respect to the Pledged
Securities; provided, however, that no vote shall be cast or corporate right
exercised
<PAGE> 18
18

or other action taken which, in the Administrative Agent's reasonable judgment,
would impair the Collateral or which would be inconsistent with or result in
any violation of any provision of the Credit Agreement, this Agreement or any
other Loan Document.

(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in such order as the Administrative Agent may determine, and (ii)
any or all of the Pledged Securities shall be registered in the name of the
Administrative Agent or its nominee, and the Administrative Agent or its
nominee may thereafter exercise (x) all voting, corporate and other rights
pertaining to such Pledged Securities at any meeting of shareholders of the
relevant Issuer or Issuers or otherwise and (y) any and all rights of
conversion, exchange, subscription and any other rights, privileges or options
pertaining to such Pledged Securities as if it were the absolute owner thereof
(including, without limitation, the right to exchange at its discretion any and
all of the Pledged Securities upon the merger, consolidation, reorganization,
recapitalization or other fundamental change in the corporate structure of any
Issuer, or upon the exercise by any Grantor or the Administrative Agent of any
right, privilege or option pertaining to such Pledged Securities, and in
connection therewith, the right to deposit and deliver any and all of the
Pledged Securities with any committee, depositary, transfer agent, registrar or
other designated agency upon such terms and conditions as the Administrative
Agent may determine), all without liability except to account for property
actually received by it, but the Administrative Agent shall have no duty to any
Grantor to exercise any such right, privilege or option and shall not be
responsible for any failure to do so or delay in so doing.

(c) Each Grantor hereby authorizes and instructs each Issuer of
any Pledged Securities pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and (y) is otherwise in accordance
with the terms of this Agreement, without any other or further instructions
from such Grantor, and each Grantor agrees that each Issuer shall be fully
protected in so complying, and (ii) unless otherwise expressly permitted
hereby, pay any dividends or other payments with respect to the Pledged
Securities directly to the Administrative Agent.

6.4 Proceeds to be Turned Over To Administrative Agent. In
addition to the rights of the Administrative Agent and the Lenders specified in
Section 6.1 with respect to payments of Receivables, if an Event of Default
shall occur and be continuing, unless otherwise agreed by the Administrative
Agent, all Proceeds received by any Grantor consisting of cash, checks and
other near-cash items shall be held by such Grantor in trust for the
Administrative Agent and the Lenders, segregated from other funds of such
Grantor, and shall, forthwith upon receipt by such Grantor, be turned over to
the Administrative Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Administrative Agent, if required). All
Proceeds received by the Administrative Agent hereunder shall be
<PAGE> 19
19

held by the Administrative Agent in a Collateral Account maintained under its
sole dominion and control. All Proceeds while held by the Administrative Agent
in a Collateral Account (or by such Grantor in trust for the Administrative
Agent and the Lenders) shall continue to be held as collateral security for all
the Obligations and shall not constitute payment thereof until applied as
provided in Section 6.5.

6.5 Application of Proceeds. At such intervals as may be agreed
upon by the Borrower and the Administrative Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Administrative
Agent's election, the Administrative Agent may apply all or any part of
Proceeds held in any Collateral Account in payment of the Obligations in such
order as the Administrative Agent may elect, and any part of such funds which
the Administrative Agent elects not so to apply and deems not required as
collateral security for the Obligations shall be paid over from time to time by
the Administrative Agent to the Borrower or to whomsoever may be lawfully
entitled to receive the same. Any balance of such Proceeds remaining after the
Obligations shall have been paid in full, no Letters of Credit shall be
outstanding and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.

6.6 Code and Other Remedies. If an Event of Default shall occur
and be continuing, the Administrative Agent, on behalf of the Lenders, may
exercise, in addition to all other rights and remedies granted to them in this
Agreement and in any other instrument or agreement securing, evidencing or
relating to the Obligations, all rights and remedies of a secured party under
the Code or any other applicable law. Without limiting the generality of the
foregoing, the Administrative Agent, without demand of performance or other
demand, presentment, protest, advertisement or notice of any kind (except any
notice required by law referred to below) to or upon any Grantor or any other
Person (all and each of which demands, defenses, advertisements and notices are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do
any of the foregoing), in one or more parcels at public or private sale or
sales, at any exchange, broker's board or office of the Administrative Agent or
any Lender or elsewhere upon such terms and conditions as it may deem advisable
and at such prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Administrative Agent or any
Lender shall have the right upon any such public sale or sales, and, to the
extent permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or equity of
redemption in any Grantor, which right or equity is hereby waived or released.
Each Grantor further agrees, at the Administrative Agent's request, to assemble
the Collateral and make it available to the Administrative Agent at places
which the Administrative Agent shall reasonably select, whether at such
Grantor's premises or elsewhere. The Administrative Agent shall apply the net
proceeds of any action taken by it pursuant to this Section 6.6, after
deducting all reasonable costs and expenses of every kind incurred in
connection therewith or incidental to the care or safekeeping of any of the
Collateral or in any way relating to the Collateral or the rights of the
Administrative
<PAGE> 20
20

Agent and the Lenders hereunder, including, without limitation, reasonable
attorneys' fees and disbursements of the Administrative Agent, to the payment
in whole or in part of the Obligations, in such order as the Administrative
Agent may elect, and only after such application and after the payment by the
Administrative Agent of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the Code, need the
Administrative Agent account for the surplus, if any, to any Grantor. To the
extent permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent or any Lender arising
out of the exercise by them of any rights hereunder. If any notice of a
proposed sale or other disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least 10 days before
such sale or other disposition.

6.7 Registration Rights. (a) If the Administrative Agent shall
determine to exercise its right to sell any or all of the Pledged Stock
pursuant to Section 6.6, and if in the opinion of the Administrative Agent it
is necessary or advisable to have the Pledged Stock, or that portion thereof to
be sold, registered under the provisions of the Securities Act, the relevant
Grantor will cause the Issuer thereof to (i) execute and deliver, and cause the
directors and officers of such Issuer to execute and deliver, all such
instruments and documents, and do or cause to be done all such other acts as
may be, in the reasonable opinion of the Administrative Agent, necessary or
advisable to register the Pledged Stock, or that portion thereof to be sold,
under the provisions of the Securities Act, (ii) use its best efforts to cause
the registration statement relating thereto to become effective and to remain
effective for a period of one year from the date of the first public offering
of the Pledged Stock, or that portion thereof to be sold, and (iii) make all
amendments thereto and/or to the related prospectus which, in the reasonable
opinion of the Administrative Agent, are necessary or advisable, all in
conformity with the requirements of the Securities Act and the rules and
regulations of the Securities and Exchange Commission applicable thereto. Each
Grantor agrees to cause such Issuer to comply with the provisions of the
securities or "Blue Sky" laws of any and all jurisdictions which the
Administrative Agent shall designate and to make available to its security
holders, as soon as practicable, an earnings statement (which need not be
audited) which will satisfy the provisions of Section 11(a) of the Securities
Act.

(b) Each Grantor recognizes that the Administrative Agent may be
unable to effect a public sale of any or all the Pledged Stock, by reason of
certain prohibitions contained in the Securities Act and applicable state
securities laws or otherwise, and may be compelled to resort to one or more
private sales thereof to a restricted group of purchasers which will be obliged
to agree, among other things, to acquire such securities for their own account
for investment and not with a view to the distribution or resale thereof. Each
Grantor acknowledges and agrees that any such private sale may result in prices
and other terms less favorable than if such sale were a public sale and,
notwithstanding such circumstances, agrees that any such private sale shall be
deemed to have been made in a commercially reasonable manner. The
Administrative Agent shall be under no obligation to delay a sale of any of the
Pledged Stock for the period of time necessary to permit the Issuer thereof to
register such
<PAGE> 21
21

securities for public sale under the Securities Act, or under applicable state
securities laws, even if such Issuer would agree to do so.

(c) Each Grantor agrees to use its best efforts to do or cause
to be done all such other acts as may be necessary to make such sale or sales
of all or any portion of the Pledged Stock pursuant to this Section 6.7 valid
and binding and in compliance with any and all other applicable Requirements of
Law. Each Grantor further agrees that a breach of any of the covenants
contained in this Section 6.7 will cause irreparable injury to the
Administrative Agent and the Lenders, that the Administrative Agent and the
Lenders have no adequate remedy at law in respect of such breach and, as a
consequence, that each and every covenant contained in this Section 6.7 shall
be specifically enforceable against such Grantor, and such Grantor hereby
waives and agrees not to assert any defenses against an action for specific
performance of such covenants except for a defense that no Event of Default has
occurred under the Credit Agreement.

6.8 Waiver; Deficiency. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
Code. Each Grantor shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are insufficient to pay its
Obligations and the fees and disbursements of any attorneys employed by the
Administrative Agent or any Lender to collect such deficiency.

SECTION 7. THE ADMINISTRATIVE AGENT

7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Each Grantor hereby irrevocably constitutes and appoints the Administrative
Agent and any officer or agent thereof, with full power of substitution, as its
true and lawful attorney-in-fact with full irrevocable power and authority in
the place and stead of such Grantor and in the name of such Grantor or in its
own name, for the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents and
instruments which may be reasonably necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality of the
foregoing, each Grantor hereby gives the Administrative Agent the power and
right, on behalf of such Grantor, without notice to or assent by such Grantor,
to do any or all of the following:

(i) in the name of such Grantor or its own name, or
otherwise, take possession of and indorse and collect any checks, drafts,
notes, acceptances or other instruments for the payment of moneys due
under any Receivable or with respect to any other Collateral and file any
claim or take any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Administrative Agent for
the purpose of collecting any and all such moneys due under any
Receivable or with respect to any other Collateral whenever payable;
<PAGE> 22
22

(ii) in the case of any Copyright, Patent or
Trademark, execute and deliver any and all agreements, instruments,
documents and papers as the Administrative Agent may request to evidence
the Administrative Agent's and the Lenders' security interest in such
Copyright, Patent or Trademark and the goodwill and general intangibles
of such Grantor relating thereto or represented thereby;

(iii) pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all or any
part of the premiums therefor and the costs thereof;

(iv) execute, in connection with any sale provided for
in Section 6.6 or 6.7, any indorsements, assignments or other instruments
of conveyance or transfer with respect to the Collateral; and

(v) (1) direct any party liable for any payment under any
of the Collateral to make payment of any and all moneys due or to become
due thereunder directly to the Administrative Agent or as the
Administrative Agent shall direct; (2) ask or demand for, collect,
receive payment of and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect of or arising out of
any Collateral; (3) sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications, notices and other documents in
connection with any of the Collateral; (4) commence and prosecute any
suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any portion thereof
and to enforce any other right in respect of any Collateral; (5) defend
any suit, action or proceeding brought against such Grantor with respect
to any Collateral; (6) settle, compromise or adjust any such suit, action
or proceeding and, in connection therewith, to give such discharges or
releases as the Administrative Agent may deem appropriate; (7) assign any
Copyright, Patent or Trademark (along with the goodwill of the business
to which any such Copyright, Patent or Trademark pertains), throughout
the world for such term or terms, on such conditions, and in such manner,
as the Administrative Agent shall in its sole discretion determine; and
(8) generally, sell, transfer, pledge and make any agreement with respect
to or otherwise deal with any of the Collateral as fully and completely
as though the Administrative Agent were the absolute owner thereof for
all purposes, and do, at the Administrative Agent's option and such
Grantor's expense, at any time, or from time to time, all acts and things
which the Administrative Agent deems necessary to protect, preserve or
realize upon the Collateral and the Administrative Agent's and the
Lenders' security interests therein and to effect the intent of this
Agreement, all as fully and effectively as such Grantor might do.

Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the
power of attorney provided for in this Section 7.1(a) unless an Event of
Default shall have occurred and be continuing.
<PAGE> 23
23

(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.

(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due Alternate Base Rate Loans under the
Credit Agreement, from the date of payment by the Administrative Agent to the
date reimbursed by the relevant Grantor, shall be payable by such Grantor to
the Administrative Agent on demand.

(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations
and agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.

7.2 Duty of Administrative Agent. The Administrative Agent's
sole duty with respect to the custody, safekeeping and physical preservation of
the Collateral in its possession, under Section 9-207 of the Code or otherwise,
shall be to deal with it in the same manner as the Administrative Agent deals
with similar property for its own account. Neither the Administrative Agent,
any Lender nor any of their respective officers, directors, employees or agents
shall be liable for failure to demand, collect or realize upon any of the
Collateral or for any delay in doing so or shall be under any obligation to
sell or otherwise dispose of any Collateral upon the request of any Grantor or
any other Person or to take any other action whatsoever with regard to the
Collateral or any part thereof. The powers conferred on the Administrative
Agent and the Lenders hereunder are solely to protect the Administrative
Agent's and the Lenders' interests in the Collateral and shall not impose any
duty upon the Administrative Agent or any Lender to exercise any such powers.
The Administrative Agent and the Lenders shall be accountable only for amounts
that they actually receive as a result of the exercise of such powers, and
neither they nor any of their officers, directors, employees or agents shall be
responsible to any Grantor for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct or their breach of the Loan
Documents.

7.3 Execution of Financing Statements. Pursuant to Section 9-402
of the Code and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the
Administrative Agent reasonably determines appropriate to perfect the security
interests of the Administrative Agent under this Agreement. A photographic or
other reproduction of this Agreement shall be sufficient as a financing
statement or other filing or recording document or instrument for filing or
recording in any jurisdiction.
<PAGE> 24
24

7.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Lenders, be governed by the Credit Agreement and by such other
agreements with respect thereto as may exist from time to time among them, but,
as between the Administrative Agent and the Grantors, the Administrative Agent
shall be conclusively presumed to be acting as agent for the Lenders with full
and valid authority so to act or refrain from acting, and no Grantor shall be
under any obligation, or entitlement, to make any inquiry respecting such
authority.

SECTION 8. MISCELLANEOUS

8.1 Amendments in Writing. Subject to the terms of the Credit
Agreement, none of the terms or provisions of this Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by each affected Grantor and the Administrative Agent, provided that
any provision of this Agreement imposing obligations on any Grantor may be
waived by the Administrative Agent in a written instrument executed by the
Administrative Agent.

8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 12.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.

8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither
the Administrative Agent nor any Lender shall by any act (except by a written
instrument pursuant to Section 8.1), delay, indulgence, omission or otherwise
be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Default or Event of Default. No failure to exercise, nor any delay in
exercising, on the part of the Administrative Agent or any Lender, any right,
power or privilege hereunder shall operate as a waiver thereof. No single or
partial exercise of any right, power or privilege hereunder shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege. A waiver by the Administrative Agent or any Lender of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Administrative Agent or such Lender would otherwise
have on any future occasion. The rights and remedies herein provided are
cumulative, may be exercised singly or concurrently and are not exclusive of
any other rights or remedies provided by law.

8.4 Enforcement Expenses; Indemnification. (a) Each Guarantor
agrees to pay or reimburse each Lender and the Administrative Agent for all its
costs and expenses incurred in collecting against such Guarantor under the
guarantee contained in Section 2 or
<PAGE> 25
25

otherwise enforcing or preserving any rights under this Agreement and the other
Loan Documents to which such Guarantor is a party, including, without
limitation, the reasonable fees and disbursements of counsel to the
Administrative Agent, in each case as set forth in the Credit Agreement.

(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with respect to,
or resulting from any delay in paying, any and all stamp, excise, sales or
other taxes which may be payable or determined to be payable with respect to
any of the Collateral or in connection with any of the transactions
contemplated by this Agreement.

(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement
(collectively, the "indemnified liabilities") to the extent the Borrower would
be required to do so pursuant to Section 12.5 of the Credit Agreement.

(d) The agreements in this Section 8.4 shall survive repayment
of the Obligations and all other amounts payable under the Credit Agreement and
the other Loan Documents.

8.5 Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of
the Administrative Agent and the Lenders and their successors and assigns;
provided that no Grantor may assign, transfer or delegate any of its rights or
obligations under this Agreement without the prior written consent of the
Administrative Agent.

8.6 Set-Off. Each Guarantor hereby irrevocably authorizes the
Administrative Agent and each Lender at any time and from time to time upon any
amount becoming due and payable by any Grantor under the Loan Documents,
without notice to such Guarantor, any other Guarantor or the Borrower, any such
notice being expressly waived by each Guarantor and by the Borrower, to set-off
and appropriate and apply any and all deposits (general or special, time or
demand, provisional or final), in any currency, and any other credits,
indebtedness or claims, in any currency, in each case whether direct or
indirect, absolute or contingent, matured or unmatured, at any time held or
owing by the Administrative Agent or such Lender to or for the credit or the
account of such Guarantor, or any part thereof in such amounts as the
Administrative Agent or such Lender may elect, against and on account of the
obligations and liabilities of such Guarantor to the Administrative Agent or
such Lender hereunder and claims of every nature and description of the
Administrative Agent or such Lender against such Guarantor, in any currency,
whether arising hereunder, under the Credit Agreement, any other Loan Document
or otherwise, as the Administrative Agent or such Lender may elect, whether or
not the Administrative Agent or any Lender has made any demand for payment and
although such obligations, liabilities and
<PAGE> 26
26

claims may be contingent or unmatured. The Administrative Agent and each Lender
shall notify such Guarantor promptly of any such set-off and the application
made by the Administrative Agent or such Lender of the proceeds thereof,
provided that the failure to give such notice shall not affect the validity of
such set-off and application. The rights of the Administrative Agent and each
Lender under this Section 8.6 are in addition to other rights and remedies
(including, without limitation, other rights of set-off) which the
Administrative Agent or such Lender may have.

8.7 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and
all of said counterparts taken together shall be deemed to constitute one and
the same instrument.

8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

8.9 Section Headings. The Section headings used in this
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation
hereof.

8.10 Integration. This Agreement and the other Loan Documents
represent the agreement of the Grantors, the Administrative Agent and the
Lenders with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Administrative Agent or any
Lender relative to subject matter hereof not expressly set forth or referred to
herein or in the other Loan Documents.

8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.

8.12 Submission To Jurisdiction; Waivers. Each Guarantor hereby
irrevocably and unconditionally:

(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Loan Documents to
which it is a party, or for recognition and enforcement of any judgement
in respect thereof, to the non-exclusive general jurisdiction of the
Courts of the State of New York, the courts of the United States of
America for the Southern District of New York, and appellate courts from
any thereof;

(b) consents that any such action or proceeding may be brought
in such courts and waives any objection that it may now or hereafter have
to the venue of any such
<PAGE> 27
27

action or proceeding in any such court or that such action or proceeding
was brought in an inconvenient court and agrees not to plead or claim the
same;

(c) agrees that service of process in any such action or
proceeding may be effected by mailing a copy thereof by registered or
certified mail (or any substantially similar form of mail), postage
prepaid, to such Guarantor at its address referred to in Section 8.2 or
at such other address of which the Administrative Agent shall have been
notified pursuant thereto;

(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit
the right to sue in any other jurisdiction; and

(e) waives, to the maximum extent not prohibited by law, any
right it may have to claim or recover in any legal action or proceeding
referred to in this Section any special, exemplary, punitive or
consequential damages.

8.13 Acknowledgements. Each Guarantor hereby acknowledges that:

(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement and the other Loan Documents to which it
is a party;

(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to any Guarantor arising out of or in
connection with this Agreement or any of the other Loan Documents, and
the relationship between the Grantors, on the one hand, and the
Administrative Agent and Lenders, on the other hand, in connection
herewith or therewith is solely that of debtor and creditor; and

(c) no joint venture is created hereby or by the other Loan
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Grantors and the Lenders.

8.14 WAIVER OF JURY TRIAL. EACH GUARANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.

8.15 Additional Grantors. Each Subsidiary of the Borrower that is
required to become a party to this Agreement pursuant to Section 7.12 of the
Credit Agreement shall become a Grantor for all purposes of this Agreement upon
execution and delivery by such Subsidiary of an Assumption Agreement in the
form of Annex 1 hereto.

8.16 Releases. (a) At such time as the Loans, the Reimbursement
Obligations and the other Obligations shall have been paid in full, the
Commitments have been terminated
<PAGE> 28
28

and no Letters of Credit shall be outstanding, the Collateral shall be released
from the Liens created hereby, and this Agreement and all obligations (other
than those expressly stated to survive such termination) of the Administrative
Agent and each Grantor hereunder shall terminate, all without delivery of any
instrument or performance of any act by any party, and all rights to the
Collateral shall revert to the Grantors. At the request and sole expense of any
Grantor following any such termination, the Administrative Agent shall deliver
to such Grantor any Collateral held by the Administrative Agent hereunder, and
execute and deliver to such Grantor such documents as such Grantor shall
reasonably request to evidence such termination.

(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens
created hereby on such Collateral. At the request and sole expense of the
Borrower, a Subsidiary Guarantor shall be released from its obligations
hereunder in the event that all the Capital Stock of such Subsidiary Guarantor
shall be sold, transferred or otherwise disposed of in a transaction permitted
by the Credit Agreement; provided that the Borrower shall have delivered to the
Administrative Agent, at least ten Business Days prior to the date of the
proposed release, a written request for release identifying the relevant
Subsidiary Guarantor and the terms of the sale or other disposition in
reasonable detail, including the price thereof and any expenses in connection
therewith, together with a certification by the Borrower stating that such
transaction is in compliance with the Credit Agreement and the other Loan
Documents.
<PAGE> 29
29

IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.

COOPERATIVE COMPUTING, INC.
COOPERATIVE COMPUTING HOLDING
COMPANY, INC.
TRIAD SYSTEMS FINANCIAL
CORPORATION
TRIAD DATA CORPORATION
TRIFARE, INC.
CCI/TRIAD GEM, INC.
TRIAD SYSTEMS CORPORATION

By: /s/ MATTHEW HALE
------------------------------------
Title: Chief Financial Officer and
Vice President

<PAGE> 1
EXHIBIT 10.6

______________________________

LOAN AND SECURITY AGREEMENT

dated as of January 1, 1997

between

CCI/TRIAD FINANCIAL HOLDING CORPORATION

as Borrowers

and

HELLER FINANCIAL, INC.

as Lender

______________________________

$20,000,000

DISCOUNT LOAN FACILITY

________________________

Loans Secured by Leases,
Lease Receivables and
Leased Equipment

<PAGE> 2

This LOAN AND SECURITY AGREEMENT is entered between CCI/TRIAD FINANCIAL
HOLDING CORPORATION ("SPE"), a California corporation, as borrower, and HELLER
FINANCIAL, INC. ("Lender"), a Delaware corporation, as Lender.

A. The "Anniversary Date" as defined in Section 1.1 shall be January 1, 1999.

B. The "Aggregate Maximum Loan Amount" of all loans, in accordance with Section
2.1, shall be Twenty Million Dollars ($20,000,000.).

C. The "Minimum Loan Amount" of any single loan, in accordance with Section
2.3, shall be Seven Hundred and Fifty Thousand Dollars ($750,000.).

D. The "Maximum Full Recourse Amount" of all loans, in accordance with Section
3.12, shall be Two Million Dollars ($2,000,000.).

E. Notices to Lender in accordance with Section 12.2 shall be addressed as
follows:

Heller Financial, Inc.
525 West Monroe Street Suite 1600
Chicago, IL 60661-3693

Attn: President, Heller Sales Finance

All the Terms and Conditions of THE MASTER LOAN AND SECURITY AGREEMENT FORM are
hereby incorporated by reference and made a part of this

<PAGE> 3
AGREEMENT, provided, however the following Special Terms and Conditions (which
supplement said MASTER LOAN AND SECURITY AGREEMENT FORM Terms and Conditions)
shall supersede and replace any conflicting Terms and Conditions in THE MASTER
LOAN AND SECURITY AGREEMENT FORM. All Section numbers and references in this
Schedule 1 document, refer to (or supplement) section numbers and references in
THE MASTER LOAN AND SECURITY AGREEMENT FORM.

SPECIAL TERMS AND CONDITIONS

1. DEFINITIONS

1.33 "Security Supplement" - in addition to the supplement hereto
substantially in the form of Exhibit "C", shall include a Non-Recourse
Promissory Note substantially in the form of Group Exhibit "C", executed and
delivered to Lender by TSFC, describing the amount of the Discount Facility
Loan, the Discount Facility Rate and the Discount Facility Loan Value.

1.37 "Administration Fee" - a fee equal to two percent (2%) of the
aggregate Loan Repayment Amount (hereinafter defined) on all then/outstanding
Loans upon the occurrence of an Event of Default.

5.3 (a) Lease Additionally (In some cases TSFC may only receive a
faxed signature from a Lessee on a Lease Schedule, in such event, SPE hereby
represents and warrants to HELLER that TSFC will only execute one counterpart of
such Lease Schedule and that such counterpart shall be the only "original" of
the Lease Schedule and such original Lease Schedule shall be delivered to Lender
by SPE or TSFC as of the Closing Date.)

5.3 (g) Acceptance Supplement Additionally (SPE hereby agrees to
indemnify and hold Lender harmless, pursuant to Section 8.1 of the Agreement,
from any and all Indemnified Amounts arising from or relating to TSFC's failure
to obtain executed certificates of acceptance with respect to any Lease.)

6.1 (b) Add at the end of this section after the word "thereto" and
prior to the ";" the following...", but none of the obligations under such
licenses"

7.4 Add at the end of this section after the word "correct" and prior
to the "." the following...", and such other reports as Lender may require from
time to time"

8.1 Indemnities Insert in the first sentence after the word
"liabilities" and prior to the parenthetical "("Indemnified Amount")" the
following "including, without limitation, attorney's fees and court costs...".
Further, in the first sentence, within the parenthetical..." (other than
Indemnified Amounts arising from or pertaining to the
<PAGE> 4
negligence or misconduct by Lender)" after the words "...pertaining to the..."
and prior to the word "...negligence..." insert the following word
"...gross...", and after the words "...the negligence or..." and prior to the
word "...misconduct..." insert the following word "...willful..."

8.3 Insurance Insert at the end of the sentence after the phase
"satisfactory to Lender" and prior to the phrase "as to amount" the following
", in its sole, but reasonable, discretion,"

9.3 Principal Place of Business Insert at the end of the sentence
after the phrase "notice to Lender" and prior to "." the following "and the
written acknowledgement of Lender thereto"

9.15 Equipment Description Add at the end of this section the
following sentence "The Equipment is in all respects in accord with the
requirements of the Leases and has been delivered to and unqualifiedly accepted
by the Lessees."

9.19 Notifications.
(a) At the end of the paragraph, after the phrase "...a default
under or breach of the..." and prior to the ";" delete the words "Operating
Agreement" and insert in their place the following "Operative Documents;"

(c) Add the following paragraph:
(c) a default under any Lease financed or refinanced by a Discount Facility
Loan; provided, however, the monthly Lease Receivable Statements sent by TSFC to
Lender shall constitute prompt notice of a Lessee payment default under a Lease;

9.21 Audit Insert after the phrase "relate to the Leases," and prior
to the word "provided" the following "TSFC's remarketing of the Equipment and
the Net Loss Pool,"

9.23 Financial Covenants Add at the end of this section the
following:

(c) no event of default shall have occurred which has not been
cured within any applicable cure period or waived under that
certain Credit Agreement dated as of February 27, 1997 among,
inter alia, CCI/Triad and The Chase Manhattan Bank.

10.1 Request to Repossess; Remarketing Upon Lender's determination
that a default exists under a Lease financed or refinanced by a Discount
Facility Loan, either through notification by SPE pursuant to Section 9.19 or
otherwise, and that such default remains uncured within the time, if any, for
curing the same permitted by the Lease, Lender, as secured party under this
Agreement, may request SPE to act as its agent, and upon such request SPE will,
as such agent, use diligent efforts to repossess the Equipment subject to such
Lease as promptly and efficiently as is legally permissible.

<PAGE> 5
Thereafter SPE will refurbish and update, as needed, and, for a period of one
hundred twenty (120) days or such other period as SPE and Lender may agree
upon in writing from the date the Equipment is repossessed (the "Remarketing
Period"), attempt to sell or release such Equipment on a non-priority (but
non-discriminatory) basis and on such terms and conditions as reflect fair
market value for similar equipment and are acceptable to Lender, in its sole
discretion. SPE shall give no less priority to remarketing Equipment pursuant
to this Section 10.1 that it would similar equipment owned, leased or managed
by TSFC. The obligations of SPE to remarket such Equipment for sale or lease
shall include, but not be limited to, efforts to sell such Equipment,
preparation and supervision of the documentation of each transaction and an
accounting of the activities referred to in this Section 10.1, including
information relative to the status of negotiations for offers made in respect
of such Equipment.

If SPE has not remarketed any Equipment at the conclusion of the Remarketing
Period, upon notice from Lender, SPE's exclusive right to remarket shall
terminate and Lender shall have the right to remarket such Equipment on terms
and conditions satisfactory to it. If Lender remarkets the Equipment, it shall
retain Proceeds in an amount equal to the Loan Repayment Amount applicable to
the Loan financing the Lease to which such Equipment was subject and any
Remarketing Expenses incurred by Lender and shall remit the Excess Proceeds to
SPE.

Nothing contained in this Section 10.1 shall be deemed to constitute a release
by Lender of its security interest in any of the Collateral. Lender shall
release its security interest in Equipment which has been sold pursuant to
this Section 10.1.

11.1(b) Insert after the phrase "corrected or" and prior to the phrase
"in the process" the following parenthetical "(in the sole discretion of
Lender)"

11.2(a) Add at the end of this section the following ", plus the
Administration Fee, any late charges, or other costs or expenses incurred by
Lender and hereunder"

11.2(c) Add at the end of this section the following "discontinue making
Loans and as liquidated damages and not a penalty, to assess an Administration
Fee (to reimburse Lender for its anticipated costs and expenses of directly
billing and collecting the Lessees for Rent) due: and to accelerate the
balance due under the First Loss Provision pursuant to Section 8.4 and the
Full Recourse Provision pursuant to Section 3.12 of the Agreement to be due
and payable immediately, or"

11.2 Insert in the paragraph following subsection (d), which paragraph
begins with the words "Upon the occurrence" after the phrase "...Loans due
under this Agreement,..." and prior to the phrase "..provided, however..." the
following ", plus the Administration Fee, any late charges, or other costs or
expenses incurred by Lender and due hereunder:"

<PAGE> 6
11.2 Add at the end of this section the following separate paragraph
"SPE shall pay to LENDER all fees, costs and expenses incurred by LENDER in
enforcing any term or condition of this Agreement, including without
limitation, LENDER's attorney's fees."

12.5 Successors: Assigns Replace the third sentence of this section
with the following sentence..."If either party does not consent to such
proposed assignment, SPE shall have the option to prepay the outstanding
aggregate Loan Repayment Amount, together with the Prepayment Fee; provided,
however, in the event Lender assigns this Agreement to a third party other than
a wholly owned subsidiary, parent or affiliate of Lender, and SPE elects to
prepay the outstanding aggregate Loan Repayment Amount, no Prepayment Fee shall
be due and owing from SPE to Lender."

12.9 Governing Law THIS AGREEMENT SHALL BE A CONTRACT MADE UNDER
AND GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS APPLICABLE TO CONTRACTS MADE
AND PERFORMED ENTIRELY WITHIN THE STATE OF ILLINOIS. SPE DOES HEREBY SUBMIT, AT
LENDER'S ELECTION, TO THE EXCLUSIVE JURISDICTION AND VENUE OF ANY COURTS
(FEDERAL, STATE OR LOCAL) HAVING A SITUS WITHIN THE COUNTY OF COOK AND THE
STATE OF ILLINOIS WITH RESPECT TO ANY DISPUTE, CLAIM, OR SUIT WHETHER DIRECTLY
OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT, OR ANY RELATED NOTE
OR ANY OF SPE'S OBLIGATIONS OR INDEBTEDNESS HEREUNDER. SPE EXPRESSLY WAIVES
PERSONAL SERVICE OF PROCESS AND CONSENTS TO SERVICE BY CERTIFIED MAIL, POSTAGE
PREPAID, DIRECTED TO THE LAST KNOWN ADDRESS OF SPE, WHICH SERVICE SHALL BE
DEEMED COMPLETED WITHIN TEN (10) DAYS AFTER THE DATE OF MAILING THEREOF. SPE
HEREBY IRREVOCABLY WAIVES ANY CLAIM THAT THE COUNTY OF COOK, STATE OF ILLINOIS
IS AN INCONVENIENT FORUM OR AN IMPROPER FORUM BASED ON LACK OF VENUE AS WELL AS
ANY RIGHT IT MAY NOW OR HEREAFTER HAVE TO REMOVE ANY SUCH ACTION OR PROCEEDING,
ONCE COMMENCED, TO ANOTHER COURT ON THE GROUNDS OF FORUM NON CONVENIENS OR
OTHERWISE. THE EXCLUSIVE CHOICE OF FORUM SET FORTH HEREIN SHALL NOT BE DEEMED
TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OBTAINED IN SUCH FORUM OR
THE TAKING OF ANY ACTION BY LENDER TO ENFORCE THE SAME IN ANY OTHER APPROPRIATE
JURISDICTION. NOTE: With regard to any example agreement forms attached as
Exhibits to this Agreement, the actual agreement forms signed by the parties
shall specify Illinois law as governing law.

12.10 Waiver of Jury Trial SPE AND LENDER HEREBY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
IN ANY WAY ARISING OUT OF THIS AGREEMENT. SPEC AND LENDER ALSO WAIVE ANY BOND
OR SURETY OR

<PAGE> 7
SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF
LENDER. THIS WAIVER IS INTENDED TO BE EFFECTIVE WITH RESPECT TO ALL DISPUTES
WHICH ARISE OUT OF THIS AGREEMENT OR PERTAIN TO THE TRANSACTIONS CONTEMPLATED
HEREBY. SPE AND LENDER EACH ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL
INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH ALREADY HAS RELIED
ON SUCH WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO
RELY ON SUCH WAIVER IN THEIR RELATED FUTURE DEALINGS. SPE AND LENDER FURTHER
WARRANT AND REPRESENT THAT EACH KNOWINGLY AND VOLUNTARILY HAS WAIVED ITS JURY
TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS
IRREVOCABLE, AND MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING, AND SUCH
WAIVER SET FORTH HEREIN SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. IN THE EVENT OF LITIGATION,
THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT.

This LOAN AND SECURITY AGREEMENT is effective as of January 1, 1997.

CCI/TRIAD FINANCIAL HOLDING CORPORATION ("SPE"),
a California corporation

By: /s/ PATRICK J. KERNAN
--------------------------------------------
Title: VP and Secretary

HELLER FINANCIAL, INC.
a Delaware Corporation

By: /s/ GARY W. LOMONACO
--------------------------------------------
Title: Vice President

<PAGE> 8

_____________________________________________

MASTER LOAN AND SECURITY AGREEMENT FORM

DATED AS OF JANUARY 1,1997

BETWEEN

CCI/TRIAD FINANCIAL HOLDING CORPORATION

AS BORROWER

AND

HELLER FINANCIAL, INC.

AS LENDER

_____________________________________________

$20,000,000

DISCOUNT LOAN FACILITY

__________________________________

LOANS SECURED BY
LEASE RECEIVABLES, LEASES, AND
LEASED EQUIPMENT

<PAGE> 9

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Anniversary Date" . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Business Day" . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Closing Date" . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Collateral" . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Discount Facility" . . . . . . . . . . . . . . . . . . . . 2
1.6 "Discount Facility Loan" . . . . . . . . . . . . . . . . . . 2
1.7 "Discount Facility Rate" . . . . . . . . . . . . . . . . . . 2
1.8 "Discount Facility Loan Value" . . . . . . . . . . . . . . . 2
1.9 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Eligible Equipment" . . . . . . . . . . . . . . . . . . . . 2
1.11 "Eligible Lease" . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Equipment" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 "Event of Default" . . . . . . . . . . . . . . . . . . . . . 3
1.14 "Excess of Proceeds" . . . . . . . . . . . . . . . . . . . . 4
1.15 "Guaranty" . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 "Invoice Price". . . . . . . . . . . . . . . . . . . . . . . 4
1.17 "Late Payment Rate". . . . . . . . . . . . . . . . . . . . . 4
1.18 "Lease". . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 "Lease Proceeds" . . . . . . . . . . . . . . . . . . . . . . 4
1.20 "Lessee" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 "Loan" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 "Loan Repayment Amount". . . . . . . . . . . . . . . . . . . 4
1.23 "Loan Repayment Date". . . . . . . . . . . . . . . . . . . . 5
1.24 "Net Loss Pool". . . . . . . . . . . . . . . . . . . . . . . 5
1.25 "Obligations". . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 "Operating Agreement". . . . . . . . . . . . . . . . . . . . 5
1.27 "Operative Documents". . . . . . . . . . . . . . . . . . . . 5
1.28 "Prepayment Fee" . . . . . . . . . . . . . . . . . . . . . . 5
1.29 "Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.30 "Remarketing Expenses" . . . . . . . . . . . . . . . . . . . 5
1.31 "Remarketing Proceeds" . . . . . . . . . . . . . . . . . . . 6
1.32 "Rent" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 "Security Supplement". . . . . . . . . . . . . . . . . . . . 6
1.34 "Standard Cost". . . . . . . . . . . . . . . . . . . . . . . 6
1.35 "Tangible Net Worth" . . . . . . . . . . . . . . . . . . . . 6
1.36 "CCI/Triad". . . . . . . . . . . . . . . . . . . . . . . . . 6

2. THE DISCOUNT FACILITY. . . . . . . . . . . . . . . . . . . . . . . . 6
2.1 Total Facility . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Interest Calculation . . . . . . . . . . . . . . . . . . . . 7
2.3 Minimum Loan . . . . . . . . . . . . . . . . . . . . . . . . 7
2.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 7

</TABLE>

i
<PAGE> 10
<TABLE>
<S> <C> <C>
3. THE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Requests for Loans . . . . . . . . . . . . . . . . . . . . . 7
3.2 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Disbursement of Discount Facility Loan . . . . . . . . . . . 8
3.4 Loan Payments and Amortizations. . . . . . . . . . . . . . . 8
3.5 Upgrades and Additions . . . . . . . . . . . . . . . . . . . 8
3.6 Optional Prepayment: Lender Refusal to Finance Upgrades or
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Mandatory Prepayment: Termination of Lease . . . . . . . . . 9
3.8 Mandatory Prepayment: Casualty . . . . . . . . . . . . . . . 10
3.9 Mandatory Prepayment: Rent Default . . . . . . . . . . . . . 10
3.10 No Other Prepayments Permitted . . . . . . . . . . . . . . . 10
3.11 Limited Recourse . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Full Recourse. . . . . . . . . . . . . . . . . . . . . . . . 10

4. CONDITIONS PRECEDENT TO THE INITIAL LOAN . . . . . . . . . . . . . . 11
4.1 Evidence of Authority OF SPE . . . . . . . . . . . . . . . . 11
4.2 Evidence of Authority of CCI/Triad . . . . . . . . . . . . . 11
4.3 Operating Agreement. . . . . . . . . . . . . . . . . . . . . 11
4.4 Financing Statements . . . . . . . . . . . . . . . . . . . . 12
4.5 SPE Officer's Certificate. . . . . . . . . . . . . . . . . . 12
4.6 CCI/Triad Officer's Certificate. . . . . . . . . . . . . . . 12
4.7 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . 13
4.8 Agreement of Admission of Additional Secured Parties . . . . 13

5. CONDITIONS PRECEDENT TO ALL LOANS. . . . . . . . . . . . . . . . . . 13
5.21 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.22 Operating Agreement. . . . . . . . . . . . . . . . . . . . . 13
5.23 Receipt of Certain Documents . . . . . . . . . . . . . . . . 13
(a) Lease. . . . . . . . . . . . . . . . . . . . . . . . . . 13
(b) Guaranty . . . . . . . . . . . . . . . . . . . . . . . . 13
(c) Financing Statements Filed Against Lessees . . . . . . . 13
(d) Financing Statements to be Filed Against TSFC. . . . . . 14
(e) Supplement . . . . . . . . . . . . . . . . . . . . . . . 14
(f) Notice of Assignment . . . . . . . . . . . . . . . . . . 14
(g) Acceptance Supplement. . . . . . . . . . . . . . . . . . 14
(h) Other Documents. . . . . . . . . . . . . . . . . . . . . 15

6. SECURITY AGREEMENT . . . . . . . . . . . . . . . . . . . . . . . . . 15
6.1 Granting Clause. . . . . . . . . . . . . . . . . . . . . . . 15
6.2 Appointment of Lender. . . . . . . . . . . . . . . . . . . . 16
6.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . 17
6.4 No Obligations Assumed by Lender . . . . . . . . . . . . . . 17
6.5 Release of Security Interest . . . . . . . . . . . . . . . . 17
</TABLE>

<PAGE> 11
<TABLE>
<S> <C> <C>
6.6 Final Release by Lender. . . . . . . . . . . . . . . . . . . 17

7. ADMINISTRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
7.1 Authorization to Collect Rent. . . . . . . . . . . . . . . . 17
7.2 Collections. . . . . . . . . . . . . . . . . . . . . . . . . 17
7.3 Remittances. . . . . . . . . . . . . . . . . . . . . . . . . 18
7.4 Lease Receivables Statements . . . . . . . . . . . . . . . . 18
7.5 First Loss Provision Statements. . . . . . . . . . . . . . . 18
7.6 Account Status Statements. . . . . . . . . . . . . . . . . . 18

8. INDEMNITIES, INSURANCE, FIRST LOSS . . . . . . . . . . . . . . . . . 18
8.1 Indemnities . . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Indemnity Payments . . . . . . . . . . . . . . . . . . . . . 20
8.3 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.4 First Loss Provision . . . . . . . . . . . . . . . . . . . . 20
8.5 Excess Proceeds. . . . . . . . . . . . . . . . . . . . . . . 21

9. REPRESENTATIONS, WARRANTIES AND COVENANTS. . . . . . . . . . . . . . 21
9.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . 21
9.2 Authority . . . . . . . . . . . . . . . . . . . . . . . . . 21
9.3 Principal Place of Business . . . . . . . . . . . . . . . . 21
9.4 Binding Obligations. . . . . . . . . . . . . . . . . . . . . 22
9.5 Approvals and Consents . . . . . . . . . . . . . . . . . . . 22
9.6 Compliance and Laws . . . . . . . . . . . . . . . . . . . . 22
9.7 Clear Ownership. . . . . . . . . . . . . . . . . . . . . . . 22
9.8 Filings. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.9 Actions. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.10 Payment of Taxes . . . . . . . . . . . . . . . . . . . . . . 23
9.11 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
9.12 Further Assurances; Enforcement of Leases. . . . . . . . . . 23
9.13 Validity and Enforceability of Leases and Guaranties . . . . 24
9.14 Leases Duly Entered Into . . . . . . . . . . . . . . . . . . 24
9.15 Equipment Description . . . . . . . . . . . . . . . . . . . 24
9.16 Leases Comply with Laws. . . . . . . . . . . . . . . . . . . 24
9.17 No Impairment of Value or Rights . . . . . . . . . . . . . . 24
9.18 No Lessor Liens. . . . . . . . . . . . . . . . . . . . . . . 24
9.19 Notifications. . . . . . . . . . . . . . . . . . . . . . . . 24
9.20 Books and Records Financial and Other Information. . . . . . 25
9.21 Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
9.22 Charges and Taxes. . . . . . . . . . . . . . . . . . . . . . 26
9.23 Financial Covenants. . . . . . . . . . . . . . . . . . . . . 26
9.24 Maximum Requests for Loans Per Month . . . . . . . . . . . . 27

10. REPOSSESSION AND REMARKETING . . . . . . . . . . . . . . . . . . . . 27
10.1 Request to Repossess; Remarketing. . . . . . . . . . . . . . 27
</TABLE>

iii

<PAGE> 12
<TABLE>
<S> <C> <C>
10.2 Remarketing Expenses . . . . . . . . . . . . . . . . . . . . 28
10.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.4 No Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . 28

11. EVENTS OF DEFAULT, REMEDIES. . . . . . . . . . . . . . . . . . . . . 28
11.1 Events of Default. . . . . . . . . . . . . . . . . . . . . . 28
11.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . 30

12. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . 32
12.5 Successors; Assigns. . . . . . . . . . . . . . . . . . . . . 32
12.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 32
12.7 Headings; Titles . . . . . . . . . . . . . . . . . . . . . . 33
12.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>

<PAGE> 13

This MASTER LOAN AND SECURITY AGREEMENT FORM is entered into as of the
Effective Date stated in the Schedule 1 document entered into between CCI/TRIAD
FINANCIAL HOLDING CORPORATION ("SPE"), a California corporation, as borrower,
and the entity shown in the Schedule 1 document, as Lender ("Lender").

INTRODUCTION

A. Both SPE and Triad Systems Financial Corporation ("TSFC"), a California
corporation are wholly owned subsidiaries of COOPERATIVE COMPUTING, INC. dba
TRIAD SYSTEMS CORPORATION ("CCI/Triad"), a Delaware corporation. CCI/Triad
manufactures and TSFC purchases from CCI/Triad and leases to TSFC's customers
computer systems and software, all in accordance with an Operating and Support
Agreement among CCI/Triad, TSFC, SPE and Lender.

B. TSFC has transferred by sale to SPE certain receivables due TSFC under
the leases and TSFC has by an agreement substantially in the form of the Sales,
Assignment and Security Interest Agreement attached hereto as Exhibit F
assigned to SPE certain of its rights and interests in the Leases, computer
systems, software and equipment.

C. Lender engages in the business of equipment lease financing.

D. Lender is willing to lend to SPE amounts equal to the discounted value
of payments receivable under certain of the customer leases of computer systems
and software, upgrades and add-ons or other equipment, and SPE is willing to
grant a security interest in the lease payments, the leased computer systems
and software or other equipment and the interest of TSFC in the leases, all
subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows;

1. DEFINITIONS

When used in capitalized form herein, the following terms shall have the
meanings indicated:

1.1 "Anniversary Date" - the date stated as the "Anniversary Date" in the
Schedule 1 document.

<PAGE> 14

1.2 "Business Day" - any day other than a Saturday, Sunday or a public or
bank holiday or the equivalent for banks generally under the laws of the State
of California.

1.3 "Closing Date" - with respect to any Loan, the date on which Lender
makes a Loan to SPE under this Agreement.

1.4 "Collateral" - as defined in Section 6.1.

1.5 "Discount Facility" - the credit facility provided by Lender to SPE
pursuant to Section 2.

1.6 "Discount Facility Loan" - a Loan made by Lender to SPE under the
Discount Facility.

1.7 "Discount Facility Rate" - with respect to a Discount Facility Loan -
will be determined from time to time by mutual agreement of SPE, and Lender.

1.8 "Discount Facility Loan Value" - of a Lease at the time a Discount
Facility Loan is made, a percentage to be determined by mutual agreement
between the parties, of each payment of Rent remaining unpaid under the Lease
at that time (but excluding any past due Rent), discounted from the date each
such payment is due to such time at the Discount Facility Rate with respect to
such Discount Facility Loan.

1.9 "Effective Date" - the date of this Agreement.

1.10 "Eligible Equipment" - new or remanufactured Equipment, including but
not limited to, computer systems and related components, software and
accessories manufactured or sold by CCI/Triad or another manufacturer or
seller, having a Discount Facility Loan Value of not less than One Thousand
Dollars ($1,000.00) subject to an Eligible Lease and not subject to a security
interest or other encumbrance in favor of any corporation, firm or other person
other than a security interest in favor of Lender arising under this Agreement
or a Security Supplement.

1.11 "Eligible Lease" - a full pay out net lease, substantially in the
form of Exhibit A-1, naming TSFC as lessor, that:

(a) has a noncancelable term of not less than 12 months nor more
than 84 months excluding renewals or extensions;

(b) provides for (i) Rent and casualty payments in amounts
sufficient to repay to Lender the Loan made

<PAGE> 15

in respect of such lease and interest on such Loan at the
Discount Facility Rate, (ii) interest on late payments under such
lease at a rate not less than the Late Payment Rate and (iii) all
payments to be made in United States dollars;

(c) provides that the lessor's right to receive payment is
absolute and not contingent upon the fulfillment of any condition
whatsoever other than the passage of time;

(d) covers only Eligible Equipment subject to a security
interest in favor of Lender and includes all hardware and any
other systems required to operate any included software;

(e) is not subject to any conditions, obligations of, or any
right or offset, counterclaim or defense by, the Lessee
thereunder;

(f) is a Lease under which the Lessee is not in default, and;

(g) is in all other respects satisfactory to Lender.

1.12 "Equipment" - any and all Eligible Equipment leased to a Lessee by
TSFC under a Lease, located in the United States and made subject to a security
interest in favor of Lender by the execution and delivery by SPE to Lender of a
Security Supplement specifically describing such Eligible Equipment, together
with (i) all accessions, replacements, parts, repairs, fixtures and accessories
incorporated therein or affixed thereto under the Lease, and (ii) all upgrades,
add-ons and additions incorporated therein or affixed thereto to the extent
they have been financed by Lender under this Agreement.

1.13 "Event of Default" - as defined in Section 11.1.

1.14 "Excess Proceeds" - of an item of Equipment - any excess of (i) the
Remarketing Proceeds thereof, over (ii) the outstanding Loan Repayment Amount
applicable to a Lease.

1.15 "Guaranty" - a guaranty, in the form of the guaranty which comprises
a part of Exhibit A-1, executed and delivered by a corporation, firm or other
person (a "Guarantor") satisfactory to Lender, assigned to Lender as security
by the execution and delivery by SPE of a Security Supplement specifically
describing such guaranty.

<PAGE> 16

1.16 "Invoice Price" - with respect to any Equipment - the aggregate
invoice prices of CCI/Triad, as manufacturer or seller, or any other
manufacturer or seller, net of taxes, transportation cost, delivery cost and
any acquisition or other fees payable by TSFC to CCI/Triad or any of its
affiliates.

1.17 "Late Payment Rate" - with respect to a Discount Facility Loan - two
percent (2%) over the applicable Discount Facility Rate.

1.18 "Lease" - an Eligible Lease duly executed by the Lessee, approved by
Lender and assigned to Lender as security by the execution and delivery by SPE
to Lender of a Security Supplement specifically describing such Eligible Lease.

1.19 "Lease Proceeds" - with respect to any Lease - all payments due from
or with respect to the Lessee, such Lease or the Equipment subject to such
Lease, including, but not limited to, all Rent and any security deposits held
by TSFC, all casualty, early termination, purchase option and indemnity
payments, and all insurance and sales or lease proceeds of and requisition
payments for the Equipment subject to such Lease.

1.20 "Lessee" - a United States-domiciled corporation, partnership or sole
proprietorship that is the obligor for payment of Rent under a Lease.

1.21 "Loan" - any advance of funds to SPE by Lender under this Agreement
as evidenced by a Security Supplement.

1.22 "Loan Repayment Amount" - with respect to a Loan at any time - the
aggregate unpaid principal of, and accrued interest (including any interest
accrued at the Late Payment Rate) on, such Loan.

1.23 "Loan Repayment Date" - with respect to any Loan - the twentieth day
of each calendar month, commencing with the first such day to occur after the
Closing Date for such Loan.

1.24 "Net Loss Pool" - as defined in Section 8.4.

1.25 "Obligations" - as defined in Section 6.1.

1.26 "Operating Agreement" - the Operating and Support Agreement entered
into among CCI/Triad, TSFC, SPE, and Lender, substantially in the form of
Exhibit "B" attached hereto.

<PAGE> 17

1.27 "Operative Documents" - this Agreement, each Security Supplement and
the Operating Agreement.

1.28 "Prepayment Fee" - a fee equal to two percent (2%) of then unpaid
principal amount due Lender under any Lease which is prepaid pursuant to
Section 3.7.

1.29 "Proceeds" - of an item of Equipment - the sum of (i) the (a) gross
cash proceeds of sale of such item or (b) aggregate Rent obligation under a
re-lease of such item discounted at the applicable Discount Facility Rate, as
the case may be, plus (ii) any past due Rent and any other termination amount
paid by the Lessee, or by SPE on behalf of the Lessee, plus (iii) any security
deposit held by TSFC that reduces the Lessee's lease termination payment.

1.30 "Remarketing Expenses" - with respect to an item of Equipment - the
sum of (i) costs of repossessing, transporting, refurbishing and remarketing
the item pursuant to Section 10, plus (ii) any applicable sales, use or similar
taxes imposed in connection with the sale or re-lease of such item and not paid
by the purchaser or lessee, plus (iii) in the case of a Lease default,
enforcement and collection costs.

1.31 "Remarketing Proceeds" - with respect to an item of Equipment - the
Proceeds minus the Remarketing Expenses.

1.32 "Rent" - under a Lease, the periodic charges specified in the Lease
for the use of the Equipment, excluding casualty or early termination, purchase
option and indemnity payments and any amounts a Lessee may be required to pay
for taxes, license fees, assessments or maintenance.

1.33 "Security Supplement" - a supplement hereto substantially in the form
of Exhibit "C", executed and delivered to Lender by SPE, describing Equipment
and Leases and subjecting the same to the security interest in favor of Lender
arising under Section 6.

1.34 "Standard Cost" - with respect to an item of Equipment at any time -
an amount equal to fifty percent (50%) of the Loan Repayment Amount of the
Lease calculated on the Loan Repayment Date.

1.35 "Tangible Net Worth" of TSFC - the gross book value of TSFC's
consolidated tangible assets less (a) reserves applicable thereto and (b) all
of TSFC's consolidated liabilities (including accrued and deferred income
taxes) other than indebtedness subordinated, in a manner satisfactory to
Lender, to TSFC's indebtedness to Lender. All determinations of the
characterization of assets and of the values comprising "Tangible Net Worth"
shall be made in accordance with generally accepted accounting principles
consistently applied.

<PAGE> 18

1.36 "CCI/Triad" - Cooperative Computing, Inc. ("CCI/Triad"), a Delaware
corporation, or any successor entity resulting from the sale or transfer of the
stock of CCI/Triad to another corporation as a result of the merger,
acquisition, consolidation, or dissolution of CCI/Triad or resulting from the
transfer of all or substantially all of the assets of CCI/Triad.

2. THE DISCOUNT FACILITY

2.1 Total Facility. Subject to the terms and conditions hereof, from time
to time, from (and including) the Effective Date to and excluding the
Anniversary Date, Lender may with respect to each Lease, make a Loan to SPE in
a principal amount equal to the Discount Facility Loan Value; provided,
however, the aggregate principal amount of all Loans outstanding at any time
shall not exceed the "Aggregate Maximum Loan Amount" stated in the Schedule 1
document, and provided further that none of TSFC, SPE nor CCI/Triad suffer a
material adverse financial change in its business or financial condition during
the term of this Agreement.

2.2 Interest Calculation. Interest on the Discount Facility Loans shall
be computed on the basis of a 360-day year of 12-30 day months.

2.3 Minimum Loan. The aggregate principal amount of the Loans made on any
Closing Date shall be not less than the "Minimum Loan Amount" stated in the
Schedule 1 document

2.4 Payments. Lender shall pay the proceeds of the Loans in immediately
available funds on the Closing Dates for such Loans. SPE shall make each
payment due under this Agreement to Lender or Lender's assignee in immediately
available funds to the account or address specified by Lender or such assignee.

3. THE LOANS

3.1 Requests for Loans. No later than ten (10) Business Days before the
Closing Date relating to a Discount Facility Loan requested by SPE, SPE shall
submit to Lender Eligible Leases together with lease schedules and other
supporting documentation, and the following:

<PAGE> 19

Thousand Dollars ($50,000.00), as of the end of such Lessee's
most recent fiscal year, and any interim financial statements of
such Lessee readily available to TSFC, SPE or CCI/Triad, all in
form and substance satisfactory to Lender, (ii) the payment
history of such Lessee under other leases entered into between
such Lessee and TSFC, and (iii) such additional financial
information pertaining to any Lessee as Lender may request;

(b) the Rent schedule for each such Eligible Lease; and

3.2 Approvals. Within ten (10) Business Days of receipt of all
information required to be submitted pursuant to Section 3.1, Lender shall
advise SPE in writing if, in its sole and unlimited discretion, Lender approves
the proposed Eligible Lease and, if Lender requires the credit support of a
Guarantor, the credit of the proposed Guarantor. If Lender fails to give such
advice within such ten (10) day period, Lender shall be deemed to have declined
such credit. Lender may revoke any credit approval prior to making the
Discount Facility Loan relating to a proposed Lease if, in Lender's judgment,
the proposed Lessee or Guarantor suffers a material adverse change in its
business or financial condition. Lender shall promptly return all credit
packages to SPE relative to any rejected lease transactions.

3.3 Disbursement of Discount Facility Loan. Subject to satisfaction of
the conditions precedent set forth in Section 4 and Section 5, Lender shall
make Discount Facility Loans on the Closing Date proposed in accordance with
this Section 3. The Discount Facility Loans made on the Closing Date shall be
in an aggregate principal amount equal to the aggregate Discount Facility Loan
Values of the Eligible Leases submitted by SPE pursuant to Section 3.1 and
approved by Lender pursuant to Section 3.2. If, for any reason, a Discount
Facility Loan is not made on a proposed Closing Date notwithstanding compliance
by SPE with Section 3.1, the Closing Date may be rescheduled to a date, within
ten (10) Business Days of such Closing Date, mutually agreed upon in writing by
Lender and SPE .

<PAGE> 20

Discount Facility Loans shall be payable in accordance with the Security
Supplement for such Discount Facility Loan. Each Discount Facility Loan shall
be amortized by the Lease Proceeds received by Lender with respect to the
Leases financed by such Loan, with such Lease Proceeds applied first to accrued
and unpaid interest, then to any other amounts due under such Loan, and then to
principal.

3.5 Upgrades and Additions. TSFC may, from time to time, agree with a
Lessee under a Lease that the Equipment subject to such Lease shall be upgraded
or that additional Eligible Equipment should be added to such Lease. If TSFC
and such Lessee amend such Lease to increase the Rent payable thereunder in
consideration of such upgrade or addition, SPE may request that Lender finance
the additional Lease Proceeds arising under such amendment ( the "Lease
Amendment") attributable to such increase in Rent. Not later than ten (10)
Business Days after such request, Lender shall give SPE written advice as to
whether Lender, in its sole discretion, has elected to finance such additional
Lease Proceeds. If Lender fails to give such advice within such ten (10) day
period, Lender shall be deemed to have declined to finance such additional
Lease Proceeds and shall so advise SPE in writing. If Lender agrees to finance
such additional Lease Proceeds, Lender shall, subject to satisfaction of the
conditions precedent set forth in Sections 4 and 5, make a Discount Facility
Loan in an amount equal to the aggregate increase in Rent effected by the Lease
Amendment which remains unpaid as of the applicable Closing Date, but excluding
any such increase in Rent which is past due, discounted at the Discount
Facility Rate determined on the applicable Closing Date. The Closing Date with
respect to such Discount Facility Loan shall be a date agreed upon in writing
by Lender and SPE. If Lender agrees to make such a Discount Facility Loan, the
Lease Amendment shall be considered a "Lease" for all purposes of this
Agreement (including, without limitation, Section 5). If SPE finances such
upgrades or additions through a source other than Lender and does not prepay in
accordance with Section 3.6, SPE agrees that any security interest granted to a
source other than Lender shall not conflict with Lender's security interest.

3.6 Optional Prepayment: Lender Refusal to Finance Upgrades or Additions.
If Lender elects not to finance increased Lease Proceeds related to upgrades or
additions pursuant to Section 3.5, SPE may give Lender not less than ten (10)
days prior written notice of its intention to prepay the Discount Facility Loan
made to finance the Lease in respect of which an upgrade or addition has been
made. On the first Loan Repayment Date to occur after the ten (10) day notice
period has elapsed, SPE shall (i) prepay the outstanding principal balance of
such Discount Facility Loan made to finance such Lease and (ii) pay all accrued
and unpaid interest on such Discount Facility Loan to the date of prepayment.
No Prepayment Fee shall be payable in respect of an optional prepayment made
pursuant to this Section 3.6.

<PAGE> 21

3.7 Mandatory Prepayment: Termination of Lease. If a Lessee voluntarily
terminates a Lease before its scheduled expiration, SPE shall prepay the
Discount Facility Loan made to finance such Lease on the Loan Repayment Date
immediately following such termination. On such Loan Repayment Date, SPE shall
pay to Lender (i) the Loan Repayment Amount with respect to the Loan made to
finance such Lease and (ii) the Prepayment Fee.

3.8 Mandatory Prepayment: Casualty. If any Equipment subject to a Lease
is lost or damaged, and cannot be repaired or replaced with substantially
similar Equipment by the first Loan Repayment Date occurring not less than
thirty (30) days after such loss or damage, SPE shall prepay the Discount
Facility Loan made to finance such Lease on such Loan Repayment Date. On such
Loan Repayment Date, SPE shall pay to Lender the Loan Repayment Amount with
respect to the Loan made to finance such Lease. No Prepayment Fee shall be
payable in respect to a mandatory prepayment made pursuant to this Section 3.8.

3.9 Mandatory Prepayment: Rent Default. If any Rent under any Lease
financed or refinanced by a Discount Facility Loan shall remain unpaid for a
period of ninety (90) days from the date when due, SPE shall prepay such Loan
up to the Net Loss Pool in accordance with Section 8.4. No Prepayment Fee
shall be payable in respect to a mandatory prepayment made pursuant to this
Section 3.9.

3.10 No Other Prepayments Permitted. No Discount Facility Loan may be
prepaid except as otherwise expressly provided in the Agreement unless SPE pays
together with the Loan Repayment Amount for such Discount Facility Loan the
Prepayment Fee.

3.11 Limited Recourse. Lender agrees that, except as provided in this
Section 3.11, Section 3.9, Section 3.12, Section 8, and Section 10 with respect
to Remarketing Expenses and Section 11, each Discount Facility Loan is
nonrecourse to SPE and that the repayment of each Discount Facility Loan shall
be obtained solely from the Lease Proceeds of the Leases, Proceeds of the
Equipment and the other collateral in which Lender has been granted a security
interest pursuant to Section 6; provided, however, that SPE shall be jointly
and severally liable (without any limitation on recourse) with TSFC (i) if (a)
either TSFC or SPE shall fail to pay over to Lender any Lease Proceeds received
by TSFC or SPE and due Lender hereunder, in which case SPE shall be liable for
the amount of the Lease Proceeds not so paid over plus interest accrued thereon
at the Late Payment Rate from the date the Lease Proceeds were required to be
paid over to Lender, or (b) the fees and payments paid by a Lessee to SPE or
TSFC upon termination of a Lease are less than the Loan Repayment Amount
relating to such Lease and (ii) for all payments required to

<PAGE> 22

be made pursuant to Section 3.8, whether or not insurance proceeds received by
SPE or TSFC are at least equal to such payments.

3.12 Full Recourse. Notwithstanding anything set forth herein, including,
without limitation, any limitation on recourse against SPE, Discount Facility
Loans in the aggregate principal amount of the "Maximum Full Recourse Amount"
stated in the Schedule 1 document at any one time outstanding may be with
recourse to SPE. Such Loans shall be secured by Leases which are Eligible
Leases except that the creditworthiness of the Lessee may not otherwise be
acceptable to Lender. A Discount Facility Loan with recourse shall be
designated as such by mutual written agreement of Lender and SPE, as the case
may be, prior to the Closing Date of such Loans. Upon occurrence at any time
of any default under such Leases, SPE shall repay the Discount Facility Loan
made to finance such Leases on the Loan Repayment Date occurring not more than
thirty (30) days after such default. On such Loan Repayment Date, SPE shall pay
(i) the outstanding principal balance of the Discount Facility Loan made to
finance such Leases, and (ii) all accrued and unpaid interest on such Discount
Facility Loan to the date of payment. No Prepayment Fee shall be payable in
respect of any such prepayment. The amounts paid to Lender by SPE pursuant to
this paragraph shall not be charged against the First Loss Provision defined in
Section 8.4.

4. CONDITIONS PRECEDENT TO THE INITIAL LOAN

Lender will not make the initial Loan hereunder until it has received all
of the following, in form and substance satisfactory to Lender:

4.1 Evidence of Authority of SPE. Certified resolutions of the Board of
Directors of SPE, authorizing the execution, delivery and performance of each
of the Operative Documents to which SPE is a party and any other document
required hereunder together with an incumbency certificate with respect to the
officer or officers of SPE executing any of such Operative Documents and any
document required hereunder.

4.2 Evidence of Authority of CCI/Triad. Certified resolutions of the
Board of Directors of CCI/Triad authorizing the execution, delivery and
performance of the Operating Agreement and any other document required
thereunder together with an incumbency certificate with respect to the officer
or officers of CCI/Triad executing the Operating Agreement and any document
required thereunder.

4.3 Operating Agreement. The Operating Agreement, duly executed by
CCI/Triad, TSFC, SPE, and Lender.

<PAGE> 23

4.4 Financial Statements. The most recent consolidated financial
statements of CCI/Triad and TSFC.

4.5 SPE Officer's Certificate. A certificate from a duly authorized
officer of SPE, dated as of the first Closing Date, stating that:

(a) all representations and warranties made by SPE under this
Agreement and under the Operating Agreement are true and correct
as of the date of the certificate;

(b) SPE is in compliance with all covenants made under this
Agreement; and

(c) no event has occurred and is continuing that is, or with the
passage of time or giving of notice would be, an Event of Default
or a default under or breach of the Operating Agreement; and
containing an express undertaking by SPE to give immediate notice
to Lender if at any time prior to the Anniversary Date if any of
the above statements are no longer true.

4.6 CCI/Triad Officer's Certificate. A certificate from a duly authorized
officer of CCI/Triad, dated as of the first Closing Date, stating that:

(a) all representations and warranties made by CCI/Triad under
the Operating Agreement are true and correct as of the date of
the certificate;

(b) CCI/Triad is in compliance with all covenants made under the
Operating Agreement;

(c) no event has occurred and is continuing that is, or with the
passage of time and/or giving of notice would be, a default under
or breach of the Operating Agreement; and

(d) containing an express undertaking by CCI/Triad to give
immediate written notice to Lender if at any time prior to the
Anniversary Date if any of the above statements is no longer
true.

4.7 Insurance. Evidence of the insurance required by Section 8.3.

<PAGE> 24

4.8 Agreement of Admission of Additional Secured Parties. Evidence that
the Agreement of Admission of Additional Secured Parties, in the form
previously executed by Lender has been duly executed and delivered by all of
the other parties thereto.

5. CONDITIONS PRECEDENT TO ALL LOANS

Lender will not make any Loan hereunder (including the initial Loan)
unless on the date thereof:

5.1 Notice. SPE shall have given Lender verbal notice of each Closing
Date no later than five (5) Business Days prior to such Closing Date.

5.2 Operating Agreement. The Operating Agreement shall be in full force
and effect and no defaults or breaches shall exist thereunder as of the
applicable Closing Date.

5.3 Receipt of Certain Documents. Lender shall have received the
following, in form and substance satisfactory to Lender:

(a) Lease. (i) A signed fax copy or original, manually executed
counterparts in the possession of CCI/Triad or TSFC on such
Closing Date of each Lease financed on such Closing Date and the
related Lease Schedule substantially in the form contained in
Exhibit "A-1", in each case duly executed by TSFC as lessor and
by the Lessee thereunder;

(b) Guaranty. If required by Lender, signed fax copy or
original, manually executed counterparts in the possession of
CCI/Triad or TSFC on such Closing Date of each Guaranty duly
executed by the Guarantor;

(c) Financing Statements Filed Against Lessees. Except in the
case of Leases of Equipment having an aggregate Invoice Price
less than Thirty-five Thousand Dollars ($35,000.00), evidence of
electronic filing receipts, a search report (from Dun and
Bradstreet or comparable reporting entity) confirming the
existence or copies (any of such documentation with filing
numbers and filing dates) of duly executed and filed Uniform
Commercial Code financing statements on form UCC-1 naming TSFC as
secured party and the Lessees under the Leases to be financed on
the

<PAGE> 25

Closing Date as debtors, identifying as collateral the Equipment
subject to such Leases.

(d) Financing Statements to be Filed Against SPE. Copies of
duly executed Uniform Commercial Code financing statements on
form UCC-1, naming SPE as debtor and Lender, as secured party,
and identifying as collateral the Leases and any Guaranties and
Equipment to be assigned in sufficient number to be filed in all
jurisdictions as may be necessary, in Lender's judgment, to
perfect Lender's security interest in such collateral, including,
without limitation, jurisdictions where SPE has its chief
executive offices and maintain its records in respect to the
Leases;

(e) Supplement. A Security Supplement, duly executed by SPE
relating to and describing the Lease, any Guaranty and the
Equipment covered thereby;

(f) Notice of Assignment. An original notice to the relevant
Lessee of the assignment to Lender of the relevant Lease, signed
by TSFC, substantially in the form of Exhibit "D";

(g) Acceptance Supplement. A copy of the original executed
counterpart of the delivery and acceptance certificate with
respect to each Lease where the Invoice Price exceeds Fifty
Thousand Dollars ($50,000.00) ( substantially in the form
contained in Exhibit "A-1") containing a complete description of
the Equipment, duly executed by the Lessee thereunder; and

(h) Other Documents. Such other documents, instruments or
agreements as Lender may reasonably request.

6. SECURITY AGREEMENT

6.1 Granting Clause. In order to induce Lender to make Loans from time to
time to SPE, and in order to secure (i) the prompt repayment of the Loans and
payment of all interest accrued thereon and any applicable Prepayment Fee if
any, (ii) the strict performance and observance by SPE of the obligations to be
performed by it hereunder and (iii) all costs of litigation, collection,
reasonable attorneys' fees and other costs expended or incurred in connection
with the enforcement of Lender's rights hereunder and with respect to

<PAGE> 26

the Leases and the Equipment (the obligations referred to in clauses (i)
through (iii) being collectively referred to as the "Obligations"), SPE hereby
assigns, pledges and grants a continuing security interest to Lender in all of
its right, title and interest in and to the following described properties,
assets and rights (such properties, assets and rights collectively called the
"Collateral"):

(a) each Lease and all of SPE's rights thereunder including the
right to receive payments (including Rent and security deposits)
due to SPE thereunder and the right to exercise rights and
remedies upon default;

(b) every item or component of Equipment subject to Leases,
together with (i) all accessions, replacements and substitutions
thereto and therefor and (ii) all upgrades, add-ons and additions
thereto and therefor to the extent they have been financed by
Lender under this Agreement, and (iii) all of its rights in the
software and licenses related thereto;

(c) each and every Guaranty, security interest, mortgage or
other security securing the payment and performance of the
Lessee's obligations under the Leases;

(d) all Lease Proceeds and Proceeds of items or components of
Equipment;

(e) all warranty and other rights SPE may have with respect to
the Leases against the manufacturer of the Equipment, and

(f) the proceeds (whether cash or non-cash proceeds), and
products of all the properties, assets and rights described in
paragraphs (a), (b),(c), (d) and (e) above including without
limitation, all insurance payments, whether or not Lender is the
loss payee thereof; in each case whether now owned or hereafter
acquired.

6.2 Appointment of Lender. If Lender assumes administration of collection
of Rent pursuant to Section 11.2, SPE irrevocably appoints the Lender as its
attorney-in-fact (such power being coupled with an interest) to do, in its sole
and unlimited discretion, any or all of the following:

<PAGE> 27

(a) to endorse or sign SPE's name on all checks, collections
receipts, UCCs or other documents related to the Leases;

(b) to take possession of and open mail addressed to SPE or TSFC
relating to such collection and remove Rent and proceeds and
products of the Collateral;

(c) to ask, demand, collect, receive, sue for, compound and give
acquittance for any and all payments assigned hereunder;

(d) to settle, adjust or compromise any claim thereunder as
fully as it could itself;

(e) to endorse its name on all checks and other commercial paper
given in payment or in part payment thereof; and

(f) in its discretion, to file any claim or take any other
action or proceeding, either in Lender's own name or in its name,
or otherwise, that Lender may deem necessary or appropriate to
collect any and all sums that may be or become due or payable
under the Leases or that may be necessary or appropriate to
protect the right, title and interest of Lender in and to the
Collateral and the security intended to be afforded thereby and
hereby.

6.3 Further Assurances. SPE will upon written direction from Lender and
at the expense of SPE, do, execute, acknowledge and deliver all and every
further acts, deeds, conveyances, instruments, transfers and assurances
reasonably necessary or proper for the better assuring, conveying, assigning
and confirming unto Lender all of the Collateral, whether now owned or
hereafter acquired and shall not provide further assurances to any other lender
which may conflict with Lender's security interest or provide such lender with
a security interest superior to Lender's without first giving to Lender the
same further assurances.

6.4 No Obligations Assumed by Lender. Lender does not assume, and its
interest herein shall not be subject to, any obligation or liability of TSFC
under any Lease or any other agreement between SPE, TSFC or CCI/Triad and a
lessee, any duty to collect money due thereunder or to enforce collection
thereof. Lender assumes no responsibility, obligation or liability for any

<PAGE> 28

representation, warranty or obligation, express or implied, made by any agent
or employee of SPE, TSFC, or CCI/Triad to a Lessee in connection with any
Lease.

6.5 Release of Security Interest. Upon payment in full of all amounts due
on a Loan and provided no Event of Default shall have occurred and be
continuing, Lender agrees to (i) release its security interest in the Lease
financed by such Loan and the Equipment subject thereto; (ii) deliver to SPE
such other documents relating to released Leases and Equipment prepared by SPE
as SPE may reasonably request, and (iii) deliver the foregoing items within
ten (10) days to SPE after receipt of termination payment.

6.6 Final Release by Lender. Upon repayment in full to Lender of all
Loans, and performance of all other Obligations, Lender will release its
security interest in the Collateral in the manner provided in Section 6.5.

7. ADMINISTRATION

7.1 Authorization to Collect Rent. Until such time as there is an Event
of Default hereunder or SPE's authority to collect Rent is terminated pursuant
to Section 11, SPE is authorized to and shall collect Rent from Lessees.

7.2 Collections. SPE will undertake such collections as an independent
contractor and not as Lender's agent, and in connection therewith will at its
sole cost and expense, diligently perform all billing and collecting for Rent
due and to become due with respect to Leases and Equipment financed under
Discount Facility Loans. SPE shall bill Lessees in accordance with a standard
billing procedures provided that each invoice sent with respect to any Lease
subject to this Agreement shall segregate the amount due thereunder for rent,
taxes and any other amounts due.

7.3 Remittances. SPE shall, on or before the Loan Repayment Date of each
month, make payment to Lender of the amount due on each Discount Facility Loan
on such date regardless of whether or not any Rent under applicable Leases
shall have been collected by SPE. SPE's obligation to make remittances
pursuant to this Section 7.3 shall cease and be of no further effect at such
time as SPE shall have no further liability under the provisions of Section 8.4
of this Agreement.

7.4 Financial Statements; Lease Receivables Statements. SPE shall provide
Lender with monthly financial statements relating to the immediately preceding
month. As soon as available, but no later than the twentieth day of each
month, SPE shall cause TSFC to deliver to Lender a list of all Leases then
outstanding, and a statement showing the aging of receivables

<PAGE> 29

under, payments and collections received under, such Leases, both being
complete and correct.

7.5 First Loss Provision Statements. On the last Business Day of each
January, April, July and October, SPE shall cause TSFC to provide Lender with a
quarterly statement as of such date of the First Loss Provision described in
Section 8.4, in the form attached hereto as Exhibit E..

7.6 Account Status Statements. As soon as available, SPE shall cause TSFC
to deliver to Lender any changes in account status for any Leases then
outstanding that TSFC becomes aware of from time to time. Account status shall
be defined, but not limited to, changes in Lessee billing address, equipment
locations, equipment, and/or legal name.

8. INDEMNITIES, INSURANCE, FIRST LOSS

8.1 Indemnities. Notwithstanding anything set forth herein, including,
without limitation, any limitation on recourse against SPE, SPE shall indemnify
Lender and hold it safe and harmless from and against any and all losses,
claims, actions, suits, proceedings, costs, expenses, damages and liabilities
("Indemnified Amount") (other than Indemnified Amounts arising from or
pertaining to the negligence or misconduct by Lender) that may at any time be
made, brought, incurred, assessed or adjudged against Lender arising from or
pertaining to:

(a) the use, maintenance or operation of the Equipment;

(b) breach of any covenant or warranty made by SPE, TSFC, or
CCI/Triad relating to any Equipment or Lease or maintenance of
any Equipment, including qualification of any Equipment for any
tax benefit;

(c) any claim, action or proceeding involving patent or
trademark infringement or copyright or trade secret violations
relating to the Equipment (including any interest or penalty)
whether or not such claim, action or proceeding involves a claim
of infringement or a combination or design patent;

(d) failure of Lender, for whatever reason, to have obtained a
first priority perfected purchase money security interest in and
lien on the Collateral, including, without limitation, the Leases
and the Equipment whether or not (i) the Equipment is deemed to
be an asset of a

<PAGE> 30

Lessee as the result of a Lease being held to be a security
agreement rather than a true lease or (ii) Uniform Commercial
Code financing statements on form UCC-1 were filed against a
Lessee with respect to the Equipment under Section 5.3 (c);

(e) any misrepresentation made by any agent or employee of SPE,
TSFC or CCI/Triad in the course of negotiations regarding any
Lease or Equipment;

(f) any breach of any warranty or covenant, or any
misrepresentation, of SPE, TSFC or CCI/Triad in any Lease, any
Operative Document or any certificate of an officer of SPE, TSFC
or CCI/Triad delivered in accordance therewith;

(g) failure of any lease or Equipment to comply with applicable
laws, regulations or contractual specifications or warranties, or
to be an Eligible Lease or Eligible Equipment, as the case may
be;

(h) any dispute, claim, offset, or defense of any Lessee (other
than payment by, or discharge in bankruptcy of, such Lessee) to
the payment of any Rent;

(i) Lender having received from TSFC only a fax copy (rather
than the original, manually executed copy) of any Lease or any
Guaranty;

(j) failure of SPE, TSFC or CCI/Triad to pay when due any taxes
for which any of them is liable; and

(k) any wrongful or negligent acts or omissions of SPE, its
agents or assigns, in carrying out SPE's obligations under
Section 7 or Section 10.

All of the indemnities set forth in this Section 8.1 shall survive the
cancellation or termination of this Agreement.

8.2 Indemnity Payment. Upon the occurrence of any of the events set forth
in Section 8.1, SPE unconditionally agrees to pay Lender, upon written demand,
the Indemnified Amount.

8.3 Insurance. With respect to all Equipment, SPE shall cause TSFC to
maintain in full effect, and shall deliver to Lender evidence of, (a) liability

<PAGE> 31

insurance, including all-risk insurance, with a combined single limit of at
lease Five Hundred Thousand Dollars ($500,000.00) per occurrence, naming Lender
as additional insured, (b) property damage insurance on all Equipment, naming
Lender as a loss payee, in an amount equal to actual cash value or replacement
value, with a deductible of not more than Two Hundred Thousand Dollars
($200,000.00) per year for all Equipment and (c) such other insurance as is
usual in the business carried on by SPE, TSFC and CCI/Triad which insurance
shall be satisfactory to Lender as to amount, form, nature and carrier.

8.4 First Loss Provision. If any Rent under any Lease financed or
refinanced by a Discount Facility Loan shall remain unpaid for a period of
ninety (90) days from the date when due, SPE shall, on the next succeeding Loan
Repayment Date, upon written demand by Lender, pay to Lender the Loan Repayment
Amount of such Discount Facility Loan. The liability of SPE under this Section
8.4 on any Loan Repayment Date shall not exceed (i) ten percent (10%) of the
aggregate initial principal amount of Loans made under this Agreement as of
such Loan Repayment Date plus (ii) the aggregate Standard Cost of all Equipment
remarketed pursuant to Section 10 as of such Loan Repayment Date minus (iii)
the aggregate Loan Repayment Amounts paid by SPE to Lender pursuant to this
Section 8.4 with respect to Discount Facility Loans as of such Loan Repayment
Date minus (iv) the aggregate of all cure amounts paid by SPE to Lender on
behalf of Lessees with respect to Leases financed by Discount Facility Loans
which Lender has demanded to be repaid under this Section 8.4 on such Loan
Repayment Date to the extent SPE has been unable to collect such amounts from
such Lessees as of such Loan Repayment Date ( the "Net Loss Pool"). The method
of determining this amount is described in Exhibit "E". Lender's rights under
this Section 8.4 shall be cumulative and in addition to all other rights to
receive payment of the Discount Facility Loans pursuant to this Agreement. If,
at any time, SPE's liability under this Section 8.4 with respect to Leases
financed by a Discount Facility Loan shall have been reduced to zero, SPE shall
thereafter have no liability under this Section 8.4 with respect to that
Discount Facility Loan.

8.5 Excess Proceeds. If, on any Loan Repayment Date, all or any portion
of any Loan Repayment Amount shall not have been paid to Lender pursuant to
Section 8.4 due to the limitation on the liability of SPE set forth in that
Section and SPE thereafter realizes Excess Proceeds with respect to any
Equipment, the previously unpaid portion of all such Loan Repayment Amounts
shall be promptly paid by SPE to Lender to the extent of such Excess Proceeds.

9. REPRESENTATIONS, WARRANTIES AND COVENANTS

SPE represents, warrants and covenants that:

<PAGE> 32

9.1 Due Organization. Both SPE and TSFC are a corporations duly organized
and validly existing in good standing under the laws of California, and each is
duly qualified or otherwise authorized to do business wherever necessary to
carry on its present business and operations and to perform its respective
obligations under each Operative Document and each Lease.

9.2 Authority. Both SPE and TSFC have the full power, authority and legal
right to enter into and perform its obligations under each Operative Document.

9.3 Principal Place of Business. As to each of SPE and TSFC, respectively,
its chief executive office and the office where it maintains its records
concerning payments under the Leases is in Livermore, California, and it will
not change such principal place of business or remove therefrom such records,
or any other records relating to the Collateral or any Loan, without at least
thirty (30) days prior written notice to Lender.

9.4 Binding Obligations. Each Operative Document has been duly authorized
and upon execution and delivery will constitute legal, valid and binding
obligations, enforceable against it, TSFC and CCI/Triad in accordance with the
terms thereof.

9.5 Approvals and Consents. No stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligation, or
authorization, consent, approval or license by, exemption from or registration
with, any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, is necessary in connection with the
execution, delivery and performance of obligations other than Lender's under
the Operative Documents, and no consent of any owner, lessor or mortgagee of
premises where any Equipment is located is needed to permit Lender or the
lessor to enforce the rights of the lessor under the Leases or, if required,
the same have been obtained and certified copies have been delivered to Lender.

9.6 Compliance with Laws. There is no law, governmental rule, regulation,
judgment, decree or order binding on it that would be contravened by the
execution and delivery of, and performance under, the Operative Documents. It
will at all times comply with, or cause to be complied with, all laws,
statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business which would materially
have an adverse impact upon SPE's business.

<PAGE> 33

interests, charges or encumbrances, except for liens for taxes due but not yet
payable and liens in favor of Lender, and shall promptly deliver to Lender any
executed counterparts of Leases which were not delivered to Lender pursuant to
Section 5.3(a) and which have subsequently come into TSFC's or CCI/Triad's
possession. Notwithstanding the foregoing, TSFC and SPE shall be entitled to
transfer to CCI/Triad or a subsidiary corporation of CCI/Triad record and
beneficial ownership of any Equipment subject to Leases in which TSFC is named
as Lessor, provided that:

(a) SPE remains fully bound under this Agreement with respect to
all Obligations, including the Obligations assumed by the
assignee;

(b) the assignee assumes in writing the Obligations of SPE under
this Agreement and recognizes the continuing validity and
priority of the lien of Lender in the Equipment; and

(c) the assignee executes any documentation reasonably required
by Lender to facilitate the foregoing provisions of this Section
9.7 and the Operating Agreement.

9.8 Filings. This Agreement and the Uniform Commercial Code filings made
pursuant hereto create in favor of Lender a valid and perfected first priority
security interest in the Collateral securing the Obligations.

9.9 Actions. There are no actions, suits, proceedings, claims or disputes
pending or, to its knowledge, threatened against or affecting it or TFSC or
their respective properties before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
that, if determined adversely to either of them, would have a material adverse
effect on their respective condition (financial or other), business
performance, operations, properties or prospects, their respective ability to
perform their respective obligations under the Operative Documents or the
Leases or Lender's security interest in the Collateral.

9.10 Payment of Taxes. It has filed and will file all tax returns
(federal, state and local) required to be filed and has paid all taxes shown
thereon to be due, including interest and penalties, unless it is contesting
the payment of certain taxes in good faith and has established adequate
reserves therefore.

9.11 Notices. It will send to Lender copies of all significant notices,
including, but not limited to, any notices with respect to the terms of any
Lease,

<PAGE> 34

and other instruments or communications required or permitted to be given by
the Lessee under any Lease.

9.12 Further Assurances; Enforcement of Leases. TSFC will: (a) preserve
and maintain its corporate existence and all rights, privileges and franchises
now enjoyed and conduct its business in an orderly, efficient and customary
manner; and (b) from time to time, at its own expense, take all actions
reasonably necessary to establish, preserve, protect and perfect the rights
created by this Agreement, including, without limitation, (i) the full and
punctual performance of all of its obligations under the Leases; (ii) the
enforcement of the Leases without waiver, amendment or modification; and (iii)
the exercise of any and all rights of the lessor under the Leases as may be
necessary or advisable to assure full compliance with the terms and provisions
thereof and to protect Lender's security interest in the Collateral.

9.13 Validity and Enforceability of Leases and Guaranties. Each Eligible
Lease and Guaranty submitted to Lender pursuant to Section 5.3 is genuine,
valid and enforceable and is not subject to any offset, deduction, counterclaim
or lien.

9.14 Leases Duly Entered Into. All parties to each Lease and Guaranty
have full authority and capacity to execute and deliver such Lease or Guaranty,
as the case may be. The entire agreement with each Lessee is embodied solely
in the executed counterparts of the applicable Lease and other documentation
furnished to Lender with respect to such Lease.

9.15 Equipment Description. Each Lease describes the Equipment leased to
the Lessee named in such Lease, the Rent required for such Equipment and any
applicable early termination payments.

9.16 Leases Comply with Laws. Each Lease complies with and does not
violate applicable laws, regulations or contractual specifications or
warranties, including without limitation, any applicable laws relating to
maximum rates of interest (whether or not imputed) or similar charges and all
required disclosures have been made with respect thereto under federal
truth-in-lending and truth-in-leasing regulations to the extent applicable.

9.17 No Impairment of Value or Rights. It will not do anything that might
impair the value of any Lease or Equipment or any of the rights or obligations
of the parties hereto under any Lease.

9.18 No Lessor Liens. No Lease submitted to Lender pursuant to Section
5.3, or any Equipment subject thereto, or any other of its rights therein, has
been assigned to, or be subject to, any lien or security interest in favor of,
any person other than Lender.

<PAGE> 35

9.19 Notifications. It will promptly notify Lender of:

(a) any Event of Default or event which, upon the lapse of time
or giving of notice, or both, would become an Event of Default,
or any event which is, or upon the lapse of time or giving of
notice, or both, would become a default under or breach of the
Operating Agreement;

(b) any and all litigation or other matters or events concerning
it or any Lessee that has a reasonable possibility of materially
and adversely affecting its or any Lessee's financial or other
condition, its business performance, operations, properties or
prospects or adversely affecting or Lender's security interest in
the Collateral.

9.20 Books and Records Financial and Other Information. SPE shall for
itself, and as to TSFC, shall cause TSFC to:

(a) maintain adequate books, accounts and records and prepare
all financial statements required hereunder in accordance with
generally accepted accounting principles and practices
consistently applied and in compliance with the regulations of
any governmental regulatory body having jurisdiction over it;

(b) give Lender and its representatives, at all reasonable times
and upon reasonable notice, access to all records, files and
books of accounting pertaining to all transactions subject to
this Agreement, and permit Lender and its representatives to
inspect, audit and make extracts therefrom;

(c) upon the occurrence of an Event of Default or an event
which, upon the lapse of time or giving of notice, or both, would
become an Event of Default, permit Lender to exercise the
inspection rights of TSFC under the Leases, on a non-exclusive
basis;

(d) deliver to Lender in form and detail satisfactory to Lender,
and in such reasonable number of copies as Lender may request:

<PAGE> 36

(i) as soon as available, but no later than thirty (30) days
after the end of each fiscal quarter, a quarterly financial
statement;

(ii) the lists of Lease receivables and statements showing the
aging of receivables as required by Section 7.4;

(iii) the statement of first loss provision required by Section
7.5;

(iv) such other information as Lender may reasonably request; and

(e) Deliver to Lender, in such reasonable number of copies as
Lender may request, as soon as available, but no later than
ninety (90) days after the end of each fiscal year, (I) the
audited annual financial statements of CCI and (ii) the annual
financial statements of TSFC, audited or reviewed if available,
or unaudited but signed by the principal financial officer of
TSFC.

9.21 Audit. It shall permit Lender, from time to time, upon reasonable
request and at Lender's sole expense, to conduct an audit of SPE's and/or
TSFC's accounting and operating procedures as they relate to the Leases,
provided such audit does not unreasonably interfere with SPE's or TSFC's normal
business operation.

9.22 Charges and Taxes. SPE shall make or arrange for all filings in
respect of and pay (or reimburse Lender for, upon presentation of an invoice)
all charges and local, state or federal taxes (other than net income taxes of
the Lender or franchise taxes levied upon Lender's net income), license fees,
or other assessments, charges, fines and penalties, together with interest
payable with respect thereto, levied or imposed upon or in connection with this
Agreement, the Leases, the Equipment, the Rent and the Proceeds. Upon request
of Lender, SPE shall cause TSFC to furnish Lender written evidence of such
payment.

9.23 Financial Covenants.

(a) the Tangible Net Worth of TSFC shall at all times at or
prior to the Anniversary Date be at least $17,500,000.00;

<PAGE> 37

(b) the ratio of TSFC's total consolidated debt (including
subordinated debt) to TSFC's Tangible Net Worth shall at all
times at or prior to the Anniversary Date be no greater than 3 to
1;

Compliance with Section 9.23 shall be made in accordance with generally
accepted accounting principles, consistently applied, as to both classification
and amounts.

9.24 Maximum Requests for Loans Per Month. It will make no more than a
combined total of three (3) requests for Loans, under Section 3.1, during each
thirty day period.

10. REPOSSESSION AND REMARKETING

10.1 Request to Repossess; Remarketing. In the event that SPE does not
perform its obligations under Section 8.4 by reason of the limitation on its
liability set forth therein, upon Lender's determination that a default exists
under a Lease financed or refinanced by a Discount Facility Loan, either
through notification by SPE or TSFC pursuant to Section 9.19 or otherwise, and
that such default remains uncured within the time, if any, for curing the same
permitted by the Lease, Lender, as secured party under this Agreement, may
request SPE to cause TSFC to act as Lender's agent, and upon such request TSFC
will, as such agent, use diligent efforts to repossess the Equipment subject to
such Lease as promptly and efficiently as is legally permissible. Thereafter
TSFC will refurbish and update, as needed, and, for a period of one hundred
twenty (120) days or such other period as TSFC and Lender may agree upon in
writing from the date the Equipment is repossessed (the "Remarketing Period"),
attempt to sell or release such Equipment on a non-priority (but
non-discriminatory) basis and on such terms and conditions as reflect fair
market value for similar equipment and are acceptable to Lender, in its sole
discretion. SPE shall cause TSFC to give no less priority to remarketing
Equipment pursuant to this Section 10.1 than it would similar equipment owned,
leased or managed by TSFC. The obligations of TSFC to remarket such Equipment
for sale or lease shall include, but not be limited to, efforts to sell such
Equipment, preparation and supervision of the documentation of each transaction
and an accounting of the activities referred to in this Section 10.1, including
information relative to the status of negotiations for offers made in respect
of such Equipment.

<PAGE> 38

Equipment, it shall retain Proceeds in an amount equal to the Loan Repayment
Amount applicable to the Loan financing the Lease to which such Equipment was
subject and any Remarketing Expenses incurred by Lender and shall remit the
Excess Proceeds to SPE.

Nothing contained in this Section 10.1 shall be deemed to constitute a
release by Lender of its security interest in any of the Collateral. Lender
shall release its security interest in Equipment which has been sold pursuant
to this Section 10.1.

10.2 Remarketing Expenses. Remarketing Expenses shall be for the account
of the party incurring such expenses and shall be recoverable from Proceeds of
such remarketing realized by the party remarketing the Equipment.

10.3 Assignment. The rights and obligations of any party under this
Section 10 may be assigned only with the written consent of all parties.

10.4 No Guaranty. Notwithstanding anything contained herein to the
contrary, the obligations and duties of SPE contained in this Section 10 shall
not be construed to include a guarantee by SPE that the Remarketing Proceeds
with respect to any Equipment will equal or exceed the Loan Repayment Amount
relating to such Equipment.

11. EVENTS OF DEFAULT, REMEDIES

11.1 Events of Default. Any one of the following events shall constitute
an "Event of Default" hereunder:

(a) SPE shall fail to remit to Lender when due any Lease
Proceeds or Proceeds of an item of Equipment received by SPE or
TSFC, or shall fail to make any payment required hereunder, in
each case within five (5) days of the date due thereof;

(b) SPE shall fail to observe or perform any other obligation
hereunder, or under any other agreement between Lender and SPE,
which is not corrected or in the process of being corrected
within thirty (30) days of written notice thereof from Lender;

(c) any covenant, representation or warranty made by SPE, TSFC
or CCI/Triad to Lender in any Operative Document or in any
certificate delivered pursuant thereto shall be untrue in any
material respect when

<PAGE> 39

made or during any period of time for which it is enforceable or
shall be breached by SPE, TSFC or CCI/Triad. Notwithstanding the
foregoing, to the extent that such a breach occurs, and such
breach relates to an individual Lease, SPE shall have thirty
(30) days from receipt of demand by Lender to repurchase the
Lease pursuant to the terms of the Mandatory Prepayment clause
set forth at Paragraph 3.7 herein. SPE's failure to repurchase
such a Lease within said thirty (30) day period shall then
constitute an Event of Default under this subparagraph (c).

(d) an injunction, attachment or other legal process shall
issue against any material part of SPE's or TSFC's property or a
material judgment or lien shall be filed against SPE or TSFC
which is not stayed, vacated, bonded, or otherwise discharged
within ninety (90) days after the date of entry thereof;

(e) SPE, TSFC or CCI/Triad shall cease to do business as a going
concern, shall become bankrupt, shall make an assignment for the
benefit of creditors or otherwise take advantage of the
bankruptcy or any other law for the relief of debtors; a trustee
or receiver for SPE, TSFC or CCI/Triad shall be appointed or
there shall be filed by or against SPE, TSFC or CCI/Triad any
petition under any provision of the Federal Bankruptcy Code, as
amended, and such petition shall not be dismissed, withdrawn, or
otherwise eliminated within ninety (90) days after the filing
thereof;

(f) any ERISA plan of CCI/Triad, SPE or TSFC shall terminate,
or CCI/Triad, SPE or TSFC shall fully or partially withdraw from
such a plan or plan which could result in liability of CCI/Triad,
TSFC or SPE to the Pension Benefit Guaranty Corporation or to
such plan or plans in the Aggregate amount of One Million Dollars
($1,000,000) or more (in excess of any applicable insurance).

11.2 Remedies. (a) If an Event of Default shall have occurred, and such
Event of Default had not been cured within an applicable cure period, and
further upon notice of such Event of Default to SPE ,Lender shall have the
right to do any or all of the following:

<PAGE> 40

(i) complete and deliver to the Lessees the notices received by
Lender from SPE pursuant to Section 5.3(f) and to commence direct
collection of the Rents until such time as Lender has received
the total Loan Repayment Amount of all Loans due under the
Agreement;

(ii) (1) exercise of any of the Lessor's rights under any of the
Leases, or (2) by written notice, require SPE to exercise on
behalf of Lender as secured party under this Agreement any and
all of the rights available to the Lessor under any Lease to the
extent not already exercised by SPE, whereupon SPE shall
immediately take all requested action;

(iii) discontinue making Loans; or

(iv) proceed against SPE, TSFC, CCI/Triad or all of them, for all
rights and remedies Lender may have in law or in equity under
this Agreement and/or the Operating Agreement.

(b) Upon the occurrence of an Event of Default, or upon the failure of a
Lessee to perform its obligation under a Lease, Lender shall have and may
exercise all the rights and remedies of a secured party under the California
Uniform Commercial Code (expressly including, but not limited to, those granted
under 9-502(1) and 9-306 dealing with retention of cash proceeds); and any
other applicable laws (including but not limited to the right to assume direct
collection of any and all Leases and retain any and all cash proceeds collected
under the leases until such time that Lender has received the total Loan
Repayment Amount of all Loans due under this Agreement); provided, however,
that so long as Lessee under a Lease is not in default thereunder, Lender shall
not take any action or exercise any right that would disturb such Lessee's full
and quiet enjoyment of all of such Lessee's rights under that Lease. Lender
will give SPE reasonable notice of the time and place of any public sale of any
Collateral or of the time after which any public or private sale of such
Collateral or any other intended disposition thereof is to be made. Unless
otherwise provided by law, the requirement of reasonable notice shall be met if
such notice is delivered at least ten (10) days before or mailed, postage
prepaid, to SPE, at least twenty (20) days before the time of such sale or
disposition. Subject to applicable provisions of this Agreement, Collateral
proceeds including, but not limited to, the proceeds of any sale or disposition
of Collateral shall be applied: first, to the expense of settling all liens and
claims against such Collateral and all reasonable costs, charges and expenses
incurred by Lender in connection with the Event of Default, Lender's exercise
of remedies under this Section 11.2

<PAGE> 41

(including without limitation those described in Section 12.4), and in taking,
removing, holding, preparing for sale and selling the Equipment; second, to the
payment of the remaining total Loan Repayment Amount of all Loans; third, to
any other unpaid obligations of SPE hereunder; or of TSFC, or CCI/Triad under
the Operating Agreement and fourth, any remaining proceeds shall be paid to
SPE.

(c) Notwithstanding the foregoing, Lender shall have the right to
discontinue making Loans at any time in its sole discretion, whether or not an
Event of Default has occurred.

(d) Nothing contained in this Section 11.2 shall entitle Lender to
recourse against SPE with respect to payment of the Loans which is not
expressly granted to Lender by this Agreement.

12. MISCELLANEOUS

12.1 General. Waiver of any particular default shall not be a waiver of
any other default. All Lender's rights are cumulative and not alternative. No
waiver or change modification or amendment in this Agreement shall bind Lender
or SPE unless an officer of Lender and SPE, has agreed to such waiver or
change modification or amendment in writing. Any provision of this Agreement
contrary to, prohibited by or invalid under applicable laws or regulations
shall be inapplicable and deemed omitted herefrom, but shall not invalidate the
remaining provisions hereof. No oral agreement, guaranty or warranty shall be
binding. This Agreement shall be governed by the laws of California.

12.2 Notices. All notices, demands, directions, consents and approvals
hereunder shall be in writing and shall be delivered in person, by telecopy, by
overnight courier or by prepaid certified mail, addressed to the party for whom
it is intended, if to

CCI/Triad Financial Holding Corporation
3055 Triad Drive
Livermore, California, 94550
Attention: William Allen, President
Telecopy No. 510-455-6471

with a copy to Corporate Counsel;

if to Lender, the party stated in Section E. Of the Schedule 1 document,

<PAGE> 42

and shall be deemed delivered on the day of actual receipt. Either party may
change its' address for the receipt of notices, demands, directions, consents,
and approvals by notice duly given to the other party pursuant to this Section
12.2.

Notices may also effectively be given by transmitting over electronic
devices such as facsimile machine, if either party to whom such notice is being
sent has such device in its office. Notices given by electronic transmitting
devices shall be deemed effective on the date of transmission.

12.3 Waivers. Lender and SPE hereby respectively waives demand,
presentment, protest and notice thereof with respect to any and all
instruments, notice of acceptance hereof, and all other demands and notices of
any description, except as expressly provided herein. No delay or omissions on
the part of either party in exercising any right, remedy, option, or notice of
default, except as any pertinent statute of limitations which may apply, on any
one occasion, shall be construed as a bar to or waiver of any other default,
right, remedy or option, or the same default, right, remedy or option on any
future occasion.

12.4 Costs and Expenses. In any case where Lender or SPE is entitled
hereunder to reimbursement of costs and expenses, such costs and expenses shall
include interest on any judgment and court costs, reasonable legal fees and
expenses (including allocated fees of internal counsel).

12.5 Successors; Assigns. This Agreement shall inure to the benefit of
and be binding upon Lender and SPE and their respective successors and
permitted assigns. Neither party may assign this Agreement without the other
party's consent, unless such assignment is to any wholly owned subsidiary,
parent or affiliate of the assigning party. If either party does not consent to
such proposed assignment, SPE shall have the option to prepay the outstanding
aggregate Loan Repayment Amount to Lender at a price to be determined by mutual
agreement of the parties.

12.6 Entire Agreement. The terms and conditions herein contained
constitute the entire agreement between Lender and SPE with respect to the
subject matter hereof, except to the extent other agreements are referred to
herein or contemplated hereby or executed contemporaneously herewith, and
supersede all previous communications whether oral or written between Lender
and SPE with respect to such subject matter. No agreement or understanding
varying or extending any rights or obligations hereunder of either of the
parties shall be binding unless in a writing signed by a duly authorized
officer or representative of the party against which such variance or extension
is sought to be enforced.

<PAGE> 43

12.7 Headings; Titles. The cover, table of contents and titles for
Sections used in this Agreement are intended to be descriptive only and shall
not be deemed to limit, extend or in any way modify the meaning of the text of
this Agreement. References to integral sections without decimals include all
decimal sections within such integral sections.

12.8 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original and all of which,
taken together, shall constitute but one and the same instrument.

-------------------------------END----------------------------

<PAGE> 44

EXHIBIT A
TO
LOAN AND SECURITY AGREEMENT

SUBORDINATION AGREEMENT

1. Each of the undersigned secured parties (collectively known herein as
"Secured Parties" and individually known herein as "Secured Party"),
understands that each of the other Secured Parties presently holds or asserts,
and/or may hereafter hold or assert, ownership and/or security interests in
property of TRIAD SYSTEMS FINANCIAL CORPORATION ("TSFC") and/or CCI/TRIAD
FINANCIAL HOLDING CORPORATION ("SPE"), in respect of various lease financing
arrangements between SPE, TSFC, COOPERATIVE COMPUTING, INC. ("CCI"), and each
of the other Secured Parties.

2. Each of the Secured Parties will from time to time acquire or discount,
and in connection therewith, acquire, from any one or more of SPE, TSFC and/or
CCI, chattel paper, including but not limited to leases of equipment, related
lease documents, and any related credit support documents.

3. Definitions:

(a) As used herein "Paper" means and includes all chattel paper
at any time or times, heretofore or hereafter, acquired or to be
acquired by a Secured Party from any one or more of SPE, CCI and/or
TSFC , pursuant to a discounting or other financing agreement, or upon
sale, or by purchase, including but not limited to leases of property,
related lease documents and related credit support documents; and in
all events said term shall include, without limitation, any and all
interests of the Secured Party in such chattel paper and/or such
documents including, without limitation, all rights, claims, benefits
and other interests at any time or times existing or arising in, to or
under, or in relation to such chattel paper and/or such documents.

(b) As used herein, the term "Equipment" means and includes all
personal property at any time or times, heretofore or hereafter,
leased or to be leased under a lease or leases included in any of the
Paper of a Secured Party, whether or not such property may be or
become fixtures.

<PAGE> 45

(c) As used herein, the term "Superior Secured Party" means and
includes a Secured Party whose right, title to and interest
(including, without limitation, ownership interests and/or security
interests) in such Superior Secured Party's Paper and Equipment is or
becomes, by virtue of the express provisions of this Agreement
hereinafter set forth, superior to and acquires hereby priority over
any and all interests (including, without limitation, ownership
interests and/or security interests) which the other Secured Parties
may at any time or time have, hold or assert therein.

4. Each Secured Party hereby agrees with the other Secured Parties that
all of its right, title to and interest (including, without limitation,
ownership interests and/or security interests) in all property (including,
without limitation, the Paper of the other Secured Parties and/or the Equipment
of the other Secured Parties) which it acquires or discounts at any time or
from time to time, from any one or more of SPE, CCI and/or TSFC, shall be or
remain fully subordinated to the interests therein of the other Secured Parties
and/or completely released with respect thereto in accordance with and only in
accordance with, the following provisions:

Each Secured Party agrees that,

(i) by its execution of this Agreement, any and all right, title
to and interest (including, without limitation, ownership
interests and/or security interests) which such Secured Party may
at any time or times have, hold or assert in any Paper and/or
Equipment of another Secured Party and all proceeds thereof shall
be and remain, or shall thereby become and remain, fully and
effectively subordinated to all of such other Secured Party's
interests therein, including, without limitation, such other
Secured Party's title thereto, ownership thereof, and/or any and
all other rights, claims, benefits and other interests of such
other Secured Party therein at any time or times existing or
arising;

(ii) this subordination shall be or become effective in each
instance, and a Secured Party shall be or become a Superior
Secured Party, by virtue of, and only by virtue of, delivery
(whether heretofore or hereafter) to the Superior Secured Party
by any one or more of SPE, CCI or TSFC and possession (whether
heretofore or hereafter) by such Superior Secured Party of an

<PAGE> 46

executed form of assignment of an item of the Paper of the
Superior Secured Party and the single original executed item of
the Paper (whether heretofore or hereafter), so marked,
identifying or describing the property subject thereto;

(iii) a Superior Secured Party's ownership interest and/or
security interest in its Paper and Equipment is or shall be
superior to and have priority over any and all interests
(including, without limitation, ownership interests and/or
security interests) which the other Secured Parties may at any
time or times have, hold or assert therein, irrespective of the
time or order of attachment or the time or order of perfection of
any such ownership interests and/or security interests, or the
time of filing financing statements, or the time of giving or
failing to give notice of acquisition of purchase money or other
ownership interests and or security interests;

(iv) if a Secured Party is or becomes a Superior Secured Party
with respect to any Paper, such Superior Secured Party shall
automatically and simultaneously be or becomes a Superior Secured
Party with respect to any Equipment leased or to be leased under
a lease or leases included in any such Paper;

(v) this subordination is or shall be applicable to the Paper
and Equipment of each Secured Party.

5. Any Secured Party may unilaterally withdraw from this Agreement as to
future transactions effective upon (i) not less than twenty (20) days written
notice thereof to all other Parties hereto and (ii) its effectuation of a
complete termination and release from any and all financing statements and/or
other filed or recorded security documents which such Secured Party may hold in
connection with any one or more of SPE, TSFC and/or CCI, of all Paper and
Equipment excepting only such Paper and Equipment held by such Secured Party as
of the date of withdrawal and as to which such Secured Party holds a ownership
interest and/or security interest therein.

Any such withdrawal from this Agreement by a Secured Party shall have no
effect upon, or alter the rights of the other Secured Parties respecting
transactions occurring prior to the effective date of the withdrawal, except as
expressly set forth in this Agreement.

<PAGE> 47

6. Each Secured Party agrees that, if and to the extent requested by any
superior Secured Party with respect to the Paper and Equipment of such Superior
Secured Party as to which the ownership interests and/or Security interests of
all the Secured Parties except such Superior Secured Party have been or are
subordinated pursuant to this Agreement, it will effectively and completely
release all of its ownership interests and/or Security interests at any time
existing or arising in the property designated by such request, and will
promptly execute and deliver such documents and instruments as may be necessary
to exclude or release such designated property from any and all financing
statements and/or other filed or recorded security documents which it may hold
affecting such Superior Secured Party's ownership interests and/or security
interests therein.

7. Until all obligations of SPE, TSFC and/or CCI to a Superior Secured
Party with respect to an ownership interest and/or which are secured by a
security interest in any Paper or Equipment of the Superior Secured Party have
been fully discharged, each other Secured Party agrees that it will not
knowingly receive, accept or retain, or take any action affecting, such Paper
or Equipment of such Superior Secured Party.

8. It is expressly acknowledged by each of the Secured Parties that any
one or more of SPE, CCI and/or TSFC intend, from time to time hereafter, to
enter into various lease financing arrangements with one or more parties other
than the Secured Parties, and that such other parties are likely to require, as
a condition to entering into such lease financing arrangements with any one or
more of SPE, CCI and/or TSFC, that this Agreement be amended so as to permit
such other parties to become parties to this Agreement, as additional Secured
Parties. Each of the Secured Parties agrees, promptly upon request of SPE, CCI
and/or TSFC, from time to time hereafter, to execute and deliver amendments to
this Agreement, in the form of Exhibit "A", together with such other documents
or instruments as are necessary or incident thereto, providing for the
admission of one or more additional parties or Secured Parties hereunder, and
for the entitlement of such other parties or Secured Parties to become Superior
Secured Parties, but only in accordance with the express conditions and
provisions of this Agreement.

9. No delay on the part of any Secured Party in the exercise of any right
or remedy shall operate as a waiver thereof, and no single or partial exercise
by any Secured Party of any right or remedy shall preclude other or further
exercise thereof, or the exercise of any other right or remedy.

10. This Agreement supersedes and replaces all previous subordination
agreements between the Secured Parties with respect to any Paper and Equipment
of the Secured Parties.

<PAGE> 48

11. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute a single
agreement.

ASSENT:

TRIAD SYSTEMS FINANCIAL COOPERATIVE COMPUTING, INC.
CORPORATION

By: _________________________ By: _________________________

Title: ______________________ Title:_______________________

CCI/TRIAD FINANCIAL
HOLDING CORPORATION

By: _________________________

Title: ______________________

BA CREDIT CORPORATION MITSUI VENDOR LEASING
U.S.A., INC.

By: _________________________ By: _________________________

Title: ______________________ Title: ______________________

NEWCOURT FINANCIAL HELLER FINANCIAL, INC.
U.S.A., INC.

By: _________________________ By: _________________________

Title: ______________________ Title:_______________________

MELLON US LEASING, NORWEST EQUIPMENT
A DIVISION OF FINANCE, INC.
MELLON LEASING CORPORATION

By: _________________________ By: _________________________

Title: ______________________ Title:_______________________

<PAGE> 49

METLIFE CAPITAL CORPORATION SANWA BUSINESS CREDIT
CORPORATION

By: ________________________ By: _________________________

Title: _______________________ Title: ________________________

<PAGE> 50

AGREEMENT OF ADMISSION

ADDITIONAL SECURED PARTIES

Reference is made to that certain Subordination Agreement a copy of which is
attached hereto as Exhibit "A" (the "Subordination Agreement"). Terms used
herein shall have the same meaning as terms defined in the Subordination
Agreement.

WHEREAS, CCI/Triad Financial Holding Corporation ("SPE"), and/or Triad
Systems Financial Corporation ("TSFC") intends to enter into lease financing
arrangements with ______________________________ ("Additional Lender"), and

WHEREAS, Additional Lender has required as a condition to entering into
said lease financing arrangements that the Subordination Agreement be amended
to permit it them to become party thereto;

NOW, THEREFORE:

1. The undersigned Secured Parties hereby admit Additional
Lender as an additional Secured Party to the Subordination
Agreement, with all the rights and privileges thereto pertaining,
subject, however, to the express terms, conditions and provisions
thereof.

2. The agreement of Additional Lender to the terms, conditions
and provisions of the Subordination Agreement is set forth below.

3 The assent of SPE, Cooperative Computing, Inc. and TSFC to
this Agreement are also set forth below.

This Agreement may be executed in any number of counterparts, each of which
shall be an original, but all of which shall constitute a single agreement.

<PAGE> 51

EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT

OPERATING AND SUPPORT AGREEMENT

OPERATING AND SUPPORT AGREEMENT entered into as of January 1, 1997 among
COOPERATIVE COMPUTING, INC. dba TRIAD SYSTEMS CORPORATION, a Delaware
corporation ("CCI/Triad"), its wholly-owned subsidiaries, TRIAD SYSTEMS
FINANCIAL CORPORATION, a California corporation ("TSFC"), CCI/TRIAD FINANCIAL
HOLDING CORPORATION , a California corporation ("SPE") and HELLER FINANCIAL,
INC.), a Delaware corporation ("Lender").

INTRODUCTION

1. CCI/Triad is in the business of manufacturing and marketing computer
systems ("System(s)"), and providing servicing therefor.

2. TSFC is in the business of purchasing Systems for the purpose of
leasing the same to the end-users thereof, some part of which leases are sold
and transferred to SPE for good consideration.

3. TSFC, from time to time, enters into sale and collection assignment
agreements with SPE under which TSFC sells to SPE receivables due TSFC under
the leases and assigns a security interest in the leases, and the equipment
subject to such leases.

4. SPE has entered into a Loan and Security Agreement dated as of January
1, 1997 with Lender (the "Loan and Security Agreement") pursuant to which
Lender agrees to lend to SPE the discounted value of certain lease receivables
and SPE agrees, in order to secure repayment of such loans, to grant to Lender
a security interest in such receivables, the related leased equipment and the
related leases.

NOW, THEREFORE, in consideration of the mutual covenants of the parties,
it is agreed as follows:

<PAGE> 52

1. Definitions. As used herein, the following terms shall have the
meanings set forth below:

(a) "Lease" shall have the same meaning as defined in Section 1.18 of
the Loan and Security Agreement.

(b) "Customer" shall mean any person who leases a System under a
Lease.

(d) "Obligations" shall have the same meaning as defined in Section 6.1
of the Loan and Security Agreement.

2. Marketing Opportunity. TSFC agrees that CCI/Triad may offer to its
Customers interested in leasing a System the alternative of entering into a
Lease with TSFC upon such terms as shall be fixed from time to time by TSFC.
TSFC shall have and retain the right to reject any Customer interested in
acquiring a System, but if TSFC and the Customer enter into a Lease with
respect to a System, then CCI/Triad agrees to sell to TSFC such System on the
terms and conditions hereinafter set forth.

3. Sale of System. If TSFC and a Customer enter into a Lease with respect
to a System, then CCI/Triad agrees to sell such System to TSFC, to install the
System at the location designated by Customer, and to provide all installation
and initial services required to obtain the acceptance by Customer of said
System.

4. Price. The sales price of any System sold by CCI/Triad to TSFC in
accordance with this Agreement shall be CCI/Triad's usual list price for the
System, less any discount, acceptable to CCI/Triad, agreed upon in writing
between TSFC and the Customer, plus all insurance, transportation, customs,
license, registration, sales, use, excise, or other taxes or assessments and,
if applicable, all costs arising from the exportation of a System from the
United States of America and its importation and sale or lease and installation
into the country of destination. Such price shall include all installation,
cables, instruments, and related services in connection with the normal
installation of a System by CCI/Triad.

5. Payment Terms. CCI/Triad will invoice TSFC for the sales price set
forth in Paragraph 4 within ten (10) days after the date of acceptance of the
System by the Customer. The invoice shall conclusively establish the sale by
CCI/Triad to TSFC of all CCI/Triad's right, title and interest in and to the

<PAGE> 53

equipment described in the invoice. The invoice shall further constitute
confirmation by CCI/Triad of the representation and warranty by CCI/Triad to
TSFC and its respective successors and assigns, that (i) CCI/Triad had good and
valid title to the equipment and software described in the invoice, free of all
liens, security interests, encumbrances, pledges, charges and claims of any
kind; (ii) CCI/Triad will defend the title to that equipment and software
against all claims and demands of all persons whomsoever; and (iii) no consent
by any person is required for the assignment and other transfers made by the
Agreement, or, if any such consent is required, such consent has been duly
obtained.

6. TSFC's Transfer to SPE. TSFC will sell and transfer to SPE certain of
its rights and interests in the Leases, computer systems, software and
equipment, as appropriate to provide security for the Loan and Security
Agreement.

7. Warranty. CCI/Triad warrants to TSFC and Lender only that the Systems
to be delivered hereunder, at the time of delivery and for a period of ninety
(90) days thereafter, will be free from defects in material and workmanship.
CCI/Triad's liability under the foregoing warranty shall be limited to the
repair or replacement, at its option and expense, of any defective or non
conforming part of the System, F.O.B. manufacture or repair site. CCI/Triad
makes no other warranty or representation to TSFC, SPE, Lender or any Customer,
whether express or implied, including any implied warranties of merchantability
or fitness for a particular purpose. TSFC is authorized to extend to the
Customer the foregoing warranty provision and agrees that no Lease entered into
by it shall contain any warranty other than the foregoing.

8. Software. CCI/Triad grants to TSFC and SPE a non-exclusive license,
with the right to relicense any Customer, to use (and to assign a security
interest therein to Lender) any and all software required to operate, a System
sold hereunder.

9. Patents. CCI/Triad agrees and authorizes TSFC and SPE to agree on the
behalf and for the account of CCI/Triad that CCI/Triad will defend, at its own
expense, any action or proceeding brought against a Customer to establish that
all or part of a System (including software) constitutes an infringement of or
violation of any lawful patent or copyright and will pay any damages or cost
awarded therein against any Customer by reason of any such infringement,
including reasonable legal fees and expenses incurred by Lender provided that
CCI/Triad shall be informed in writing of any such proceeding as soon as is
practicable after its commencement and given the right to control the defense
thereof. If any part of the System is found by final judgment of any competent
tribunal to infringe or violate any patent or copyright, and the use thereof is
enjoined, then CCI/Triad shall, within ninety (90) days, at its sole election
and

<PAGE> 54

expense, either (i) obtain authorization for the Customer or Lender or its
assignee to continue using the part thereof so enjoined, or (ii) replace the
part thereof so enjoined with a comparable, non infringing part, or (iii)
modify the part thereof so enjoined to eliminate the infringement, or (iv)
remove the System and repurchase the System for the unpaid portion of the
purchase price or the unamortized portion of the capitalized value of the Lease
related thereto, whichever is applicable. The foregoing states CCI/Triad's
whole complete responsibility or liability with respect thereto.

10. Insurance. CCI/Triad agrees to maintain adequate insurance on any
System sold hereunder for the full value thereof until such date as TSFC
acquires title to the System.

11. Support.

(a) CCI/Triad represents to Lender that it owns 100% of the stock of
TSFC and TSFC owns 100% of SPE, and CCI/Triad agrees that it will maintain its
existing control of TSFC and TSFC agrees it will maintain its existing control
of SPE.

(b) CCI/Triad and TSFC each agree that they each will cause SPE to
comply in a timely manner with its Obligations herein and under the Loan and
Security Agreement by making equity contributions or subordinated loans to SPE
in amounts sufficient to enable SPE to comply with such Obligations.

(c) SPE, TSFC and CCI/Triad authorize Lender, without notice or demand,
and without affecting their respective liabilities hereunder, from time to
time, to:

(i) renew, compromise, extend, accelerate or otherwise change the
time for payment of, or otherwise change the terms of the Obligations of Lessees
under Leases assigned to Lender or the Obligations or any part thereof;

(ii) take and hold security for such Obligations or the Obligations,
and exchange, enforce, waive and release any such security; and

(iii) apply such security and direct the order and manner of sale
thereof as Lender, in its discretion, may determine. Lender may, without
notice, assign its rights in this Agreement in whole or in part.

(d) (i) SPE, TSFC and CCI/Triad each respectively waive any right to
require Lender to (a) proceed against any other party, or (b) proceed against
or exhaust any security held from SPE or (c) pursue any other remedy in
Lender's power whatsoever. SPE, TSFC and CCI/Triad each respectively waive

<PAGE> 55

any defense arising by reason of the cessation from any cause whatsoever of the
liability of any other person. Until all the Obligations of Customers under
Leases assigned to Lender and the Obligations shall have been paid in full,
SPE, TSFC and CCI/Triad each respectively waive any interest in the security
held by Lender and any benefit, and any right to participate in, any security
now or hereafter held by Lender.

(ii) SPE, TSFC and CCI/Triad each respectively waive all
presentments, demands for performance, notices of non-performance, protests,
notices of dishonor, and notices of acceptance of this Agreement, and each
respectively waives the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof.

(e) CCI/Triad agrees that it shall assume all liability for, and shall
indemnify and hold harmless TSFC, Lender and their respective assignees from
any and all claims, actions, suits, proceedings, costs, expenses, damages and
liabilities, including attorneys' fees, arising out of or relating to any
negligent acts of TSFC claimed to have been committed in connection with the
sale or lease of Systems to Customers or such assignees.

12. Term. This Agreement shall continue in effect until terminated by
mutual agreement of the parties; provided, however, that any party may
terminate this Agreement upon three (3) months' written notice of such
termination to the other parties, but no such termination shall have the effect
of terminating any of the rights, obligations or liabilities of any party with
respect to Systems theretofore sold and purchased pursuant hereto.
Notwithstanding the foregoing, this Agreement shall remain in full force and
effect, and may not be terminated, as long as any Lease assigned by SPE to
Lender pursuant to the Loan and Security Agreement remains in effect.

13. Further Assurance. The parties hereto shall cooperate with each other
in the preparation and execution of such documents and the taking of such
actions as may be reasonably necessary to carry out the provisions and purposes
of this Agreement.

14. Compensation. TSFC agrees to perform such services (including
billing, for the account of SPE, of amounts due under Agreements) and provide
such facilities for SPE as are reasonably required to conduct the business of
SPE. SPE agrees to compensate TSFC for its services at reasonable fees as
mutually agreed from time to time.

15. Remarketing Support. CCI/Triad and TSFC each agrees to provide
remarketing support to SPE to enable it to perform its Obligations under
Section 10 of the Loan and Security Agreement.

<PAGE> 56

16. Notices. All notices given or made hereunder shall be deemed to have
been given when made in writing and hand delivered to, or deposited in the
mail, first class postage prepaid, addressed to, the other parties as follows
(or such other address as any party hereto may from time to time designate in
writing to the others):

Cooperative Computing, Inc.
3055 Triad Drive
Livermore, CA 94550
Attention: President
with a copy to Corporate Counsel

Triad Systems Financial Corporation
3055 Triad Drive
Livermore, CA 94550
Attention: President
with a copy to Corporate Counsel

CCI/Triad Financial Holding Corporation
3055 Triad Drive
Livermore, CA 94550
Attention: President
with a copy to Corporate Counsel

Heller Financial, Inc.
525 West Monroe Street Suite 1600
Chicago, IL 60661-3693
Attn: President, Heller Sales Finance

17. Successors; Assigns. Neither CCI/Triad nor TSFC shall assign its
obligations hereunder without the consent of the other parties hereto. This
Agreement shall inure to the benefit of the successors and assigns of
CCI/Triad, TSFC and Lender.

18. Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of California.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunder duly authorized as of the day
and year first above written.

<PAGE> 57

COOPERATIVE COMPUTING, INC. ('CCI/Triad")

By:_______________________________

Its:_______________________________

TRIAD SYSTEMS FINANCIAL CORPORATION ("TSFC")

By:_______________________________

Its:_______________________________

CCI/TRIAD FINANCIAL HOLDING CORPORATION("SPE")

By:________________________________

Its:_________________________________

HELLER FINANCIAL, INC. ("Lender")

By:_________________________________

Its:_________________________________

<PAGE> 58

EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT

SECURITY SUPPLEMENT NO. _____

Security Supplement No. ______, dated ____________, 19___ by CCI/TRIAD
FINANCIAL HOLDING CORPORATION as borrower ("Debtor") under a Loan and Security
Agreement dated as of January 1, 1997 (the "Agreement") with HELLER FINANCIAL,
INC., as lender ("Secured Party"). Capitalized terms used herein are used with
the meaning given in the Agreement.

RECITALS

A. The Agreement provides for the execution and delivery from time to time
of Security Supplements thereto substantially in the form hereof, each of which
shall particularly describe Rent, Equipment, Leases, and other property to be
assigned and included in the Collateral under the Agreement.

B. The Agreement relates to the Equipment, the Leases, all Rents and other
payments due from Lessees thereunder, and other property described therein.

NOW THEREFORE, THIS SUPPLEMENT WITNESSETH:

1. Debtor confirms that the Equipment described in the Schedule hereto has
been delivered to the Lessee(s) named in the Schedule, is located on the
properties described in the relevant Leases, and is part of the Collateral
under the Agreement, subject to the security interest with respect thereto
granted thereby.

2. In consideration of and in order to induce Secured Party to make Loans
to Debtor, and in order to secure (a) the prompt repayment of the Loans and
payment of all interest accrued thereon, (b) the strict performance and
observance by Debtor of the obligations to be performed by it under the
Agreement and (c) all costs of litigation, collection (including attorneys
fees) or other costs expended or incurred in connection with the enforcement of
Secured Party's rights under the Agreement (collectively, the ("Obligations"):

<PAGE> 59

GRANTING CLAUSE

Debtor hereby grants a security interest in favor of Secured Party in
all of the Leases, Guaranties and Equipment described in the Schedule hereto to
the full extent set forth in Section 6 of the Agreement.

3. Debtor has full power and authority to execute this Security
Supplement.

4. If any assigned moneys are received by Debtor, the same will be
delivered to Secured Party as provided in the Agreement.

5. Debtor hereby confirms as of the date hereof its representations and
warranties contained in Sections 9(b) and 9(c) of the Agreement.

6. This Security Supplement shall be construed as supplemental to the
Agreement and shall form a part thereof. As supplemented hereby, the Agreement
is in all respects ratified, approved and confirmed, and the Agreement and this
Security Supplement shall together constitute one and the same instrument.

7. This Security Supplement is being delivered in, and shall in all
respects be governed by and construed in accordance with, the laws of
California.

8. This Security Supplement may be executed in separate counterparts, each
of which when so executed and delivered shall be an original, but all such
counterparts shall together constitute but one and the same Security
Supplement.

IN WITNESS WHEREOF, Debtor has caused this Security Supplement to be duly
executed by one of its officers thereunto duly authorized, as of the day and
year first above written.

CCI/TRIAD FINANCIAL HOLDING CORPORATION

By: _________________________

Title:_______________________

Accepted:

<PAGE> 60

HELLER FINANCIAL, INC.

By: _________________________

Title: ______________________

<PAGE> 61

EXHIBIT D
TO
LOAN AND SECURITY AGREEMENT

NOTICE OF ASSIGNMENT

[Date]

TO: [Name and Address of Lessee]

You are currently leasing from Triad Systems Financial Corporation
("TSFC") a computer system or systems, equipment and/or software. Notice is
hereby given that, pursuant to a Loan and Security Agreement dated as of
____________, 199__ between TSFC's assignee, CCI/Triad Financial Holding
Corporation, and ___________________________ ("Lender"), a security interest in
your lease and the related equipment was granted to Lender. As provided in
your lease, you are hereby directed to make all payments of rent and other
amounts due under your lease directly to
__________________________________________ or at such other address as Lender
may direct.

Very truly yours,

TRIAD SYSTEMS FINANCIAL CORPORATION

By: ____________________________

Name: _________________________

Title: _________________________

<PAGE> 62

EXHIBIT E
TO
LOAN AND SECURITY AGREEMENT

ACCOUNTING FOR REPOSSESSED AND REMARKETED
EQUIPMENT AND FIRST LOSS BALANCE

[letterhead of SPE]

[Date]

[Address]

Re: Statement of Activity and First Loss Balance for the Quarterly Period
Ending _____________________. 19 ______

Gentlemen:

This statement is delivered pursuant to the Loan and Security Agreement dated
as of ___________, 199___ between you and our assignee, CCI/Triad Financial
Holding Corporation ("SPE"), (the "Agreement"; defined terms therein being used
herein as so defined).

1A. First Loss "NET LOSS POOL" ("NLP') as of beginning of the above statement
period ("Period').

1B. Ten percent (10%) of the aggregate principal amount of Loans made during
the Period.

2. Standard Cost of all Equipment remarketed during the Period.

<PAGE> 63

3. Unreimbursed amounts paid by SPE to Lender on behalf of Lessees during the
Period.

4. Subtotal Debits and Credits during the Period.

5. Net Loss Pool balance at ________________, 19___.

(See attached sample report format.)

<PAGE> 64

EXHIBIT F
TO
LOAN AND SECURITY AGREEMENT

SALE AND ASSIGNMENT AGREEMENT

SALE AND ASSIGNMENT AGREEMENT entered into as of January 1, 1997 between
TRIAD SYSTEMS FINANCIAL CORPORATION, a California corporation ("TSFC"), and
CCI/TRIAD FINANCIAL HOLDING CORPORATION, a California corporation ("FHC").

INTRODUCTION

1. Cooperative Computing, Inc., a Delaware corporation doing business as
Triad Systems Corporation and the parent corporation of TSFC and FHC
("CCI/Triad"), is in the business of manufacturing and marketing computer
systems ("System(s)"), and providing servicing therefor.

2. TSFC is in the business of purchasing Systems from CCI/Triad and other
personal property from other vendors for the purpose of leasing the same to the
end-users thereof ("Customer(s)" or "Lessee(s)").

3. FHC is in the business of purchasing from TSFC lease receivables
consisting of the periodic rental payments due under leases entered into by
TSFC with its customers and financing such purchases with loans from various
funding sources, secured by a continuing security interest in, among other
things, such receivables and all of FHC's and TSFC's right, title and interest
in and to such leases and in the related Systems, software and other equipment.

4. FHC has entered into a Loan and Security Agreement dated as of January
1, 1997 (the "Loan and Security Agreement"), with HELLER FINANCIAL, INC.
("Lender"), pursuant to which Lender has agreed to lend to FHC the discounted
value of certain of such lease receivables and FHC has agreed, in order to
secure repayment of such loans, to grant to Lender such security interests.
Capitalized terms used herein are used with the meanings given in the Loan and
Security Agreement.

5. TSFC desires to sell to FHC, and FHC desires to purchase from TSFC,
the lease receivables consisting of the Rent set forth on Schedule A hereto
(the "Specified Rent") under the Leases referred to therein (the "Specified
Leases"), and in that connection TSFC will grant to FHC a continuing security
interest in the Specified Leases, the related Equipment (the "Specified
Equipment") and

<PAGE> 65

other Collateral pertaining thereto (collectively, the "Specified Collateral"),
all on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the parties, it is agreed as follows:

1. Additional Definitions As used herein, the terms "Specified Eligible
Equipment", "Specified Eligible Lease", "Specified Guaranty", "Specified Lease
Proceeds" and "Specified Proceeds" shall mean Eligible Equipment, Eligible
Lease, Guaranty, Lease Proceeds and Proceeds, respectively, pertaining to the
Specified Leases and the Specified Equipment referred to in Schedule A hereto.

2. Sale. TSFC hereby sells and assigns to FHC, and FHC hereby purchases
from TSFC, the Specified Rents for the purchase price set forth in Schedule A
hereto. TSFC expressly retains and reserves its interest in the Specified
Leases and the Specified Equipment, subject, however, to the security interest
therein granted in Section 3.

3. Security Interest. In order to induce FHC to purchase the Specified
Rents and to enable FHC to comply with its obligations under Section 6 of the
Loan and Security Agreement, TSFC hereby assigns, pledges and grants a
continuing security interest to FHC in all of its right, title and interest in
and to the following described properties, assets and rights (such properties,
assets and rights collectively called the "Specified Collateral"):

(a) each Specified Lease and all of TSFC's rights thereunder including
the right to receive payments (including Rent and security deposits) due
to TSFC thereunder and the right to exercise rights and remedies upon
default;

(b) every item or component of Specified Equipment subject to Specified
Leases, together with (i) all accessions, replacements and substitutions
thereto and therefor and (ii) all upgrades, add-ons and additions thereto
and therefor to the extent they have been financed by Lender under the
Loan and Security Agreement, and (iii) all of its rights in the software
and licenses related thereto;

(c) each and every Specified Guaranty, security interest, mortgage or
other security (including security deposits) securing the payment and
performance of the Lessees' obligations under the Specified Leases;

(d) all Specified Lease Proceeds and Proceeds of items or components of
Specified Equipment;

<PAGE> 66

(e) all warranty and other rights TSFC may have with respect to the
Specified Leases and the Specified Equipment subject thereto against the
manufacturer(s) of the Specified Equipment; and

(f) the proceeds (whether cash or non-cash proceeds), and products of
all the properties, assets and rights described in paragraphs (a),
(b),(c), (d) and (e) above including without limitation, all insurance
payments, whether or not FHC or Lender is the loss payee thereof; in each
case whether now owned or hereafter acquired.

TSFC acknowledges that FHC will assign, pledge and grant to Lender the
foregoing security interest, pursuant to Section 6 of the Loan and Security
Agreement, as security for FHC's Obligations.

4. Representations, Warranties and Covenants of TSFC. TSFC represents,
warrants and covenants that:

4.1 Due Organization. It is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified or otherwise authorized to do business wherever necessary
to carry on its present business and operations and to perform its obligations
under this Agreement and each Specified Lease.

4.2 Authority. It has the full power, authority and legal right to enter
into and perform its obligations under this Agreement.

4.3 Principal Place of Business. Its chief executive office and the
office where it maintains its records concerning payments under the Specified
Leases is in Livermore, California, and it will not change such principal place
of business or remove therefrom such records, or any other records relating to
the Collateral or any Loan, or change its name, identity or corporate
structure, without at least thirty (30) days prior written notice to Lender.

4.4 Binding Obligation. This Agreement has been duly authorized,
executed and delivered by TSFC and constitutes the legal, valid and binding
obligation of TSFC, enforceable against it in accordance with its terms.

4.5 Approvals and Consents. No stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligation, or
authorization, consent, approval or license by, exemption from or registration
with, any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, is necessary in connection with the
execution, delivery and performance of the obligations of TSFC under this
Agreement, and no consent of any owner, lessor or mortgagee of premises where
any Specified Equipment is located is needed to permit any of Lender,

<PAGE> 67

FHC or TSFC to enforce the rights of the lessor under the Specified Leases or,
if required, the same have been obtained and certified copies have been
delivered to Lender.

4.6 Compliance with Laws. There is no law, governmental rule,
regulation, judgment, decree or order binding on it that would be contravened
by the execution and delivery of, and performance under, this Agreement by
TSFC. TSFC will at all times comply with, or cause to be complied with, all
laws, statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business if not complied with,
would have a material adverse effect on its business, condition (financial or
other), performance, operations, properties or prospects or on its ability to
perform its obligations under this Agreement or the Specified Leases.

4.7 Clear Ownership. The interests of FHC and TSFC combined are, and
will continue to be, the record and beneficial ownership of 100% of each
Specified Lease and all Specified Equipment subject to Specified Leases in
which TSFC is named as Lessor free and clear of all mortgages, deeds of trust,
pledges and other liens, security interests, charges or encumbrances, except
for liens for taxes due but not yet payable and liens in favor of Lender and
TSFC shall promptly deliver to Lender any executed counterparts of Specified
Leases which were not delivered to Lender pursuant to Section 5.3(a) of the
Loan and Security Agreement and which have subsequently come into possession of
it. Notwithstanding the foregoing, TSFC shall be entitled to transfer to
CCI/Triad or another subsidiary corporation of CCI/Triad record and beneficial
ownership of any Specified Equipment, subject to Specified Leases in which TSFC
is named as Lessor, provided that:

(a) TSFC remains fully bound under this Agreement with respect to all
obligations hereunder, including the obligations assumed by the assignee;

(b) TSFC has complied with any and all requirements under the applicable
Specified Lease or Leases with respect to such transfer;

(c) the assignee assumes in writing the obligations of TSFC under this
Agreement, subject to all the terms and conditions hereof and Lender's
rights and remedies under the Loan and Security Agreement, and recognizes
the continuing validity and priority of the lien of Lender in the
Specified Equipment;

(d) the assignee executes any documentation reasonably required by
Lender to facilitate the foregoing provisions of this Section 4.7 and the
Operating Agreement; and

<PAGE> 68

(e) the assignee and TSFC execute and file all Uniform Commercial Code
financing statements and assignment statements necessary or appropriate,
in Lender's sole judgment, to continue, perfect and protect Lender's
first priority security interest in the Specified Collateral hereunder.

4.8 Filings. This Agreement and the Uniform Commercial Code filings made
pursuant hereto create in favor of FHC a valid and perfected first priority
security interest in the Specified Collateral and, upon assignment to Lender,
create in favor of Lender a valid and perfected first priority security
interest in the Specified Collateral securing the Obligations.

4.9 Actions. There are no actions, suits, proceedings, claims or disputes
pending or, to its knowledge, threatened against or affecting TSFC or its
properties before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that, if determined
adversely to it, would have a material adverse effect on its business,
condition (financial or other), performance, operations, properties or
prospects, its ability to perform its obligations under this Agreement or the
Specified Leases or FHC's or Lender's security interest in the Specified
Collateral.

4.10 Payment of Taxes. TSFC has filed and will file all tax returns
(federal, state and local) required to be filed and has paid all taxes shown
thereon to be due, including interest and penalties, unless it is contesting
the payment of certain taxes in good faith and has established adequate
reserves therefor.

4.11 Notices. It will send to FHC and Lender copies of all significant
notices, including, but not limited to, any notices with respect to the terms
of any Specified Lease, and other instruments or communications required or
permitted to be given by the Lessee under any Specified Lease.

4.12 Further Assurances; Enforcement of Leases. TSFC will: (a) preserve
and maintain its corporate existence and all rights, privileges and franchises
now enjoyed and conduct its businesses in an orderly, efficient and customary
manner; and (b) from time to time, at its own expense, take all actions
reasonably necessary to establish, preserve, protect and perfect the rights
created by this Agreement, including, without limitation, (i) the full and
punctual performance of all of its obligations under the Specified Leases; (ii)
the enforcement of the Specified Leases without waiver, amendment or
modification; and (iii) the exercise of any and all rights of the lessor under
the Specified Leases as may be necessary or advisable to assure full compliance
with the terms and provisions thereof and to protect FHC's and Lender's
security interest in the Specified Collateral.

<PAGE> 69

4.13 Validity and Enforceability of Specified Leases and Specified
Guaranties. Each Specified Eligible Lease and Specified Guaranty is genuine,
valid and enforceable and is not subject to any offset, deduction, counterclaim
or lien.

4.14 Specified Leases Duly Entered Into. All parties to each Specified
Lease and Specified Guaranty have full power, authority and legal right to
enter into and perform its obligations under such Specified Lease or Specified
Guaranty, as the case may be. Each Specified Lease and Specified Guaranty will
be duly authorized, executed and delivered by the parties thereto, will
constitute legal, valid and binding obligations of the parties thereto,
enforceable in accordance with their respective terms and are in full force and
effect on the date of this Agreement, and no default thereunder exists on such
date. The entire agreement with each Lessee is embodied solely in the executed
counterparts of the applicable Specified Lease and other documentation
furnished to Lender with respect to such Specified Lease.

4.15 Equipment Description. Each Specified Lease describes the Specified
Equipment leased to the Lessee named in such Specified Lease, the Specified
Rent required for such Specified Equipment and any applicable early termination
payments.

4.16 Specified Leases Comply with Laws. Each Specified Lease complies
with and does not violate applicable laws, regulations or contractual
specifications or warranties, including without limitation, any applicable laws
relating to maximum rates of interest (whether or not imputed) or similar
charges and all required disclosures have been made with respect thereto under
federal truth-in-lending and truth-in-leasing regulations to the extent
applicable.

4.17 No Impairment of Value or Rights. TSFC will not do anything that
might impair the value of any Specified Lease or Specified Equipment or any of
the rights or obligations of the parties hereto under any Specified Lease.

4.18 No Lessor Liens. No Specified Lease or any Specified Equipment
subject thereto, or any other of its rights therein, has been assigned to, or
is subject to, any lien or security interest in favor of, any person other than
FHC and Lender.

4.19 Notifications. TSFC will promptly notify FHC and Lender of:

(a) any Event of Default or event which, upon the lapse of time or
giving of notice, or both, would become an Event of Default, or any event
which is, or upon the lapse of time or giving of notice, or both, would
become a default under or breach of the Operating Agreement;

<PAGE> 70

(b) any and all litigation or other matters or events concerning it or
any Lessee that has a reasonable possibility of materially and adversely
affecting its or any Lessee's business, condition (financial or other),
performance, operations, properties or prospects or adversely affecting
Lender's security interest in the Specified Collateral.

4.20 Books and Records; Financial and Other Information. TSFC shall:

(a) maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with generally
accepted accounting principles and practices consistently applied and in
compliance with the regulations of any governmental regulatory body
having jurisdiction over it;

(b) give Lender and its representatives, at all reasonable times and
upon reasonable notice, access to all records, files and books of
accounting pertaining to all transactions subject to this Agreement, and
permit Lender and its representatives to inspect, audit and make extracts
therefrom; and

(c) upon the occurrence of an Event of Default or an event which, upon
the lapse of time or giving of notice, or both, would become an Event of
Default, permit Lender to exercise TSFC's inspection rights under the
Specified Leases, on a non-exclusive basis.

4.21 Audit. TSFC shall permit Lender, and shall cause CCI/Triad to
permit Lender, from time to time, upon reasonable request and at Lender's sole
expense, to conduct an audit of TSFC'S and CCI/Triad's accounting and operating
procedures as they relate to the Specified Leases, provided such audit does not
unreasonably interfere with TSFC's or CCI/Triad's normal business operations.

4.22 Charges and Taxes. TSFC shall make all filings in respect of and
pay (or reimburse Lender for, upon presentation of an invoice) all charges and
local, state or federal taxes (other than net income taxes of Lender or
franchise taxes levied upon Lender's net income), license fees, or other
assessments, charges, fines and penalties, together with interest payable with
respect thereto, levied or imposed upon or in connection with this Agreement,
the Specified Leases, the Specified Equipment, the Specified Rent and the
Specified Proceeds. Upon request of FHC or Lender, TSFC shall furnish Lender
written evidence of such payment.

5. Representations, Warranties and Covenants of FHC. FHC represents,
warrants and covenants that:

<PAGE> 71

5.1 Due Organization. It is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified or otherwise authorized to do business wherever necessary
to carry on its present business and operations and to perform its obligations
under this Agreement.

5.2 Authority. It has the full power, authority and legal right to enter
into and perform its obligations under this Agreement.

5.3 Binding Obligation. This Agreement has been duly authorized,
executed and delivered by FHC and constitutes the legal, valid and binding
obligation of FHC, enforceable against it in accordance with its terms.

5.4 Approvals and Consents. No stockholder approval, or approval or
consent of any trustee or holder of any indebtedness or obligation, or
authorization, consent, approval or license by, exemption from or registration
with, any court or governmental department, commission, board, agency or
instrumentality, domestic or foreign, is necessary in connection with the
execution, delivery and performance of the obligations of HFC under this
Agreement.

5.5 Compliance with Laws. There is no law, governmental rule,
regulation, judgment, decree or order binding on it that would be contravened
by the execution and delivery of, and performance under, this Agreement by FHC.
FHC will at all times comply with, or cause to be complied with, all laws,
statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business if not complied with,
would have a material adverse effect on its business, condition (financial or
other), performance, operations, properties or prospects or on its ability to
perform its obligations under this Agreement.

6. Indemnities.

(a) TSFC shall indemnify, protect and defend FHC and Lender and hold each
of them safe and harmless from and against any and all losses, claims, demands,
penalties, actions, suits, proceedings, costs, expenses (including reasonable
attorneys' fees), damages and liabilities ("Indemnified Amount") (other than
Indemnified Amounts arising from or pertaining to the gross negligence or
willful misconduct by FHC or Lender) that may at any time be made, brought,
incurred, assessed or adjudged against Lender arising from or pertaining to:

(i) the manufacture, purchase, license, subscription, financing,
ownership, delivery, rejection, nondelivery, possession, use,
dismantling,

<PAGE> 72

transportation, storage, operation, maintenance, repair, return or other
disposition of the Specified Equipment;

(ii) breach of any covenant or warranty made by TSFC or CCI/Triad
relating to any Specified Equipment or Specified Lease or maintenance of
any Specified Equipment, including qualification of any Specified
Equipment for any tax benefit;

(iii) any claim, action or proceeding involving patent or trademark
infringement or copyright or trade secret violations relating to the
Specified Equipment (including any interest or penalty) whether or not
such claim, action or proceeding involves a claim of infringement or a
combination or design patent;

(iv) failure of FHC, and, pursuant to the Loan and Security Agreement,
Lender, for whatever reason, to have obtained a first priority perfected
purchase money security interest in and lien on the Specified Collateral,
including, without limitation, the Specified Leases and the Specified
Equipment whether or not (A) the Specified Equipment is deemed to be an
asset of a Lessee as the result of a Specified Lease being held to be a
security agreement rather than a true lease or (B) Uniform Commercial
Code financing statements on form UCC-1 were filed against a Lessee with
respect to the Specified Equipment under Section 5.3 (c) of the Loan and
Security Agreement;

(v) any misrepresentation made by any agent or employee of TSFC or
CCI/Triad in the course of negotiations regarding any Specified Lease or
Specified Equipment;

(vi) any breach of any warranty or covenant, or any misrepresentation,
of TSFC or CCI/Triad in any Specified Lease, any Operative Document or
any certificate of an officer of TSFC or CCI/Triad delivered in
accordance therewith;

(vii) failure of any Specified Lease or Specified Equipment to comply
with applicable laws, regulations or contractual specifications or
warranties, or to be an Specified Eligible Lease or Specified Eligible
Equipment, as the case may be;

(viii) any dispute, claim, offset, or defense of any Lessee (other than
payment by, or discharge in bankruptcy of, such Lessee) to the payment of
any Specified Rent;

<PAGE> 73

(ix) FHC having received from TSFC, and accordingly Lender having
received from FHC, only a fax copy (rather that the original, manually
executed copy) of any Specified Lease or any Specified Guaranty;

(x) failure of TSFC or CCI/Triad to pay when due any taxes for which it
is liable; and

(xi) any wrongful or negligent acts or omissions of TSFC, its agents or
assigns, in carrying out its obligations, upon the request of FHC or
Lender or pursuant to the Servicing Agreement, under Section 7 or Section
10 of the Loan and Security Agreement.

TSFC shall assume, at its expense, full responsibility for the defense and
satisfaction of the foregoing, with counsel reasonably satisfactory to FHC and
Lender. All of the indemnities set forth in this Section 6(a) shall survive
the cancellation or termination of this Agreement and the Loan and Security
Agreement.

(b) Upon the occurrence of any of the events set forth in Section 6(a),
TSFC unconditionally agrees to pay FHC or Lender, upon written demand, the
Indemnified Amount.

7. Further Assurance. The parties hereto shall cooperate with each other
in the preparation and execution of such documents and the taking of such
actions as may be reasonably necessary to carry out the provisions and purposes
of this Agreement.

8. Notices. All notices, demands, directions, consents and approvals
hereunder shall be in writing and shall be delivered in person, by telecopy, by
overnight courier or by prepaid certified mail, addressed to the party for whom
it is intended, if to:

Triad Systems Financial Corporation
3055 Triad Drive
Livermore, CA 94550
Attention: Ronald D. Lindberg, Vice President
Telecopy No. 510/449-6962

CCI/Triad Financial Holding Corporation
3055 Triad Drive
Livermore, CA 94550
Attention: Ronald D. Lindberg, Vice President
Telecopy No. 510/449-6962

<PAGE> 74

Any party may change its address for the receipt of notices, demands,
directions, consents and approvals by notice duly given to the other parties
pursuant to this Section 8.

9. Successors; Assigns. Neither TSFC nor FHC shall assign its
obligations hereunder without the consent of Lender. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
successors and permitted assigns; the representations, warranties and covenants
of TSFC in this Agreement shall specifically inure to the benefit of Lender, as
assignee of FHC.

10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of California.

11 Entire Agreement. The terms and conditions herein contained
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, except to the extent that other agreements are referred
to herein or contemplated hereby or executed contemporaneously herewith, and
supersede all previous communications whether oral or written among the parties
hereto with respect to such subject matter. No agreement or understanding
varying or extending any rights or obligations hereunder of any of the parties
shall be binding unless in a writing signed by a duly authorized officer or
representative of the party against which such variance or extension is sought
to be enforced.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunder duly authorized as of the day
and year first above written.

TRIAD SYSTEMS FINANCIAL
CORPORATION

By: ___________________________
Its: __________________________

CCI/TRIAD FINANCIAL HOLDING
CORPORATION

By: __________________________

Its: _________________________

<PAGE> 1
EXHIBIT 10.7

---------------------

LOAN AND SECURITY AGREEMENT

dated as of January 1, 1997

between

CCI/TRIAD FINANCIAL HOLDING CORPORATION

as Borrower

and

METLIFE CAPITAL CORPORATION

as Lender

---------------------

$40,000,000

DISCOUNT LOAN FACILITY

---------------------

Loans Secured by Leases,
Lease Receivables and
Leased Equipment

<PAGE> 2

This LOAN AND SECURITY AGREEMENT is entered between CCI/TRIAD FINANCIAL
HOLDING CORPORATION ("SPE"), a California corporation, as borrower, and METLIFE
CAPITAL CORPORATION ("Lender"), a Delaware corporation, as Lender.

A. The "Anniversary Date" as defined in Section 1.1 shall be December 31, 1997.

B. The "Aggregate Maximum Loan Amount" of all loans, in accordance with Section
2.1, shall be Forty Million Dollars ($40,000,000).

C. The "Minimum loan Amount" of any single loan, in accordance with Section
2.3, shall be Two Hundred and Fifty Thousand Dollars ($250,000).

D. The "Maximum Full Recourse Amount" of all loans, in accordance with Section
3.12, shall be Forty Million Dollars ($40,000,000).

E. Notices to Lender in accordance with Section 12.2 shall be addressed as
follows:

Metlife Capital Corporation
44 Montgomery Street, Suite 500
San Francisco, CA 94104

Attn: Executive Vice President, Vendor

All the Terms and conditions of THE MASTER LOAN AND SECURITY AGREEMENT FORM are
hereby incorporated by reference and made a part of this AGREEMENT, provided,
however the following Special Terms and Conditions (which supplement said
MASTER LOAN AND SECURITY AGREEMENT FORM Terms and Conditions) shall supersede
and replace any conflicting Terms and Conditions in THE MASTER LOAN AND
SECURITY AGREEMENT FORM. All Section numbers and

<PAGE> 3
references in this Schedule 1 document, refer to (or supplement) section
numbers and references in THE MASTER LOAN AND SECURITY AGREEMENT FORM.

SPECIAL TERMS AND CONDITIONS

This LOAN AND SECURITY AGREEMENT is effective as of January 1, 1997.

CCI/TRIAD FINANCIAL HOLDING CORPORATION
a California Corporation

By: /s/ PATRICK J. KERNAN
---------------------------------

METLIFE CAPITAL CORPORATION
a Delaware Corporation

By: /s/ MANUEL G. MONTANEZ
---------------------------------
Vice President/Manager Vendor/
Indirect Group
<PAGE> 4

_____________________________________________

MASTER LOAN AND SECURITY AGREEMENT FORM

DATED AS OF JANUARY 1,1997

BETWEEN

CCI/TRIAD FINANCIAL HOLDING CORPORATION

AS BORROWER

AND

METLIFE CAPITAL CORPORATION

AS LENDER

_____________________________________________

$40,000,000

DISCOUNT LOAN FACILITY

__________________________________

LOANS SECURED BY
LEASE RECEIVABLES, LEASES, AND
LEASED EQUIPMENT

<PAGE> 5

TABLE OF CONTENTS

<TABLE>
<S> <C> <C>
1. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
1.1 "Anniversary Date" . . . . . . . . . . . . . . . . . . . . . 1
1.2 "Business Day" . . . . . . . . . . . . . . . . . . . . . . . 2
1.3 "Closing Date" . . . . . . . . . . . . . . . . . . . . . . . 2
1.4 "Collateral" . . . . . . . . . . . . . . . . . . . . . . . . 2
1.5 "Discount Facility" . . . . . . . . . . . . . . . . . . . . 2
1.6 "Discount Facility Loan" . . . . . . . . . . . . . . . . . . 2
1.7 "Discount Facility Rate" . . . . . . . . . . . . . . . . . . 2
1.8 "Discount Facility Loan Value" . . . . . . . . . . . . . . . 2
1.9 "Effective Date" . . . . . . . . . . . . . . . . . . . . . . 2
1.10 "Eligible Equipment" . . . . . . . . . . . . . . . . . . . . 2
1.11 "Eligible Lease" . . . . . . . . . . . . . . . . . . . . . . 2
1.12 "Equipment" . . . . . . . . . . . . . . . . . . . . . . . . 3
1.13 "Event of Default" . . . . . . . . . . . . . . . . . . . . . 3
1.14 "Excess of Proceeds" . . . . . . . . . . . . . . . . . . . . 4
1.15 "Guaranty" . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.16 "Invoice Price". . . . . . . . . . . . . . . . . . . . . . . 4
1.17 "Late Payment Rate". . . . . . . . . . . . . . . . . . . . . 4
1.18 "Lease". . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.19 "Lease Proceeds" . . . . . . . . . . . . . . . . . . . . . . 4
1.20 "Lessee" . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.21 "Loan" . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
1.22 "Loan Repayment Amount". . . . . . . . . . . . . . . . . . . 4
1.23 "Loan Repayment Date". . . . . . . . . . . . . . . . . . . . 5
1.24 "Net Loss Pool". . . . . . . . . . . . . . . . . . . . . . . 5
1.25 "Obligations". . . . . . . . . . . . . . . . . . . . . . . . 5
1.26 "Operating Agreement". . . . . . . . . . . . . . . . . . . . 5
1.27 "Operative Document" . . . . . . . . . . . . . . . . . . . . 5
1.28 "Prepayment Fee" . . . . . . . . . . . . . . . . . . . . . . 5
1.29 "Proceeds" . . . . . . . . . . . . . . . . . . . . . . . . . 5
1.30 "Remarketing Expenses" . . . . . . . . . . . . . . . . . . . 5
1.31 "Remarketing Proceeds" . . . . . . . . . . . . . . . . . . . 6
1.32 "Rent" . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
1.33 "Security Supplement". . . . . . . . . . . . . . . . . . . . 6
1.34 "Standard Cost". . . . . . . . . . . . . . . . . . . . . . . 6
1.35 "Tangible Net Worth" . . . . . . . . . . . . . . . . . . . . 6
1.36 "CCI/Triad". . . . . . . . . . . . . . . . . . . . . . . . . 6

</TABLE>

i
<PAGE> 6
<TABLE>
<S> <C> <C>
3. THE LOANS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.1 Requests for Loans . . . . . . . . . . . . . . . . . . . . . 7
3.2 Approvals. . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.3 Disbursement of Discount Facility Loan . . . . . . . . . . . 8
3.4 Loan Payments and Amortizations. . . . . . . . . . . . . . . 8
3.5 Upgrades and Additions . . . . . . . . . . . . . . . . . . . 8
3.6 Optional Prepayment: Lender Refusal ro Finance Upgrades or
Additions. . . . . . . . . . . . . . . . . . . . . . . . . . 9
3.7 Mandatory Prepayment: Termination of Lease . . . . . . . . . 9
3.8 Mandatory Prepayment: Casualty . . . . . . . . . . . . . . . 10
3.9 Mandatory Prepayment: Rent Default . . . . . . . . . . . . . 10
3.10 No Other Prepayments Permitted . . . . . . . . . . . . . . . 10
3.11 Limited Recorse" . . . . . . . . . . . . . . . . . . . . . . 10
3.12 Full Recourse. . . . . . . . . . . . . . . . . . . . . . . . 11

<PAGE> 7
<TABLE>
<S> <C> <C>
6.6 Final Release by Lender. . . . . . . . . . . . . . . . . . . 17

8. INDEMNITIES, INSURANCE, FIRST LOSS . . . . . . . . . . . . . . . . . 18
8.1 Total Facility . . . . . . . . . . . . . . . . . . . . . . . 18
8.2 Interest Calculation . . . . . . . . . . . . . . . . . . . . 20
8.3 Minimum Loan . . . . . . . . . . . . . . . . . . . . . . . . 20
8.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . 20
8.5 Excess Proceeds. . . . . . . . . . . . . . . . . . . . . . . 21

10. REPOSSESSION AND REMARKETING . . . . . . . . . . . . . . . . . . . . 27
10.1 Request to Repossess; Remarketing. . . . . . . . . . . . . . 27
</TABLE>

iii

<PAGE> 8
<TABLE>
<S> <C> <C>
10.2 Remarketing Expenses . . . . . . . . . . . . . . . . . . . . 28
10.3 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . 28
10.4 No Guaranty. . . . . . . . . . . . . . . . . . . . . . . . . 28

12. MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.1 General. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.2 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 31
12.3 Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
12.4 Costs and Expenses . . . . . . . . . . . . . . . . . . . . . 32
12.5 Successors; Assigns. . . . . . . . . . . . . . . . . . . . . 32
12.6 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . 33
12.7 Headings; Titles . . . . . . . . . . . . . . . . . . . . . . 33
12.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 33
</TABLE>

<PAGE> 9

INTRODUCTION

B. TSFC has transferred by sale to SPE certain receivables due TSFC under
the leases and TSFC has by an agreement substantially in the form of the Sale
and Assignment Agreement attached hereto as Exhibit F assigned to SPE certain
of its rights and interests in the Leases, computer systems, software and
equipment.

C. Lender engages in the business of equipment lease financing.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows;

1. DEFINITIONS

When used in capitalized form herein, the following terms shall have the
meanings indicated:

1.1 "Anniversary Date" - the date stated as the "Anniversary Date" in the
Schedule 1 document.

1
<PAGE> 10

1.2 "Business Day" - any day other than a Saturday, Sunday or a public or
bank holiday or the equivalent for banks generally under the laws of the State
of California.

1.3 "Closing Date" - with respect to any Loan, the date on which Lender
makes a Loan to SPE under this Agreement.

1.4 "Collateral" - as defined in Section 6.1.

1.5 "Discount Facility" - the credit facility provided by Lender to SPE
pursuant to Section 2.

1.6 "Discount Facility Loan" - a Loan made by Lender to SPE under the
Discount Facility.

1.7 "Discount Facility Rate" - with respect to a Discount Facility Loan -
will be determined from time to time by mutual agreement of SPE, and Lender.

1.9 "Effective Date" - the date of this Agreement.

1.11 "Eligible Lease" - a full pay out net lease, substantially in the
form of Exhibit A-1, naming TSFC as lessor, that:

(a) has a noncancelable term of not less than 12 months nor more
than 84 months excluding renewals or extensions;

(b) provides for (i) Rent and casualty payments in amounts
sufficient to repay to Lender the Loan made

2
<PAGE> 11
in respect of such lease and interest on such Loan at the
Discount Facility Rate, (ii) interest on late payments under
such lease at a rate not less than the Late Payment Rate and
(iii) all payments to be made in United States dollars;

(c) provides that the lessor's right to receive payment is absolute
and not contingent upon the fulfillment of any condition
whatsoever other than the passage of time;

(d) covers only Eligible Equipment subject to a security interest
in favor of Lender and includes all hardware and any other
systems required to operate any included software;

(e) is not subject to any conditions, obligations of, or any right
or offset, counterclaim or defense by, the Lessee thereunder;

(f) is a Lease under which the Lessee is not in default, and;

(g) is in all other respects satisfactory to Lender.

1.13 "Event of Default" - as defined in Section 11.1.

1.14 "Excess Proceeds" - of an item of Equipment - any excess of (i) the
Remarketing Proceeds thereof, over (ii) the outstanding Loan Repayment Amount
applicable to a Lease.

3
<PAGE> 12
1.16 "Invoice Price" - with respect to any Equipment - the aggregate
invoice prices of CCI/Triad, as manufacturer or seller, or any other
manufacturer or seller, net of taxes, transportation cost, delivery cost and
any acquisition or other fees payable by TSFC to CCI/Triad or any of its
affiliates.

1.17 "Late Payment Rate" - with respect to a Discount Facility Loan - two
percent (2%) over the applicable Discount Facility Rate.

1.20 "Lessee" - a United States-domiciled corporation, partnership or sole
proprietorship that is the obligor for payment of Rent under a Lease.

1.21 "Loan" - any advance of funds to SPE by Lender under this Agreement
as evidenced by a Security Supplement.

1.22 "Loan Repayment Amount" - with respect to a Loan at any time - the
aggregate unpaid principal of, and accrued interest (including any interest
accrued at the Late Payment Rate) on, such Loan.

1.23 "Loan Repayment Date" - with respect to any Loan - the twentieth day
of each calendar month, commencing with the first such day to occur after the
Closing Date for such Loan.

1.24 "Net Loss Pool" - as defined in Section 8.4.

1.25 "Obligations" - as defined in Section 6.1.

1.26 "Operating Agreement" - the Operating and Support Agreement entered
into among CCI/Triad, TSFC, SPE, and Lender, substantially in the form of
Exhibit "B" attached hereto.

4
<PAGE> 13
1.27 "Operative Documents" - this Agreement, each Security Supplement and
the Operating Agreement.

1.28 "Prepayment Fee" - a fee equal to two percent (2%) of then unpaid
principal amount due Lender under any Lease which is prepaid pursuant to
Section 3.7.

1.30 "Remarketing Expenses" - with respect to an item of Equipment - the
sum of (i) costs of repossessing, transporting, refurbishing and
remarketing the item pursuant to Section 10, plus (ii) any applicable sales,
use or similar taxes imposed in connection with the sale or re-lease of such
item and not paid by the purchaser or lessee, plus (iii) in the case of a Lease
default, enforcement and collection costs.

1.31 "Remarketing Proceeds" - with respect to an item of Equipment - the
Proceeds minus the Remarketing Expenses.

1.33 "Security Supplement" - a supplement hereto substantially in the
form of Exhibit "C", executed and delivered to Lender by SPE, describing
Equipment and Leases and subjecting the same to the security interest in favor
of Lender arising under Section 6.

1.34 "Standard Cost" - with respect to an item of Equipment at any time -
an amount equal to fifty percent (50%) of the Loan Repayment Amount of the
Lease calculated on the Loan Repayment Date.

5
<PAGE> 14
1.36 "CCI/Triad" - Cooperative Computing, Inc. ("CCI/Triad"), a Delaware
corporation, or any successor entity resulting from the sale or transfer of the
stock of CCI/Triad to another corporation as a result of the merger,
acquisition, consolidation, or dissolution of CCI/Triad or resulting from the
transfer of all or substantially all of the assets of CCI/Triad.

2. THE DISCOUNT FACILITY

2.2 Interest Calculation. Interest on the Discount Facility Loans shall
be computed on the basis of a 360-day year of 12-30 day months.

2.3 Minimum Loan. The aggregate principal amount of the Loans made on
any Closing Date shall be not less than the "Minimum Loan Amount" stated in the
Schedule 1 document

3. THE LOANS

6
<PAGE> 15
Thousand Dollars ($50,000.00), as of the end of such Lessee's
most recent fiscal year, and any interim financial statements
of such Lessee readily available to TSFC, SPE or CCI/Triad, all
in form and substance satisfactory to Lender, (ii) the payment
history of such Lessee under other leases entered into between
such Lessee and TSFC, and (iii) such additional financial
information pertaining to any Lessee as Lender may request;

(b) the Rent schedule for each such Eligible Lease; and

7
<PAGE> 16
Discount Facility Loans shall be payable in accordance with the Security
Supplement for such Discount Facility Loan. Each Discount Facility
Loan shall be amortized by the Lease Proceeds received by Lender with respect
to the Leases financed by such Loan, with such Lease Proceeds applied first to
accrued and unpaid interest, then to any other amounts due under such Loan, and
then to principal.

8
<PAGE> 17

9
<PAGE> 18
be made pursuant to Section 3.8, whether or not insurance proceeds received by
SPE or TSFC are at least equal to such payments.

3.12 Full Recourse. Notwithstanding anything set forth herein,
including, without limitation, any limitation on recourse against SPE, Discount
Facility Loans in the aggregate principal amount of the "Maximum Full Recourse
Amount" stated in the Schedule 1 document at any one time outstanding may be
with recourse to SPE. Such Loans shall be secured by Leases which are Eligible
Leases except that the creditworthiness of the Lessee may not otherwise be
acceptable to Lender. A Discount Facility Loan with recourse shall be
designated as such by mutual written agreement of Lender and SPE, as the case
may be, prior to the Closing Date of such Loans. Upon occurrence at any time
of any default under such Leases, SPE shall repay the Discount Facility Loan
made to finance such Leases on the Loan Repayment Date occurring not more than
thirty (30) days after such default. On such Loan Repayment Date, SPE shall pay
(i) the outstanding principal balance of the Discount Facility Loan made to
finance such Leases, and (ii) all accrued and unpaid interest on such Discount
Facility Loan to the date of payment. No Prepayment Fee shall be payable in
respect of any such prepayment. The amounts paid to Lender by SPE pursuant to
this paragraph shall not be charged against the First Loss Provision defined in
Section 8.4.

4. CONDITIONS PRECEDENT TO THE INITIAL LOAN

Lender will not make the initial Loan hereunder until it has received all
of the following, in form and substance satisfactory to Lender:

4.3 Operating Agreement. The Operating Agreement, duly executed by
CCI/Triad, TSFC, SPE, and Lender.

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<PAGE> 19
4.4 Financial Statements. The most recent consolidated financial
statements of CCI/Triad and TSFC.

4.5 SPE Officer's Certificate. A certificate from a duly authorized
officer of SPE, dated as of the first Closing Date, stating that:

(a) all representations and warranties made by SPE under this
Agreement and under the Operating Agreement are true and
correct as of the date of the certificate;

(b) SPE is in compliance with all covenants made under this
Agreement; and

(c) no event has occurred and is continuing that is, or with the
passage of time or giving of notice would be, an Event of
Default or a default under or breach of the Operating
Agreement; and containing an express undertaking by SPE to give
immediate notice to Lender if at any time prior to the
Anniversary Date if any of the above statements are no longer
true.

4.6 CCI/Triad Officer's Certificate. A certificate from a duly
authorized officer of CCI/Triad, dated as of the first Closing Date, stating
that:

(a) all representations and warranties made by CCI/Triad under the
Operating Agreement are true and correct as of the date of the
certificate;

(b) CCI/Triad is in compliance with all covenants made under the
Operating Agreement;

(c) no event has occurred and is continuing that is, or with the
passage of time and/or giving of notice would be, a default
under or breach of the Operating Agreement; and

(d) containing an express undertaking by CCI/Triad to give
immediate written notice to Lender if at any time prior to the
Anniversary Date if any of the above statements is no longer
true.

4.7 Insurance. Evidence of the insurance required by Section 8.3.

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<PAGE> 20
4.8 Agreement of Admission of Additional Secured Parties. Evidence that
the Agreement of Admission of Additional Secured Parties, in the form
previously executed by Lender has been duly executed and delivered by all of
the other parties thereto.

5. CONDITIONS PRECEDENT TO ALL LOANS

Lender will not make any Loan hereunder (including the initial Loan)
unless on the date thereof:

5.1 Notice. SPE shall have given Lender verbal notice of each Closing
Date no later than five (5) Business Days prior to such Closing Date.

5.2 Operating Agreement. The Operating Agreement shall be in full force
and effect and no defaults or breaches shall exist thereunder as of the
applicable Closing Date.

5.3 Receipt of Certain Documents. Lender shall have received the
following, in form and substance satisfactory to Lender:

(a) Lease. (i) A signed fax copy or original, manually executed
counterparts in the possession of CCI/Triad or TSFC on such
Closing Date of each Lease financed on such Closing Date and
the related Lease Schedule substantially in the form contained
in Exhibit "A-1", in each case duly executed by TSFC as lessor
and by the Lessee thereunder;

(b) Guaranty. If required by Lender, signed fax copy or original,
manually executed counterparts in the possession of CCI/Triad
or TSFC on such Closing Date of each Guaranty duly executed by
the Guarantor;

(c) Financing Statements Filed Against Lessees. Except in the case
of Leases of Equipment having an aggregate Invoice Price less
than Thirty-five Thousand Dollars ($35,000.00), evidence of
electronic filing receipts, a search report (from Dun and
Bradstreet or comparable reporting entity) confirming the
existence or copies (any of such documentation with filing
numbers and filing dates) of duly executed and filed Uniform
Commercial Code financing statements on form UCC-1 naming TSFC
as secured party and the Lessees under the Leases to be
financed on the

12
<PAGE> 21
Closing Date as debtors, identifying as collateral the
Equipment subject to such Leases.

(d) Financing Statements to be Filed Against SPE. Copies of duly
executed Uniform Commercial Code financing statements on form
UCC-1, naming SPE as debtor and Lender, as secured party, and
identifying as collateral the Leases and any Guaranties and
Equipment to be assigned in sufficient number to be filed in
all jurisdictions as may be necessary, in Lender's judgment, to
perfect Lender's security interest in such collateral,
including, without limitation, jurisdictions where SPE has its
chief executive offices and maintain its records in respect to
the Leases;

(e) Supplement. A Security Supplement, duly executed by SPE
relating to and describing the Lease, any Guaranty and the
Equipment covered thereby;

(f) Notice of Assignment. An original notice to the relevant
Lessee of the assignment to Lender of the relevant Lease,
signed by TSFC, substantially in the form of Exhibit "D";

(g) Acceptance Supplement. A copy of the original executed
counterpart of the delivery and acceptance certificate with
respect to each Lease where the Invoice Price exceeds Fifty
Thousand Dollars ($50,000.00) ( substantially in the form
contained in Exhibit "A-1") containing a complete description
of the Equipment, duly executed by the Lessee thereunder; and

(h) Other Documents. Such other documents, instruments or
agreements as Lender may reasonably request.

6. SECURITY AGREEMENT

6.1 Granting Clause. In order to induce Lender to make Loans from time
to time to SPE, and in order to secure (i) the prompt repayment of the Loans
and payment of all interest accrued thereon and any applicable Prepayment Fee
if any, (ii) the strict performance and observance by SPE of the obligations to
be performed by it hereunder and (iii) all costs of litigation, collection,
reasonable attorneys' fees and other costs expended or incurred in connection
with the enforcement of Lender's rights hereunder and with respect to

13
<PAGE> 22

(a) each Lease and all of SPE's rights thereunder including the
right to receive payments (including Rent and security
deposits) due to SPE thereunder and the right to exercise
rights and remedies upon default;

(b) every item or component of Equipment subject to Leases,
together with (i) all accessions, replacements and
substitutions thereto and therefor and (ii) all upgrades,
add-ons and additions thereto and therefor to the extent they
have been financed by Lender under this Agreement, and (iii)
all of its rights in the software and licenses related thereto;

(c) each and every Guaranty, security interest, mortgage or other
security securing the payment and performance of the Lessee's
obligations under the Leases;

(d) all Lease Proceeds and Proceeds of items or components of
Equipment;

(e) all warranty and other rights SPE may have with respect to the
Leases against the manufacturer of the Equipment, and

(f) the proceeds (whether cash or non-cash proceeds), and products
of all the properties, assets and rights described in
paragraphs (a), (b),(c), (d) and (e) above including without
limitation, all insurance payments, whether or not Lender is
the loss payee thereof; in each case whether now owned or
hereafter acquired.

6.2 Appointment of Lender. If Lender assumes administration of
collection of Rent pursuant to Section 11.2, SPE irrevocably appoints the
Lender as its attorney-in-fact (such power being coupled with an interest) to
do, in its sole and unlimited discretion, any or all of the following:

14
<PAGE> 23
(a) to endorse or sign SPE's name on all checks, collections
receipts, UCCs or other documents related to the Leases;

(b) to take possession of and open mail addressed to SPE or TSFC
relating to such collection and remove Rent and proceeds and
products of the Collateral;

(c) to ask, demand, collect, receive, sue for, compound and give
acquittance for any and all payments assigned hereunder;

(d) to settle, adjust or compromise any claim thereunder as fully
as it could itself;

(e) to endorse its name on all checks and other commercial paper
given in payment or in part payment thereof; and

(f) in its discretion, to file any claim or take any other action
or proceeding, either in Lender's own name or in its name, or
otherwise, that Lender may deem necessary or appropriate to
collect any and all sums that may be or become due or payable
under the Leases or that may be necessary or appropriate to
protect the right, title and interest of Lender in and to the
Collateral and the security intended to be afforded thereby and
hereby.

15
<PAGE> 24
representation, warranty or obligation, express or implied, made by any agent
or employee of SPE, TSFC, or CCI/Triad to a Lessee in connection with any
Lease.

6.5 Release of Security Interest. Upon payment in full of
all amounts due on a Loan and provided no Event of Default shall have occurred
and be continuing, Lender agrees to (i) release its security interest in the
Lease financed by such Loan and the Equipment subject thereto; (ii) deliver to
SPE such other documents relating to released Leases and Equipment prepared by
SPE as SPE may reasonably request, and (iii) deliver the foregoing items
within ten (10) days to SPE after receipt of termination payment.

7. ADMINISTRATION

16
<PAGE> 25
under, payments and collections received under, such Leases, both being
complete and correct.

7.6 Account Status Statements. As soon as available, SPE shall cause
TSFC to deliver to Lender any changes in account status for any Leases then
outstanding that TSFC becomes aware of from time to time. Account status shall
be defined, but not limited to, changes in Lessee billing address, equipment
locations, equipment, and/or legal name.

8. INDEMNITIES, INSURANCE, FIRST LOSS

(a) the use, maintenance or operation of the Equipment;

(c) any claim, action or proceeding involving patent or trademark
infringement or copyright or trade secret violations relating
to the Equipment (including any interest or penalty) whether or
not such claim, action or proceeding involves a claim of
infringement or a combination or design patent;

(d) failure of Lender, for whatever reason, to have obtained a
first priority perfected purchase money security interest in
and lien on the Collateral, including, without limitation, the
Leases and the Equipment whether or not (i) the Equipment is
deemed to be an asset of a

17
<PAGE> 26
Lessee as the result of a Lease being held to be a security
agreement rather than a true lease or (ii) Uniform Commercial
Code financing statements on form UCC-1 were filed against a
Lessee with respect to the Equipment under Section 5.3 (c);

(e) any misrepresentation made by any agent or employee of SPE,
TSFC or CCI/Triad in the course of negotiations regarding any
Lease or Equipment;

(f) any breach of any warranty or covenant, or any
misrepresentation, of SPE, TSFC or CCI/Triad in any Lease, any
Operative Document or any certificate of an officer of SPE,
TSFC or CCI/Triad delivered in accordance therewith;

(g) failure of any lease or Equipment to comply with applicable
laws, regulations or contractual specifications or warranties,
or to be an Eligible Lease or Eligible Equipment, as the case
may be;

(h) any dispute, claim, offset, or defense of any Lessee (other
than payment by, or discharge in bankruptcy of, such Lessee) to
the payment of any Rent;

(i) Lender having received from TSFC only a fax copy (rather than
the original, manually executed copy) of any Lease or any
Guaranty;

(j) failure of SPE, TSFC or CCI/Triad to pay when due any taxes for
which any of them is liable; and

(k) any wrongful or negligent acts or omissions of SPE, its agents
or assigns, in carrying out SPE's obligations under Section 7
or Section 10.

All of the indemnities set forth in this Section 8.1 shall survive the
cancellation or termination of this Agreement.

8.2 Indemnity Payment. Upon the occurrence of any of the events set
forth in Section 8.1, SPE unconditionally agrees to pay Lender, upon written
demand, the Indemnified Amount.

8.3 Insurance. With respect to all Equipment, SPE shall cause TSFC to
maintain in full effect, and shall deliver to Lender evidence of, (a) liability

18
<PAGE> 27
insurance, including all-risk insurance, with a combined single limit of at
lease Five Hundred Thousand Dollars ($500,000.00) per occurrence, naming Lender
as additional insured, (b) property damage insurance on all Equipment, naming
Lender as a loss payee, in an amount equal to actual cash value or replacement
value, with a deductible of not more than Two Hundred Thousand Dollars
($200,000.00) per year for all Equipment and (c) such other insurance as is
usual in the business carried on by SPE, TSFC and CCI/Triad which insurance
shall be satisfactory to Lender as to amount, form, nature and carrier.

8.5 Excess Proceeds. If, on any Loan Repayment Date, all or any portion
of any Loan Repayment Amount shall not have been paid to Lender
pursuant to Section 8.4 due to the limitation on the liability of SPE set forth
in that Section and SPE thereafter realizes Excess Proceeds with respect to any
Equipment, the previously unpaid portion of all such Loan Repayment Amounts
shall be promptly paid by SPE to Lender to the extent of such Excess Proceeds.

9. REPRESENTATIONS, WARRANTIES AND COVENANTS

SPE represents, warrants and covenants that:

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<PAGE> 28
9.1 Due Organization. Both SPE and TSFC are a corporations duly organized
and validly existing in good standing under the laws of California, and each is
duly qualified or otherwise authorized to do business wherever necessary to
carry on its present business and operations and to perform its respective
obligations under each Operative Document and each Lease.

9.2 Authority. Both SPE and TSFC have the full power, authority and
legal right to enter into and perform its obligations under each Operative
Document.

9.3 Principal Place of Business. As to each of SPE and TSFC,
respectively, its chief executive office and the office where it maintains its
records concerning payments under the Leases is in Livermore, California, and
it will not change such principal place of business or remove therefrom such
records, or any other records relating to the Collateral or any Loan, without
at least thirty (30) days prior written notice to Lender.

9.4 Binding Obligations. Each Operative Document has been duly
authorized and upon execution and delivery will constitute legal, valid and
binding obligations, enforceable against it, TSFC and CCI/Triad in accordance
with the terms thereof.

9.6 Compliance with Laws. There is no law, governmental rule,
regulation, judgment, decree or order binding on it that would be contravened
by the execution and delivery of, and performance under, the Operative
Documents. It will at all times comply with, or cause to be complied with, all
laws, statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business which would materially
have an adverse impact upon SPE's business.

20
<PAGE> 29
interests, charges or encumbrances, except for liens for taxes due but not yet
payable and liens in favor of Lender, and shall promptly deliver to Lender any
executed counterparts of Leases which were not delivered to Lender pursuant to
Section 5.3(a) and which have subsequently come into TSFC's or CCI/Triad's
possession. Notwithstanding the foregoing, TSFC and SPE shall be entitled to
transfer to CCI/Triad or a subsidiary corporation of CCI/Triad record and
beneficial ownership of any Equipment subject to Leases in which TSFC is named
as Lessor, provided that:

(a) SPE remains fully bound under this Agreement with respect to
all Obligations, including the Obligations assumed by the
assignee;

(b) the assignee assumes in writing the Obligations of SPE under
this Agreement and recognizes the continuing validity and
priority of the lien of Lender in the Equipment; and

(c) the assignee executes any documentation reasonably required by
Lender to facilitate the foregoing provisions of this Section
9.7 and the Operating Agreement.

9.11 Notices. It will send to Lender copies of all significant notices,
including, but not limited to, any notices with respect to the terms of any
Lease,

21
<PAGE> 30
and other instruments or communications required or permitted to be given by
the Lessee under any Lease.

9.14 Leases Duly Entered Into. All parties to each Lease and Guaranty
have full authority and capacity to execute and deliver such Lease or
Guaranty, as the case may be. The entire agreement with each Lessee is
embodied solely in the executed counterparts of the applicable Lease and other
documentation furnished to Lender with respect to such Lease.

9.15 Equipment Description. Each Lease describes the Equipment leased to
the Lessee named in such Lease, the Rent required for such Equipment and any
applicable early termination payments.

9.17 No Impairment of Value or Rights. It will not do anything that might
impair the value of any Lease or Equipment or any of the rights or obligations
of the parties hereto under any Lease.

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<PAGE> 31

9.19 Notifications. It will promptly notify Lender of:

(a) any Event of Default or event which, upon the lapse of time or
giving of notice, or both, would become an Event of Default, or
any event which is, or upon the lapse of time or giving of
notice, or both, would become a default under or breach of the
Operating Agreement;

(b) any and all litigation or other matters or events concerning it
or any Lessee that has a reasonable possibility of materially
and adversely affecting its or any Lessee's financial or other
condition, its business performance, operations, properties or
prospects or adversely affecting or Lender's security interest
in the Collateral.

9.20 Books and Records Financial and Other Information. SPE shall for
itself, and as to TSFC, shall cause TSFC to:

(a) maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with
generally accepted accounting principles and practices
consistently applied and in compliance with the regulations of
any governmental regulatory body having jurisdiction over it;

(c) upon the occurrence of an Event of Default or an event which,
upon the lapse of time or giving of notice, or both, would
become an Event of Default, permit Lender to exercise the
inspection rights of TSFC under the Leases, on a non-exclusive
basis;

(d) deliver to Lender in form and detail satisfactory to Lender,
and in such reasonable number of copies as Lender may request:

<PAGE> 32

(i) as soon as available, but no later than thirty (30) days
after the end of each fiscal quarter, a quarterly
financial statement;

(ii) the lists of Lease receivables and statements showing the
aging of receivables as required by Section 7.4;

(iii) the statement of first loss provision required by Section
7.5;

(iv) such other information as Lender may reasonably request;
and

9.23 Financial Covenants.

(a) the Tangible Net Worth of TSFC shall at all times at or prior
to the Anniversary Date be at least $17,500,000.00;

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<PAGE> 33
(b) the ratio of TSFC's total consolidated debt (including
subordinated debt) to TSFC's Tangible Net Worth shall at all
times at or prior to the Anniversary Date be no greater than 3
to 1;

Compliance with Section 9.23 shall be made in accordance with generally
accepted accounting principles, consistently applied, as to both classification
and amounts.

9.24 Maximum Requests for Loans Per Month. It will make no more than a
combined total of three (3) requests for Loans, under Section 3.1, during each
thirty day period.

10. REPOSSESSION AND REMARKETING

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<PAGE> 34

Nothing contained in this Section 10.1 shall be deemed to constitute a
release by Lender of its security interest in any of the Collateral. Lender
shall release its security interest in Equipment which has been sold pursuant
to this Section 10.1.

10.2 Remarketing Expenses. Remarketing Expenses shall be for the
account of the party incurring such expenses and shall be recoverable from
Proceeds of such remarketing realized by the party remarketing the Equipment.

10.3 Assignment. The rights and obligations of any party under this
Section 10 may be assigned only with the written consent of all parties.

11. EVENTS OF DEFAULT, REMEDIES

11.1 Events of Default. Any one of the following events shall constitute
an "Event of Default" hereunder:

(a) SPE shall fail to remit to Lender when due any Lease Proceeds or
Proceeds of an item of Equipment received by SPE or TSFC, or
shall fail to make any payment required hereunder, in each case
within five (5) days of the date due thereof;

(c) any covenant, representation or warranty made by SPE, TSFC or
CCI/Triad to Lender in any Operative Document or in any
certificate delivered pursuant thereto shall be untrue in any
material respect when

26
<PAGE> 35
made or during any period of time for which it is enforceable
or shall be breached by SPE, TSFC or CCI/Triad.
Notwithstanding the foregoing, to the extent that such a breach
occurs, and such breach relates to an individual Lease, SPE
shall have thirty (30) days from receipt of demand by Lender to
repurchase the Lease pursuant to the terms of the Mandatory
Prepayment clause set forth at Paragraph 3.7 herein. SPE's
failure to repurchase such a Lease within said thirty (30) day
period shall then constitute an Event of Default under this
subparagraph (c).

(d) an injunction, attachment or other legal process shall issue
against any material part of SPE's or TSFC's property or a
material judgment or lien shall be filed against SPE or TSFC
which is not stayed, vacated, bonded, or otherwise discharged
within ninety (90) days after the date of entry thereof;

(e) SPE, TSFC or CCI/Triad shall cease to do business as a going
concern, shall become bankrupt, shall make an assignment for
the benefit of creditors or otherwise take advantage of the
bankruptcy or any other law for the relief of debtors; a
trustee or receiver for SPE, TSFC or CCI/Triad shall be
appointed or there shall be filed by or against SPE, TSFC or
CCI/Triad any petition under any provision of the Federal
Bankruptcy Code, as amended, and such petition shall not be
dismissed, withdrawn, or otherwise eliminated within ninety
(90) days after the filing thereof;

(f) any ERISA plan of CCI/Triad, SPE or TSFC shall terminate, or
CCI/Triad, SPE or TSFC shall fully or partially withdraw from
such a plan or plan which could result in liability of
CCI/Triad, TSFC or SPE to the Pension Benefit Guaranty
Corporation or to such plan or plans in the Aggregate amount of
One Million Dollars ($1,000,000) or more (in excess of any
applicable insurance).

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<PAGE> 36

(i) complete and deliver to the Lessees the notices received
by Lender from SPE pursuant to Section 5.3(f) and to
commence direct collection of the Rents until such time as
Lender has received the total Loan Repayment Amount of all
Loans due under the Agreement;

(ii) (1) exercise of any of the Lessor's rights under any of
the Leases, or (2) by written notice, require SPE to
exercise on behalf of Lender as secured party under this
Agreement any and all of the rights available to the
Lessor under any Lease to the extent not already exercised
by SPE, whereupon SPE shall immediately take all requested
action;

(iii) discontinue making Loans; or

(iv) proceed against SPE, TSFC, CCI/Triad or all of them, for
all rights and remedies Lender may have in law or in
equity under this Agreement and/or the Operating
Agreement.

(b) Upon the occurrence of an Event of Default, or upon the failure
of a Lessee to perform its obligation under a Lease, Lender
shall have and may exercise all the rights and remedies of a
secured party under the California Uniform Commercial Code
(expressly including, but not limited to, those granted under
9-502(1) and 9-306 dealing with retention of cash proceeds);
and any other applicable laws (including but not limited to the
right to assume direct collection of any and all Leases and
retain any and all cash proceeds collected under the leases
until such time that Lender has received the total Loan
Repayment Amount of all Loans due under this Agreement);
provided, however, that so long as Lessee under a Lease is not
in default thereunder, Lender shall not take any action or
exercise any right that would disturb such Lessee's full and
quiet enjoyment of all of such Lessee's rights under that
Lease. Lender will give SPE reasonable notice of the time and
place of any public sale of any Collateral or of the time after
which any public or private sale of such Collateral or any
other intended disposition thereof is to be made. Unless
otherwise provided by law, the requirement of reasonable notice
shall be met if such notice is delivered at least ten (10) days
before or mailed, postage prepaid, to SPE, at least twenty (20)
days before the time of such sale or disposition. Subject to
applicable provisions of this Agreement, Collateral proceeds
including, but not limited to, the proceeds of any sale or
disposition of Collateral shall be applied: first, to the
expense of settling all liens and claims against such
Collateral and all reasonable costs, charges and expenses
incurred by Lender in connection with the Event of Default,
Lender's exercise of remedies under this Section 11.2

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<PAGE> 37
(including without limitation those described in Section 12.4),
and in taking, removing, holding, preparing for sale and
selling the Equipment; second, to the payment of the remaining
total Loan Repayment Amount of all Loans; third, to any other
unpaid obligations of SPE hereunder; or of TSFC, or CCI/Triad
under the Operating Agreement and fourth, any remaining
proceeds shall be paid to SPE.

(c) Notwithstanding the foregoing, Lender shall have the right to
discontinue making Loans at any time in its sole discretion,
whether or not an Event of Default has occurred.

(d) Nothing contained in this Section 11.2 shall entitle Lender to
recourse against SPE with respect to payment of the Loans which
is not expressly granted to Lender by this Agreement.

12. MISCELLANEOUS

CCI/Triad Financial Holding Corporation
3055 Triad Drive
Livermore, California, 94550
Attention: William Allen, President
Telecopy No. 510-455-6471

with a copy to Corporate Counsel;

if to Lender, the party stated in Section E. Of the Schedule 1 document,

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<PAGE> 38

<PAGE> 39
12.7 Headings; Titles. The cover, table of contents and titles for
Sections used in this Agreement are intended to be descriptive only and shall
not be deemed to limit, extend or in any way modify the meaning of the text of
this Agreement. References to integral sections without decimals include all
decimal sections within such integral sections.

-------------------------------END----------------------------

<PAGE> 40
EXHIBIT A
TO
LOAN AND SECURITY AGREEMENT

SUBORDINATION AGREEMENT

1. Each of the undersigned secured parties (collectively known herein
as "Secured Parties" and individually known herein as "Secured Party"),
understands that each of the other Secured Parties presently holds or asserts,
and/or may hereafter hold or assert, ownership and/or security interests in
property of TRIAD SYSTEMS FINANCIAL CORPORATION ("TSFC") and/or CCI/TRIAD
FINANCIAL HOLDING CORPORATION ("SPE"), in respect of various lease financing
arrangements between SPE, TSFC, COOPERATIVE COMPUTING, INC. ("CCI"), and each
of the other Secured Parties.

2. Each of the Secured Parties will from time to time acquire or
discount, and in connection therewith, acquire, from any one or more of SPE,
TSFC and/or CCI, chattel paper, including but not limited to leases of
equipment, related lease documents, and any related credit support documents.

3. Definitions:

(a) As used herein "Paper" means and includes all
chattel paper at any time or times, heretofore or hereafter,
acquired or to be acquired by a Secured Party from any one or
more of SPE, CCI and/or TSFC, pursuant to a discounting or
other financing agreement, or upon sale, or by purchase,
including but not limited to leases of property, related lease
documents and related credit support documents; and in all
events said term shall include, without limitation, any and
all interest of the Secured Party in such chattel paper and/or
such documents including, without limitation, all rights,
claims, benefits and other interests at any time or times
existing or arising in, to or under, or in relation to such
chattel paper and/or such documents.

(b) As used herein, the term "Equipment" means and
includes all personal property at any time or times,
heretofore or hereafter, leased or to be leased under a lease
or leases included in any of the Paper of a Secured Party,
whether or not such property may be or become fixtures.

<PAGE> 41
(c) As used herein, the term "Superior Secured Party"
means and includes a Secured Party whose right, title to and
interest (including, without limitation, ownership interests
and/or security interests) in such Superior Secured Party's
Paper and Equipment is or becomes, by virtue of the express
provisions of this Agreement hereinafter set forth, superior
to and acquires hereby priority over any and all interests
(including, without limitation, ownership interests and/or
security interests) which the other Secured Parties may at any
time or time have, hold or assert therein.

4. Each Secured Party hereby agrees with the other Secured
Parties that all of its right, title to and interest (including, without
limitation, ownership interests and/or security interests) in all property
(including, without limitation, the Paper of the other Secured Parties and/or
the Equipment of the other Secured Parties) which it acquires or discounts at
any time or from time to time, from any one or more of SPE, CCI and/or TSFC,
shall be or remain fully subordinated to the interest therein of the other
Secured Parties and/or completely released with respect thereto in accordance
with and only in accordance with, the following provisions:

Each Secured Party agrees that,

(i) by its execution of this Agreement, any and all
right, title to and interest (including, without
limitation, ownership interests and/or security
interests) which such Secured Party may at any time
or times have, hold or assert in any Paper and/or
Equipment of another Secured party and all proceeds
thereof shall be and remain, or shall thereby
become and remain, fully and effectively
subordinated to all of such other Secured Party's
interests therein, including, without limitation,
such other Secured Party's title thereto, ownership
thereof, and/or any and all other rights, claims,
benefits and other interests of such other Secured
Party therein at any time or times existing or
arising;

(ii) this subordination shall be or become effective in
each instance, and a Secured Party shall be or
become a Superior Secured Party, by virtue of, and
only by virtue of, delivery (whether heretofore or
hereafter) to the Superior Secured Party, by
virtue of, and only by virtue of, delivery
(whether heretofore or hereafter) to the Superior
Secured Party by any one or more of SPE, CCI or
TSFC and possession (whether heretofore or
hereafter) by such Superior Secured Party of an

<PAGE> 42
executed form of assignment of an item of the Paper of the Superior
Secured Party and the single original executed item of the Paper
(whether heretofore or hereafter), so marked, identifying or
describing the property subject thereto:

(iii) a Superior Secured Party's ownership interest and/or security interest
in its Paper and Equipment is or shall be superior to and have
priority over any and all interests (including, without limitation,
ownership interests and/or security interest) which the other Secured
Parties may at any time or times have, hold or assert therein,
irrespective of the time or order of attachment or the time or order
of perfection of any such ownership interest and/or security
interests, or the time of filing financing statements, or the time of
giving or failing to give notice of acquisition of purchase money or
other ownership interests and or security interest;

(iv) if a Secured Party is or becomes a Superior Secured Party with
respect to any Paper, such Superior Secured Party shall automatically
and simultaneously be or becomes a Superior Secured Party with respect
to any Equipment leased or to be leased under a lease or leases
included in any such Paper;

(v) this subordination is or shall be applicable to the Paper and
Equipment of each Secured Party.

Any such within from this Agreement by a Secured Party shall have
no effect upon, or alter the rights of the other Secured Parties respecting
transactions occurring prior to the effective date of the withdrawal, except as
expressly set forth in this Agreement.
<PAGE> 43
6. Each Secured Party agrees that, if and to the extent requested by any
superior Secured Party with respect to the Paper and Equipment of such Superior
Secured Party as to which the ownership interests and/or Security interests of
all the Secured Parties except such Superior Secured Party have been or are
subordinated pursuant to this Agreement, it will effectively and completely
release all of its ownership interest and/or Security interests at any time
existing or arising in the property designated by such request, and will
promptly execute and deliver such documents and instruments as may be
necessary to exclude or release such designated property from any and all
financing statements and/or other filed or recorded security documents which it
may hold affecting such Superior Secured Party's ownership interests and/or
security interests therein.

7. Until all obligations of SPE, TSFC and/or CCI to a Superior Secured
Party with respect to any ownership interest and/or which are secured by a
security interest in any Paper or Equipment of the Superior Secured Party have
been fully discharged, each other Secured Party agrees that it will not
knowingly receive, accept or retain, or take any action affecting, such Paper
or Equipment of such Superior Secured Party.

9. No delay on the part of any Secured Party in the exercise of any
right or remedy shall operate as a waiver thereof, and no single or partial
exercise by any Secured Party of any right or remedy shall preclude other or
further exercise thereof, or the exercise of any other right or remedy.

10. This Agreement supersedes and replaces all previous subordination
agreements between the Secured Parties with respect to any Paper and Equipment
of the Secured Parties.

<PAGE> 44
11. This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which shall constitute a single
agreement.

ASSENT:

TRIAD SYSTEMS FINANCIAL COOPERATIVE COMPUTING, INC.
CORPORATION

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

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

CCI/TRIAD FINANCIAL
HOLDING CORPORATION

By:
------------------------
Title:
---------------------

BA CREDIT CORPORATION MITSUI VENDOR LEASING
U.S.A., INC.

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

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

NEWCOURT FINANCIAL HELLER FINANCIAL, INC.
U.S.A, INC.

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

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

MELLON US LEASING, NORWEST EQUIPMENT
A DIVISION OF FINANCE, INC.
MELLON LEASING CORPORATION

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

Title: Title:
--------------------- ---------------------
<PAGE> 45
METLIFE CAPITAL CORPORATION SANWA BUSINESS CREDIT
CORPORATION

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

Title: Title:
--------------------- ---------------------
<PAGE> 46

EXHIBIT B
TO
LOAN AND SECURITY AGREEMENT

OPERATING AND SUPPORT AGREEMENT

OPERATING AND SUPPORT AGREEMENT entered into as of ____________, 199___ among
COOPERATIVE COMPUTING, INC. dba TRIAD SYSTEMS CORPORATION, a Delaware
corporation ("CCI/Triad"), its wholly-owned subsidiaries, TRIAD SYSTEMS
FINANCIAL CORPORATION, a California corporation ("TSFC"), CCI/TRIAD FINANCIAL
HOLDING CORPORATION , a California corporation ("SPE") and
__________________________________, a _____________ corporation ("Lender").

INTRODUCTION

1. CCI/Triad is in the business of manufacturing and marketing computer
systems ("System(s)"), and providing servicing therefor.

2. TSFC is in the business of purchasing Systems for the purpose of
leasing the same to the end-users thereof, some part of which leases are sold
and transferred to SPE for good consideration.

4. SPE has entered into a Loan and Security Agreement dated as of
_____________, 199___ with Lender (the "Loan and Security Agreement") pursuant
to which Lender agrees to lend to SPE the discounted value of certain lease
receivables and SPE agrees, in order to secure repayment of such loans, to
grant to Lender a security interest in such receivables, the related leased
equipment and the related leases.

NOW, THEREFORE, in consideration of the mutual covenants of the parties,
it is agreed as follows:

1
<PAGE> 47

1. Definitions. As used herein, the following terms shall have the
meanings set forth below:

(a) "Lease" shall have the same meaning as defined in Section 1.18 of
the Loan and Security Agreement.

(b) "Customer" shall mean any person who leases a System under a Lease.

(d) "Obligations" shall have the same meaning as defined in Section 6.1
of the Loan and Security Agreement.

2
<PAGE> 48

confirmation by CCI/Triad of the representation and warranty by CCI/Triad to
TSFC and its respective successors and assigns, that (i) CCI/Triad had good and
valid title to the equipment and software described in the invoice, free of all
liens, security interests, encumbrances, pledges, charges and claims of any
kind; (ii) CCI/Triad will defend the title to that equipment and software
against all claims and demands of all persons whomsoever; and (iii) no consent
by any person is required for the assignment and other transfers made by the
Agreement, or, if any such consent is required, such consent has been duly
obtained.

3
<PAGE> 49

assignee to continue using the part thereof so enjoined, or (ii) replace the
part thereof so enjoined with a comparable, non infringing part, or (iii)
modify the part thereof so enjoined to eliminate the infringement, or (iv)
remove the System and repurchase the System for the unpaid portion of the
purchase price or the unamortized portion of the capitalized value of the Lease
related thereto, whichever is applicable. The foregoing states CCI/Triad's
whole complete responsibility or liability with respect thereto.

10. Insurance. CCI/Triad agrees to maintain adequate insurance on any
System sold hereunder for the full value thereof until such date as TSFC
acquires title to the System.

11. Support.

(c) SPE, TSFC and CCI/Triad authorize Lender, without notice or
demand, and without affecting their respective liabilities hereunder, from time
to time, to:

(i) renew, compromise, extend, accelerate or otherwise change the
time for payment of, or otherwise change the terms of the Obligations of
Lessees under Leases assigned to Lender or the Obligations or any part thereof;

(ii) take and hold security for such Obligations or the
Obligations, and exchange, enforce, waive and release any such security; and

4
<PAGE> 50

the liability of any other person. Until all the Obligations of Customers
under Leases assigned to Lender and the Obligations shall have been paid in
full, SPE, TSFC and CCI/Triad each respectively waive any interest in the
security held by Lender and any benefit, and any right to participate in, any
security now or hereafter held by Lender.

15. Remarketing Support. CCI/Triad and TSFC each agrees to provide
remarketing support to SPE to enable it to perform its Obligations under
Section 10 of the Loan and Security Agreement.

5
<PAGE> 51

Cooperative Computing, Inc.
3055 Triad Drive
Livermore, CA 94550
Attention: President
with a copy to Corporate Counsel

Triad Systems Financial Corporation
3055 Triad Drive
Livermore, CA 94550
Attention: President
with a copy to Corporate Counsel

CCI/Triad Financial Holding Corporation
3055 Triad Drive
Livermore, CA 94550
Attention: President
with a copy to Corporate Counsel

(Lender)____________________________

____________________________________

Attention: ________________________

18. Governing Law. This Agreement shall be governed by and construed in
accordance with the Laws of California.

IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunder duly authorized as of the day
and year first above written.

<PAGE> 52

COOPERATIVE COMPUTING, INC. ('CCI/Triad")

By:_______________________________

Its:_______________________________

TRIAD SYSTEMS FINANCIAL CORPORATION ("TSFC")

By:_______________________________

Its:_______________________________

CCI/TRIAD FINANCIAL HOLDING CORPORATION("SPE")

By:________________________________

Its:_________________________________

____________________________________ ("Lender")

By:_________________________________

Its:_________________________________

7
<PAGE> 53

EXHIBIT C
TO
LOAN AND SECURITY AGREEMENT

SECURITY SUPPLEMENT NO. _____

Security Supplement No. ______, dated ____________, 19___ by CCI/TRIAD
FINANCIAL HOLDING CORPORATION as borrower ("Debtor") under a Loan and Security
Agreement dated as of ________________, 199__ (the "Agreement") with
___________________________, as lender ("Secured Party"). Capitalized terms
used herein are used with the meaning given in the Agreement.

RECITALS

B. The Agreement relates to the Equipment, the Leases, all Rents and other
payments due from Lessees thereunder, and other property described therein.

NOW THEREFORE, THIS SUPPLEMENT WITNESSETH:

1
<PAGE> 54

GRANTING CLAUSE

Debtor hereby grants a security interest in favor of Secured Party in all
of the Leases, Guaranties and Equipment described in the Schedule hereto to the
full extent set forth in Section 6 of the Agreement.

3. Debtor has full power and authority to execute this Security
Supplement.

4. If any assigned moneys are received by Debtor, the same will be
delivered to Secured Party as provided in the Agreement.

5. Debtor hereby confirms as of the date hereof its representations and
warranties contained in Sections 9(b) and 9(c) of the Agreement.

7. This Security Supplement is being delivered in, and shall in all
respects be governed by and construed in accordance with, the laws of
California.

IN WITNESS WHEREOF, Debtor has caused this Security Supplement to be duly
executed by one of its officers thereunto duly authorized, as of the day and
year first above written.

CCI/TRIAD FINANCIAL HOLDING CORPORATION

By:______________________________
Title:___________________________

Accepted:

___________________________

By:
Title:

2
<PAGE> 55

EXHIBIT D
TO
LOAN AND SECURITY AGREEMENT

NOTICE OF ASSIGNMENT

[Date]

TO: [Name and Address of Lessee]

Very truly yours,

TRIAD SYSTEMS FINANCIAL CORPORATION

By: ______________________________

Name: ___________________________

Title: __________________________

1
<PAGE> 56

EXHIBIT E
TO
LOAN AND SECURITY AGREEMENT

ACCOUNTING FOR REPOSSESSED AND REMARKETED
EQUIPMENT AND FIRST LOSS BALANCE

[letterhead of SPE ]

[Date]

[Address]

Re: Statement of Activity and First Loss Balance for the Quarterly Period
Ending _____________________. 19 ______

Gentlemen:

1A. First Loss "NET LOSS POOL" ("NLP') as of beginning of the above statement
period ("Period').

1B. Ten percent (10%) of the aggregate principal amount of Loans made during
the Period.

2. Standard Cost of all Equipment remarketed during the Period.

1
<PAGE> 57

3. Unreimbursed amounts paid by SPE to Lender on behalf of Lessees during the
Period.

4. Subtotal Debits and Credits during the Period.

5. Net Loss Pool balance at ________________, 19___.

(See attached sample report format.)

2
<PAGE> 58
EXHIBIT F
TO
LOAN AND SECURITY AGREEMENT

SALE AND ASSIGNMENT AGREEMENT

SALE AND ASSIGNMENT AGREEMENT entered into as of January 1, 1997 between TRIAD
SYSTEMS FINANCIAL CORPORATION, a California corporation ("TSFC"), and CCI/TRIAD
FINANCIAL HOLDING CORPORATION, a California corporation ("FHC").

INTRODUCTION

3. FHC is in the business of purchasing from TSFC lease receivables
consisting of the periodic rental payments due under leases entered into by TSFC
with its customers and financing such purchases with loans from various funding
sources, secured by a continuing security interest in, among other things, such
receivables and all of FHC's and TSFC's right, title and interest in and to
such leases and in the related Systems, software and other equipment.

5. TSFC desires to sell to FHC, and FHC desires to purchase from TSFC, the
lease receivables consisting of the Rent set forth on Schedule A hereto (the
"Specified Rent") under the Leases referred to therein (the "Specified
Leases"), and in that connection TSFC will grant to FHC a continuing security
interest in the Specified Leases, the related Equipment (the "Specified
Equipment") and

<PAGE> 59
other Collateral pertaining thereto (collectively, the "Specified Collateral"),
all on the terms and conditions hereinafter set forth.

NOW, THEREFORE, in consideration of the premises and the mutual covenants
of the parties, it is agreed as follows:

1. Additional Definitions. As used herein, the terms "Specified Eligible
Equipment", "Specified Eligible Lease", "Specified Guaranty", "Specified Lease
Proceeds" and "Specified Proceeds" shall mean Eligible Equipment, Eligible
Lease, Guaranty, Lease Proceeds and Proceeds, respectively, pertaining to the
Specified Leases and the Specified Equipment referred to in Schedule A hereto.

(a) each Specified Lease and all of TSFC's rights thereunder including the
right to receive payments (including Rent and security deposits) due to TSFC
thereunder and the right to exercise rights and remedies upon default;

(b) every item or component of Specified Equipment subject to Specified
Leases, together with (i) all accessions, replacements and substitutions
thereto and therefor and (ii) all upgrades, add-ons and additions thereto and
therefor to the extent they have been financed by Lender under the Loan and
Security Agreement, and (iii) all of its rights in the software and licenses
related thereto;

(d) all Specified Lease Proceeds and Proceeds of items or components of
Specified Equipment;
<PAGE> 60
(e) all warranty and other rights TSFC may have with respect to
the Specified Leases and the Specified Equipment subject thereto
against the manufacturer(s) of the Specified Equipment; and

(f) the proceeds (whether cash or non-cash proceeds), and products
of all the properties, assets and rights described in paragraphs (a),
(b), (c), (d), and (e) above including without limitation, all
insurance payments, whether or not FHC or Lender is the loss payee
thereof; in each case whether now owned or hereafter acquired.

TSFC acknowledges that FHC will assign, pledge and grant to Lender the
foregoing security interest, pursuant to Section 6 of the Loan and Security
Agreement, as security for FHC's Obligations.

4. Representations, Warranties and Covenants of TSFC. TSFC
represents, warrants and covenants that:

4.2 Authority. It has the full power, authority and legal right to
enter into and perform its obligations under this Agreement.

4.7 Clear Ownership. The interest of FHC and TSFC combined are, and
will continue to be, the record and beneficial ownership of 100% of each
Specified Lease and all Specified Equipment subject to Specified Leases in
which TSFC is named as Lessor free and clear of all mortgages, deeds of trust,
pledges and other liens, security interests, charges or encumbrances, except
for liens for taxes due but not yet payable and liens in favor of Lender and
TSFC shall promptly deliver to Lender any executed counterparts of Specified
Leases which were not delivered to Lender pursuant to Section 5.3(a) of the
Loan and Security Agreement and which have subsequently come into possession of
it. Notwithstanding the foregoing, TSFC shall be entitled to transfer to
CCI/Triad or another subsidiary corporation of CCI/Triad record and beneficial
ownership of any Specified Equipment, subject to Specified Leases in which
TSFC is named as Lessor, provided that:

(a) TSFC remains fully bound under this Agreement with respect to all
obligations hereunder, including the obligations assumed by the
assignee;

(b) TSFC has complied with any and all requirements under the
applicable Specified Lease or Leases with respect to such transfer;

(c) the assignee assumes in writing the obligations of TSFC under
this Agreement, subject to all the terms and conditions hereof and
Lender's rights and remedies under the Loan and Security Agreement,
and recognizes the continuing validity and priority of the lien of
Lender in the Specified Equipment;

(d) the assignee executes any documentation reasonably required by
Lender to facilitate the foregoing provisions of this Section 4.7
and the Operating Agreement; and
<PAGE> 62
(e) the assignee and TSFC execute and file all Uniform Commercial Code
financing statements and assignment statements necessary or appropriate, in
Lender's sole judgment, to continue, perfect and protect Lender's first
priority security interest in the Specified Collateral hereunder.

<PAGE> 63
4.13 Validity and Enforceability of Specified Leases and Specified
Guaranties. Each Specified Eligible Lease and Specified Guaranty is genuine,
valid and enforceable and is not subject to any offset, deduction, counterclaim
or lien.

4.14 Specified Leases Duly Entered Into. All parties to each
Specified Lease and Specified Guaranty have full power, authority and legal
right to enter into and perform its obligations under such Specified Lease or
Specified Guaranty, as the case may be. Each Specified Lease and Specified
Guaranty will be duly authorized, executed and delivered by the parties
thereto, will constitute legal, valid and binding obligations of the parties
thereto, enforceable in accordance with their respective terms and are in full
force and effect on the date of this Agreement, and no default thereunder
exists on such date. The entire agreement with each Lessee is embodied solely
in the executed counterparts of the applicable Specified Lease and other
documentation furnished to Lender with respect to such Specified Lease.

4.15 Equipment Description. Each Specified Lease describes the
Specified Equipment leased to the Lessee named in such Specified Lease, the
Specified Rent required for such Specified Equipment and any applicable early
termination payments.

4.19 Notifications. TSFC will promptly notify FHC and Lender of:

(a) any Event of Default or event which, upon the lapse of time or giving
of notice, or both, would become an Event of Default, or any event which
is, or upon the lapse of time or giving of notice, or both, would become a
default under or breach of the Operating Agreement;

<PAGE> 64
(b) any and all litigation or other matters or events concerning it or
any Lessee that has a reasonable possibility of materially and adversely
affecting its or any Lessee's business, condition (financial or other),
performance, operations, properties or prospects or adversely affecting
Lender's security interest in the Specified Collateral.

4.20 Books and Records; Financial and Other Information. TSFC shall:

(a) maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with generally
accepted accounting principles and practices consistently applied and in
compliance with the regulations of any governmental regulatory body having
jurisdiction over it;

(b) give Lender and its representatives, at all reasonable times and upon
reasonable notice, access to all records, files and books of accounting
pertaining to all transactions subject to this Agreement, and permit Lender
and its representatives to inspect, audit and make extracts therefrom; and

(c) upon the occurrence of an Event of Default or an event which, upon the
lapse of time or giving of notice, or both, would become an Event of
Default, permit Lender to exercise TSFC's inspection rights under the
Specified Leases, on a non-exclusive basis.

5. Representations, Warranties and Covenants of FHC. FHC
represents, warrants and covenants that:

<PAGE> 65
5.1 Due Organization. It is a corporation duly organized and validly
existing in good standing under the laws of its jurisdiction of incorporation,
and is duly qualified or otherwise authorized to do business wherever necessary
to carry on its present business and operations and to perform its obligations
under this Agreement.

5.2 Authority. It has the full power, authority and legal right to enter
into and perform its obligations under this Agreement.

5.3 Binding Obligation. This Agreement has been duly authorized, executed
and delivered by FHC and constitutes the legal, valid and binding obligation of
FHC, enforceable against it in accordance with its terms.

5.5 Compliance with Laws. There is no law, governmental rule, regulation,
judgment, decree or order binding on it that would be contravened by the
execution and delivery of, and performance under, this Agreement by FHC. FHC
will at all times comply with, or cause to be complied with, all laws,
statutes, rules, regulations, orders and directions of any governmental
authority having jurisdiction over it or its business if not complied with,
would have a material adverse effect on its business, condition (financial or
other), performance, operations, properties or prospects or on its ability to
perform its obligations under this Agreement.

6. Indemnities.

(i) the manufacture, purchase, license, subscription, financing,
ownership, delivery, rejection, nondelivery, possession, use, dismantling,

<PAGE> 66
transportation, storage, operation, maintenance, repair, return or other
disposition of the Specified Equipment;

(ii) breach of any covenant or warranty made by TSFC or CCI/Triad relating to
any Specified Equipment or Specified Lease or maintenance of any Specified
Equipment, including qualification of any Specified Equipment for any tax
benefit;

(iii) any claim, action or proceeding involving patent or trademark
infringement or copyright or trade secret violations relating to the Specified
Equipment (including any interest or penalty) whether or not such claim, action
or proceeding involves a claim of infringement or a combination or design
patent;

(iv) failure of FHC, and, pursuant to the Loan and Security Agreement, Lender,
for whatever reason, to have obtained a first priority perfected purchase money
security interest in and lien on the Specified Collateral, including, without
limitation, the Specified Leases and the Specified Equipment whether or not (A)
the Specified Equipment is deemed to be an asset of a Lessee as the result of a
Specified Lease being held to be a security agreement rather than a true lease
or (B) Uniform Commercial Code financing statements of form UCC-1 were filed
against a Lessee with respect to the Specified Equipment under Section 5.3(c)
of the Loan and Security Agreement;

(v) any misrepresentation made by any agent or employee of TSFC or CCI/Triad
in the course of negotiations regarding any Specified Lease or Specified
Equipment;

(vi) any breach of any warranty or covenant, or any misrepresentation, of TSFC
or CCI/Triad in any Specified Lease, any Operative Document or any certificate
of an officer of TSFC or CCI/Triad delivered in accordance therewith;

(vii) failure of any Specified Lease or Specified Equipment to comply with
applicable laws, regulations or contractual specifications or warranties, or to
be an Specified Eligible Lease or Specified Eligible Equipment, as the case may
be;

(viii) any dispute, claim, offset, or defense of any Lessee (other than payment
by, or discharge in bankruptcy of, such Lessee) to the payment of any Specified
Rent;

<PAGE> 67
(ix) FHC having received from TSFC, and accordingly Lender having received
from FHC, only a fax copy (rather that the original, manually executed
copy) of any Specified Lease or any Specified Guaranty;

(x) failure of TSFC or CCI/Triad to pay when due any taxes for which it is
liable; and

(xi) any wrongful or negligent acts or omissions of TSFC, its agents or
assigns, in carrying out its obligations, upon the request of FHC or Lender
or pursuant to the Servicing Agreement, under Section 7 or Section 10 of
the Loan and Security Agreement.

TSFC shall assume, at its expense, full responsibility for the defense and
satisfaction of the foregoing, with counsel reasonably satisfactory to FHC and
Lender. All of the indemnities set forth in this Section 6(a) shall survive the
cancellation or termination of this Agreement and the Loan and Security
Agreement.

(b) Upon the occurrence of any of the events set forth in Section 6(a),
TSFC unconditionally agrees to pay FHC or Lender, upon written demand, the
Indemnified Amount.

Triad Systems Financial Corporation
3055 Triad Drive
Livermore, CA 94550
Attention: Ronald D. Lindberg, Vice President
Telecopy No. 510/449-6962

CCI/Triad Financial Holding Corporation
3055 Triad Drive
Livermore, CA 94550
Attention: Ronald D. Lindberg, Vice President
Telecopy No. 510/449-6962
<PAGE> 68
Any party may change its address for the receipt of notices, demands,
directions, consents and approvals by notice duly given to the other parties
pursuant to this Section 8.

9. Successors; Assigns. Neither TSFC nor FHC shall assign its
obligations hereunder without the consent of Lender. This Agreement shall be
binding upon, and inure to the benefit of, the parties hereto and their
successors and permitted assigns; the representations, warranties and
covenants of TSFC in this Agreement shall specifically inure to the benefit of
Lender, as assignee of FHC.

10. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of California.

11. Entire Agreement. The terms and conditions herein contained
constitute the entire agreement among the parties hereto with respect to the
subject matter hereof, except to the extent that other agreements are referred
to herein or contemplated hereby or executed contemporaneously herewith, and
supersede all previous communications whether oral or written among the parties
hereto with respect to such subject matter. No agreement or understanding
varying or extending any rights or obligations hereunder of any of the parties
shall be binding unless in a writing signed by a duly authorized officer or
representative of the party against which such variance or extension is sought
to be enforced.

In WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their respective officers thereunder duly authorized as of the day
and year first above written.

TRIAD SYSTEMS FINANCIAL
CORPORATION

By: __________________________

Its: _________________________

CCI/TRIAD FINANCIAL HOLDING
CORPORATION

By: __________________________

Its: _________________________

<PAGE> 1
EXHIBIT 10.8

LOAN AND SECURITY AGREEMENT entered into as of between CCI/TRIAD FINANCIAL
HOLDING CORPORATION ("SPE"), a California corporation, and SANWA BUSINESS CREDIT
CORPORATION ("SBCC"), a Delaware corporation, as lender.

I N T R O D U C T I O N

B. TSFC has transferred by sale to SPE certain receivables due TSFC under
the leases and TSFC has assigned to SPE certain of its rights and interests in
the Leases, computer systems, software and equipment.

C. Lender engages in the business of equipment lease financing.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows.

1. DEFINITIONS.

When used in capitalized form herein, the following terms shall have the
meanings indicated:

1.1 "Adjustment Amount" means the amount determined in accordance with
Schedule A attached hereto and made a part hereof ("as" the same may from time
to time be revised by SBCC by written revisions). The Adjustment Amount
compensates SBCC for the initial direct costs incurred when discounting the
Lease to which it relates.

<PAGE> 2

1.2 "Business Day" - any day other than a Saturday, Sunday or a public or
bank holiday or the equivalent for banks generally under the laws of the State
of California.

1.3. "Closing Date" with respect to each Loan - the date on which SBCC
makes a Loan to SPE under this Agreement.

1.4 "Collateral" - as defined in Section 6.1.

1.5 "Discount Facility" - the credit facility provided by SBCC to SPE
pursuant to Section 4.

1.6 "Discount Facility Loan" - a loan made by SBCC to SPE under the
Discount Facility, including Recourse Loans.

1.7 "Discount Facility Rate" - with respect to a Discount Facility Loan -
a per annum rate of interest equal to the sum of (i) one-half of the sum the
yields quoted for "this week" for "five (5) year Treasury Notes, constant
maturity yield" in the two most recently published versions of Statistical
Release H.15(519) (as published by the Board of Governors of the Federal
Reserve System), plus (ii) three hundred (300) basis points.

1.8 "Discount Facility Loan Value" of (i) a Lease at the time a Discount
Facility Loan is made - (a) with respect to Leases dated as of May+31,+1989 or
earlier, one hundred percent (100%) of each payment of Rent (net of any
rebates, credits or reductions which are or may be applicable thereto)
remaining unpaid under the Lease at that time (but excluding any past due
Rent), discounted from the date each such payment is due to such time at the
Discount Facility Rate with respect to such Discount Facility Loan, and (b)
with respect to Leases dated as of June 1, 1989 or later, one hundred percent
(100%) of each payment of Rent (net of all Credits, rebates and discounts)
remaining unpaid under the Lease at that time (but excluding any past due Rent)
discounted from the date each such payment is due to such time at the Discount
Facility Rate with respect to such Discount Facility Loan; and (ii) of a
Purchase Option at the time a Recourse Loan is made - one hundred percent
(100%) of the amount of the Purchase Option discounted from the date that the
Put is due to such time at the Discount Facility Rate with respect to such
Recourse Loan.

1.9 "Effective Date" - the date of this Agreement.

1.10 "Eligible Equipment" - new or remanufactured computer systems and
related components, software and accessories, or other equipment acceptable to
SBCC, having a Discount Loan Value of not less than $5,000.00 or such other
amount as is consented to by SBCC, subject to an Eligible Lease and not subject
to a security interest or other encumbrance in favor of any corporation, firm
or other person other than a security interest in favor of SBCC arising under
this Agreement or a Security Supplement."

<PAGE> 3

1.11 "Eligible Lease" - a full payout net lease in the form of Exhibit
A-1, naming TSFC as lessor, that:

(a) has a noncancellable term of not more than 84 months excluding
renewals or extensions;

(b) provides for (i) Rent and casualty payments in amounts sufficient to
repay to SBCC the Loan made in respect of such lease and interest on such
Loan at the Discount Facility Rate, (ii) interest on late payments under such
lease at a rate not less than the Late Payment Rate and (iii) all payments to
be made in the United States dollars;

(c) provides that the lessor's right to receive payment is absolute and
not contingent upon the fulfillment of any condition whatsoever other than
the passage of time;

(d) covers only Eligible Equipment subject to a security interest in
favor of SBCC and includes all hardware and any other systems required to
operate any included software;

(e) is not subject to any conditions of the obligations of, or any
right or offset, counterclaim or defense by, the Lessee thereunder;

(f) is a Lease of Equipment solely for business or commercial
purposes, and not for any personal, family, household or agricultural
purpose;

(g) as of the Closing Date, has no unpaid accrued Rent which is more
than thirty (30) days overdue;

(h) is a Lease under which the Lessee is not in default, nor has there
occurred any event which with the passage of time or giving of notice or both
would become a Lessee Default; and

(i) is in all other respects satisfactory to SBCC.

1.12 "Equipment" - any and all Eligible Equipment leased to a Lessee by
TSFC under a Lease, located in the United States and made subject to a security
interest in favor of SBCC by the execution and delivery by SPE of a Security
Supplement specifically describing such Eligible Equipment, together with (i)
all accessions, replacements, parts, repairs, fixtures and accessories
incorporated therein or affixed thereto under the Lease, and (ii) all upgrades,
add-ons and additions incorporated therein or affixed thereto to the extent
they have been financed by SBCC under this Agreement.

1.13 "Event of Default" - as defined in section 11.1.

<PAGE> 4

1.14 "Excess Proceeds" - of an item of Equipment - any excess of (i) (A)
the Proceeds thereof less (B) Remarketing Expenses, over (ii) the relevant Loan
Repayment Amount.

1.15 "Guaranty" - a guaranty, in the form of the guaranty which comprises
a part of Exhibit A-1, executed and delivered by a corporation, firm or other
person (a "Guarantor") satisfactory to SBCC, assigned to SBCC as security by
the execution and delivery by TSC of a Security Supplement specifically
describing such guaranty.

1.16 "Invoice Price" - with respect to any Equipment - the aggregate
invoice prices of Triad, as manufacturer or seller, or any other manufacturer
or seller, net of taxes, transportation cost, delivery cost and any acquisition
or other fees payable to CCI/Triad or any of its affiliates.

1.17 "Late Payment Rate" with respect to a Discount Facility Loan - two
percent (2%) in excess of the applicable Discount Facility Rate.

1.18 "Lease" - an Eligible Lease duly executed by the Lessee, approved by
SBCC and assigned to SBCC as security by the execution and delivery by SPE to
SBCC of a Security Supplement specifically describing such Eligible Lease.

1.19 "Lease Proceeds" with respect to any Lease - all payments due from or
with respect to the Lessee, such Lease or the Equipment subject to such Lease,
including, but not limited to, all Rent and any security deposits held by TSFC,
all casualty, early termination, purchase option and indemnity payments, and
all insurance and sales or lease proceeds of and requisition payments for the
equipment subject to such Lease.

1.20 "Lessee" - a United States-domiciled corporation, partnership or sole
proprietorship that is the obligor for payment of Rent under a Lease.

1.21 "Lessee Default" means: (i) failure of an Lessee under any Lease to
make a Lease a payment of Rent within ninety (90) days of the due date of the
payment; (ii) failure of any Lessee to perform any of its material obligations
(other then its obligation to pay Rent) under Lease; (iii) insolvency of any
Lessee, inability of any Lessee to pay its debts as they mature, the making by
any Lessee of an assignment for the benefit of creditors, or institution of any
proceeding by or against any Lessee alleging that the Lessee is insolvent or
unable to pay its debts as they mature if such proceeding is not withdrawn or
dismissed within sixty (60) days after its institution; (iv) entry of any final
judgment against any Lessee remaining unsatisfied for a period of thirty (30)
days if such judgment is deemed by us to be a material factor in the
creditworthiness of the Lessee; (v) death of any Lessee who is a natural person
or of any general partner of any Lessee which is a partnership; (vi)
dissolution, merger, consolidation or transfer of a substantial part of the
property of any Lessee which is a corporate or a partnership, if such
dissolution, merger, consolidation or transfer is deemed by us to be a material
factor in determining the creditworthiness of such Obligor; or (vii) falsity in
any material respect as of the

<PAGE> 5

date made in any statement, representation or warranty of any Lessee in
connection with any Lease.

1.22 "Loan" - any advance of funds by SBCC under this Agreement to SPE.

1.23 "Loan Repayment Date" with respect to any Loan - the twentieth day of
each calendar month, commencing with the first such day to occur after the
Closing Date for such Loan.

1.24 'Net Book Value' - with respect to a Loan at any time - means the sum
of (i) the unpaid balance of principal of such Loan, (ii) the unpaid amount of
costs, expenses and other amounts then due under or with respect to such Loan,
and (iii) any unpaid interest accrued on such principal, costs, expenses and
amounts at the Discount Loan Rate or Late Payment Rate, whichever is
applicable."

1.25 "Obligations" - as set forth in Section 6.1.

1.26 "Operating Agreement" - the Operating and Support Agreement dated as
of _______________, among CCI/Triad, TSFC, SPE, and SBCC, in the form of
Exhibit _____ attached hereto.

1.27 "Operative Documents" - this Agreement, each Security Supplement,
Note and the Operating Agreement.

1.28 "Proceeds" of an item of Equipment subject to remarketing under this
Agreement - the sum of (i) the (A) gross cash proceeds of sale of such item or
(B) aggregate Rent obligation under a re-lease of such item discounted at the
then applicable Discount Facility Rate, or, if none, at the rate then used by
SBCC for discounting similar leases or agreements, plus (ii) any past due Rent
and any other termination amount paid by the Lessee, or by SPE on behalf of the
Lessee, plus (iii) any security deposit held by TSFC or SPE that reduces the
Lessee's lease termination payment.

1.29 "Purchase Option" - an obligation of the Lessee under a Lease to pay
a specific amount at the end of the Lease's term in addition to any regular
installments of Rent, which obligation may be unconditional (e.g. a "put") or
subject to the Lessee's election (e.g. a fixed price purchase option).

1.30 "Qualified Lease" - a Lease which satisfies, which covers Equipment
which satisfies, and with respect to which are satisfied, all of the
requirements and conditions of Sections 1.10, 1.11, 8.3, 9.7, 9.8, 9.13-9.19,
9.23 and 9.26. In addition, and notwithstanding that a Lease is otherwise a
Qualified Lease, upon a breach of the covenants set forth in Section 9.27 or
9.28, or a breach of any other covenant or agreement (excepting covenants or
agreements to make payments which are limited pursuant to Section 3.12) which
remains unremedied thirty

<PAGE> 6

(30) days after notice from SBCC, the Lease and all other Leases shall cease to
be Qualified Leases.

1.31 "Recourse Loan" - as defined in Section 3.13.

1.32 "Remarketing Expenses" with respect to an item of Equipment - the sum
of (i) CCI/Triad's or TSFC's standard costs of repossessing, transporting,
refurbishing and remarketing the item pursuant to Section 10, plus (ii) any
applicable sales, use or similar taxes imposed in connection with the sale or
re-lease of such item and not paid by the purchaser or lessee, plus (iii)
reasonable and customary enforcement and collection costs.

1.33 "Remarketing Proceeds" with respect to an item of Equipment - the
Proceeds minus the Remarketing Expenses.

1.34 "Rent" - under a Lease, the periodic charges specified in the Lease
for the use of the Equipment, excluding casualty or early termination, purchase
option, Put, indemnity payments and any amounts a Lessee may be required to pay
for taxes, license fees, assessments or maintenance.

1.35 "Security Supplement" - a supplement hereto substantially in the form
of Exhibit ______, executed and delivered to SBCC by SPE, describing Equipment
and Leases and subjecting the same to the security interest in favor of SBCC
arising under Section 6.

1.36 "Standard Cost" with respect to an item of Equipment at any time - an
amount equal to fifty percent (50%) of the Net Book Value for the related Loan
calculated on the date of payment.

1.37 "System Evaluation Agreement" - the System Purchase, Support, and
License Agreement in the form of Exhibit _____.

1.38 [Intentionally Omitted]

1.39 "Upgrade" - as defined in Section 3.5.

1.40 "Supplemented Net Book Value" - with respect to a Loan at any time -
means the sum of (i) the Net Book Value of such Loan, and (ii) the Adjustment
Amount for such Loan for the period in which the Net Book Value is calculated.

2. THE LOANS.

2.1 Loans. Subject to the terms and conditions hereof, and to SBCC's
approval of from time to time, from (and including) the Effective Date to (and
excluding) the termination of this Agreement, upon request of SPE, for itself
or on behalf of, SBCC may, with

<PAGE> 7

respect to each Lease covered by the request and in SBCC's sole discretion,
make a Loan to SPE in a principal amount equal to the Discount Facility Loan
Value of such Lease(s)"

2.2 Interest Calculation. Interest on the Discount Facility Loans shall
be computed on the basis of a 360-day year consisting of twelve 30-day periods.

2.3 Minimum Loan. The aggregate principal amount of the Loans made on any
Closing Date shall be not less than $250,000.00.

2.4 Payments. SBCC shall pay the proceeds of the Loans in immediately
available funds on the Closing Dates. SPE shall make each payment due under
this Agreement or any Security Supplement to SBCC or its assignee in
immediately available funds to the account or address specified by SBCC or such
assignee.

3. DISCOUNT FACILITY.

3.1 Requests for Loans. No later than ten (10) Business Days before each
proposed Closing Date relating to a Discount Facility Loan requested by SPE,
SPE shall submit to SBCC Eligible Leases together with lease schedules and
other supporting documentation, and the following:

(a) the name of each Lessee under such Eligible Leases, together with
(i) unless previously submitted to SBCC, financial statements of each such
Lessee and each Guarantor relating to such Lease as of the end of such
Lessee's and Guarantor's most recent fiscal year, respectively, and any
interim financial statements of such Lessee and such Guarantor readily
available to SPE, or TSFC, all in form and substance satisfactory to SBCC,
(ii) the payment history of such Lessee or Guarantor under other leases
entered into between such Lessee or Guarantor and SPE, or TSFC and (iii) such
additional financial information pertaining to any Lessee or Guarantor as
SBCC may request;

(b) the Rent schedule for each such Eligible Lease;

(c) copies of invoices evidencing the Invoice Price of each item of
Equipment subject to such Eligible Leases and evidence satisfactory to SBCC
that such Invoice Price has been paid in full to CCI/Triad by the lessor
under such Eligible Leases; and

(d) such other relevant information as SBCC shall reasonable require.

3.2 Approvals. Within ten (10) Business Days of receipt of all
information required to be submitted pursuant to Section 3.1, SBCC shall advise
SPE if, upon review of the credit of the Lessee, the value of the Equipment and
the documentation submitted pursuant to Section 3.1, SBCC approves the proposed
Lease and, if SBCC requires the credit support of a guarantor, the credit of
the proposed Guarantor. If SBCC fails to give such advice within such

<PAGE> 8

ten day period, SBCC shall be deemed to have declined such credit and shall so
advise SPE. SBCC may revoke any credit approval prior to making the Discount
Facility Loan relating to a proposed Lease if, in SBCC's sole judgment, the
proposed Lessee or Guarantor suffers an adverse change in its business or
financial condition.

3.3 Disbursement of Discount Facility Loans. Subject to satisfaction of
the conditions precedent set forth in Section 4 and Section 5, SBCC may make
Discount Facility Loans with respect to approved Leases on the Closing Dates
proposed in accordance with Section 3.1. The Discount Facility Loans made on
each Closing Date shall be in an aggregate principal amount equal to the
aggregate Discount Facility Loan Values of the Eligible Leases submitted by SPE
pursuant to Section 3.1 and approved by SBCC pursuant to Section 3.2 If, for
any reason, a Discount Facility Loan is not made on a proposed Closing Date
notwithstanding compliance by SPE with Section 3.1, the Closing Date may be
rescheduled to a date, within ten (10) Business Days of such Closing Date,
mutually agreed upon in writing by SBCC and SPE.

3.4 Loan Payments and Amortizations. Each Discount Facility Loan shall
bear interest at the Discount Facility Rate determined on the applicable
Closing Date. Principal of, and accrued interest on, the Discount Facility
Loans shall be payable on each Loan Repayment Date until fully paid. Each
Discount Facility Loan shall be amortized by the Lease Proceeds received by
SBCC with respect to the Leases financed by such Loan, with such Lease Proceeds
applied first to accrued and unpaid interest, then to any other amounts due
under the Loan (excluding principal) and then to principal.

3.5 Upgrades and Additions. If the Lessee desires to add features to or
to enhance the performance of Equipment covered by a Lease by adding or
replacing components to the leased Equipment, (an "Upgrade"), SPE shall
promptly advise SBCC of the Lessee's intention and offer SBCC the right to
finance the Upgrade. Upgrades financed under a contract or agreement separate
from the primary Lease covering the Equipment to be upgraded will be offered to
SBCC for discounting in the same manner as Leases are offered under this
Agreement, with a Discount Facility Loan Value to be determined at the time the
Upgrade is offered. Upgrades which are to be financed by increasing the
monthly payments under, or by extensions to the term of, the existing Lease
will similarly be offered to SBCC, with a Discount Facility Loan Value
determined at the time the Upgrade is offered. Not later than ten (10)
Business Days after such, offering SBCC shall give SPE written advice as to
whether SBCC, in its sole discretion, has elected to finance such additional
Lease Proceeds. If SBCC fails to give such advice within such ten (10) day
period, SBCC shall be deemed to have declined to finance such additional Lease
Proceeds and shall so advise SPE in writing. If SBCC agrees to finance such
additional Lease Proceeds, SBCC shall, subject to satisfaction of the
conditions precedent set forth in Sections 4 and 5, make a Discount Facility
Loan in an amount equal to the aggregate increase in Rent effected by the Lease
Amendment which remains unpaid as of the applicable Closing Date, but excluding
any such increase in Rent which is past due, discounted at the Discount
Facility Rate determined on the applicable Closing Date. The Closing Date with
respect to such Discount Facility Loan shall be a date agreed upon in writing
by SBCC and SPE. If SBCC agrees to make such a Discount Facility

<PAGE> 9

Loan, the Lease Amendment shall be considered a "Lease" for all purposes of
this Agreement (including, without limitation, Section 5).

3.6 Optional Prepayment: SBCC Refusal to Finance Upgrades or Additions.
If SBCC elects not to finance increased Lease Proceeds related to Upgrades or
additions pursuant to Section 3.5, SPE may give SBCC notice of its intention to
prepay the Discount Facility Loan or part thereof made to finance the Lease in
respect of which an Upgrade has been made. On the next Loan Repayment Date
occurring in January, April, July or October, SPE shall prepay such Loan or
part thereof by paying SBCC an amount equal to the Net Book Value thereof,
determined as of the date of prepayment. No Prepayment Fee in excess of such
Net Book Value shall be payable in respect of an optional prepayment made
pursuant to this Section 3.6.

3.7 Mandatory Prepayment: Termination of Lease. If a Lessee terminates a
Lease before its scheduled expiration, SPE shall prepay the Discount Facility
Loan or part thereof made to finance such Lease on the Loan Repayment Date next
occurring in January, April, July or October. On such Loan Repayment Date, SPE
shall prepay such Loan or part thereof by paying SBCC an amount equal to the
Supplemented Net Book Value thereof, determined as of the date of prepayment.

3.8 Mandatory Prepayment: Casualty. If any Equipment subject to a Lease
is lost or damaged, and cannot be repaired or replaced with substantially
similar Equipment manufactured by CCI/Triad by the Loan Repayment Date next
occurring in January, April, July or October occurring not less than thirty
(30) days after such loss or damage, SPE shall prepay the Discount Facility
Loan or part thereof made to finance such Lease on such Loan Repayment Date. On
such Loan Repayment date, SPE shall prepay such Loan or part thereof by paying
SBCC an amount equal to the Supplemented Net Book Value thereof, determined as
of the date of prepayment.

3.9 Mandatory Prepayment: Lessee Default. If any Lessee Default under
any Lease financed or refinanced by a Discount Facility Loan shall have
occurred SPE shall prepay such Loan in accordance with, and subject to the
liability limitations of Section 8.4. No Prepayment Fee in excess of such Net
Book Value shall be payable in respect of any such prepayment. Prepayments
made pursuant to Sections 3.6, 3.7, 3.8 or 3.10 shall not constitute
prepayments made pursuant to this Section 3.9, nor shall any such prepayments
be taken into account as credits against SPE's ultimate loss liability under
Section 8.4.

3.10 Mandatory Prepayment: Qualified Lease. If at any time, any Lease
which is financed or refinanced by a Discount Facility Loan shall not be or
shall cease to be a Qualified Lease, SPE shall, on the next occurring Loan
Repayment Date, prepay such Loan or part thereof as is attributable to such
Lease by paying SBCC an amount equal to the Supplemented Net Book Value
thereof, determined on the date of prepayment.

3.11 No Other Prepayments Permitted. No Discount Facility Loan may be
prepaid except as expressly provided in this Agreement.

<PAGE> 10

3.12 Limited Recourse. SBCC agrees that, except as provided in Sections
3.6-3.10, Section 3.13, Section 7, Section 8, and Section 10 with respect to
Remarketing Expenses, each Discount Facility Loan is nonrecourse to SPE and
that the repayment of each Discount Facility Loan shall be obtained solely from
the Lease Proceeds of the Leases, Proceeds of the Equipment and the other
Collateral in which SBCC has been granted a security interest pursuant to
Section 6; provided, however, that SPE shall be jointly and severally liable
(without any limitation on recourse) (i) if (A) either SPE or TSFC shall fail
to pay over to SBCC any Lease Proceeds received by SPE or TSFC if required to
do so, in which case SPE shall be liable for the amount of the Lease Proceeds
received by SPE or TSFC if required to do so, in which case SPE shall be liable
for the amount of the Lease Proceeds not so paid over plus interest accrued
thereon at the Late Payment Rate from the date the Lease Proceeds were required
to be paid over to SBCC, or (B) the fees and payments paid by a Lessee to SPE
upon termination of a Lease are less than the Supplemented Net Book Value
relating to such Lease and (ii) for all payments required to be made pursuant
to Section 3.8, whether or not insurance proceeds received by SPE are at least
equal to such payments.

3.13 Full Recourse. Notwithstanding anything set forth herein, including,
without limitation, any limitation on recourse against SPE, Discount Facility
Loans may be made with recourse to SPE ("Recourse Loans"). Such Recourse Loans
shall be made with respect to Leases which are Eligible Leases except that the
creditworthiness of the Lessee is not otherwise acceptable to SBCC and/or
Leases under which a Purchase Option is provided. A Recourse Loan shall be
designated as such by mutual written agreement of SBCC and SPE prior to the
Closing Date of such Loans. Upon occurrence at any time of (i) any Lessee
Default under a Lease made subject to a Recourse Loan because of the
unacceptability of the Lessee's creditworthiness, or (ii) the failure, by a
Lessee, to pay the full amount of the Purchase Option at the end of the Lease
term under a Recourse Loan made with respect to such Purchase Option, SPE shall
repay the Recourse Loan or part thereof made to finance such Lease or Purchase
Option on the Loan Repayment Date occurring not more than thirty (30) days
after such default. On such Loan Repayment Date, SPE shall prepay such
Recourse Loan or part thereof by paying to SBCC an amount equal to the Net Book
Value thereof, determined as of the date of prepayment. No prepayment fee in
excess of such Net Book Value shall be payable in respect of any such
prepayment. The amounts paid to SBCC by SPE pursuant to this paragraph shall
not be charged against the First Loss Provision defined in Section 8.4.

4. CONDITIONS PRECEDENT TO FIRST LOAN.

SBCC's obligations to provide the first Loan hereunder are subject to the
receipt by SBCC of the following, in form and substance satisfactory to SBCC:

4.1 Evidence of Authority of SPE. Certified resolutions of the board of
directors of SPE, respectively, authorizing the execution, delivery and
performance of each of the Operative Documents to which it is a party and any
other document required hereunder together

<PAGE> 11

with an incumbency certificate with respect to the officer or officers of SPE,
respectively, executing any of such Operative Documents and any document
required hereunder.

4.3 Operating Agreement. The Operating Agreement, duly executed by
CCI/Triad, TSFC, SPE, and SBCC.

4.4 Financial Statements. The most recent fiscal year's financial
statements of CCI/Triad, SPE, prepared in accordance with the standards
described in Section 9.21 and certified by independent certified public
accountants of recognized national standing; and interim financial statements
for each reporting period ended after such fiscal year, prepared in accordance
with the standards described in Section 9.21 and signed by such company's
respective chief financial officer treasurer or controller.

4.5 Officer's Certificate. A certificate from a duly authorized officer
of SPE, dated as of the first Closing Date, stating that:

(a) all representations and warranties made by SPE under this
Agreement and under the Operating Agreement are true and correct as of the
date of the certificate;

(b) SPE are in compliance with all covenants made under this
Agreement; and

(c) no event has occurred and is continuing that is, or with the
passage of time or giving of notice would be, an Event of Default or a
default under or breach of the Operating Agreement;

and containing an express undertaking by SPE, at any time that any Obligation
remains outstanding, to give immediate notice to SBCC if any of the above
statements is no longer true.

4.6 CCI/Triad Officer's Certificate. A certificate from a duly authorized
officer of CCI/Triad, dated as of the first Closing Date, stating that:

(a) all representations and warranties made by CCI/Triad under the
Operating Agreement are true and correct as of the date of the certificate;

(b) CCI/Triad is in compliance with all covenants made under the
Operating Agreement; and

<PAGE> 12

(c) no event has occurred and is continuing that is, or with the
passage of time or giving of notice would be, a default under or breach of
the Operating Agreement;

and containing an express undertaking by CCI/Triad to give immediate written
notice to SBCC if at any time prior to the Anniversary Date any of the above
statements is no longer true.

4.7 Insurance. Evidence of the insurance required by Section 8.3.

4.8 Opinion of Counsel. A written opinion of outside counsel,
substantially in the form attached hereto as Exhibit _____ and dated as of the
first Closing Date, with respect to the matters set forth in Exhibit ______,
and such other legal matters relating hereto as SBCC may reasonably request.

4.9 Agreement of Admission of Additional Secured Parties. Evidence that
the Agreement of Admission of Additional Secured Parties, in the form
previously executed by SBCC, has been duly executed and delivered by all of the
other parties thereto.

5. CONDITIONS PRECEDENT TO ALL LOANS.

5.1 Notice. SPE shall have given SBCC notice of each Closing Date no
later than ten (10) Business Days prior to such Closing Date.

5.2 Operating Agreement. The Operating Agreement shall be in full force
and effect and no defaults or breaches shall exist thereunder as of the
applicable Closing Date.

5.3 System Evaluation Agreements. No Leases being financed by a Discount
Facility Loan shall be subject to any condition, contingency, acceptance or
performance evaluation, including any under a System Evaluation Agreement on
the applicable Closing Date.

5.4 Receipt of Certain Documents. SBCC shall have received the following,
in form and substance satisfactory to SBCC:

(a) Lease. (i) All original, manually executed counterparts in the
possession of CCI/Triad, TSFC or SPE on such Closing Date of each Lease
financed on such Closing Date and the related Lease Schedule, in each case
duly executed by TSFC as lessor and by the Lessee thereunder;

(b) Guaranty. If required by SBCC, all original, manually executed
counterparts in the possession of CCI/Triad, SPE on such Closing Date of each
Guaranty duly executed by the Guarantor;

(c) Financing Statements Filed Against Lessees. Except in the case of
Leases of Equipment having an aggregate Invoice Price less than $15,000,
copies of duly executed and filed Uniform Commercial Code financing
statements on form UCC-1

<PAGE> 13

(or, in Louisiana, a document with similar effect) naming SPE as secured
party and the Lessees under the Leases to be financed on the Closing Date as
debtors, identifying as collateral the Equipment subject to such Leases
together with all accessions, replacements, parts, additions and
substitutions thereto and therefor, whether then owned or after acquired, and
all upgrades, add-ons and additions thereto and therefor. SBCC shall have
the right at any time (which right is coupled with an interest and a power of
appointment) to act as SPE's and/'s attorney in fact to execute UCC-1, UCC-2,
or UCC-3 financial statements on behalf of SPE for the purpose of filing
and/or assigning said financing statements to SBCC and perfecting SBCC's
security interest in the Equipment, provided SBCC bear all costs and expenses
incurred with the filing of such UCC Statements;

(d) Financing Statements To Be Filed Against SPE. Copies of duly
executed Uniform Commercial Code financing statements on form UCC-1 (or, in
Louisiana, a document with similar effect), naming SPE, respectively, as
debtor and SBCC as secured party, and identifying as collateral the
Collateral described in Section 6.1, in sufficient number to be filed in all
jurisdictions as may be necessary, in SBCC's judgment, to perfect SBCC's
security interest in such Collateral, including, without limitation,
jurisdictions where (i) SPE has its chief executive offices, (ii) SPE
maintain its records concerning the Leases and (iii) the Equipment is
located;

(e) Supplement. A Security Supplement, duly executed by SPE relating
to and describing the Lease, any Guaranty and the Equipment covered thereby;

(f) Notice of Assignment. An original notice to the relevant Lessee
of the assignment to SBCC of the relevant Lease, signed by TSFC substantially
in the form of Exhibit ___________;

(g) Acceptance Supplement. An original executed counterpart of the
certificate of acceptance with respect to each Lease (in the form contained
in Exhibit A-1) containing a complete description of the Equipment, duly
executed by the Lessee thereunder; and

(h) Other Documents. Such other documents, instruments or agreements
as SBCC may reasonably request.

6. SECURITY AGREEMENT.

6.1 Granting Clause. In order to induce SBCC to make Loans from time to
time to SPE, and in order to secure (i) the prompt repayment of the Loans and
payment of all interest accrued thereon, (ii) the strict performance and
observance by SPE of the obligations to be performed by it hereunder and (iii)
all costs of litigation, collection, reasonable attorneys' fees and other costs
expended or incurred in connection with the enforcement of SBCC's rights
hereunder and with respect to the Leases and the Equipment (the obligations
referred to in

<PAGE> 14

clauses (i) through (iii) being collectively referred to as the "Obligations"),
SPE hereby assign, pledge and grant a continuing security interest to SBCC in
all of its right, title and interest in and to the following described
properties, assets and rights (such properties, assets and rights collectively
called the "Collateral"):

(a) each Lease, Guaranty and all payments (including Rent) due and to
become due to SPE thereunder;

(b) every item or component of Equipment subject to Leases, together
with (i) all accessions, replacements, parts, additions and substitutions
thereto and therefor whether now owned or hereafter acquired and (ii) all
upgrades, add-ons and additions thereto and therefor unless the same can be
readily removed without affecting the original performance or configuration
of the original Equipment and in any case if they have been financed by SBCC
under this Agreement;

(d) the proceeds (whether cash or non-cash proceeds), and products of
all the properties, assets and rights described in paragraphs (a), (b) and
(c) above, including without limitation, all insurance payments, whether or
not SBCC is the loss payee thereof;

in each case whether now owned or hereafter acquired.

6.2 Appointment of SBCC. If SBCC assumes administration of collection of
Rent pursuant to Section 7 or Section 11.2, SPE irrevocably authorizes SBCC:

(a) to endorse or sign SPE's ' name on all checks, collections,
receipts UCC's or other documents related to the Leases;

(b) to take possession of an open mail addressed to SPE or TSFC
relating to such collection and remove Rent and proceeds and products of the
Collateral;

(c) to ask, demand, collect, receive, sue for, compound and give
acquittance for any and all payments assigned hereunder;

(d) to settle, adjust or compromise any claim thereunder as fully as
it or TSFC could;

(e) to endorse SPE's or TSFC's name on all checks and other commercial
paper given in payment or in part payment thereof; and

(f) in its discretion, to file any claim or take any other action or
proceeding, either in SBCC's own name or in SPE's or TSFC's names, or
otherwise, that SBCC may

<PAGE> 15

deem necessary, desirable or appropriate to collect any and all sums that may
be or become due or payable under the Leases or that may be necessary or
appropriate to protect the right, title and interest of SBCC in and to the
Collateral and the security intended to be afforded thereby and hereby.

6.3 Further Assurances. SPE will upon written direction from SBCC and at
the expense of SPE, do, execute, acknowledge and deliver all and every further
acts, deeds, conveyances, transfers and assurances reasonably necessary or
proper for the better effectuation of this Agreement, including but not limited
to assuring, conveying, assigning and confirming unto SBCC all of the
Collateral, whether now owned or hereafter acquired.

6.4 No Obligations Assumed by SBCC. SBCC does not assume, and its
interest herein shall not be subject to, any obligations or liability of TSFC
under any lease or any duty to collect money due thereunder or to enforce
collection thereof. SBCC assumes no responsibility, obligation or liability of
any kind whatsoever with respect to any Lease or Equipment, or for any
representation, warranty or obligation, express or implied, made by any person
or entity in connection with any lease.

6.5 Release of Security Interest. Upon payment in full of all amounts due
on a Loan and provided no Event of Default shall have occurred and be
continuing, SBCC agrees to (i) release its security interest in the Lease
financed by such Loan and the Equipment subject thereto, except to the extent
that such Lease or Equipment constitute Collateral for any unpaid Recourse Loan
or other Obligation; (ii) execute and deliver to SPE such UCC-3 releases and
other documents relating to released Leases and Equipment prepared by SPE as
SPE may reasonably request, and (iii) if requested by SPE, deliver to SPE
within thirty (30) days of such request the original documents relating to
released Leases described in Section 5.4(a), (b), (f), (g) and (h).

6.6 Final Release by SBCC. Upon termination of SBCC's commitment to make
Loans, repayment in full to SBCC of all Loans, and performance of all other
Obligations, SBCC will release its security interest in the Collateral in the
manner provided in Section 6.5.

7. ADMINISTRATION.

7.1 Authorization to Collect Rent. Until such time as there is an Event
of Default hereunder or SPE's authority to collect Rent is terminated pursuant
to Section 7.7, or 11.2 SPE is authorized to and shall collect Rent from
Lessees.

7.2 Collections. SPE will undertake such collections as an independent
contractor and not as SBCC's agent, and in connection therewith will at its
sole cost and expense, diligently perform all billing and collecting for Rent
due and to become due with respect to Leases and Equipment financed under
Discount Facility Loans. SPE shall bill Lessees in accordance with its
standard billing procedures provided that each invoice sent with respect to

<PAGE> 16

any Lease sold and assigned hereunder shall segregate the amount due thereunder
for maintenance, services and taxes.

7.3 Remittances. SPE shall, on or before the Loan Repayment Date of each
month, make payment to SBCC of the amount due on each Discount Facility Loan on
such date regardless of whether or not any Rent under applicable Leases shall
have been collected by SPE. SPE's obligation to make remittances pursuant to
this Section 7.3 shall, except with respect to remittances under Recourse
Loans, cease and be of no further effect at such time as SPE shall have no
further liability to SBCC under the provisions of Section 8.4(c) of this
Agreement.

7.4 Lease Receivables Statements. As soon as available, but no later than
the twentieth day of each month, SPE shall cause TSFC to deliver to SBCC a list
of all Leases then outstanding, and a statement showing the aging of
receivables under, and collections received under, such Leases both certified
as being complete and correct by a responsible officer of SPE.

7.5 First Loss Provision Statements. On the last Business Day of each
January, April, July and October, SPE shall cause TSFC to provide SBCC with a
quarterly statement as of such date of the first loss provision described in
Section 8.4.

7.6 Account Status Statements. As soon as available, SPE shall cause TSFC
to deliver to SBCC any changes in account status for any Leases then
outstanding that TSFC becomes aware of from time to time. Account status shall
be defined, but not limited to, changes in Lessee billing address, equipment
locations, equipment, and/or legal name.

7.7 Collection by SBCC. If, at any time, (i) an Event of Default shall
have occurred, or (ii) Rents under more than ten percent (10%) of all Leases
(determined according to the current Net Book Value of Discount Facility Loans
than outstanding respect to the Leases) shall be sixty (60) or more days past
due, then in either of such events, SBCC may immediately terminate SPE's
authority to bill and collect for Rent. Upon such termination SBCC may
undertake to collect Rents and other amounts due and to become due under the
Leases, deliver to the Lessees notices of the assignment of the Leases to SBCC,
direct the Lessees to thenceforth make payment of all Rents and other amounts
then due or to become due under the Leases directly to SBCC, and otherwise
enforce the rights of the lessor under the Leases.

7.8 Power of Attorney, Discretion to Collect. Upon SBCC's undertaking to
collect Rents, SPE hereby irrevocably constitute and appoint SBCC as its true
and lawful attorney with full power of substitution, for it and in its name,
place and stead, to ask, demand, collect, receive, receipt for, sue for,
compound and give acquittance for any and all Rents and other sums due under
Leases assigned hereunder, and to endorse the name of SPE on all checks,
collections, receipts or instruments given in payment or part payment thereof.
SBCC may take or fail to take whatever action with respect to collections as
it, in its sole discretion, shall deem proper. Regardless of what collection
action is taken, the provisions of Section 3.13 and 8.4 shall be unaffected by
any such action or failure to act.

<PAGE> 17

8. INDEMNITIES; INSURANCE; FIRST LOSS.

8.1 Indemnities. Notwithstanding anything set forth herein, including,
without limitation, any limitation on recourse against SPE, SPE shall indemnify
SBCC and hold it safe and harmless from and against any and all losses, claims,
actions, suits, proceedings, costs, expenses, damages, penalties, forfeitures
and liabilities including reasonable attorneys' fees and court costs
("Indemnified Amount") (other than Indemnified Amounts arising from or
pertaining solely to the gross negligence or willful misconduct by SBCC) that
may at any time be made, brought, incurred, assessed or adjudged against SBCC
solely arising from or pertaining to the Leases and Equipment, including but
not limited to:

(a) the leasing, use, maintenance or operation of the Equipment;

(b) breach of any alleged covenant, obligation or warranty made by
SPE, TSFC, or CCI/Triad relating to any Equipment or Lease or maintenance of
any Equipment, including qualification of any Equipment for any tax benefit;

(c) any claim, action or preceding involving patent infringement or
copyright or trade secret violations relating to the Equipment (including any
interest or penalty) whether or not such claim, action or proceeding involves
a claim or infringement of a combination or design patent;

(d) failure of SBCC, for whatever reason, to have obtained a first
priority perfected purchase money security interest in and lien on the
Collateral, including, without limitation, the Leases and the Equipment
(whether or not (i) the Equipment is deemed to be an asset of a Lessee as the
result of a Lease being held to be a security agreement rather than a true
lease or (ii) Uniform Commercial Code financing statements on form UCC-1 were
filed against a Lessee with respect to the equipment under Section 5.4(c));

(e) any statement or misrepresentation made in the course of
negotiations regarding any Lease or Equipment;

(f) any breach of any warranty or covenant, or any misrepresentation,
of SPE, TSFC or CCI/Triad in any Lease, any Operative Document or any
certificate of an officer of SPE, or CCI/Triad delivered in accordance
therewith;

(g) failure of any lease or Equipment to comply with applicable laws,
regulations or contractual specifications or warranties, or to be an Eligible
Lease or Eligible Equipment, as the case may be;

(h) any dispute, claim, offset or defense of any Lessee (other than
payment by, or discharge in bankruptcy of, such Lessee) to the payment of any
Rent;

<PAGE> 18

(i) failure to SPE, TSFC or CCI/Triad to pay when due any taxes for
which it is liable;

(j) any alleged injury to persons or property or any violation of
invention or patent rights;

(k) any governmental fees, taxes, charges or penalties levied or
imposed in respect to any Lease or related Equipment; and

(l) any wrongful or negligent acts or omissions of SPE or TSFC, or
either of their agents or assigns, in carrying out SPE's or TSFC's
obligations under Section 7 or Section 10.

All of the indemnities set forth in this Section 8.1 shall survive the
cancellation or termination of this Agreement.

8.2 Indemnity Payment. Upon the occurrence of any of the events set
forth in Section 8.1, SPE unconditionally agree to pay to SBCC, upon written
demand, the Indemnified Amount.

8.3 Insurance. With respect to all Equipment, SPE shall cause TSFC to
maintain in full effect, and shall deliver to SBCC evidence of, (a) liability
insurance, including all-risk insurance, with a combined single limit of at
least $500,000.00 per occurrence, naming SBCC as additional insured, (b)
property damage insurance on all Equipment, naming SBCC as a loss payee, in an
amount equal to actual cash value or replacement value, with a deductible of
not more than $200,000.00 per year for all Equipment, in each case with such
endorsements (including breach of warranty) and with such underwriters as are
satisfactory to SBCC and (c) such other insurance as is usual in the business
carried on by SPE, TSFC and CCI/Triad, which insurance shall be satisfactory to
SBCC as to amount, form, nature and carrier.

8.4 First Loss Provision.

(a) Upon the occurrence of any Lessee Default under any Lease financed
or refinanced by a Discount Loan Facility (excepting Recourse Loans), and
upon written demand by SBCC, SPE shall prepay, on the next Loan Prepayment
Date occurring in January, April, July or October, the Discount Facility Loan
or part thereof which is attributable to such Lease by paying to SBCC an
amount equal to the Net Book Value of the Discount Facility Loan or part
thereof outstanding with respect to the defaulted Lease.

(b) Upon SBCC's receipt of a prepayment specified in Section 8.4(a),
SBCC will terminate its security interest in the defaulted Lease and related
Collateral (except to the extent that such Lease or Collateral constitute
security for any unpaid Recourse Loan or other Obligation) and reassign the
same to SPE without recourse to, and

<PAGE> 19

without representations or warranties by SBCC of any kind whatsoever. SPE
shall then promptly take all reasonable steps to recapture possession of the
Equipment covered by the defaulted Lease and use its best efforts to remarket
the Equipment in the manner provided in Section 10 hereof.

(c) The maximum amount of liability which SPE will be required to bear
under Section 8.4(a) hereof with respect to any Loans made at any time under
this Agreement shall be limited to the extent that any amount payable
thereunder exceeds the sum of ten percent (10%) of the aggregate initial
amount of all Loans, exclusive of Recourse Loans, made pursuant to this
Agreement, plus (i) the aggregate Standard Cost of all Equipment covered by
defaulted Leases which in turn are covered by Loans prepaid under Section
8.4(a), plus (ii) the excess, if any, of the aggregate Remarketing Proceeds
realized with respect to such Equipment over the Standard Cost thereof, plus
(iii) the maximum amount of liability which TSFC may be required to bear
under Section 8.4 (net of any reductions on account of repurchases and other
reductions to such maximum liability as provided in said Section) of that
certain Loan and Security Agreement, dated as of August 8, 1989, as amended
and supplemented from time to time, between SBCC and TSFC, as successor to
TSC Leasing Corporation and Orleans Leasing Corporation, minus (iv) the
amount, if any, of payments (exclusive of any such payments made with respect
to Recourse Loans) made by SPE under Section 7.3 hereof which have not been
received from the Lessees, and minus (v) the amount of excess loss charges
made with respect to the Canadian Loan Agreement (as provided for in Section
8.4(d) below). SBCC's rights under this Section 8.4 shall be cumulative and
in addition to all other rights (except the rights to receive prepayments
under Section 3.9 which are incorporated in SBCC's rights under this Section
8.4) to receive payment of the Discount Facility Loans pursuant to this
Agreement.

If, at any time, SPE's ' liability under this Section 8.4 shall have
been reduced to zero, SPE shall thereafter have no liability under this
Section 8.4 except to the extent that SPE thereafter realizes Excess Proceeds
with respect to any Equipment or Rent from any Lessee not previously received
by SPE, in which event the previously unpaid portion of all such Net Book
Values shall be promptly paid by SPE to the extent of such Excess Proceeds.

(d) It is understood that Triad Systems Canada, Limited ("Triad
Canada") an affiliate of SPE's, TSFC's and CCI/Triad's, has entered into a
Loan and Security Agreement, dated as of _________________ (the "Canada Loan
Agreement") with Sanwa Bank Canada, Ltd. ("Sanwa Bank Canada"). The Canada
Loan Agreement is structured similarly to this Agreement and provides that
Triad Canada must, to the extent of a specified loss limitation, make
mandatory payment of loans upon the occurrence of obligor defaults under the
agreements securing such loans. SBCC, Sanwa Bank Canada, SPE, TSFC and
CCI/Triad, and Triad Canada have agreed that, to the extent that such
obligor-default-triggered loan repayments under the Canada

<PAGE> 20

Loan Agreement exceed the amount of loss limitation provided under the Canada
Loan Agreement, Triad Canada may be required by Sanwa Bank Canada to continue
to make such loan repayments to the extent that the loss limitation under
Section 8.4(c) of this Agreement has not been exceeded. In furtherance of
the agreement regarding loss limitations applicable to the Canada Loan
Agreement, SBCC has agreed to reimburse Sanwa Bank Canada for the amount of
any such additional loss which is not promptly paid by Triad Canada, and SPE
has agreed to reimburse SBCC for the amount of any such payments. It is
acknowledged and agreed that any such reimbursement obligations owed to SBCC
from SPE shall constitute and be construed as obligations under this
Agreement. To the extent that such excess payments under the Canada Loan
Agreement or such reimbursements are made, the amount of such payment or
reimbursement shall be charged against the maximum amount of loss provided
under Section 8.4(c) of this Agreement, and the maximum amount of loss
provided under Section 8.4(c) will be reduced by the U.S. Dollar equivalent
of such charge (determined as of the date of payment of such amount to Sanwa
Bank Canada).

9. REPRESENTATIONS, WARRANTIES AND COVENANTS.

SPE represents, warrants and covenants that, at all times until all Loans
made pursuant to this Agreement shall have been fully paid:

9.1 Due Organization. It and TSFC each is a corporation duly organized
and validly existing good standing under the laws of California, and is duly
qualified or otherwise authorized to do business wherever necessary to carry on
its present business and operations and to perform its respective obligations
under each Operative Document.

9.2 Authority. It and TSFC each has the full power, authority and legal
right to enter into and perform its obligations under each Operative Document.

9.3 Principal Place of Business. As to SPE and TSFC respectively, its
chief executive office and the office where it maintains its records concerning
payments under the Leases is at 3055 Triad Drive Livermore, California
94550-9559, and it will not change such principal place of business or remove
therefrom such records, or any other records relating to the Collateral or any
Loan, without thirty (30) days prior written notice to SBCC.

9.4 Binding Obligations. Each Operative Document has been duly
authorized and upon execution and delivery will constitute legal, valid and
binding obligations, enforceable against it, TSFC and/or CCI/Triad in
accordance with the terms thereof.

<PAGE> 21

commission, board, agency or instrumentality, domestic or foreign, is or will
be necessary in connection with the execution, delivery and performance of its
obligations under the Operative Documents, and no consent of any owner, lessor
or mortgagee of premises where any Equipment is located is or will be needed to
permit SBCC or the lessor to enforce the rights of the lessor under the Leases
or, if required, the same have been or, as needed, will be obtained and
certified copies have been or will be delivered to SBCC.

9.7 Clear Ownership. The interests of SPE and TSFC combined are, and
will continue to be, the record and beneficial ownership of 100% of each Lease
and all Equipment subject to Leases in which TSFC is named as Lessor, free and
clear of all of the Collateral free and clear of all mortgages, deeds of trust,
pledges and other liens, security interests, charges or encumbrances, except
for liens for taxes due but not yet payable, and shall promptly deliver to SBCC
any executed counterparts of Leases which were not previously delivered to SBCC
pursuant to Section 5.4(a) and which have subsequently come into its, TSFC's or
CCI/Triad's possession.

9.8 Filings. This Agreement and the Uniform Commercial Code filings made
pursuant hereto create in favor of SBCC a valid and perfected first priority
security interest in the Collateral securing the Obligations.

9.9 Actions. There are no actions, suits, proceedings, claims or
disputes pending or, to its knowledge, threatened against or affecting it or
its properties before any court or governmental department, commission, board,
bureau, agency or instrumentality, domestic or foreign, that, if determined
adversely to it, would have a material adverse effect on its condition,
business or operations, its ability to perform its obligations under the
Operative Agreements or SBCC's security interest in the Collateral.

9.10 Payment of Taxes. It has filed and will file all tax returns
(federal, state and local) required to be filed and has paid and will pay all
taxes shown thereon to be due, including interest and penalties, unless it is
contesting the payment of certain taxes in good faith and has established
adequate reserves therefor.

9.11 Notices. It will send to SBCC copies of all significant notices,
including, but not limited to, any notices with respect to the terms of any
Lease, and other instruments or communications required or permitted to be
given by the Lessee under any Lease.

9.12 Further Assurances; Enforcement of Leases. It will and will cause
TSFC to:

<PAGE> 22

(a) preserve and maintain its corporate existence and all rights,
privileges and franchises now enjoyed and conduct its business in an orderly,
efficient and customary manner;

(b) from time to time, at its own expense, take all action reasonably
necessary to establish, preserve, protect and perfect the rights created by
this Agreement, including, without limitation, (i) the full and punctual
performance of all of its obligations arising by contract or imposed by
applicable law, rate or regulation under the Leases and with respect to the
Equipment; (ii) the enforcement of the Leases without waiver, amendment or
modification; (iii) in the case of Leases having an Invoice Price equal to or
greater than $15,000, and to the extent not previously done pursuant to
Section 5.4(c)(ii), preparation, execution and filing of amendments on form
UCC-2 or UCC-3, as appropriate, to the financing statements described in
Section 5.4(c) to name SBCC as assignee of the secured party, and delivery to
SBCC of copies thereof; and (iv) the exercise of any and all rights of the
lessor under the Leases as may be necessary or advisable to assure full
compliance with the terms and provisions thereof and to protect SBCC's
security interest in the Collateral.

9.13 Validity and Enforceability of Leases and Guaranties. Each Eligible
Lease and Guaranty submitted to SBCC pursuant to Section 3.1 shall be genuine,
valid and enforceable and shall not be subject to any offset, deduction,
counterclaim defense or lien of any kind whatsoever.

9.14 Leases Duly Entered Into. All parties to each Lease and Guaranty
shall have full authority and capacity to execute and deliver such Lease or
Guaranty, as the case may be and to perform its obligations thereunder.

9.15 Equipment Description. Each Lease will correctly and accurately
describe the Equipment leased to the Lessee named in such Lease, the Rent
required for such Equipment and any applicable early termination payments.

9.16 Leases Comply with Laws. Each Lease will comply with and not
violate applicable laws and regulations including, without limitation, any
applicable laws relating to maximum rates of interest (whether or not imputed)
or similar charges.

9.17 No Impairment of Value or Rights. It has not done nor will it do
anything that might impair the value or validity of any Lease guaranty or
Equipment or any of the rights of the parties hereto under any Lease.

9.18 No Lessor Liens. No Lease submitted to SBCC pursuant to Section
3.1, or any Equipment subject thereto, or any Rents or other of its rights
therein, will have been assigned to, or be subject to any lien or security
interest in favor of, any person other than SBCC.

<PAGE> 23

9.19 No Modification of Leases. It will not waive, amend or otherwise
modify any provision of any Lease without the prior written consent of SBCC.

9.20 Notifications. It will promptly notify SBCC of:

(a) any Event of Default or event which, upon the lapse of time or
giving of notice, or both, would become an Event of Default, or any event
which is, or upon the lapse of time or giving of notice, or both, would
become a default under or breach of the Operating Agreement;

(b) any Lessee Default, default or violation of any of the provisions
of a Lease by a Lessee, any loss or damage to any Equipment or any materially
adverse credit information that it may have knowledge of with respect to a
Lessee or Guarantor, or a proposed Lessee or Guarantor;

(c) any and all litigation or other matters or events concerning it or
any Lessee that has a reasonable possibility of materially and adversely
affecting its or any Lessee's financial condition, its business or SBCC's
security interest in the Collateral;

(d) any change in the name or address of any Lessee; and

(e) not less than ten (10) days prior to such occurrence, any change
in the location of SPE's principal place of business or chief executive
office or (ii) opening or closing any places of business in any jurisdiction
where a UCC financing statement or similar document would need to be filed in
order to perfect or protect SBCC's security interest or other interest in any
Lease, Rents or Equipment.

9.21 Books and Records; Financial and Other Information. It shall and as
to TSFC, shall cause TSFC to:

(a) maintain adequate books, accounts and records and prepare all
financial statements required hereunder in accordance with generally accepted
accounting principles and practices consistently applied and in compliance
with the regulations of any governmental regulatory body having jurisdiction
over it;

(b) give SBCC and its representatives, at all reasonable times and
upon reasonable notice, access to all records, files and books of accounting
pertaining to all transactions subject to this Agreement, and permit SBCC and
its representatives to inspect, audit, and make extracts therefrom;

(c) upon SBCC's undertaking of collection of Rents or the occurrence
of an Event of Default or an event which, upon the lapse of time or giving of
notice, or both, would become an Event of Default, permit SBCC to exercise
the inspection rights of TSFC under the Leases, on a non-exclusive basis;

<PAGE> 24

(d) deliver to SBCC in form and detail satisfactory to SBCC, and in
such reasonable number of copies as SBCC may request:

(i) the lists of Lease receivables and statements showing the aging of
receivables, as required by Section 7.4;

(ii) the statements of first loss provision required by Section 7.5;
and

(iii) such other statement or statements, lists of property and
accounts, budgets, forecasts or reports as to TSFC or SPE as SBCC may
reasonably request.

(e) promptly, but in no event later than ninety (90) days after the
end of the relevant fiscal year or sixty (60) days after the end of the
relevant fiscal quarter, submit to SBCC copies of the most recent 10-K or
10-Q statement of CCI/Triad filed with the Securities and Exchange Commission
("SEC"), or if such reports are not so filed, comparable reports containing
such detail and prepared according to the same standards as in 10K and 10Q
reports, and any and all financial reports, notices and proxy statements sent
by it to shareholders as a group or filed with the SEC;

(f) promptly, but in no event later than ninety (90) days after the
end of the relevant year or fiscal quarter, submit to SBCC copies of SPE's
unaudited financial statements for such year or quarter, which shall present
fairly SPE's financial condition as of the end of such period and the results
of operations for such period, which shall be signed by SPE's chief financial
officer; and

(g) Monthly Financial Statements. Not later than thirty (30) days
after the end of each month, SPE shall provide SBCC with monthly financial
statements relating to the immediately preceding month.

9.22 Audit. It shall permit SBCC, from time to time, upon reasonable
request and at SBCC's sole expense, to conduct an audit of TSFC's and SPE's '
accounting and operating procedures as they relate to the Leases.

9.23 Charges and Taxes. It shall make all filings in respect of and pay
(or reimburse SBCC for, upon presentation of an invoice) all charges and local,
state or federal taxes (other than net income taxes of SBCC or franchise taxes
levied upon SBCC's net income), license fees, or other assessments, charges,
fines and penalties, together with interest payable with respect thereto,
levied or imposed upon or in connection with this Agreement, the Leases, the
Equipment and the Rent. Upon request of SBCC, SPE shall furnish, or cause TSFC
to furnish, written evidence of such payment to SBCC.

9.24 Financial Covenants. Neither CCI/Triad nor any successor entity
will be in default of, or fail to satisfy, any of the financial covenants which
are applicable to it under any

<PAGE> 25

credit facility provided by The Chase Manhattan Bank, N.A. or other acquisition
or working capital lender, including any covenants pertaining to interest
coverage, consolidated EBITDA to consolidated cash interest expense, minimum
consolidated EBITDA, consolidated total debt to consolidated EBITDA, and fixed
charge coverage. TSC will provide certificates to SBCC, concurrently with the
delivery of the financial statements required under this Agreement and signed
by a responsible officer, stating that to the best of such officer's knowledge,
the requirements of this Section 9.24 have been duly observed and satisfied,
and showing in detail the calculations supporting such statements.

9.25 Maximum Requests for Loans Per Month. It will make no more than a
combined total of two (2) requests for Loans, under Section 3.1, during each
calendar month until the Anniversary Date.

9.26 Concerning the Leases. With respect to each Lease all of the
following are true and correct as to the Lease, the Rents under the Lease, and
the Equipment covered by the Lease:

(a) The Lease arises from a bona fide lease or sale of the Equipment
described in the Lease and the Equipment is in all respects in accord with
the requirements of the Lease and has been delivered to and unqualifiedly
accepted by the lessee or vendee thereunder; none of the Equipment covered by
the Lease, after its delivery and acceptance by such lessee or vendee, is a
fixture under the applicable laws of any state where the Equipment is or may
be located;

(b) The Equipment complies with all applicable laws and regulations;

(c) The Contract accurately describes the Equipment covered thereby
and the Rent due thereunder, and is in all respects what it purports to be;

(d) All counterparts of the Lease have been clearly marked to
indicate that only one counterpart is the "Original", and that counterpart
will be delivered to SBCC at the time of our purchase;

(e) At the time of the SBCC Loan with respect to the Lease, SPE has
informed SBCC in writing of all agreements entered into in connection with
the Lease and fully executed copies (all original copies if requested by
SBCC) of all those agreements will be delivered to SBCC simultaneously with
delivery of the Lease;

(f) Each Lessee under a Lease or guarantor under a guaranty has all
the legal power, capacity and right required for it to enter into the Lease
or guaranty and any supplemental agreements and to perform its obligations
thereunder;

(g) Neither SPE, TSFC, or the vendor or lessor of the Equipment is in
default of any of its or such vendor's or lessor's obligations under the
Lease or arising by

<PAGE> 26

contract or imposed by applicable law, rule or regulation with respect to the
Lease and the related Equipment;

(h) SPE and/or TSFC have taken, at their expense, all steps from time
to time necessary or deemed by SBCC to be desirable to perfect (and continue
the perfection of) SBCC's security interest in the Lease, the Rent and the
Equipment covered by the Lease;

(i) At the time of SBCC's Loan with respect to the Lease, no amounts
have been prepaid on the Lease except advance payments which are required by
the terms of the Lease.

9.27 Continuation of Existence and Business. Neither SPE, TSFC, or
CCI/Triad will (i) cease to engage in substantially the same line of business
in which any of them are engaged on the date of this Agreement, (ii) cease to
engage in the sale or lease of Equipment, or (iii) sell, transfer or convey a
substantial part of its assets or effect or be a party to any merger or
consolidation without SBCC's prior written consent.

9.28 The Operating Agreement is in full force and effect, has not been
withdrawn, modified without SBCC's written consent, rescinded or repudiated,
and no default or breach thereunder exists.

10. REPOSSESSION AND MARKETING.

10.1 Request to Repossess; Remarketing. If a default exists under a
Lease financed or refinanced by a Discount Facility Loan, either through
notification by SPE or TSFC pursuant to Section 9.20 or otherwise, and that
such default remains uncured within the time, if any, for curing the same
permitted by the Lease, and provided that no prepayment with respect to such
Lease has been made pursuant to Section 8.4 of this Agreement, SBCC, as secured
party under this Agreement, may request SPE to cause TSFC to act as its agent,
and upon such request TSFC will, as such agent, use diligent efforts to
repossess the Equipment subject to such Lease as promptly and efficiently as is
legally permissible. Thereafter TSFC will refurbish and update, as needed,
and, for a period of one hundred twenty (120) days or such other period as TSFC
and SBCC may agree upon in writing from the date the Equipment is repossessed
(the "Remarketing Period"), attempt to sell or release such Equipment on a
non-priority (but nondiscriminatory) basis and on such terms and conditions as
reflect fair market value for similar equipment and are acceptable to SBCC, in
its sole discretion. TSFC shall give no less priority to remarketing Equipment
pursuant to this Section 10.1 than it would similar equipment owned, leased or
managed by TSFC. The obligations of TSFC to remarket such Equipment for sale
of lease shall include, but not be limited to, efforts sell such Equipment,
preparation and supervision of the documentation of each transaction and an
accounting of the activities referred to in this Section 10.1, including
information relative to the status of negotiations for offers made in respect
of such Equipment.

<PAGE> 27

If TSFC has not remarketed any Equipment at the conclusion of the
Remarketing Period, upon notice from SBCC, TSFC's exclusive right to remarket
shall terminate and SBCC shall have the right to remarket such Equipment on
terms and conditions satisfactory to it. If SBCC remarkets the Equipment, it
shall retain Proceeds in an amount equal to the Net Book Value applicable to
the Loan financing the Lease to which such Equipment was subject and any
reasonable expenses incurred and shall remit the Excess Proceeds to SPE.

Nothing contained in this Section 10.1 shall be deemed to constitute a
release by SBCC of its security interest in any of the Collateral. SBCC shall
release its security interest in Equipment which has been sold pursuant to this
Section 10.1.

10.2 Remarketing Expenses. Remarketing Expenses shall be for the account
of the party incurring such Expenses and shall be recoverable from Proceeds
realized by the party remarketing the Equipment.

10.3 No Guaranty. Notwithstanding anything contained herein to the
contrary, the obligations and duties of SPE and TSFC contained in this Section
10 shall not be construed to include a guaranty that the Remarketing Proceeds
with respect to any Equipment will equal or exceed the Net Book Value relating
to such Equipment.

11. EVENT OF DEFAULT; REMEDIES.

11.1 Event of Default. Any one of the following events shall constitute
an "Event of Default" hereunder:

(a) SPE shall fail to remit to SBCC when due any Lease Proceeds or
Proceeds of an item of Equipment received directly by SPE or TSFC, or shall
fail to make any payment required hereunder, in each case within five (5)
days written notice thereof from SBCC;

(b) SPE shall fail to observe or perform any other obligation
hereunder, or under any other agreement between SBCC and SPE, which is not
corrected within thirty (30) days of written notice thereof from SBCC;

(c) any covenant, representation or warranty made by SPE, TSFC, or
CCI/Triad to SBCC in any Operative Documents or in any certificate delivered
pursuant thereto shall be untrue in any material respect when made or shall
be breached by SPE, TSFC, or CCI/Triad. Notwithstanding the foregoing, to the
extent that such a breach occurs, and such breach relates to an individual
Lease, SPE shall have ten (10) days from receipt of demand by SBCC to prepay
the Discount Facility Loan with respect to the Lease pursuant to the terms of
the Mandatory Prepayment clause set forth a Paragraph 3.7 herein. SPE's
failure to prepay such Loan within said ten (10) day period shall then
constitute an Event of Default under this subparagraph (c);

<PAGE> 28

(d) an injunction, attachment or other legal process shall issue
against any material part of SPE's or TSFC ' property or a material judgment
or lien shall be filed against SPE's or TSFC which is not stayed, vacated,
bonded, or otherwise discharged within sixty (60) days after the date of
entry thereof;

(e) SPE, TSFC, or CCI/Triad shall cease to do business as a going
concern, shall become bankrupt, shall make an assignment for the benefit of
creditors or otherwise take advantage of the bankruptcy or any other law for
the relief of debtors; a trustee or receiver for SPE or TSFC shall be
appointed or there shall be filed by or against SPE or TSFC any petition
under any provision of the Federal Bankruptcy Code, as amended, and such
petition shall not be dismissed, withdrawn, or otherwise eliminated within
sixty (60) days after the filing thereof;

(f) SPE, TSFC, or CCI/Triad shall (i) cease to engage in substantially
the same line of business in which any of them are engaged on the date of
this Agreement, (ii) cease to engage in the sale or lease of Equipment, or
(iii) sell, transfer or convey a substantial part of its assets or effect or
be a party to any merger or consolidation;

(g) any material breach or default shall occur under any Operative
Document or such Operative Document shall be rescinded or otherwise
abrogated;

(h) any material adverse change since the Effective Date shall occur
in the financial condition or business operations of CCI/Triad, SPE or TSFC ;
or

(i) any ERISA plan of CCI/Triad, SPE or TSFC shall terminate, or
CCI/Triad, SPE or TSFC shall fully or partially withdraw from such a plan or
plan which could result in liability of CCI/Triad, SPE or TSFC to the Pension
Benefit Guaranty Corporation or to such plan or plans in the aggregate amount
of $50,000 or more (in excess of any applicable insurance).

11.2 Remedies. If an Event of Default shall have occurred, upon notice
of such Event of Default (other than an Event of Default under Section 11.1(e))
to SPE, SBCC shall have the right to do any or all of the following:

(a) complete and deliver to the Lessees the notices received by SBCC
pursuant to Section 5.4(f) and to commence direct collection of the Rents
until such time as SBCC has received the total Supplemented Net Book Value of
all Loans due under this Agreement;

(b) (i) exercise any of the lessor's rights under any of the Leases,
or (ii) by written notice, require SPE or TSFC to exercise on behalf of SBCC
as secured party under this Agreement any and all of the rights available to
the lessor under any Lease to the extent not already exercised by SPE,
whereupon SPE shall immediately take or cause TSFC to take all requested
action;

<PAGE> 29

(d) proceed against SPE, TSFC or CCI/Triad for all rights and remedies
SBCC may have in law or in equity under this Agreement and/or the Operating
Agreement.

Upon the occurrence of an Event of Default, or upon the failure of an
Lessee to perform its obligation under a Lease, SBCC shall have and may
exercise all the rights and remedies of a secured party under the California
Uniform Commercial Code (expressly including, but not limited to, those granted
under 9-502(1) and 9-306 dealing with the retention of cash proceeds), and any
other applicable laws (including but not limited to the right to assume direct
collection of any and all Leases and retain any and all cash proceeds collected
under the leases until such time that SBCC has received he total Supplemented
Net Book Value of all Loans due under this Agreement); provided, however, that
so long as Lessee under a Lease is not in default thereunder, SBCC shall not
take any action or exercise any right that would disturb such Lessee's full and
quiet enjoyment of all of such Lessee's rights under that Lease. SBCC will
give SPE reasonable notice of the time and place of any public sale of any
Collateral or of the time after which any public or private sale of such
Collateral or any other intended disposition thereof is to be made. Unless
otherwise provided by law, the requirement of reasonable notice shall be met if
such notice is delivered at least ten (10) days before or mailed, postage
prepaid, to SPE, at least twenty (20) days before the time of such sale or
disposition. Subject to applicable provisions of this Agreement, the proceeds
of any sale or disposition of Collateral shall be applied: first, to the
expense of settling all liens and claims against such Collateral and all costs,
charges and expenses incurred by SBCC in connection with the Event of Default,
SBCC's exercise of remedies under this Section 11.2 (including without
limitation those described in Section 12.4), and in taking, removing, holding,
preparing for sale and selling the Equipment; second, to the payment of the
remaining total Supplemented Net Book Value of all Loans; third, to any other
unpaid obligations of SPE hereunder; and fourth, any remaining proceeds shall
be paid to SPE.

Notwithstanding the foregoing, SBCC shall have the right to discontinue
making Loans at any time in its sole discretion, whether or not an Event of
Default has occurred.

Nothing contained in this Section 11.2 shall entitle SBCC to recourse
against SPE with respect to payment of the Loans which is not expressly granted
to SBCC by this Agreement.

12. MISCELLANEOUS.

12.1 General. Waiver of any particular default shall not be a waiver of
any other default. All SBCC's rights are cumulative and not alternative. No
waiver or change in this Agreement shall bind SBCC or SPE unless an officer of
SBCC or SPE has agreed to such waiver or change in writing. Any provision of
this Agreement contrary to, prohibited by or invalid under applicable laws or
regulations shall be inapplicable and deemed omitted herefrom, but shall not
invalidate the remaining provisions hereof. No oral agreement, guaranty or
warranty shall be binding. This Agreement shall be governed by the laws of
California.

<PAGE> 30

12.2 Notices. All notices demands, directions, consents and approvals
hereunder shall be in writing and shall be delivered in person, by telegram, by
overnight courier or by prepaid certified mail, addressed to the party for whom
it is intended, (i) if to SPE, at 3055 Triad Drive, Livermore, California
94550, Attention: President, and (ii) if to SBCC, at One South Wacker Drive,
Suite 3900, Chicago, Illinois 60606, Attention:++Senior Credit Officer, VFD,
and shall be deemed delivered on the day of actual receipt. Either party may
change its address for the receipt of notices, demands, directions, consent,
and approvals by notice duly given to the other party pursuant to this Section
12.2.

12.3 Waivers. SPE hereby waive demand, presentment, protest and notice
thereof with respect to any and all instruments, notice of acceptance hereof,
and all other demands and notices of any description, except as expressly
provided herein. No delay or omissions on the part of either party in
exercising any right, remedy, option, or notice of default, except as any
pertinent statute of limitations which may apply, on any one occasion, shall be
construed as a bar to or waiver of any other default, right, remedy or option,
or the same default, right, remedy or option on any future occasion.

12.4 Costs and Expenses. In any case where SBCC or SPE is entitled
hereunder to reimbursement of costs and expenses, such costs and expenses shall
include interest on any judgment and court costs, reasonable legal fees and
expenses (including allocated fees of internal counsel) and punitive (as award
by a court of competent jurisdiction) as well as actual damages.

12.5 Successors, Assignment By SBCC. This Agreement shall be binding on,
and inure to the benefit of, SBCC, SPE, and their respective successors and
assigns and contains the entire understanding and agreement with respect to the
subject matter hereof. It is understood and agreed that from time to time SBCC
may, without notice to SPE, (i) decide that any or all of the Loans pursuant
hereto shall be made by one or more of SBCC's affiliates, subsidiaries, or
subsidiaries of its affiliates; (ii) assign to one or more of its affiliates,
subsidiaries or subsidiaries of its affiliates, all of its right, title and
interest in any Loan made hereunder and the Equipment covered by any Lease; and
(iii) assign this Agreement in whole or in part and/or all or part of its
rights and benefits under this Agreement to any person. If one or more of
SBCC's affiliates, subsidiaries or subsidiaries of its affiliates make any
Loans pursuant to this Agreement, such Loans shall be made under the terms and
conditions of this Agreement.

12.6 No Assignment By SPE. This Agreement is not assignable by SPE, by
operation of law or otherwise.

12.7 Reliance. All of the covenants, agreements, representations and
warranties made by SPE in this Agreement shall, notwithstanding any
investigation by SBCC, be deemed to be material to and to have been relied upon
by SBCC with respect to each Loan made pursuant to this Agreement. SBCC's
knowledge at any time of any breach of or non-compliance with any of such
covenants, agreements, representations or warranties shall not constitute a
waiver of any thereof by SBCC.

<PAGE> 31

12.8 Entire Agreement. The terms and conditions herein contained
constitute the entire agreement between SBCC, SPE with respect to the subject
matter hereof, except to the extent other agreements are referred to herein or
contemplated hereby or executed contemporaneously herewith, and supersede all
previous communications whether oral or written between SBCC and SPE with
respect to such subject matter. No agreement or understanding varying or
extending any rights or obligations hereunder of either of the parties shall be
binding unless in a writing signed by a duly authorized officer or
representative of the party against which such variance or extension is sought
to be enforced.

12.9 Headings; Title. The cover, table of contents and titles for
Sections used in this Agreement are intended to be descriptive only and shall
not be deemed to limit, extend or in any way modify the meaning of the text of
this Agreement. Reference to integral sections without decimals include all
decimal sections within such integral sections.

12.10 Joint and Several Liability. SPE shall be jointly and severally
liable for all recourse liability of SPE under this Agreement.

12.11 Jury Waiver, Jurisdiction Selection. SPE AND SBCC HEREBY WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION TO ENFORCE OR DEFEND ANY MATTER
ARISING FROM OR RELATED TO THIS AGREEMENT. SPE AGREES NOT TO INSTITUTE ANY
LEGAL ACTION OR PROCEEDING AGAINST SBCC OR ANY OF ITS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING
TO THIS AGREEMENT IN ANY COURT OTHER THAN ONE LOCATED IN COOK COUNTY, ILLINOIS.

12.12 Termination. This Agreement shall continue in effect until
terminated by either party at any time upon thirty (30) days written notice to
the other, provided, however that all of the rights and obligations of the
parties applicable to Loans made prior to such termination shall survive such
termination.

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their officers thereunto duly authorized as of the day and
year first above written.

CCI/TRIAD FINANCIAL HOLDING CORPORATION ("SPE"),
a California Corporation

By: /s/ BILL ALLEN
------------------------------

Its: President
-----------------------------

SANWA BUSINESS CREDIT CORPORATION,
a Delaware Corporation

By: /s/ THOMAS MAY
------------------------------

Its: Credit Manager
-----------------------------

<PAGE> 1
EXHIBIT 10.9

AGREEMENT made the _______ day of __________ 19 BETWEEN THE INDUSTRIAL
DEVELOPMENT AUTHORITY having its registered office at Wilton Park House, Wilton
Place, Dublin 2 (hereinafter called "the Authority") of the first part and
TRIAD SYSTEMS IRELAND LIMITED having its registered office at __________________
(hereinafter called "the Company") of the second part TRIAD SYSTEMS CORPORATION
having its registered office at __________________ (hereinafter called "Triad")
of the third part and TRIDEX SYSTEMS LIMITED having its registered office at
____________________ (hereinafter called "Tridex" of the fourth part), the third
and fourth part hereinafter collectively called "the Promoters".

WHEREAS:

1. The Company which is controlled by the Promoters has been incorporated
with the principal object of establishing in three phases and carrying
on in Templemichael, Longford, Co Longford an industrial undertaking
for the provision of Inventory Management Systems for automotive parts
to include Product Development, Systems Assembly, Marketing,
Market/Customer Support, Data Processing and Data Base Development
(hereinafter called "the Undertaking") in accordance with proposals
furnished to the Authority by the Promoters and has applied to the
Authority for financial assistance towards the cost of establishing
the Undertaking which is intended to give employment to 231 persons;

2. The Company and the Promoters having made all necessary enquiries are
satisfied and represent to the Authority that to the best of their
belief there will be available to the Undertaking the
<PAGE> 2
business and technical personnel, knowledge and facilities required
for its proper establishment and efficient operation.

3. The Promoters have represented to the Authority that the Undertaking
will contribute to the regional development of Ireland.

NOW IT IS HEREBY WITNESSED that in consideration of the Company
implementing the said proposals, the Authority agrees to grant the
Company:-

A. Phase 1 (year 1 and year 2)

(i) the sum of 396,000 Irish Pounds or the aggregate of 4,500
Irish Pounds for each job created in accordance with the Sixth
Schedule hereto in the Undertaking whichever is the lesser
(hereinafter called "the Employment Grant"),

(ii) the sum of 36,000 Irish Pounds or 60% of the actual
expenditure on the provision of specified building
modifications for the Undertaking and the sum of 544,500 Irish
Pounds or 45% of the actual expenditure on the provision of new
machinery and equipment for the Undertaking (hereinafter called
"the eligible assets") whichever is the lesser (hereinafter
called "the Capital Grant");

(iii) the sum of 66,000 Irish Pounds or 100% of the annual rent
payable for the first 2 years for the premises rented for the
Undertaking, whichever is the lesser (hereinafter called "the
Rent Reduction Grant");

B. Phase 2 (year 3 and year 4)

(i) the sum of 378,000 Irish Pounds or the aggregate of 4,500
Irish Pounds for each job created in accordance with the Sixth
Schedule hereto in the Undertaking whichever is the lesser

-2-
<PAGE> 3
(hereinafter called "the Employment Grant");

(ii) the sum of 40,874 Irish Pounds or 10.7% of the actual
expenditure on the provision of new machinery and equipment
for the Undertaking (hereinafter called "the eligible assets")
whichever is the lesser (hereinafter called "the Capital
Grant");

C. Phase 3 (year 5)

(i) the sum of 265,500 Irish Pounds or the aggregate of 4,500
Irish Pounds for each job created in accordance with the Sixth
Schedule hereto in the Undertaking whichever is the lesser
(hereinafter called "the Employment Grant");

The Employment, Capital, and Rent Reduction Grant are hereinafter .
collectively referred to as "the grants" and are subject to the following terms
and conditions including those contained in the Schedules hereto:

1. DEVELOPMENT OF THE UNDERTAKING:

The development of the Undertaking and in particular the provision of
employment shall be substantially in accordance with the particulars given in
the said proposals.

2. CONTROL OF THE COMPANY:

No arrangement shall be made which would materially alter the controlling
interest in the Company without the prior written consent of the Authority.

3. PROMOTERS INVESTMENT:

The Company shall procure or provide for the purposes of the Undertaking:-

-3-
<PAGE> 4
3-1 Equity Equivalent of IRL.1,726,874;

For the purposes of this Agreement "Equity Equivalent" shall mean the
total moneys obtained by the Company as follows:-

3-1-1 cash received by the Company from the Promoters in
consideration for the issue at par of fully paid-up Ordinary
and Preference Shares in the Company; and/or

3-1-2 retained earnings of the Company capitalised at par as fully
paid-up Ordinary Shares in the Company; and/or

3-1-3 retained earnings of the Company transferred to a special
non-distributable reserve account which shall be maintained at
the appropriate level for the duration of this Agreement;
and/or

3-1-4 Loans from the Promoters on the following terms and conditions
("Subordinated Loans"):-

3-1-4-1 that no interest on such loans shall be
payable except out of profits which would
otherwise be available for dividend;

3-1-4-2 that no such loans shall be repaid except out
of profits of the Company which would
otherwise be available for dividend or out of
a new loan obtained on the same terms for
this purpose, or out of the proceeds of a new
issue at par of fully paid-up Ordinary Shares
of the Company made for this purpose;

3-1-4-3 that where any such loans are repaid out of
profits, there shall be transferred out of
profits which would otherwise have been
available for dividend to a special

-4-
<PAGE> 5
non-distributable reserve account a sum equal
to the amount of the loan repaid, and that
there shall be no reduction in the amount of
such special non-distributable reserve
account during the term of this Agreement;

3-1-4-4 that where any such loans are repaid out of a
new loan obtained for this purpose, the new
loan shall be subject to these conditions as
if it were the original loan;

3-1-4-5 that in the event of the winding up of the
Company the amount of any such loans still
outstanding shall be subordinated to the
claims of the unsecured creditors of the
Company;

PROVIDED ALWAYS that not less than IRL.822,000 of the Equity Equivalent shall
be Ordinary Shares in the Company as specified at sub-paragraphs 3-1-1 and/or
3-1-2 above and not less than IRL.500,000 of the Equity Equivalent shall be by
way of Preference Shares in the Company, the total amount of IRL.1,322,000 to
be procured as follows:-

and PROVIDED FURTHER that retained earnings utilised as Equity Equivalent as
aforesaid shall not include any sum received in respect of the grants or
derived from a revaluation of the fixed assets of the Company.

-5-
<PAGE> 6
4. PROVISION OF SERVICES:

Unless otherwise agreed to in writing by the Authority the Company shall not
for a period of ten years from the date of its acceptance of the offer of the
grant provide its services within the Republic of Ireland. The Company shall
furnish to the Authority if, and whenever required by the Authority evidence in
writing satisfactory to the Authority in relation to the Company's compliance
with this condition.

5. GUARANTEES:

The Company shall not give a guarantee in respect of any borrowings other than
borrowings for the purposes of the Undertaking.

6. DIVIDENDS:

The Company shall not distribute by way of dividend or otherwise any sum
received in respect of the grants;

7. ROYALTIES OR SIMILAR PAYMENTS:

The Company may only make royalty or similar payments on the following terms
and conditions:-

7-1 that to the extent that the said royalty and/or similar payments
exceed 5% of the Company's net annual sales, such excess shall not be
payable except out of profits of the Company which would otherwise be
available for dividend, and

7-2 that in the event of the winding up of the Company the amount of any
such excess accrued or accruing for payment but unpaid shall be
subordinated to the claims of the unsecured creditors, including the
Authority, of the Company.

-6-
<PAGE> 7
8. PAYMENT OF GRANT:

8-1 Before any payment for phase 1 is made from a grant hereunder, the
Company shall:-

8-1-1 furnish a letter from its Solicitor confirming that it has
been properly incorporated and that its Memorandum and
Articles of Association empower it to implement this
Agreement;

8-1-2 provide evidence satisfactory to the Authority;

(i) that the Company has title acceptable to the
Authority to all land and buildings required for the
Undertaking;

(ii) that the necessary arrangements have been made for
the provision of all capital required for the
Undertaking as specified at Clause 3 hereof;

(iii) that the Company has complied up-to-date with all of
the conditions of this Agreement including those
contained in the Schedules;

(iv) that all expenditures in respect of which payment is
sought from the grants shall be vouched and examined
in such manner as the Authority may reasonably
require;

(v) that the Company has obtained a tax number in the
relevant tax district; that it is up to date in its
tax affairs with the Revenue Commissioners and prior
to total payments from the grant exceeding IRL.5,000
and to each subsequent payment from the grant is
shall submit an up to date Tax Clearance Certificate
from the Revenue Commissioners;

-7-
<PAGE> 8
(vi) that payment of 50% of the Capital Grant on new
machinery and equipment (i.e. IRL.272,500) will be
withheld until Phase 1 has been implemented i.e.
until 88 permanent full-time jobs are in place and
until the Company has generated IRL.2,000,000 in
sales from the 'Catelog' products and supporting
software and hardware through the United Kingdom.

8-2 Before any payments for Phase 2 and/or Phase 3 are made from a grant
hereunder the Company shall provide evidence satisfactory to the
Authority:-

4. that Phase 1 and Phase 2 respectively have been successfully
implemented;

5. that the necessary arrangements have been made for the
provision of all capital required for the particular stage of
the Undertaking as specified in Clause 3 hereof;

6. that the Company has complied up to date with the provisions
of this Agreement.

8-3 Subject to the provisions of Paragraphs 8-1 and 8-2 hereof the grants
shall be paid to the Company in accordance with the arrangements set
forth in the Schedule applicable to the particular grant from which
payment is sought PROVIDED ALWAYS that the total amount paid from the
Employment Grant together with the total amount paid from the Capital
Grant and Rent Reduction Grant shall at no time exceed the total
amount procured by the Company by way of Equity Equivalent as
hereinbefore defined.

-8-
<PAGE> 9
9. FURNISHING OF INFORMATION:

9-1 The Company shall permit the officers and agents of the Authority to
inspect the eligible assets at all reasonable times during the term of
this Agreement and shall furnish to the Authority promptly whenever
required to do so by the Authority all such information and
documentary evidence as the Authority may from time to time reasonably
require to vouch compliance by the Company with any of the terms and
conditions of this Agreement.

9-2 The Company acknowledges the right of the Authority to consult with
Government Departments, Government Agencies, Local Authorities and
Financial Institutions to obtain any information it requires relating
to the affairs of the Company and/or the Promoters prior to any
payment from the grant and to withhold grant payments in the event of
such information being unsatisfactory to the Authority. The Company
and/or the Promoters hereby undertake to instruct such third parties
to furnish any such information to the Authority on request.

9-3 The Company shall submit Annual Audited Accounts satisfactory to the
Authority for the duration of this Agreement within six months from
the end of the relevant financial year.

10. NOTICES:

10-1 The Certificate of an Officer of the Authority certifying any decision
of the Authority taken or made hereunder shall be conclusive evidence
of any such decision;

-9-
<PAGE> 10
10-2 Any notice by the Authority to the Company or the Promoters or
vice-versa under this Agreement shall be sent by registered post to
the Registered Office of the party for whom it is intended.

11. CONSENTS:

11-1 Circumstances requiring the consent, approval or permission of any
party hereto shall be interpreted to mean that such consents,
approvals or permissions shall not be unreasonably withheld. This
provision shall not apply to the provisions of Clause 2 hereof and to
Paragraph 7 of the Second Schedule;

11-2 Any variation or modification of any of the terms or conditions herein
made at the request of or with the agreement of the Company and with
the consent of the Authority shall not in any way determine or
prejudice the Promoters' liability hereunder PROVIDED that the
financial amount of the Promoters' said liability shall not be
increased without its express agreement in writing.

12. TERMINATION OF AGREEMENT:

This Agreement shall terminate on the date being eight years from the date of
last claim from the grant.

13. CANCELLATION AND REVOCATION OF GRANTS:

The Authority at any time during the term of this Agreement may stop payment of
the grants and/or revoke and cancel or abate the grants or so much thereof as
shall not then have been actually paid to the Company if any one or more of the
following events occur:-

-10-
<PAGE> 11
(i) if there be any breach of the terms or conditions of Clause 2
hereof and/or Paragraph 7 of the Second Schedule;

(ii) if the Company should to a material extent be in breach of any
of the terms and conditions of this Agreement other than those
specified in Paragraph (i) of this Clause and having failed to
establish to the reasonable satisfaction of the Authority that
such breach was due to force majeure shall not have rectified
such breach within 45 days after written notice thereof has
been served on the Company;

(iii) if an order is made or an effective resolution is passed for
the winding up of the Company;

(iv) if a Receiver is appointed over any of the property of the
Company or if a distress or execution is levied or served upon
any of the property of the Company and is not paid off within
45 days;

(v) if the Company should without the written consent of the
Authority cease to carry on the Undertaking;

14. REPAYMENT OF GRANTS:

14-1 If pursuant to the provisions of Clause 13 hereof or of Paragraph 6 of
the First Schedule hereto any of the grants be revoked, the Company
shall repay to the Authority on demand all sums received in respect of
the grant or grants revoked and if any of the grants be reduced the
Company shall repay to the Authority on demand all sums received by
the Company as aforesaid in excess of the amount of the reduced grant
or grants;

-11-
<PAGE> 12
14-2 If the Company should fail to repay to the Authority on demand any
moneys becoming due to be repaid by the Company to the Authority
pursuant to any of the provisions of this Agreement, the moneys so due
shall be recoverable by the Authority from the Company and the
Promoters as a joint and several simple contract debt in any court of
competent jurisdiction.

-12-
<PAGE> 13
15. ACHIEVEMENT OF PROJECTED PERFORMANCE

Schedule of Capital and Rent Reduction Grant Drawdown of the Undertaking

<TABLE>
<CAPTION>
Period Ending End of Year 1 End of Year 2 End of Year 3
30/06/93 30/06/94 30/06/95
- ----------------------- ------------- ------------- -------------
<S> <C> <C> <C>
Cumulative Relevant
Jobs to be created 50 88 129

Maximum Cumulative
Relevant
Grant Drawdown 226,500 374,250 687,374

Period Ending End of Year 4 End of Year 5
30/06/96 30/06/97
- ---------------------- ------------- -------------

Cumulative Relevant
Jobs to be created 172 231

Maximum Cumulative
Relevant
Grant Drawdown 687,374 687,374
</TABLE>

Unless otherwise agreed to by the Authority and notwithstanding any other
provision in this Agreement:

15-1 The aggregate amount payable from the grant in each period set out
above shall not exceed the maximum amounts specified for that period.

15-2 The maximum grant drawdown in the period to the end of Year 1 shall be
available subject to compliance with the provisions of this Agreement.

15-3 Subject to compliance as aforesaid, payment from the maximum
cumulative grant drawdowns in the periods to the end of Years 2, 3, 4
and 5 respectively, shall be conditional upon the cumulative number of
Relevant Jobs (as set out above) being created by the immediately
preceding End of

-13-
<PAGE> 14
Year; in the event of such number of Relevant Jobs not having been
created by the relevant date no part of the grant drawdown for the
following year will be paid to the Company until such number of
Relevant Jobs has been created.

15-4 On or after the 30 day of June 1995 the Company and the Authority
shall review the development of the Undertaking to that date. If the
Authority is not satisfied that the Company has proceeded with
implementation of Phase 2 unless otherwise agreed to by the Authority
and notwithstanding any other provision in this Agreement, all capital
and rent reduction grant monies paid on foot of this Agreement in
excess of IRL.2,976 per job multiplied by the number of jobs existing
in the Company at the date of review shall be repayable to the
Authority by the Company (and in the event of default by the Company
in making repayment shall be repayable by the Promoters) not later
than three months from the date of review.

15-5 On or after the 30 day of June 1997 the Company and the Authority
shall review the development of the Undertaking to that date with
particular reference to the creation of jobs in the Company If the
Authority is not satisfied that the Company has proceeded with
implementation of Phase 3 or should the total number of jobs existing
in the Company at the date of review be less than 231 unless otherwise
agreed to by the Authority and notwithstanding any other provision in
this Agreement all capital and rent reduction grant monies paid on
foot of this Agreement in excess of IRL.2,976 for job multiplied by
the number of jobs existing in the Company at the date of review shall
be repayable to the Authority by the Company (and in the event of
default by the Company in making

-14-
<PAGE> 15
repayment shall be repayable by the Promoters) by not later than three
months from the date of review.

For the purposes of this clause the expression "jobs existing in the Company"
shall mean full-time permanent jobs existing in the Company at the date of
review.

16. GOVERNING LAW:
This Agreement shall be governed by and be construed in accordance with the
Laws of the Republic of Ireland and the parties hereto expressly and
irrevocably submit to the jurisdiction of the Irish courts and the Promoters
hereby irrevocably appoint the Company to be its attorney for the purpose of
accepting service on its behalf of any notice, document or legal process with
respect to the Promoters obligations pursuant to the provisions of Clause 14
(and/or Clause 15) hereof and service of any such document on such attorney
shall be deemed for all purposes to be good service.

-15-
<PAGE> 16
FIRST SCHEDULE

ADDITIONAL TERMS AND CONDITIONS RELATING TO THE EMPLOYMENT GRANT

1. The Employment Grant (in this Schedule called "the grant") shall be
payable in respect of the total number of such jobs (as specified in
the Sixth Schedule hereto) as are created in the Company within five
years from the date hereof provided at least 80% of such jobs are
occupied by Irish Nationals; in the event of less than 80% of such
jobs being so occupied the amount of the grant shall be subject to
abatement and/or revocation pursuant to Clause 13 of the within
Agreement.

2. A job for the purposes of the grant shall be a permanent full time
position in the Undertaking and shall be deemed to be created when a
contract of employment has been signed and payment has been made to an
employee in respect of work done in the job.

3. The grant in respect of each job created shall be paid in two
moieties. The first moiety shall be payable when the job has been
created and the second moiety shall be payable when permanent
full-time employment in the job for a twelve month period has been
completed.

4. Claims for payment of an instalment from the grant may be submitted
monthly and shall be certified by the Company's Auditors in an agreed
format.

-16-
<PAGE> 17
5. The Company shall also submit an Auditors Certificate if and whenever
required to do so showing the Company's employment history to date;
this shall give such particulars as the Authority may require.

6. The Authority may at any time within five years from the date of
payment of the first moiety of the grant in respect of any job revoke
the grant paid in respect of that job if the job should become vacant
and remain vacant for a period in excess of six calendar months.

-17-
<PAGE> 18
SECOND SCHEDULE

ADDITIONAL TERMS AND CONDITIONS ATTACHING TO THE CAPITAL GRANT

1. ELIGIBLE ASSETS & ESTIMATED COST

<TABLE>
<CAPTION>
Phase 1 Phase 2 Total
<S> <C> <C> <C>
Building Modifications IRL. 60,000 IRL. 60,000

New Machinery and
Equipment IRL.1,210,000 IRL. 382,000 IRL.1,592,000
------------- ------------ -------------

Total IRL.1,270,000 IRL. 382,000 IRL.1,652,000
</TABLE>

2. The eligible assets shall be purchased new by the Company and be installed
ready for operation in the Company's premises within two years from the date of
this Agreement in respect of Phase 1 of the Undertaking and within four years
for the date of this Agreement in respect of Phase 2 of the Undertaking.

3. The Company shall permit the officers and the agents of the Authority to
inspect the eligible assets at all reasonable times.

4. PLACING OF CONTRACTS:

4-1 The Company shall ensure in relation to the placing of contracts for
the eligible assets that a minimum of three competitive quotations is
sought and that none but the lowest is accepted without the prior
written consent of the Authority;

4-2 In the placing of contracts for the construction of the said factory
buildings, building services and facilities any contractors appointed
by the Company in the aforesaid construction shall at the date of such
appointment possess an up to date tax clearance certificate or a
current C2

-18-
<PAGE> 19
certificate from the Revenue Commissioners. The Company shall retain
copies of such certificates for inspection by the Authority as
evidence of compliance with this sub-paragraph.

5. INSURANCE:
The Company shall:-

(i) keep all its property insured to the full cost of re-instatement
against loss or damage by fire and explosion;

(ii) obtain on commencement of business and in accordance with good
commercial practice Consequential Loss Insurance to adequately
indemnify the Company against losses and costs resulting from fire and
explosion, and

(iii) make arrangements to ensure that the Authority will be notified of any
failure to renew the insurance specified at sub-paragraphs (i) and
(ii) of this Paragraph and also of any change in such insurance.

6. RESTORATION OF FIXED ASSETS:
If there should be damage to or loss of the Company's property through fire or
explosion or any other cause the insurance or other compensation received shall
be used forthwith to restore to the reasonable satisfaction of the Authority
the property so damaged or lost and in the event of such compensation being
insufficient for that purpose the Company shall make good the deficiency out of
its own funds.

7. ALIENATION OF ASSETS:
The Company shall not alienate, assign, part with the possession of or
otherwise dispose of or remove (save for purpose of normal

-19-
<PAGE> 20
repair, renewal, replacement or substitution) or mortgage or charge (except for
the purpose of securing finance for the Undertaking) the eligible assets or any
part thereof without the prior written consent of the Authority. The provisions
of this Agreement shall apply also to assets which are substituted for eligible
assets.

8. USE OF ELIGIBLE ASSETS:
The Company shall not without the prior written consent of the Authority use or
permit the use of the eligible assets or any part thereof except for the
purposes of the Undertaking.

9. PAYMENT OF GRANT:
Subject to compliance by the Company with the terms and conditions of this
Agreement the Capital Grant shall be paid to the Company in instalments at the
appropriate percentage level of each sum of IRL.100,000 or more expended by the
Company on the provision of eligible assets installed in the premises as
aforesaid.

-20-
<PAGE> 21
THIRD SCHEDULE

ADDITIONAL TERMS AND CONDITIONS ATTACHED TO THE RENT REDUCTION GRANT

1. The Company shall furnish to the Authority a copy, certified by the
Lessor to be a true copy, of the lease of any premises in respect of
which payment is sought from the Rent Reduction Grant.

2. The terms and conditions of any such lease shall be satisfactory to
the Authority.

3. The grant shall be payable in instalments related to the rent
instalments paid by the Company in accordance with the Lease and which
have been vouched in such manner as the Authority may require.

4. The Company shall notify and verify in such manner as the Authority
may require any changes made from time to time in the terms of any
such Lease.

5. Any premises in respect of which a payment is made from the grant
shall be used solely for the purposes of the Undertaking during the
term of this Agreement, unless otherwise agreed to in writing by the
Authority.

6. The Company shall procure that the said premises are kept insured
against the insured risks as defined in the Lease and shall furnish to
the Authority before any part of the grant is paid and whenever
required to do so thereafter evidence in writing that the said
insurance has been so arranged.

-21-
<PAGE> 22
7. The Company will procure that in the event of the premises being
destroyed or damaged by any of the insured risks as defined in the
said Lease the insurance moneys or any other compensation moneys
received by the Lessee or Lessor of the said premises shall be used
forthwith to restore in full and to the satisfaction of the Authority
the property so damaged or lost or alternatively will arrange to
occupy suitable equivalent accomodation for the remaining period of
this Agreement.

8. The Company shall not alienate, assign, sub-let or part with the
possession of any premises in respect of which a payment is made from
the grant or any part thereof or grant any rights in respect thereof
without the prior consent in writing of the Authority and will
continue to occupy premises suitable for the Undertaking for a period
of ten years from the date of this Agreement.

-22-
<PAGE> 23
FOURTH SCHEDULE

VARIATIONS IN CURRENCY EXCHANGE RATES

1. The amounts shown in this Agreement for Grants and for eligible
expenditure on new machinery and equipment are based on a currency
exchange rate of US$l.57 to the Irish Pound and the grants in respect
of new machinery and equipment shall (but so that the overall maximum
amount of grant that may be legislation be made by the Authority to
the Company shall not be exceeded) be adjusted upwards or downwards to
take account of the actual rates prevailing on the dates of payment
for the machinery and equipment PROVIDED that in the event of any
eligible expenditure on such new machinery and equipment occurring
after the period specified in Paragraph 2 of the Second Schedule to
this Agreement no adjustment therein or in the portion of the Capital
Grant applicable thereto will be made or allowed for grant purposes on
account of any decrease in the value of the Irish pound against the
value of the US Dollor below that determined by the currency exchange
rate prevailing on the said dates specified in Paragraph 2 of the said
Second Schedule;

2. When the actual amount of any additional grant payable pursuant to 1
above has been determined, the additional grant shall be the subject of
a Supplemental Agreement between the Authority and the Company upon
the same terms and conditions as those contained in this Agreement.

-23-
<PAGE> 24
FIFTH SCHEDULE

REDUCTION OF CONTINGENT LIABILITY FOR REPAYMENT OF GRANT

The Company's liability for repayment of grant moneys paid in respect of new
machinery and equipment shall be reduced by one tenth on the day which is five
years prior to the last day of the term of this Agreement and on each
anniversary of that date PROVIDED ALWAYS that the aforesaid reduction in the
Company's contingent liability for repayment of the grant in respect of new
machinery and equipment shall not operate in the event of a Receiver or a
Liquidator being appointed over any of the property of the Company.

-24-
<PAGE> 25
SIXTH SCHEDULE

EMPLOYMENT SCHEDULE

<TABLE>
<CAPTION>
LABOUR PROJECTIONS Phase 1 Phase 2 Phase 3 Total
<S> <C> <C> <C> <C>
Management 4 3 1 8
Administration 3 4 2 9
Production Supervisors 6 5 2 13
Data Analyst Q/A 4 7 5 16
Data Analyst Senior 13 15 15 43
Data Analyst B 29 20 12 61
Data Analyst C 21 19 9 49
Catalog Research 4 2 2 8
Document Control 1 3 3 7
Distribution 1 2 4 7
Customer Support 2 4 4 10
-- -- -- ---
88 84 59 231
</TABLE>

-25-
<PAGE> 26
IN WITNESS WHEREOF the parties hereto have affixed their respective seals the
day and year first herein written.

PRESENT when the Seal of the
INDUSTRIAL DEVELOPMENT AUTHORITY
was affixed hereto:-

/s/ [ILLEGIBLE]
-------------------------------------------
Authorised Officer

-------------------------------------------
Member/Authorised Officer

PRESENT when the Seal of
TRIAD SYSTEMS IRELAND LIMITED
was affixed hereto:-

/s/ JAMES R. PORTER
-------------------------------------------
Director

/s/ DONALD C. WOOD
-------------------------------------------
Director

-26-
<PAGE> 27
PRESENT when the Seal of
TRIAD SYSTEMS CORPORATION
was affixed hereto:-

/s/ JAMES R. PORTER
-------------------------------------------
Director

/s/ GEORGE O. HARMON
-------------------------------------------
Director

PRESENT when the Seal of
TRIDEX SYSTEMS LIMITED
was affixed hereto:-

/s/ JAMES R. PORTER
-------------------------------------------
Director

/s/ JEROME W. CARLSON
-------------------------------------------
Director

-27-
<PAGE> 28
Dated the ___________ of _________ 19__

THE INDUSTRIAL DEVELOPMENT AUTHORITY
first part

TRIAD SYSTEMS IRELAND LIMITED
second part

TRIAD SYSTEMS CORPORATION
third part

-AND-

TRIDEX SYSTEMS LIMITED
fourth part

AGREEMENT

INDUSTRIAL DEVELOPMENT AUTHORITY
Wilton Park House
Wilton Place
DUBLIN 2

-28-

<PAGE> 1
EXHIBIT 10.10

Dated day of 1993

INDUSTRIAL DEVELOPMENT AUTHORITY

first part

TRIAD SYSTEMS IRELAND LIMITED

second part

TRIAD SYSTEMS CORPORATION

third part

and

TRIDEX SYSTEMS LIMITED

fourth part

---------------------------------------------------

SUPPLEMENTAL AGREEMENT

---------------------------------------------------

INDUSTRIAL DEVELOPMENT AUTHORITY
Wilton Park House
Wilton Place
Dublin 2

<PAGE> 2
AGREEMENT made the 23rd day of June 1993 BETWEEN the INDUSTRIAL DEVELOPMENT
AUTHORITY having its registered office at Wilton Park House, Wilton Place,
Dublin 2 (hereinafter called "the Authority") of the first part, TRIAD SYSTEMS
IRELAND LIMITED having its registered office at Ballinalee Road, Longford
(hereinafter called "the Company") of the second part, TRIAD SYSTEMS CORPORATION
having its registered office at 3055 Triad Drive, Livermore, CA 94550 USA
(hereinafter called "Triad") of the third part and TRIDEX SYSTEMS LIMITED having
its registered office at 2-3 Victory Business Centre Fleming Way, Isleworth,
Middlesex (hereinafter called "Tridex") of the fourth part, the third and
fourth part hereinafter collectively called "the Promoters" SUPPLEMENTAL to the
Grant Agreement dated the 25th day of September 1992 made between the Authority,
the Company and the Promoters (hereinafter called the "the Principal
Agreement").

WHEREAS:

A. Under the Principal Agreement the Authority agreed to make grants totalling
IRL.1,726,874 towards the cost of establishing in three phases and carrying
on in Templemichael, Longford, Co Longford an Industrial undertaking for
the provision of Inventory Management Systems for automotive parts to
include Product Development, Systems Assembly, Marketing, Market/Consumer
Support, Data Processing and Data Base Development (hereinafter called "the
Undertaking")

B. The Company has now applied to the Authority for its consent to the
following:

(i) that there shall be a re-allocation of expenditure in the amount of
L.361,714 from new machinery and equipment to building modifications
for phase 1 of the Undertaking.

(ii) that the Company be permitted to sell its product on the domestic
market.

(iii) that the phrase "through the United Kingdom" in Clause 8-1-2 (vi) of
the Principal Agreement be deleted.

C. The Authority is willing to accede to the said application.

NOW IT IS HEREBY WITNESSED by and between the Authority, the Company and the
Promoters that in consideration of the Company carrying on the Undertaking in
accordance with the terms of the Principal Agreement the Authority agrees to the
foregoing SUBJECT to the following terms and conditions:-

<PAGE> 3

1. That Paragraph 1 of the Second Schedule to the Principal Agreement be
amended to read as follows:-

ELIGIBLE ASSETS AND ESTIMATED COST

<TABLE>
<CAPTION>
PHASE 1 PHASE 2 TOTAL
--------- -------- ---------
<S> <C> <C> <C>
Building
Modifications 421,714 421,714
New Machinery
and Equipment 848,286 382,000 1,230,286
--------- -------- ---------

TOTAL 1,270,000 382,000 1,652,000
</TABLE>

2. That the grant towards expenditure on building modifications in the amount
of (pound)361,714 (being the amount the subject of reallocation) be paid at
a rate of 45%.

3. That Clause 4 - Provision of Services - in the Principal Agreement be
deleted.

4. That Clause 8-1-2 (vi) of the Principal Agreement be amended to read as
follows:

(vi) that grant monies in the amount of (pound)272,500 towards new machinery and
equipment will be withheld until Phase 1 of the Undertaking has been
implemented i.e. until 88 permanent full time jobs are in place and the
Company has generated IR(pound)2,000,000 in sales from the "Catelog"
products and supporting software and hardware.

IT IS HEREBY AGREED that except as expressly or impliedly provided in this
agreement the provisions of the Principal Agreement shall continue to operate
and apply.
<PAGE> 4

IN WITNESS WHEREOF the parties hereto have affixed their respective seals the
day and year first herein written.

PRESENT when the Seal of the
INDUSTRIAL DEVELOPMENT AUTHORITY
was affixed hereto:-

/s/ [ILLEGIBLE]
----------------------------------------
Authorised Officer

PRESENT when the Seal of
TRIAD SYSTEMS IRELAND LIMITED
was affixed hereto:

/s/ JEROME W. CARLSON
----------------------------------------
Director

/s/ [ILLEGIBLE]
----------------------------------------
Director

PRESENT when the Seal of
TRIAD SYSTEMS CORPORATION
was affixed hereto:

/s/ JEROME W. CARLSON
----------------------------------------
Secretary

/s/ JAMES R. PORTER
----------------------------------------
Director

PRESENT when the Seal of
TRIDEX SYSTEMS LIMITED
was affixed hereto:
/s/ [ILLEGIBLE]
----------------------------------------
Director

/s/ JEROME W. CARLSON
----------------------------------------
Director

<PAGE> 1
EXHIBIT 10.11

TRIAD SYSTEMS CORPORATION

REAL ESTATE DISTRIBUTION AGREEMENT

This Real Estate Distribution Agreement (this "AGREEMENT") is entered
into as of February 26, 1997 (the "EFFECTIVE DATE") among Triad Systems
Corporation, a Delaware corporation ("Triad"), 3055 Triad Dr. Corp., a
California corporation and a wholly-owned subsidiary of Triad ("3055"), 3055
Management Corp., a California corporation ("3055 MANAGEMENT"), and Triad Park,
LLC, a Delaware limited liability company ("PARK"), in the following factual
context:

A. Triad owns certain land located in Triad Park, Livermore,
California;

B. 3055 owns three (3) buildings (comprising 220,000 square feet)
and certain land situated in Triad Park, Livermore, California, which are leased
to Triad for use as its headquarters in Livermore, California;

C. Cooperative Computing, Inc., a Texas corporation ("CCI"), CCI
Acquisition Corp., a Delaware corporation ("CCI ACQUISITION"), and Triad are
parties to an Agreement and Plan of Merger, dated as of October 17, 1996 (as the
same may be amended from time to time, the "MERGER AGREEMENT"), pursuant to
which the parties thereto, among other things, agreed that, subject to the terms
and conditions specified therein, Triad would declare and pay a dividend
consisting of interests in an entity owning certain real property then held by
Triad, certain real property then owned by 3055, and certain related assets;

THE PARTIES NOW AGREE AS FOLLOWS:

SECTION 1: CERTAIN DEFINITIONS

As used herein, the following terms shall have the indicated meanings:

1.1 "AAA" shall mean the American Arbitration Association.

1.2 "After-tax basis" shall have the meaning given to such term in
Section 11.4 of this Agreement.

1.3 "American General Consent" shall mean the letter agreement
among 3055, Park and The Variable Annuity Life Insurance Company, an affiliate
of American General Insurance Company, in the form of Exhibit 1.3 to this
Agreement, relating to the termination of certain obligations under the 3055
Note and the 3055 Deed of Trust.

<PAGE> 2

1.4 "Assignment and Assumption Agreement" shall mean the
Assignment and Assumption Agreement, to be dated as of the Contribution Date,
among Triad, 3055 and Park, in the form attached as Exhibit 1.4 to this
Agreement.

1.5 "Assumed Obligations" shall mean all liabilities or
obligations of Triad or any of its subsidiaries (including, without limitation,
3055, but excluding Park) under the following:

(i) the Specified Secured Debt;
(ii) the 3055 Note;
(iii) the 3055 Deed of Trust;
(iv) the Dividend Expenses; and
(v) the Real Property Agreements.

In addition,"Assumed Obligations" shall mean all obligations of 3055 under the
Lease Agreement, as amended by the Lease Amendment.

1.6 "Code" shall have the meaning given to such term in Section
11.1 of this Agreement.

1.7 "Commission" shall mean the Securities and Exchange
Commission.

1.8 "Contribution Date" shall mean the date on which shares of
Triad Common Stock are purchased pursuant to the Offer to Purchase.

1.9 "Damages" shall mean any and all losses, liabilities, claims,
damages, obligations, payments, costs and expenses, including, without
limitation, costs and expenses of investigation and reasonable fees and
disbursements of counsel.

1.10 "Deemed Sales" shall have the meaning given to such term in
Section 11.1 of this Agreement.

1.11 "Designated Park Employees" shall have the meaning given to
such term in Section 9.1 of this Agreement.

1.12 "Distribution Agent" shall mean the existing transfer agent
and registrar for the Triad Common Stock or such other person as may be selected
by Park prior to the distribution of the Dividend, which will serve as the
distribution agent for the Dividend.

1.13 "Dividend" shall have the meaning set forth in Section 2 of
this Agreement.

2
<PAGE> 3

1.14 "Dividend Expenses" shall mean all costs and expenses solely
attributable to the transactions contemplated hereby, whether incurred before or
after consummation of the Offer to Purchase, and including, without limitation,
any and all

(i) necessary and reasonable fees and expenses of counsel,
accountants and advisors,

(ii) filing fees,

(iii) escrow fees charges by any title company engaged in
connection with the consummation of any of the transactions contemplated hereby,

(iv) costs and expenses of obtaining current tax certificates
for any of the Triad Designated Assets and of recording the Triad Deed in the
County Records of Alameda County, California,

(v) costs and expenses of any title examination,

(vi) costs and expenses of obtaining a current, as-built
survey of the real property included in the Triad Designated Assets, and

(vii) costs and expenses of issuance of an Owner's Title
Policy, if any, insuring title in accordance with the terms of this Agreement.

1.15 "Environmental Costs and Liabilities" shall have the meaning
given to such term in the Merger Agreement.

1.16 "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations promulgated by the Commission
thereunder.

1.17 "Indemnified Party" and"Indemnified Parties" shall have the
respective meanings given to such terms in Section 9.1 of this Agreement.

1.18 "Information Statement" shall mean the definitive information
statement, as amended or supplemented, mailed to the Record Holders in
connection with the Dividend.

1.19 "Lease Agreement" shall mean that certain Project Lease
Agreement, dated as of August 1, 1988, between Triad and 3055.

1.20 "Lease Amendment" shall mean that certain First Amendment to
Project Lease Agreement, to be dated as of the Contribution Date, among Triad,
3055 and Park.

3
<PAGE> 4

1.21 "Mailing Date" shall mean the date the Information Statement
is first mailed to the stockholders of Triad.

1.22 "Merger" shall have the meaning given to such term in Section
4 of this Agreement.

1.23 "Net Proceeds" shall mean, with respect to the sale, transfer,
assignment or conveyance of any Triad Designated Asset, the net proceeds
received by Triad or 3055, as applicable, after deduction for all costs incurred
by Triad, 3055 or any of their respective subsidiaries, whether or not at such
time such costs have been paid, in connection with such sale, transfer,
assignment or conveyance.

1.24 "Offer to Purchase" shall mean the Offer to Purchase for Cash
all Outstanding Shares of Common Stock (Including the Associated Rights) of
Triad, dated October 23, 1996, by CCI Acquisition.

1.25 "Partnership Item Tax Contest" shall have the meaning given to
such term in Section 11.2 of this Agreement.

1.26 "Real Property" means all of the approximately 206 acres owned
by Triad or 3055 in Livermore, California, commonly known as Triad Park, and
which is particularly described upon SCHEDULE 1.26, including the three
buildings containing approximately 220,000 square feet (excluding cubicles,
furniture and office equipment).

1.27 "Real Property Agreements" means the agreements listed on
SCHEDULE 1.27.

1.28 "Record Holders" shall mean the record holders of Triad Common
Stock immediately preceding the acceptance of shares pursuant to the Offer of
Purchase.

1.29 "Registration Statement" shall mean the registration statement
on Form 10SB, if available, or Form 10 to be filed with the Commission under the
Exchange Act in connection with the Dividend, in the form declared effective by
the Commission, as amended or supplemented.

1.30 "Rules" shall have the meaning given to such term in Section
13.1 of this Agreement.

1.31 "Securities Act" shall mean the Securities Act of 1933, as
amended.

1.32 "Specified Claim" shall have the meaning given to such term in
Section 13.8 of this Agreement.

1.33 "Specified Secured Debt" shall mean any indebtedness of Triad
or any of its subsidiaries (other than the Triad Revolving Credit Agreement)
that is secured, in whole or in part, by any of the Triad Designated Assets,
including, without limitation, the 3055 Note.

4
<PAGE> 5

1.34 "Spin-Off Tax Contest" shall have the meaning given to such
term in Section 11.2 of this Agreement.

1.35 "Statement" shall have the meaning given to such term in
Section 11.6 of this Agreement.

1.36 "Taxes" shall have the meaning given to such term in the
Merger Agreement.

1.37 "Tax Returns" shall have the meaning given to such term in the
Merger Agreement.

1.38 "Third Party Claim" shall have the meaning given to such term
in Section 10.2 of this Agreement.

1.39 "3055 Deed of Trust" shall mean that certain First Deed of
Trust and Assignment of Rents, Security Agreement and Fixture Filing, by and
between 3055, as Trustor, Mason-McDuffie Financial Corporation, as Trustee, and
The Variable Annuity Life Insurance Company, as Beneficiary.

1.40 "3055 Management" shall mean 3055 Management Corp., a
California corporation.

1.41 "3055 Management Contribution Note" shall have the meaning set
out in Section 5.4.

1.42 "3055 Management Membership Interest" shall mean the limited
liability company interest (as defined in the Delaware Limited Liability Company
Act, as amended) in Park received by 3055 Management in exchange for the
contribution to Park of the 3055 Management Contribution Note pursuant to
Section 5.4 of this Agreement.

1.43 "3055 Note" shall mean that certain Promissory Note, dated as
of August 23, 1988, in the original principal amount of $15,500,000, by 3055, as
Maker, and The Variable Annuity Life Insurance Company, a Texas corporation, as
Payee.

1.44 "Transaction Documents" shall mean, collectively, this
Agreement and each other document, agreement or instrument contemplated by, or
otherwise executed and delivered in connection with, this Agreement.

1.45 "Triad Common Stock" shall mean shares of common stock, $.01
par value per share, of Triad.

5
<PAGE> 6

1.46 "Triad Deed" shall have the meaning given to such term in
Section 5.3 of this Agreement.

1.47 "Triad Designated Assets" shall mean all of the Real Property
and all related rights, privileges, easements, improvements, fixtures and
appurtenances, including but not limited to the following:

(i) All rights, subject to all obligations, under the Real
Property Agreements;

(ii) the Net Proceeds received by Triad upon the consummation of
any sale of any Triad Designated Asset from and after October 17, 1996 and prior
to the conveyance of the Triad Designated Assets to Park as described in Section
5.3 of this Agreement;

(iii) all Triad Sales Agreements;

(iv) all of the landlord's interest under the Lease Agreement, as
amended by the Lease Amendment;

(v) all rights to Triad Park on and off site improvements and to
any reimbursements to be paid by the City of Livermore, any utility company or
any other property owner within the improvement district; and

(vi) Copies of all books and records related to any of the
foregoing or related to the 3055 Note and the 3055 Deed of Trust or the Assumed
Liabilities.

1.48 "Triad Excluded Assets" shall mean those Triad Designated
Assets sold, assigned, transferred or conveyed by Triad prior to the conveyance
of the Triad Designated Assets to Park as described in Section 5.3 of this
Agreement.

1.49 "Triad Membership Interest" shall mean the limited liability
company interest (as defined in the Delaware Limited Liability Company Act, as
amended) in Park received by Triad in exchange for the conveyance by Triad to
Park of the Triad Designated Assets pursuant to Section 5.3 of this Agreement.

1.50 "Triad Revolving Credit Agreement" shall mean that certain
Revolving Credit Loan Agreement, dated as of June 30, 1992, by and between Triad
and Comerica Bank-California.

1.51 "Triad Sales Agreement" shall mean any agreement to which
Triad is a party pursuant to which Triad has agreed or agrees to sell, assign,
transfer or convey any Triad Designated Asset.

<PAGE> 7

1.52 "Waiver of Conflicts" shall mean the Conflict Agreement among
Triad, CCI, 3055, 3055 Management, Park and McCutchen, Doyle, Brown & Enersen,
LLP, dated as of the Contribution Date, in the form of Exhibit 1.51 to this
Agreement.

SECTION 2: DECLARATION OF DIVIDEND

Subject to the terms and conditions of this Agreement, the Board of
Directors of Triad will declare a dividend of the Triad Membership Interest
(the "DIVIDEND") payable to the Record Holders on a pro rata basis upon the
satisfaction of the conditions set forth herein. Following the satisfaction of
the conditions to the payment of the Dividend, Triad shall deliver to the
Distribution Agent a certificate representing the Triad Membership Interest and
instruct the Distribution Agent to distribute, as soon as practicable, such
membership interest to the Record Holders.

SECTION 3: CONDITION PRECEDENT

The payment of the Dividend by Triad is conditioned in all respects
upon the following:

(a) The Triad Board of Directors shall have declared such Dividend
as provided in Section 2 of this Agreement.

(b) The transactions contemplated by Section 4 and Section 5 of
this Agreement, and the deliveries contemplated by Section 7 of this Agreement,
all to occur on the Contribution Date, shall have been consummated in all
respects and the Lease Amendment shall be in full force and effect.

(c) The Registration Statement shall have become effective under
the Exchange Act and shall continue to be effective as of the payment date for
the Dividend, and no stop order shall have been issued and no proceeding by the
Commission shall have been instituted to suspend the use of the Registration
Statement or the Information Statement.

(d) The Information Statement is ready to be distributed to the
holders of Triad Common Stock in accordance with the requirements of the
Exchange Act and the Commission.

(e) All authorizations, consents, approvals and clearances of all
federal, state, local and foreign governmental agencies or authorities required
to permit the valid consummation by the parties hereto of the transactions
contemplated hereby shall have been obtained and shall be in full force and
effect.

(f) No preliminary or permanent injunction or other order, decree
or ruling issued by a court of competent jurisdiction or by a governmental,
regulatory or administrative agency or authority, and no statute, rule,
regulation, or executive order promulgated or enacted by any governmental agency
or authority, shall be in effect preventing the payment of the Dividend.

<PAGE> 8

(g) The Dividend shall be payable in accordance with applicable
law.

(h) Coopers & Lybrand shall have issued to Triad a"cold comfort"
letter consistent in form and content with applicable professional standards,
regarding the historical financial information contained in the Registration
Statement and the Information Statement.

(i) Triad shall have received an opinion, dated as of the Mailing
Date and otherwise in form and substance reasonably acceptable to Triad, from
McCutchen, Doyle, Brown & Enersen, LLP, counsel to Park, as to the matters set
forth on Exhibit 3(i) to this Agreement.

SECTION 4: MERGER OF 3055

Upon the Contribution Date and immediately prior to the contributions
to Park under Section 5, Triad shall cause 3055 to be merged with and into
Triad.

SECTION 5: FORMATION OF TRIAD PARK, LLC

5.1 FORMATION OF PARK. Immediately prior to the execution and
delivery hereof, Triad and 3055 Management have formed Park. The limited
liability company agreement of Park and the Certificate of Formation of Park are
attached hereto as Exhibit 5.1A and Exhibit 5.1B, respectively. Each such
document is in full force and effect in the form attached hereto.

5.2 RELEASE OF CERTAIN LIENS, CONSENT. On or before the
Contribution Date, and without the payment or delivery of any consideration, or
the incurrence of any obligation to pay or deliver any consideration, by Triad
or any of its subsidiaries (other than Park), Triad shall obtain the American
General Consent.

5.3 CONVEYANCE BY TRIAD. Upon the Contribution Date, subject to
the terms and conditions hereof, Triad will sell, assign, transfer and convey to
Park all of Triad's right, title and interest in the Triad Designated Assets
(other than the Triad Excluded Assets) in exchange for the issuance to Triad of
the Triad Membership Interest, equal to 99% of the capital, profits and losses
of Park, and the assumption by Park of the Assumed Obligations. The conveyance
of the real property included in the Triad Designated Assets (other than the
Triad Excluded Assets) shall be effected through the execution and delivery by
Triad of a grant deed in the form of Exhibit 5.3 to this Agreement (the "TRIAD
DEED"). The conveyance of the remaining property included in the Triad
Designated Assets (other than the Triad Excluded Assets), and the assumption of
the Assumed Obligations, shall be effected through the execution and delivery of
the Assignment and Assumption Agreement by Triad and Park. The real

<PAGE> 9

property included in the Triad Designated Assets shall be free and clear of
monetary liens and encumbrances granted or created under the Tender Facility or
the Interim Facility (as defined in the Offer to Purchase); otherwise the
recourse for breach of title warranties of Triad under the Triad Deed will be
strictly limited to the extent that Triad is insured therefor under its title
insurance in effect prior to the Effective Date.

5.4 CONTRIBUTION OF 3055 MANAGEMENT. Upon the Contribution Date,
3055 Management will contribute its recourse promissory note due in 120 days,
without interest, equal to 1.01 percent of the total value of the contributions
to Park by Triad (the "3055 MANAGEMENT CONTRIBUTION NOTE") in exchange for a one
percent (1%) interest in the capital, profits and losses of Park.

5.5 CONDITIONS TO CONVEYANCES. The conveyances described in
Section 5.3 and Section 5.4 of this Agreement are conditioned in all respects
upon the occurrence of the actions described in Section 4.

5.6 NO REPRESENTATIONS OR WARRANTIES. Park understands and agrees
that, except as specifically provided in Section 5.3, neither Triad nor 3055 is,
in any Transaction Document, nor shall Triad or 3055 be deemed or implied to be,
making any representation or warranty as to the value of any Triad Designated
Asset, the absence of any encumbrance on any Triad Designated Asset, the title
to any Triad Designated Asset, the legal sufficiency to convey title to any
Triad Designated Asset, or as to any other matter regarding any Triad Designated
Asset, it being understood and agreed that each of Triad and 3055 is merely
conveying such person's right, title and interest, if any, in the Triad
Designated Assets to Park and that all such Triad Designated Assets are being
conveyed "AS IS, WHERE IS" and that Park shall bear the economic and legal risk
that any conveyances of any Triad Designated Assets shall prove to be
insufficient or that Triad's or 3055's title to any such assets shall be other
than good and marketable title free from encumbrances. Similarly, Park
understands and agrees that neither Triad nor 3055 is, in any Transaction
Document, nor shall Triad or 3055 be deemed or implied to be, making any
representation or warranty as to whether any consents, authorizations,
approvals, waivers, applications, filings or amendments are necessary in
connection with the execution, delivery or performance of, or the consummation
of the transactions contemplated by, any Transaction Document to satisfy the
requirements of any applicable agreements, laws, rules, regulations, judgments,
orders or decrees, it being understood and agreed that Park shall bear the
economic and legal risk that any necessary consents, authorizations, approvals,
waivers, applications, filings or amendments are not obtained or that the
requirements of any law, rule, regulation, judgment, order or decree are not
complied with.

5.7 SALE AGREEMENTS. Each Triad Sale Agreement entered into by
Triad from and after the date of this Agreement shall provide that, upon the
conveyance by Triad of the Triad Designated Assets to Park pursuant to this
Agreement, the purchaser agrees to an automatic novation substituting Park for
Triad in the Triad Sale Agreement.

<PAGE> 10

5.8 LOAN BY TRIAD. Immediately prior to the payment of the
Dividend, Park shall deliver to Triad a balance sheet as of that time, certified
by a duly authorized officer of Park. In the event that, upon the payment of the
Dividend, Park shall not have cash and/or cash equivalent assets totaling at
least $100,000, Triad shall make a loan to Park in an amount equal to the
difference between $100,000 and total amount of cash and cash equivalent assets
of Park, such loan to be evidenced and governed by a promissory note which shall
be due in one year, shall bear interest at nine percent (9%) per annum, payable
at maturity.

5.9 INSURANCE. Effective upon the Contribution Date, the
participation by Park in any insurance coverage of Triad or any of its
subsidiaries (including, without limitation, 3055) shall cease. Park shall
retain any claims under the pre-existing insurance coverage arising out of
events occurring before the Contribution Date.

5.10 APPRAISAL. Triad has commissioned Carneghi-Bautovich &
Partners, Inc., an independent qualified real estate valuation expert, to
prepare an appraisal of the real property included in the Triad Designated
Assets (the "APPRAISAL"). The Carneghi-Bautovich appraisal is the agreed-upon
appraisal to be used for the purposes described in Section 6.10 of the Merger
Agreement. The Appraisal shall also be used to determine the size of the capital
accounts of Triad and 3055 Management as follows:

(a) The capital account of Triad in Park shall be equal to the
value of the Triad Designated Assets and the value of the real property included
shall be determined by the Appraisal, less any indebtedness assumed by Park;

(b) The capital account of 3055 Management in Park shall be equal
to the face amount of the 3055 Management Note.

SECTION 6: [INTENTIONALLY LEFT BLANK]

SECTION 7: CLOSING DELIVERIES

7.1 DELIVERIES BY TRIAD. On the Contribution Date, Triad shall
deliver the following:

(a) The Triad Deed;

(b) A counterpart of the Assignment and Assumption
Agreement;

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<PAGE> 11

(d) A copy of the resolutions of Triad's Board of
Directors, certified by its Secretary, declaring the Dividend, authorizing or
ratifying its execution and delivery of this Agreement, the Lease Amendment, the
actions of 3055 in connection with this Agreement and the Lease Amendment, and
the consummation of the transactions contemplated by this Agreement and the
Lease Amendment;

(e) The American General Consent; and

(f) A counterpart of the Waiver of Conflicts.

7.2 DELIVERIES BY 3055. On the Contribution Date, 3055 shall
deliver the following:

(a) A copy of the resolutions of the Board of Directors,
certified by 3055's Secretary, authorizing or ratifying its execution and
delivery of this Agreement, the Merger and the consummation of the transactions
contemplated by this Agreement;

(b) A copy of the resolutions by Triad, as the sole
stockholder of 3055, certified by 3055's Secretary, authorizing or ratifying the
Merger;

7.3 DELIVERIES BY PARK. On the Contribution Date, Park shall
deliver the following:

(a) A counterpart of the Lease Amendment fully executed by
Park;

(b) Evidence of the Triad Membership Interests and the
3055 Management Membership Interests;

(d) A counterpart of the Waiver of Conflicts;

(e) Confirmation that 3055 Management is the sole manager
of Park and is authorized to execute and deliver this Agreement, the Lease
Amendment, the Assignment and Assumption Agreement and the Consummation of the
transactions contemplated by this Agreement.

7.4 DELIVERIES BY MANAGEMENT. On the Contribution Date, Management
shall deliver the following:

(a) A copy of the resolutions of the Board of Directors,
certified by Management's' Secretary, authorizing or ratifying Management's
execution and delivery of this Agreement, and as Manager of Park of the Lease
Amendment and the consummation of the transactions contemplated by this
Agreement and the Lease Amendment;

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<PAGE> 12

(b) A counterpart of the Waiver of Conflicts.

SECTION 8: SECURITIES EXCHANGE ACT OF 1934 UNDERTAKING

Promptly following the Contribution Date, Park shall prepare and file
with the Commission the Registration Statement and Triad shall prepare and file
with the Commission the Information Statement.

SECTION 9: CERTAIN COVENANTS

9.1 SUPPORT. In order to facilitate the orderly management of Park
following the Spin-Off Transaction, for a period of one year following the
Contribution Date, Triad shall provide to Park at Triad's Livermore corporate
offices (at no cost to Park) the following:

(a) Two cubicles of office space, reasonable filing space,
and two telephones (provided, however, that all telephone service charges for
such telephones (including, without limitation, fees for basic service, long
distance charges, and repair and maintenance services) shall be paid by Park);
and

(b) During normal business hours, (i) reasonable access to
the cubicles and filing space referenced in clause (a) above by two Park
employees that may be designated from time to time by Park (the "DESIGNATED PARK
EMPLOYEES"), (ii) reasonable light and heating and air conditioning for the
immediate area in which the cubicles referenced in clause (a) above are located,
(iii) secretarial support for the Designated Park Employees, (iv) reasonable
access by the Designated Park Employees to two word processing computers and
such other office equipment and facilities as is reasonably necessary for the
performance of their duties.

Notwithstanding the foregoing, Park shall be liable for all damages to any
equipment or improvements provided by Triad in accordance with the foregoing
provisions to the extent such damages result from the conduct of any employees
or representatives of Park.

9.2 FURTHER ASSURANCES. From time to time after the Contribution
Date, each party to this Agreement shall, without further consideration, take
such actions as any other party hereto may reasonably request in order to more
effectively consummate the transactions contemplated hereby. Should any claim be
made against Triad by the holders of Specified Secured Debt, Park shall obtain
the complete and unconditional release of Triad from those claims.

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<PAGE> 13

9.3 CONTRACT SERVICES AGREEMENT. In order for Park to meet its
reporting requirements under the Securities Exchange Act of 1934 and to conduct
its real estate operations, Triad shall provide Park for a period of two years
after the Contribution Date, with administrative assistance from such members of
Triad's in-house legal staff and accounting staff who have experience with the
particular matters as Triad may reasonably designate from time to time with
sales contracts, regulatory filings, tax returns, and information management.
Park shall reimburse Triad for its fully burdened hourly cost of providing these
services . Triad shall have no liability to Park whatsoever arising out of the
provision of services by its employees pursuant to this Section 9.3.

9.4 PROPERTY MANAGERS. Following the Contribution Date, Triad and
Park shall jointly agree to the selection and/or replacement of property
managers who will act as the facilities managers for Triad and the development
mangers for Park as described in SCHEDULE 9.4 (the "PROPERTY MANAGERS"). On the
Contribution Date, the Property Managers shall be actively employed by Triad for
fifty percent (50%) of their time and by Park for fifty percent (50%) of their
time. Park shall reimburse Triad for fifty percent (50%) of the Property
Managers' salary and benefits listed on SCHEDULE 9.4. Triad shall have no
liability to Park whatsoever arising out of the provision of services by its
employees pursuant to this Section 9.4.

9.5 LIMITED LICENSE. Effective upon payment of the Dividend, Triad
grants Park a perpetual license, free of any royalty payments, to use the
name "Triad Park" or Triad Business Park in references to the real property
included in the Triad Designated Assets in connection with the operations of
Park related to the disposition of the Triad Designated Assets.

9.6 PARK NET WORTH REQUIREMENT. At all times following the
Contribution Date until the expiration of Park's indemnity obligations under
Section 11 in accordance with Section 11.8, Park shall not, directly or
indirectly, without the prior written consent of Triad, declare or pay any
dividend or distribution (whether in cash, property, securities or otherwise)
which after giving effect to the dividend or distribution would result in Park
have a Specified Net Worth less than the Minimum Worth. If at any time the
Specified Net Worth of Park drops below the Trigger Amount, then Triad may elect
to require the remaining Real Property of Park to be appraised with the costs of
appraisal shared equally by Triad and Park. In addition, Triad may request an
appraisal at any time at its sole cost. Any appraisal shall be conducted by an
independent appraiser mutually acceptable to Triad and Park. The results of the
appraisal shall be used to recalculate Park's Specified Net Worth for the
purposes of this Section.

As used in this Section 9.6, the following terms shall have the
following meanings:

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<PAGE> 14

"Specified Net Worth" is the net worth of Park determined in accordance
with generally accepted accounting principles consistently applied, except that
for the purposes of this calculation: (i) the value of the remaining Real
Property shall be included at the value determined by the Appraisal, or if a
subsequent appraisal has been performed in accordance with this Section, by that
more recent appraisal, each as adjusted by depreciation since the appraisal
date; and (ii) there shall be no liability attributable to Park's obligations
under Section 11 included in the calculation of Specified Net Worth.

"Minimum Worth" shall mean the greater of: (i) an amount equal to
$2,350,000 plus interest on $2,350,000 at the Interest Rate computed from the
75th day following the Contribution Date; or (ii) the amount of any deficiency
proposed in writing by the Internal Revenue Service which would be subject to
indemnification under Section 11 plus interest on that amount at the Interest
Rate computed from the date of the writing stating the proposed deficiency.

"Trigger Amount" shall mean $4,000,000 plus interest on $4,000,000 at
the Interest Rate from the Contribution Date.

"Interest Rate" shall mean ten percent (10%) per annum, compounded
annually.

SECTION 10. CERTAIN INDEMNIFICATION PROVISIONS

10.1 INDEMNIFICATION FOR CERTAIN MATTERS. From and after the
Contribution Date, Park shall indemnify, defend and hold harmless each of Triad
and 3055 and their respective officers, directors and affiliates, and each
person, if any, who controls any of the foregoing within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act, and each of the
heirs, executors, successors and assigns of any of the foregoing (each
an "INDEMNIFIED PARTY" and, collectively, the "INDEMNIFIED PARTIES") from and
against any and all Damages arising out of, related to or based upon:

(a) Any untrue statement (or alleged untrue statement) of a
material fact contained in the Registration Statement as of the effective date
thereof, the Mailing Date or the payment date of the Dividend, or in the
Information Statement as of the Mailing Date or the payment date of the
Dividend;

(b) Any omission (or alleged omission) to state in the
Registration Statement, as of the effective date thereof, the Mailing Date or
the payment date of the Dividend, or in the Information Statement, as of the
Mailing Date or the payment date of the Dividend, a material fact required to be
stated therein or necessary to make the statements therein not misleading;

(c) The failure to register all or any portion of the Triad
Membership Interest under the Securities Act or any state securities or"blue
sky" laws;

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<PAGE> 15

(d) The Assumed Obligations;

(e) All Environmental Costs and Liabilities with respect
to any of the Triad Designated Assets;

(f) The Dividend Expenses; and

(g) The breach by Park of any of its representations or
warranties under this Agreement or the failure by Park to perform any of its
covenants, agreements or obligations under this Agreement.

10.2 CERTAIN PROCEDURES. Any Indemnified Party will (i) give prompt
written notice to Park of any claim with respect to which it seeks
indemnification under this Section 10 (but the failure to so notify shall not
relieve Park from any liability which it may have under this Agreement except to
the extent such failure materially prejudices Park), and (ii) permit Park to
assume the defense of any claim made against such Indemnified Party by any
person other than Park or any affiliate or controlling person of Park (a "THIRD
PARTY CLAIM") with counsel reasonably satisfactory to the Indemnified Party. Any
Indemnified Party hereunder shall have the right to employ separate counsel and
to participate in the defense of such Third Party Claim, but the fees and
expenses of such separate counsel shall be at the expense of such Indemnified
Party unless (X) Park has agreed to pay such fees or expenses, (Y) Park shall
have failed to assume the defense of such Third Party Claim and employ counsel
reasonably satisfactory to such Indemnified Party, or (Z) the parties to such
action include both the Indemnified Party and Park and, in the reasonable
judgment of the Indemnified Party, a conflict of interest may exist between the
Indemnified Party and Park (in which case Park shall not have the right to
assume the defense of such action on behalf of the Indemnified Party). Park
shall not settle any pending or threatened claim in respect of which any
Indemnified Party is or could have been a party and in respect of which
indemnification could have been sought hereunder unless such settlement shall
provide for a complete and unconditional release of each of the Indemnified
Parties hereunder. If the defense of a Third Party Claim is not assumed by Park
as permitted hereunder, Park will not be subject to any liability for any
settlement made by the Indemnified Party without its consent (but such consent
will not be unreasonably withheld).

10.3 CONTRIBUTION. If the indemnification provided for in clause
(a), (b) or (c) of Section 10.1 is unavailable to an Indemnified Party in
respect of any Damages referred to therein, then Park, in lieu of indemnifying
such Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages in such proportion as shall be
appropriate to reflect the relative fault of Park, on the one hand, and the
Indemnified Party, on the other hand, with respect to the facts and
circumstances that resulted in such Damages, as well as any other equitable
considerations. With respect to the indemnification provided in clauses (a) and
(b) of Section 10.1, the relative fault shall be determined by reference to
whether the untrue

<PAGE> 16

untrue statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by Park or persons acting on
behalf of Park, on the one hand, or the Indemnified Party, on the other hand,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission, but not by
reference to Triad's ownership interest in Park. With respect to the
indemnification provided in clause (c) of Section 10.1, because Park is being
advised by counsel with respect to the legal requirements of the transactions
contemplated hereby, Park shall be deemed to be solely at fault.

SECTION 11: TAX INDEMNITY

11.1 REPORTING. For income Tax purposes, Triad and Park shall
report the transactions contemplated by this Agreement based upon the following
principles: (i) Park is a partnership; (ii) the Liquidation is a liquidation
described in Section 332 of the Code; (iii) the conveyances of the Triad
Designated Assets by Triad and of the 3055 Management Contribution Note in
exchange for the Triad Membership Interest and the 3055 Management Membership
Interest, respectively, are transactions described in Section 721 of the
Internal Revenue Code of 1986, as amended (the "CODE"); (iv) the Dividend gives
rise to a sale or exchange of the Membership Interest pursuant to Section 311 of
the Code (the "DEEMED SALES"); (v) the amount realized in the Deemed Sales and
the amount distributed to the stockholders of Triad shall be equal to the
appraised value of the Triad Designated Assets as set forth in the Appraisal
(adjusted as appropriate to reflect Park's liabilities and taking into account
any adjustments pursuant to Section 752 of the Code); (vi) the adjusted basis of
the Triad Membership Interest shall be equal to the adjusted basis of the Triad
Designated Assets on the date of contribution to Park as determined by the
accounting firm selected under the terms of Section 6.10 of the Merger
Agreement, adjusted in accordance with Sections 705, 722, 733 and 752 of the
Code; and (vii) the Dividend gives rise to a termination and reconstitution of
Park for purposes of Section 708(b)(1)(B) of the Code. Triad and Park shall file
all Tax Returns in a manner consistent with this Section 11.1 and neither Triad
nor Park shall amend its Tax Returns or file a claim for refund of Taxes in a
manner which is inconsistent with this Section 11.1 without the prior written
consent of Park or Triad, as the case may be, which consent shall not be
unreasonably withheld. For purposes of this Section 11, the term"Triad" shall
include all corporations which join with Triad in the filing of consolidated or
combined tax returns.

11.2 TAX CONTEST.

(a) Upon receipt of a formal written notification from a
taxing authority of an audit of any Tax Returns relating to the transactions
contemplated by this Agreement or of a proposed adjustment to the Tax reporting
of the transactions contemplated by this Agreement, Triad or Park, as the case
shall be, shall promptly notify Park or Triad, as applicable, of the audit or
the proposed adjustment.

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<PAGE> 17

(b) In the case of an audit of or proposed adjustment to a Tax
Return of Triad relating to the transactions contemplated by this Agreement,
Park shall be permitted to participate in and conduct, at Park's expense and
subject to Triad's right of supervision and review, those aspects of an audit,
examination or proceeding relating to Taxes for which Park would be responsible
under this Section 11 (a" SPIN-OFF TAX CONTEST"). Triad will deliver to Park any
limited power of attorney required to enable Park and its representatives to
participate in a Spin-Off Tax Contest. With respect to a Spin-Off Tax Contest,
Park shall have the right to determine, subject to Triad's consent which shall
not be unreasonably withheld, (i) the attorneys, accountants and/or experts to
represent Triad in connection with the Spin-Off Tax Contest, (ii) whether or not
to protest or appeal any decision of any administrative or judicial body, and
(iii) whether or not to settle the Spin-Off Tax Contest. Triad will not agree,
without Park's written consent, to any extension of the applicable statute of
limitations with respect to taxable periods which include the Tax consequences
of transactions subject to indemnification by Park hereunder, which consent will
not be unreasonably withheld; provided that such consent of Park will not be
required if the failure to agree to such extension may reasonably be expected to
result in the proposed assessment of a deficiency for material Taxes unrelated
to the transactions contemplated by this Agreement.

(c) In the case of an audit of or a proposed adjustment with
respect to Park pursuant to Sections 6221 to 6233 of the Code and relating to
the transactions contemplated by this Agreement (a "PARTNERSHIP ITEM TAX
CONTEST"), Park shall keep Triad fully informed of the progress of such
Partnership Item Tax Contest and shall permit the participation, supervision and
review of Triad in such matter, and Park shall not settle the Partnership Item
Tax Contest without the prior written consent of Triad, which consent shall not
be unreasonably withheld.

11.3 TAX INDEMNITY. Park shall indemnify and hold Triad harmless
from and against any Taxes (and any fees, costs, expenses and other damages with
respect to such Taxes or any dispute thereof) attributable to, arising out of or
relating to (i) any sale, exchange, dividend, distribution or other disposition
of Triad Designated Assets after October 17, 1996, (ii) Park, (iii) the
formation of Park, (iv) the transfer by Triad or any affiliate of the Triad
Designated Assets to Park, (v) the assumption or refinancing of any liabilities
(including the Assumed Obligations) with respect to the Triad Designated Assets,
(vi) the sale, exchange, distribution or other disposition of any assets by
Park, (vii) the sale, exchange, distribution, dividend or other disposition of
the Triad Membership Interest by Triad or any affiliate, (viii) the Liquidation,
and (ix) any steps which are attendant to or necessary in connection with any of
the foregoing transactions. Park's indemnification obligations under this
Section 11.3 shall be computed without reduction, offset or credit for (i) any
net operating loss carryforwards, capital loss carryforwards, or tax credit
carryforwards of Triad from taxable periods ending before the date of the
Dividend, or (ii) any net operating losses, capital losses, or tax credits for
the taxable period which includes the date of the Dividend.

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11.4 AFTER-TAX BASIS. Any indemnity payment under this Agreement
shall be made on an "after-tax basis." The term "after-tax basis" means any
indemnity payment shall be (i) decreased by any Tax reductions (net of any Tax
increases) actually realized by the indemnified party or any affiliate as a
result of the indemnified loss, and (ii) increased by any increase in Taxes
actually realized by the indemnified party or any affiliate as a result of the
receipt or accrual of an indemnity payment (including any additional payments
pursuant to this sentence).

11.5 LIMITATIONS. Notwithstanding Section 11.3, Park shall not be
required to indemnify Triad for any interest or penalties caused by Triad's
failure to timely file any Tax Return.

11.6 DEMAND AND PAYMENT. In connection with each payment of
estimated Taxes, the filing of Tax Returns, the payment of any additional Taxes
due in connection with an audit, administrative or judicial proceeding, and at
the time any other indemnified matters relating to Taxes are due and payable,
Triad shall provide Park with a written statement setting forth the amount of
Taxes and other indemnified items due from Park under this Section 11
(the "STATEMENT"). Unless Park disagrees with the calculation of the amount of
its indemnity obligation under this Section 11 reflected in the Statement, Park
shall pay to Triad the amount shown as due in the Statement within ten days
after receipt of such notice, but in no event, in the case of current period and
estimated Taxes, shall Park be required to pay any Taxes earlier than three
business days prior to the due date of such Taxes. Any payment which is not
timely paid by Park shall bear interest at the rate of 9 percent (9%) per annum.
If Park disagrees with the amount set forth in the Statement, Park and Triad
shall attempt to resolve such disagreement over a period of seven days. If Park
and Triad fail to resolve any dispute within such period, then any computational
disagreement shall be submitted to arbitration in accordance with this
Agreement, except that the arbitrator shall be a tax partner from a big six
accounting firm with offices in the San Francisco Bay Area agreed upon by the
parties or, if they cannot agree, selected by the AAA. Park shall pay to Triad
the amount determined to be due pursuant to such arbitration within five
business days of the arbitrator's written resolution thereof.

11.7 COOPERATION. Triad and Park agree to cooperate in regard to
the filing of all Tax Returns relating to this Agreement and any audit or
administrative or judicial proceeding with respect thereto, and each party shall
provide the other party with reasonable access to Tax and accounting records
which relate to such Taxes and Tax Returns.

11.8 SURVIVAL. Any indemnification pursuant to this Section 11
shall survive and remain in full force and effect thereafter until sixty days
after the expiration of all applicable statutes of limitations for the
assessment or collection of Taxes (including all periods of extension, whether
automatic or permissive).

18
<PAGE> 19

SECTION 12: AMOUNTS TO BE PRORATED

12.1 On the Contribution Date, the following items shall be
prorated between Triad and Park as of the Contribution Date: (i) property taxes
for the year during which the Contribution Date occurs, (ii) interest on the
3055 Note for the month in which the Contribution Date occurs, (iii) rentals
paid under the Lease Agreement attributable to the month in which the
Contribution Date occurs, including, without limitation, fixed or minimum rent,
additional rent and expense pass-throughs, (iv) utility expenses, and other
costs and expenses attributable to the Property, and (v) any other items listed
on SCHEDULE 12.1 attached hereto.

12.2 If any of the prorations are based upon estimates as of the
Contribution Date, it is mutually agreed as a covenant to survive the closing
that an accurate adjustment shall be made by cash settlement between Triad and
Park within thirty (30) days after the estimated item is known for certain. In
the event that on the Contribution Date Triad shall not have received tax
statements for the calendar year during which the closing occurs, estimated tax
figures for that year based upon tax receipts for the immediately preceding
calendar year shall, by mutual consent, be used for the purpose of prorating
taxes at the closing. It is mutually agreed, as a covenant expressly to survive
the closing, that upon receipt of tax statements for the calendar year during
which the closing occurs, an accurate adjustment of such tax proration shall be
made by cash settlement between Triad and Park within thirty (30) days after
receipt of all such tax invoices.

SECTION 13: ARBITRATION OF DISPUTES

13.1 AGREEMENT TO ARBITRATE. (a) The parties specifically agree
that any controversy, claim or dispute arising out of or relating in any way to
this Agreement or any of the other Transaction Documents, or any alleged breach
thereof, shall be settled exclusively by arbitration. Subject to the
modifications set forth herein, any arbitration shall be administered by the San
Francisco, California office of the AAA in accordance with its Commercial
Arbitration Rules and the Supplementary Procedures for Large, Complex Disputes
in effect at the time the arbitration is initiated (collectively, the "RULES"),
unless all parties to the dispute agree in writing that the total amount in
controversy is less than one million dollars, in which case, the Commercial
Arbitration Rules in effect at the time the arbitration is initiated alone shall
govern.

13.2 NUMBER, SELECTION AND AUTHORITY OF ARBITRATORS.

(a) As soon as a demand for arbitration shall be made by any
party to this Agreement, the AAA shall proceed to provide a list of the Large,
Complex Case Panel (unless the agreement to use the Commercial Rules has been
made by all of the parties to the dispute as provided for in the preceding
paragraph, in which case arbitrators from the Commercial Panel shall be used)
from which the parties shall select a panel of three arbitrators in accordance
with the Rules and normal procedures of the San Francisco, California office of
the AAA. If necessary, the AAA shall select some or all of the arbitrators when
it is authorized to do so under the Rules.

19
<PAGE> 20

(b) The arbitration panel shall be empowered to render full
and complete resolution of the dispute. The panel shall also have the authority
and discretion to order, as it sees fit, the payment of the parties' attorneys'
fees and any and all expenses of the arbitration, including payment of the
arbitrators' compensation. In the event the arbitration panel finds that any
party has abused or failed to comply with the applicable arbitration or
discovery provisions in this contract or in the Rules, the panel shall be
empowered to render any sanction that would otherwise be available under the
Federal Rules of Civil Procedure, including without limitation rendition of an
award for complete relief (including attorneys' fees and all arbitration
expenses), in favor of the non-offending parties and against the offending
party. All arbitrations shall take place in San Francisco, California.

13.3 SCHEDULE FOR ARBITRATION. The parties agree that the
expeditious conclusion of the arbitration is critical to all parties, and they
direct and agree that the arbitration panel shall so allocate time and impose
deadlines that the complete proceeding from the initial demand for arbitration
to the decision of the panel shall be completed within one hundred and eighty
(180) calendar days. In order to promote this expeditious resolution, the
following procedural sequence shall be followed by the parties and shall be
enforced by the panel:

(a) Any party who makes demand for arbitration (whether an
initial demand or by counterclaim or cross claim) shall specify and quantify the
remedies that it seeks, including all amounts of money claimed to be payable,
transfers of property, or undertakings of obligations (including, without
limitation, indemnity and assumption of the defense of litigation).

(b) Within ten calendar days after receipt (by fax, telecopy,
express delivery, certified mail, or otherwise) of a demand for arbitration,
each responding party shall deliver to the opposing party a written response
that states with specificity the portions of the relief that it does not contest
and that provides a narrative summary of all grounds for contesting each claim
for relief that is contested.

(c) Any relief that is not contested shall be provided
(including, without limitation, the payment of money admitted to be due or the
performance of other contractual obligations) within ten calendar days after a
responding party admits that it does not contest some aspect of an arbitration
demand, and the presence of continuing controversy about other requests for
relief shall not be the basis for failure to provide the relief that is not
contested during the pendency of the arbitration.

(d) The panel shall establish a schedule for discovery,
conferences, any written submissions, the hearing, and other matters that
permits it to hold a hearing and return its award within the one hundred
eighty-day period specified, and all parties agree to abide by directions of the
panel with regard to scheduling.

20
<PAGE> 21

(e) If the panel finds that any party has failed to cooperate
in good faith with these scheduling provisions, or if any party fails to comply
with a scheduling order of the panel, the panel may award damages and impose
sanctions for all injuries caused by this delay or failure to comply with these
provisions, including, but not limited to, attorneys fees. If the panel finds
that actual damages arising from delay are impractical to estimate with
reasonable certainty, the parties agree that reasonable liquidated damages for
delay shall be $5,000 per day, which may be assessed by the panel as a part of
its award.

13.4 CONSOLIDATION OF PENDING ARBITRATIONS.

(a) In the event that any subsequent or further controversy,
claim or dispute arising out of or relating in any way to this Agreement or any
of the other Transaction Documents, or any alleged breach thereof, arises while
any arbitration demand under any such document is pending but before the
arbitration panel appointed as a result thereof has rendered its final decision,
such panel shall have exclusive jurisdiction over the resolution of such
subsequent or further controversies, claims or disputes and shall consolidate
all such controversies, claims or disputes before the panel.

(b) In the event any arbitration panel created to resolve any
controversies, claims and disputes under this Agreement has already rendered a
final decision on the controversies, claims and disputes pending before it prior
to the initiation of arbitration for any subsequent or further controversy,
claim or dispute, such subsequent or further controversy, claim or dispute shall
be resolved by a new panel of arbitrators appointed pursuant to the provisions
of this Section. No arbitrator who previously served on an arbitration panel
appointed pursuant to an arbitration provision set forth in the Agreement, shall
be appointed to any subsequent arbitration panel without the express agreement
of all parties to the dispute.

13.5 DISCOVERY PROCEDURES. Unless otherwise agreed to by all
parties or ordered by the arbitration panel, discovery shall be limited in the
arbitration to the following:

(a) The number of depositions concerning any single or
consolidated arbitration shall be limited to four (4) depositions by each side
to the dispute, regardless of whether more than one party is allied on one side
of the dispute;

(b) Each deposition shall last no more than one business day
and may commence no earlier than 9:00 a.m. and continue no later than 5:00 p.m.,
as measured at the location of the deposition;

21
<PAGE> 22

(c) The parties may exchange three (3) sets of requests for
documents, but the documents called for in each request shall be limited so as
not to exceed 100 pages unless a greater page limit is directed by the Panel;

(d) Unless a different time is specified by the arbitration
panel, production of requested documents for inspection and copying by all other
parties to the dispute shall occur within thirty days of actual receipt of the
request, whether served by U.S. mail, telecopy, fax, hand delivery or overnight
delivery;

(e) Subject to other provisions hereof and the Rules, the
scheduling and conduct of depositions and document requests and production shall
be governed by the Federal Rules of Civil Procedure, as modified by the local
rules for the United States District Court for Northern District of California;
and

(f) All testimony, whether by deposition, at a hearing, or in
written submissions, must be submitted under oath or under penalty of perjury.

13.6 JUDICIAL DETERMINATION. With regard to this arbitration
provision, the parties intend that the proceeding may be initiated and continue
under the guidance of the AAA and the appointed arbitrators without the need for
judicial intervention, but, to the extent any party seeks a judicial
determination of the meaning of this arbitration provision or seeks to compel,
prevent, or limit a pending arbitration, all parties consent to exclusive
jurisdiction for any such controversy in any court of competent jurisdiction in
San Francisco, California.

13.7 ENFORCEMENT OF ARBITRATION AWARD. Any award or decision of an
arbitration panel appointed pursuant to this Section may be confirmed by any
court of competent jurisdiction.

13.8 THIRD PARTY CLAIMS. Notwithstanding any provision of this
Agreement or any of the other Transaction Documents to the contrary, in the
event a claim otherwise subject to arbitration hereunder (a "SPECIFIED CLAIM")
arises as a result of a Third Party Claim and such Third Party Claim is asserted
in a proceeding before a court or other governmental tribunal, the party to this
Agreement in whose favor such Specified Claim arises may, at its option, assert
such Specified Claim against a party hereto in such proceeding.

SECTION 14: REPRESENTATIONS AND WARRANTIES

Triad, Park, 3055 Management and 3055 each have the corporate power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated by this Agreement, which have been duly authorized by
the Board of Directors of Triad, Park, 3055 Management and 3055; no other
corporate proceedings on the part of Triad, Park, 3055 Management or 3055 are
necessary to authorize Triad, Park, 3055 Management or 3055 to enter into this
Agreement or to consummate the transactions contemplated by this Agreement; and
this Agreement is the legal, valid, and binding obligation of Triad, Park, 3055
Management and 3055.

22
<PAGE> 23

SECTION 15: MISCELLANEOUS PROVISIONS

15.1 ATTORNEYS' FEES. If any legal action or other proceeding is
commenced to enforce or interpret any provision of, or otherwise relating to,
this Agreement, the losing party shall pay the prevailing party's actual
expenses incurred in the investigation of any claim leading to the proceeding,
preparation for and participation in the proceeding, any appeal or other post
judgment motion, and any action to enforce or collect the judgment including
contempt, garnishment, levy, discovery and bankruptcy. For this
purpose "expenses" include, without limitation, court or other proceeding costs
and experts' and attorneys' fees and their expenses. The phrase "prevailing
party" shall mean the party who is determined in the proceeding to have
prevailed or who prevails by dismissal, default or otherwise.

15.2 CHOICE OF LAW. This Agreement shall be construed in accordance
with, and governed by, the internal laws of the State of Delaware, without
giving effect to the principle of conflicts of laws thereof.

15.3 COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and counterpart
signature pages may be assembled to form a single original document.

15.4 NOTICES. All notices, consents, requests, demands or other
communications to or upon the respective parties shall be in writing and shall
be effective for all purposes upon receipt on any business day before 5:00 PM
local time and on the next business day if received after 5:00 PM or on other
than a business day, including without limitation, in the case of (i) personal
delivery, (ii) delivery by messenger, express or air courier or similar courier,
(iii) delivery by United States first class certified or registered mail,
postage prepaid and (iv) transmittal by telecopier or facsimile, addressed as
follows:

If to Triad or 3055, to:

Triad Systems Corporation
6207 Bee Cave Road
Austin, Texas 78746-5146
Attn: Glenn Staats
Telephone: (512) 328-2300
Telecopy: (512) 329-6461

23
<PAGE> 24

With a copy to:

Triad Systems Corporation
3055 Triad Drive
Livermore, California 94550
Attn: Glenn Staats
Telephone: (510) 449-0606
Telecopy: (510) 455-6917

Weil, Gotshal & Manges, LLP
100 Crescent Court
Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
Telephone: (214) 746-7748
Telecopy: (214) 746-7777

and

Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court
Suite 1600
Dallas, Texas 75201-6950
Attn: Lawrence D. Stuart, Jr.
Telephone: (214) 740-7365
Telecopy: (214) 740-7313

If to Park or to 3055 Management, to:

Triad Park, LLC
3055 Triad Drive
Livermore, California 94550
Attn: James Porter
Telephone: (510) 499-0606
Telecopy: (510) 455-6917

With a copy to:

McCutchen, Doyle, Brown & Enersen, LLP
Three Embarcadero Center, 18th Floor
San Francisco, CA 94111-4066
Attn: Edward S. Merrill
Telephone: (415) 393-2112
Telecopy: (415) 393-2286

24
<PAGE> 25

In this section "business days" means days other than Saturdays, Sundays, and
federal and state legal holidays. Either party may change its address by written
notice to the other in the manner set forth above. Receipt of communications by
United States first class or registered mail will be sufficiently evidenced by
return receipt. Receipt of communications by facsimile will be sufficiently
evidenced by a machine generated confirmation of transmission without an error
message. In the case of illegible or otherwise unreadable facsimile
transmissions, the receiving party shall promptly notify the transmitting party
of any transmission problem and the transmitting party shall promptly re-send
any affected pages.

15.5 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein,
this Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns. No rights of any party under
this Agreement are assignable without the written consent of all other parties,
which any other party may withhold in its absolute discretion.

15.6 THIRD PARTIES. Except as expressly provided herein, nothing in
this Agreement shall be construed to give any person other than the express
parties to this Agreement any benefits, rights or remedies.

15.7 TERMS. Undefined capitalized terms used in this Agreement have
the meaning attributed to those terms as set forth in the Merger Agreement.

15.8 WAIVER/MODIFICATION/AMENDMENT. No amendment of, or waiver of
any obligation under, this Agreement will be enforceable unless set forth in a
writing signed by the party against which enforcement is sought.

The parties have executed this Agreement as of the Effective Date.

Triad Systems Corporation

By: /s/ JAMES R. PORTER
-------------------------------
Its: President
-------------------------------

3055 Triad Dr. Corp.

By: /s/ JAMES R. PORTER
-------------------------------
Its: President
-------------------------------

25
<PAGE> 26

Triad Park, LLC

By: Triad Systems Corporation

By: /s/ JAMES R. PORTER
-------------------------------
Its: President
-------------------------------

By: 3055 Management Corp.

By: /s/ JAMES R. PORTER
-------------------------------
Its: President
-------------------------------

3055 Management Corp.

By: /s/ JAMES R. PORTER
-------------------------------
Its: President
-------------------------------

<PAGE> 1
EXHIBIT 10.12

ASSIGNMENT AND ASSUMPTION AGREEMENT

This Assignment and Assumption Agreement ("ASSIGNMENT"), effective as of
February 27, 1997 (the "EFFECTIVE DATE") is between Triad Systems Corporation,
a Delaware corporation ("ASSIGNOR"), and Triad Park, LLC, a Delaware limited
liability company ("ASSIGNEE").

RECITALS

A. 3055 Triad Dr. Corp., a California corporation and a wholly-owned
subsidiary of Assignor ("3055"), is a party to the Note and First Deed of Trust
(as defined below).

B. Immediately prior to the effectiveness of this Agreement, 3055 has
merged with and into Assignor, with Assignor as the surviving corporation (the
"MERGER"). By virtue of the Merger, Assignor has assumed all rights and
obligations of 3055, including, without limitation, those under the Note and
the First Deed of Trust.

C. Assignor now desires to assign to Assignee all of its rights and
obligations arising from the Note and the First Deed of Trust, and Assignee
desires to accept the assignment and to assume all future liabilities under the
Note and First Deed of Trust for the benefit of The Variable Annuity Life
Insurance Company, a Texas corporation.

AGREEMENTS

FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
Assignor and Assignee agree as follows:

1. DEFINITIONS.

(a) As used in this Agreement, "NOTE" means the Promissory Note, dated
August 23, 1988, in the original principal sum of $15,500,000, executed by 3055
as Maker in favor of the Variable Annuity Life Insurance Company, a Texas
corporation ("VARIABLE").

(b) As used in this Agreement, "FIRST DEED OF TRUST" means the First Deed
of Trust and Assignment of Rents, Security Agreement and Fixture Filing, dated
as of August 23, 1988, by and among 3055, as Trustor, Mason-McDuffie Financial
Corporation, as Trustee, and Variable, as Beneficiary, recorded as Series No.
88-215552, in Alameda County, State of California

2. ASSIGNMENT. Assignor assigns to Assignee all of its rights and
obligations under the Note and the First Deed of Trust.

3. ASSUMPTION. Assignee assumes and agrees to perform all obligations of
Assignor to be performed under the Note and the First Deed of Trust after the
Effective

<PAGE> 2

Date. This assumption is not intended to amend the provision of the Note
defining the circumstances when the Maker does or does not have recourse
liability.

4. INDEMNITY. Assignee shall indemnify, defend and hold Assignor harmless
from and against all claims, losses, damages, costs, expenses and liabilities
(including reasonable attorneys' fees) arising out of or relating to the
performance of the Note and the First Deed of Trust after the Effective Date.

5. ATTORNEYS' FEES. If any legal action or other proceeding is commenced
to enforce or interpret any provision of, or otherwise relating to, this
Agreement, the losing party shall pay the prevailing party's actual expenses
incurred in the investigation of any claim leading to the proceeding,
preparation for and participation in the proceeding, any appeal or other post
judgment motion, and any action to enforce or collect the judgment including
contempt, garnishment, levy, discovery and bankruptcy. For this purpose
"EXPENSES" include, without limitation, court or other proceeding costs and
experts' and attorneys' fees and their expenses. The phrase "prevailing party"
shall mean the party who is determined in the proceeding to have prevailed or
who prevails by dismissal, default or otherwise.

6. CHOICE OF LAW AND FORUM. This Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of California.
Any action to enforce or interpret its provisions must be brought in State or
Federal Courts located in San Francisco, California.

7. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and counterpart signature pages may
be assembled to form a single original document.

8. NOTICES. All notices, consents, requests, demands or other
communications to or upon the respective parties shall be in writing and shall
be effective for all purposes upon receipt on any business day before 5:00 PM
local time and on the next business day if received after 5:00 PM or on other
than a business day, including without limitation, in the case of (i) personal
delivery, (ii) delivery by messenger, express or air courier or similar
courier, (iii) delivery by United States first class certified or registered
mail, postage prepaid and (iv) transmittal by telecopier or facsimile,
addressed as follows:

If to Assignor, to:

Triad Systems Corporation
6207 Bee Cave Road
Austin, Texas 78746-5146
Attn: Glenn Staats
Telephone: (512) 328-2300
Telecopy: (512) 329-6461

<PAGE> 3

With a copy to:

Weil, Gotshal & Manges, LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
Telephone: (214) 746-7748
Telecopy: (214) 746-7777

If to Assignee, to:

Triad Park, LLC
3055 Triad Drive
Livermore, California 94550
Attn: James Porter
Telephone: (510) 449-0606
Telecopy: (510) 455-6917

With a copy to:

McCutchen, Doyle, Brown & Enersen, LLP
Three Embarcadero Center, 18th Floor
San Francisco, California 94111-4066
Attn: Edward S. Merrill
Telephone: (415) 393-2112
Telecopy: (415) 393-2286

In this section "BUSINESS DAYS" means days other than Saturdays, Sundays, and
federal and state legal holidays. Either party may change its address by
written notice to the other in the manner set forth above. Receipt of
communications by United States first class or registered mail will be
sufficiently evidenced by return receipt. Receipt of communications by
facsimile will be sufficiently evidenced by a machine generated confirmation of
transmission without an error message. In the case of illegible or otherwise
unreadable facsimile transmissions, the receiving party shall promptly notify
the transmitting party of any transmission problem and the transmitting party
shall promptly resend any affected pages.

9. SUCCESSORS AND ASSIGNS: ASSIGNABILITY. No rights of any party under
this Agreement are assignable without the written consent of all other parties,
which any other party may withhold in its absolute discretion.

10. THIRD PARTIES. This Agreement is for the express benefit of The
Variable Annuity Life Insurance Company, a Texas corporation ("BENEFICIARY")
whose address is c/o American General Realty Advisors, Inc., Attention:
Director, Mortgage Loans-Asset Management, Box 1493, Houston, Texas 77253.
Nothing in this Agreement shall be construed to give any person other than the
express parties to this Agreement and Beneficiary any benefits, rights or
remedies.

<PAGE> 4

11. WAIVER/MODIFICATION/AMENDMENT. No amendment of, or waiver of any
obligation under, this Agreement will be enforceable unless set forth in a
writing signed by the party against which enforcement is sought.

The parties have executed this Assignment and Assumption Agreement as of
the Effective Date.

"ASSIGNOR"

TRIAD SYSTEMS CORPORATION

By: /s/ JAMES R. PORTER
-------------------------------
Name: James R. Porter
Title: President

"ASSIGNEE"

TRIAD PARK, LLC

By 3055 MANAGEMENT CORP., ITS SOLE
MANAGER

By: /s/ JAMES R. PORTER
-------------------------------
Name: James R. Porter
Title:

<PAGE> 1
EXHIBIT 10.13

ASSIGNMENT AND ASSUMPTION AGREEMENT

RECITALS

A. Assignor owns certain real property located in Triad Park, Livermore,
California.

B. Assignor and Assignee, along with 3055 Triad Dr. Corp., a California
corporation and a wholly-owned subsidiary of Assignor ("3055"), are parties to
a certain Real Estate Distribution Agreement of even date herewith (the
"DISTRIBUTION AGREEMENT"), pursuant to which, among other things, Assignor and
3055 have agreed to contribute certain land and buildings to Assignee in
exchange for membership interests in Assignee. Capitalized terms used but not
defined herein shall have the meanings set forth in the Distribution Agreement.

C. Immediately prior to the effectiveness of this Agreement, 3055 has
merged with and into Assignor, with Assignor as the surviving corporation (the
"Merger"). By virtue of the Merger, Assignor has assumed all rights and
obligations of 3055.

D. Assignor desires to assign to Assignee certain assets related to the
real property not previously conveyed to Assignee by grant deed along with
certain obligations.

E. Assignee desires to accept the assignment and to assume all future
liabilities in connection therewith.

AGREEMENTS

FOR VALUABLE CONSIDERATION, the receipt of which is hereby acknowledged,
Assignor and Assignee agree as follows:

1. ASSIGNMENT. Assignor assigns to Assignee all of Assignor's right,
title, and interest in and to contracts and agreements primarily related to the
Real Property (as defined in the Distribution Agreement) (other than insurance
policies and the Distribution Agreement), including those certain agreements
described in Exhibit A (the "REAL PROPERTY AGREEMENTS").

2. ASSUMPTION. Assignee hereby accepts and assumes all liabilities and
obligations of Assignor arising or to be performed in connection with the Real
Property or the Real Property Agreements. Assignee further agrees to fully pay,
observe the terms of,

<PAGE> 2

satisfy, or discharge each, every and all liabilities and obligations assumed
by Assignee herein if, as, when and to the extent due.

3. INDEMNITY. Assignee shall indemnify, defend and hold Assignor harmless
from and against all claims, losses, damages, costs, expenses and liabilities
(including reasonable attorneys' fees) arising out of or relating to any of the
Real Property or Real Property Agreements (including, without limitation,
environmental matters or any failure to obtain required consents to this
Assignment, if any) whether arising before, on or after the Effective Date.

4. ATTORNEYS' FEES. If any legal action or other proceeding is commenced
to enforce or interpret any provision of, or otherwise relating to, this
Agreement, the losing party shall pay the prevailing party's actual expenses
incurred in the investigation of any claim leading to the proceeding,
preparation for and participation in the proceeding, any appeal or other post
judgment motion, and any action to enforce or collect the judgment including
contempt, garnishment, levy, discovery and bankruptcy. For this purpose
"EXPENSES" include, without limitation, court or other proceeding costs and
experts' and attorneys' fees and their expenses. The phrase "prevailing party"
shall mean the party who is determined in the proceeding to have prevailed or
who prevails by dismissal, default or otherwise.

5. CHOICE OF LAW AND FORUM. This Agreement shall be construed in
accordance with, and governed by, the internal laws of the State of California.
Any action to enforce or interpret its provisions must be brought in State or
Federal Courts located in San Francisco, California.

6. COUNTERPARTS. This Agreement may be executed in multiple counterparts,
each of which shall be deemed an original, and counterpart signature pages may
be assembled to form a single original document.

7. NOTICES. All notices, consents, requests, demands or other
communications to or upon the respective parties shall be in writing and shall
be effective for all purposes upon receipt on any business day before 5:00 PM
local time and on the next business day if received after 5:00 PM or on other
than a business day, including without limitation, in the case of (i) personal
delivery, (ii) delivery by messenger, express or air courier or similar
courier, (iii) delivery by United States first class certified or registered
mail, postage prepaid and (iv) transmittal by telecopier or facsimile,
addressed as follows:

If to Assignor, to:

Triad Systems Corporation
6207 Bee Cave Road
Austin, Texas 78746-5146
Attn: Glenn Staats
Telephone: (512) 328-2300
Telecopy: (512) 329-6461

<PAGE> 3

With a copy to:

Weil, Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201-6950
Attn: Thomas A. Roberts
Telephone: (214) 746-7748
Telecopy: (214) 746-7777

If to Assignee, to:

Triad Park, LLC
3055 Triad Drive
Livermore, California 94550
Attn: [James Porter]
Telephone: (510) 449-0606
Telecopy: (510) 455-6917

With a copy to:

McCutchen, Doyle, Brown & Enersen, LLP
Three Embarcadero Center, 18th Floor
San Francisco, California 94111-4066
Attn: Edward S. Merrill
Telephone: (415) 393-2112
Telecopy: (415) 393-2286

8. SUCCESSORS AND ASSIGNS: Assignability. No rights of any party under
this Agreement are assignable without the written consent of all other parties,
which any other party may withhold in its absolute discretion.

9. THIRD PARTIES. Nothing in this Agreement shall be construed to give any
person other than the express parties to this Agreement any benefits, rights or
remedies.

<PAGE> 4

10. WAIVER/MODIFICATION/AMENDMENT. No amendment of, or waiver of any
obligation under, this Agreement will be enforceable unless set forth in a
writing signed by the party against which enforcement is sought.

The parties have executed this Assignment and Assumption Agreement as of
the Effective Date.

"ASSIGNOR"

TRIAD SYSTEMS CORPORATION

By: /s/ JAMES R. PORTER

-------------------------
Name: James R. Porter
Title: President

"ASSIGNEE"

TRIAD PARK, LLC

By: /s/ JAMES R. PORTER
-------------------------
Name: James R. Porter
Title:

<PAGE> 1
EXHIBIT 10.14

No. of Shares of Warrant No. 1
Common Stock:

10,000 shares

WARRANT
to Purchase Common Stock of

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

THIS CERTIFIES that, for value received, A. Laurence Jones or his
registered permitted assigns (the "Warrantholder") is entitled at any time
during the Exercise Period (as hereinafter defined) to subscribe for and
purchase from Cooperative Computing Holding Company, Inc., a Texas corporation
(the "Company"), in whole or in part, an aggregate of 10,000 shares of Common
Stock, par value $0.01 per share ("Common Stock"), of the Company (subject to
adjustment as provided herein) at a purchase price (the "Warrant Price") of
$10.00 per share of Common Stock (subject to adjustment as provided herein)
upon the terms and subject to the conditions set forth in this Warrant and in
the Stockholders Agreement (as hereinafter defined).

Section 1. Exercise Period. The "Exercise Period" of this Warrant is the
period from September 10, 1997 (the "Issuance Date") until 5:00 p.m., Dallas,
Texas time on September 10, 2004. This Warrant will terminate automatically
and immediately upon the expiration of the Exercise Period.

Section 2. Exercise of Warrant. Subject to compliance with Sections 5 and
6 hereof, this Warrant may be exercised by the Warrantholder, in whole or in
part (but not as to a fractional share of Common Stock), at any time during the
Exercise Period, by surrendering this Warrant (properly endorsed) to the
Company and by executing and delivering to the Company a Subscription Form in
the form attached hereto as Exhibit A, together with payment of the Warrant
Price, in cash or by certified or official bank check payable to the Company,
for each share of Common Stock being purchased hereunder. Upon compliance with
the foregoing by the Warrantholder, the Company will deliver to the
Warrantholder within 5 business days a certificate or certificates representing
the aggregate number of shares of Common Stock so purchased, registered in the
name of the Warrantholder. With respect to any exercise of this Warrant, the
Warrantholder will for all purposes be deemed to have become the holder of
record of the number of shares of Common Stock purchased hereunder as of the
close of business on the date the Subscription Form, this Warrant, and payment
of the Warrant Price is received by the Company from the Warrantholder,
irrespective of the date of delivery of the certificate or certificates
evidencing such shares to the Warrantholder, except that, if the date of such
receipt is a date on which the stock transfer books of the Company are closed,
such person will be deemed to have become the holder of such shares at the
close of business on the next succeeding date on which the stock transfer books
are open.

If this Warrant is exercised in part, the Company shall, at the time of
delivery of the certificate or certificates representing the shares of Common
Stock issuable upon such exercise (unless this Warrant shall have then
expired), issue and deliver to the Warrantholder a new Warrant in the name of
the Warrantholder evidencing the rights of the Warrantholder to acquire the
aggregate number of shares of Common Stock for which this Warrant shall not
have been exercised, and this Warrant shall be cancelled. The

<PAGE> 2

Company shall not issue fractional shares of Common Stock upon any exercise of
this Warrant and, in lieu of any fractional shares of Common Stock that
otherwise would be issuable upon any exercise of this Warrant, the Company
shall, at the time of exercise of this Warrant in accordance with Section 3
hereof, deliver to the Warrantholder an amount in cash equal to the then fair
market value (as determined in good faith by the Board of Directors of the
Company) of such fractional shares.

Section 3. Adjustments to Warrant Price and Shares.

(a) Adjustment to Warrant Price. If the Company shall at any time before
the exercise of this Warrant (1) declare a distribution or declare a dividend
on the Common Stock in shares of Common Stock, (2) subdivide the outstanding
shares of Common Stock into a greater number of shares, or (3) combine the
outstanding shares of Common Stock into a smaller number of shares, then the
Warrant Price in effect immediately before such action shall be adjusted to a
price obtained by multiplying such Warrant Price by a fraction, the numerator
of which shall be the number of shares of Common Stock outstanding immediately
before such action and the denominator of which shall be the number of shares
of Common Stock outstanding immediately after giving effect to such action.
Any adjustment pursuant to this Section 3(a) shall become effective immediately
after the effective date of such action.

(b) Adjustment to Shares.

(1) Upon each adjustment of the Warrant Price pursuant to Section 3(a)
hereof, the number of shares of Common Stock purchasable upon exercise of this
Warrant following the effectiveness of such adjustment shall be adjusted to the
number of shares of Common Stock obtained by (i) multiplying the number of
shares of Common Stock purchasable immediately before such adjustment upon the
exercise of the Warrant by the Warrant Price in effect immediately before such
adjustment and (ii) dividing the product so obtained by the Warrant Price in
effect immediately after such adjustment of the Warrant Price.

(2) Upon any capital reorganization of the Company or any
reclassification or recapitalization of the Common Stock (other than a change
in par value or as a result of a subdivision or combination), or if the Company
merges or consolidates into or with another corporation or entity or if another
corporation or entity merges into or with the Company (excluding a merger or
consolidation in which the Company is the surviving or continuing corporation
and which does not result in any reclassification, conversion, exchange, or
cancellation of the outstanding shares of Common Stock) (any such event being
referred to herein as a "Reorganization Transaction"), then, as a condition of
the consummation of the Reorganization Transaction, the Company or the other
entity surviving the Reorganization Transaction, as the case may be, shall make
lawful and adequate provision so that the holder of the Warrant, upon the
exercise thereof at any time on or after the consummation of the Reorganization
Transaction, shall be entitled to receive (without the payment of any
additional consideration) the kind and number of shares of Common Stock or
other securities or other property that the Warrantholder would have owned or
have been entitled to receive as a result of the Reorganization Transaction if
such Warrantholder had exercised this Warrant immediately before the effective
time of the Reorganization Transaction.

(3) In case the Company shall issue (without the payment of any
consideration) to all holders of outstanding Common Stock rights, options, or
warrants to subscribe for or purchase shares of Common stock or securities
convertible into or exchangeable for Common Stock, then the Company shall also
distribute such rights,

<PAGE> 3

options, warrants, or securities to the Warrantholder as if this Warrant had
been exercised immediately prior to the record date for such distribution.

(4) In case a record date is established for making of a distribution
to holders of shares of Common Stock of cash, evidences of indebtedness,
securities or other property or assets other than those referred to in Section
3(a)(1), (2), or (3) hereof and other than in connection with the total
liquidation, dissolution or winding-up of the Company, then the Company shall
distribute to, or set aside for distribution to, the Warrantholder the amount
of cash, evidences of indebtedness, securities or other property or assets to
which the Warrantholder would have been entitled as a holder of Common Stock if
such holder had exercised this Warrant immediately prior to the record date for
such distribution.

(5) Except as otherwise provided herein, if the Company shall
consolidate or merge with another corporation, and the Company is the surviving
corporation, then the Warrantholder shall have the right to receive upon
exercise of this Warrant such number of shares of Common Stock and other
property which the Warrantholder would have been entitled to receive upon or as
a result of such consolidation or merger had this Warrant been exercised
immediately prior to such event.

Section 4. Common Stock to be Issued; Reservation of Shares. The Company
shall at all times reserve and keep available out of the aggregate of its
authorized but unissued Common Stock, for the purpose of enabling it to satisfy
any obligation to issue shares of Common Stock upon exercise of this Warrant,
through the close of business on the Expiration Date, the number of shares of
Common Stock deliverable upon the exercise of this Warrant. The Company
represents and warrants that all shares of Common Stock issued upon exercise of
this Warrant will, upon issuance in accordance with the terms of this Warrant,
be duly and validly issued and fully paid and nonassessable.

Section 5. Requirements of Law. The Company shall not be required to
transfer this Warrant or to sell or issue shares of Common Stock under this
Warrant, or to transfer shares of Common Stock issued upon exercise of this
Warrant, if such transfer, sale, or issuance would constitute a violation by
the Warrantholder or the Company of any provisions of any law or regulation of
any governmental authority, including the Act. In particular, the
Warrantholder agrees that it shall not, and the Company shall not be required
to, issue shares of Common Stock under this Warrant or transfer this Warrant or
the shares of Common Stock issued upon the exercise hereof unless the Company
has received evidence satisfactory to it, which may include an opinion of
counsel reasonably satisfactory to the Company, to the effect that such
proposed issuance or transfer may be effected without registration under the
Act or state securities laws. The shares of Common Stock issued upon the
exercise hereof may have imprinted the following legend or any other legend
which the Company considers necessary or advisable to comply with the Act:

"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, NOR
PURSUANT TO THE SECURITIES OR "BLUE SKY" LAWS OF ANY STATE. SUCH
SHARES OF COMMON STOCK MAY NOT BE OFFERED, SOLD, TRANSFERRED,
PLEDGED, HYPOTHECATED OR OTHERWISE ASSIGNED, EXCEPT PURSUANT TO
(I) A REGISTRATION STATEMENT WITH RESPECT TO SUCH SHARES WHICH IS
EFFECTIVE UNDER SUCH ACT, (II) RULE 144 UNDER SUCH ACT, OR (III)
ANY OTHER EXEMPTION FROM REGISTRATION UNDER SUCH ACT."

<PAGE> 4

Section 6. Stockholders Agreement. Concurrently herewith, the
Warrantholder has become a party to that certain Stockholders Agreement, dated
as of February 27, 1997, among the Company, Hicks, Muse, Tate & Furst Equity
Fund III, L.P., HM3 Coinvestors, L.P., Glenn E. Staats and Preston W. Staats,
Jr. (the "Stockholders Agreement"), pursuant to which the Warrantholder has
agreed to be bound by and is entitled to certain agreements, obligations, and
rights in respect of this Warrant and the shares of Common Stock issuable
hereunder. A copy of the Stockholders Agreement has been delivered to the
Warrantholder concurrently herewith. The shares of Common Stock issued upon
the exercise hereof may have imprinted the following legend or any other legend
which the Company considers necessary or advisable with respect to the
enforcement of the terms and conditions of the Stockholders Agreement:

"THIS SECURITY IS SUBJECT TO RESTRICTIONS ON TRANSFER, VOTING AND
OTHER TERMS AND CONDITIONS SET FORTH IN THE STOCKHOLDERS
AGREEMENT, DATED AS OF FEBRUARY 27, 1997, A COPY OF WHICH MAY BE
OBTAINED FROM COOPERATIVE COMPUTING HOLDING COMPANY, INC. AT ITS
PRINCIPAL EXECUTIVE OFFICES."

Section 7. No Stockholder Rights or Liabilities. Except as otherwise
provided herein, this Warrant does not entitle the Warrantholder to any voting
rights or other rights as a stockholder of the Company. No provision hereof,
in the absence of affirmative action by the Warrantholder to purchase shares of
Common Stock pursuant to the exercise of this Warrant, and no mere enumeration
herein of the rights or privileges of the Warrantholder will give rise to any
liability of such Warrantholder for the Warrant Price or as a stockholder of
the Company, whether such liability is asserted by the Company or by creditors
of the Company.

Section 8. Lost, Stolen, Mutilated, or Destroyed Warrant. If this Warrant
is lost, stolen, mutilated, destroyed, the Company may, on such terms as to
indemnity or otherwise as it may in its discretion reasonably impose (which
will, in the case of a mutilated Warrant, include the surrender thereof), issue
a new Warrant of like denomination and tenor as the Warrant so lost, stolen,
mutilated, or destroyed. Any such new Warrant will constitute an original
contractual obligation of the Company, whether or not the allegedly lost,
stolen, mutilated, or destroyed Warrant is at any time enforceable by anyone.
The provisions of this Section 8 are exclusive and shall preclude (to the
extent lawful) all other rights or remedies with respect to the replacement of
mutilated, lost, stolen, or destroyed Warrants.

Section 9. Notices to Warrantholder. Upon any adjustment to the Warrant
Price or the number of shares of Common Stock purchasable upon exercise of this
Warrant pursuant to Section 3 hereof, the Company shall promptly cause to be
sent to the Warrantholder by first class mail, postage prepaid, a certificate
signed by the Chief Financial Officer of the Company setting forth the Warrant
Price and the number of shares of Common Stock purchasable upon exercise of
this Warrant after such adjustment and setting forth in reasonable detail the
method of calculation and the facts upon which such calculations are based.
Where appropriate, such certificate shall be given in advance of the effective
date of such adjustment, and included as a party of the notice required to be
mailed under the other provisions of this Section.

In the event that at any time after the date hereof there shall be a
voluntary or involuntary dissolution, liquidation or winding up of the Company,
then the Company shall give to the Warrantholder, at least 20 calendar days
prior to the date set for definitive action, by certified or registered mail,
postage prepaid, a written notice stating the date on

<PAGE> 5

which any such dissolution, liquidation, or winding up is expected to become
effective, and the date as of which it is expected that holders of record of
shares of Common Stock shall be entitled to exchange such shares for securities
or other property, if any, deliverable upon such dissolution, liquidation or
winding up. The failure to give the notice required by this Section or any
defect therein shall not affect the legality or validity of any dissolution,
liquidation or winding up or the vote upon any such action.

In case the Company shall propose (a) to pay any dividend payable in stock
of any class to the holders of its Common Stock or to make any other
distribution to the holders of its Common Stock, or (b) to effect any
reclassification of its Common Stock (other than a reclassification involving
only the subdivision or combination of outstanding shares of Common Stock), or
(c) to effect any capital reorganization, or (d) to effect any consolidation,
merger or sale, transfer or other disposition of all or substantially all its
property, assets or business, then in each such case, the Company shall give to
the Warrantholder, in accordance with Section 10 hereof, a notice of such
proposed action, which shall specify the date on which a record is to be taken
for the purposes of such stock dividend, distribution or rights, or the date on
which such reclassification, reorganization, consolidation, merger, sale,
transfer or disposition is to take place and the date of participation therein
by the holders of Common Stock, if any such date is to be fixed, and shall also
set forth such facts with respect thereto as shall be reasonably necessary to
indicate the effect of such action on the Common Stock, after giving effect to
any adjustment which will be required as a result of such action. Such notice
shall be so given in the case of any action covered by clause (a) above at
least 20 days prior to the record date for determining holders of the Common
Stock for purposes of such action and, in the case of any other such action, at
least 20 days prior to the date of the taking of such proposed action or the
date of participation therein by the holders of Common Stock, whichever shall
be the earlier.

The Company shall deliver to the Warrantholder, at the same time and in
the same manner as the stockholders of the Company, all communications sent
generally to the stockholders of the Company by the Company.

Section 10. Notices. Unless otherwise provided herein, all notices,
requests, and other communications required or permitted to be given or
delivered hereunder will be in writing, and will be deemed to have been duly
given or delivered if delivered or sent by certified or registered mail,
postage prepaid to the following addresses:

(a) If to the Warrantholder, at the address reflected in the Company's
Warrant register and transfer records, or such other address as the
Warrantholder may designate by written notice to the Company.

(b) If to the Company, at 6207 Bee Cave Road, Austin, Texas, 78746,
Attention: Matthew Hale, or at such other address as the Company may designate
by written notice to the Warrantholder.

If a notice, demand, or delivery is delivered or mailed in the manner
provided above within the time provided, it shall be deemed to be duly given,
whether or not the addressee receives it.

Section 11. Transfer, Division and Combination

(a) Transfer. Subject to Sections 5 and 6 hereof, any transfer of this
Warrant and all rights hereunder, in whole or in part, shall be registered on
the books of the Company to be maintained for such purpose, upon surrender of
this Warrant at the principal office of the Company, together with a written
assignment of this Warrant

<PAGE> 6

substantially in the form of Exhibit B hereto duly executed by the
Warrantholder or its agent or attorney and funds sufficient to pay any transfer
taxes payable upon the making of such transfer. Upon such surrender and, if
required, such payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees and in the denomination
specified in such instrument of assignment, and shall issue and deliver to the
assignor a new Warrant evidencing the portion of this Warrant not so assigned,
and this Warrant shall promptly be cancelled. A Warrant, if properly assigned,
may be exercised by a new warrantholder for the purchase of shares of Common
Stock without having a new Warrant issued.

(b) Division and Combination. Subject to Sections 5 and 6 hereof, this
Warrant may be divided or combined with other Warrants upon presentation hereof
at the aforesaid office of the Company, together with a written notice
specifying the names and denominations in which new Warrants are to be issued,
signed by the Warrantholder or its agents or attorney. Subject to compliance
with Sections 5 and 6 hereof, as to any transfer which may be involved in such
division or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.

(c) Expenses. The Company shall prepare, issue and deliver at its own
expense (other than transfer taxes) the new Warrant or Warrants under this
Section 11.

(d) Maintenance of Books. The Company agrees to maintain, at its
aforesaid office, books for the registration and the registration of transfer
of the Warrants.

Section 12. Compliance with Governmental Requirements. The Company will
take from time to time any corporate action that shall, in the opinion of its
counsel, be necessary in order that the Company may validly and legally issue
fully paid and nonassessable shares of Common Stock upon exercise of this
Warrant, including, but not limited to, making all necessary allocations of
surplus to the capital account of the Company in respect of the shares of
Common Stock that are issuable upon exercise of this Warrant.

Section 13. Payment of Taxes. The Company shall pay all taxes (other than
any income taxes) and other governmental charges that may be imposed under the
laws of the United States of America or any political subdivision or taxing
authority thereof or therein in respect of the issuance or delivery thereof or
of other securities deliverable upon exercise of this Warrant. The Company
shall not be required, however, to pay any tax or other charge imposed in
connection with any transfer involved in the issue of any certificate or
certificates for shares of Common Stock or other securities issuable upon
exercise of this Warrant, and in the case of such transfer or payment, the
Company shall not be required to issue or deliver any stock certificate or a
new Warrant until such tax or charge has been paid or it has been established
to the Company's satisfaction that no such tax or other charge is due.

Section 14. Headings. The headings of the Sections of this Warrant are
inserted for convenience only and shall not be deemed to constitute a part of
this Agreement or to affect the construction thereof.

Section 15. Governing Law. This Warrant will be governed by and construed
and enforced in accordance with the laws of the State of Texas (without regard
to the principles of conflicts of law embodied therein) applicable to contracts
executed and performable in such state.

<PAGE> 7

Section 16. Severability. If any provision of this Warrant is held to be
illegal, invalid, or unenforceable under present or future laws, such provision
shall be fully severable, this Warrant shall be construed and enforced as if
such illegal, invalid, or unenforceable provision had never comprised a part of
this Warrant, and the remaining provisions of this Warrant shall remain in full
force and effect and shall not be affected by the illegal, invalid, or
unenforceable provision or by its severance of this Warrant.

Section 17. Binding Effect. This Warrant will be binding upon and inure
to the benefit of the parties hereto and their respective heirs, beneficiaries,
personal representatives, successors, and permitted assigns.

Section 18. Gender, etc. Unless the context of this Warrant otherwise
requires, words of any gender will be deemed to include each other gender and
words using the singular or plural number will also include the plural or
singular number, respectively.

IN WITNESS WHEREOF, the Company has executed this Warrant on and as of
the 10th day of September, 1997.

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

By: /s/ MATTHEW HALE
----------------------------
Matthew Hale
Chief Financial Officer

<PAGE> 1

EXHIBIT 10.15

MONITORING AND OVERSIGHT AGREEMENT

THIS MONITORING AND OVERSIGHT AGREEMENT (this "Agreement") is made and
entered into effective as of February 27, 1997, among Cooperative Computing
Holding Company, Inc. (formerly named Cooperative Computing, Inc.), a Texas
corporation (together with its successors, "Holdings"), Cooperative Computing,
Inc. (formerly named Triad Systems Corporation), a Delaware corporation
(together with its successors, the "Company"), and Hicks, Muse & Co. Partners,
L.P., a Texas limited partnership (together with its successors, "HMCo").

1. Retention. Holdings and the Company hereby acknowledge that
they have retained HMCo, and HMCo acknowledges that, subject to reasonable
advance notice in order to accommodate scheduling, HMCo will provide financial
oversight and monitoring services to Holdings and the Company as requested by
the board of directors of Holdings during the term of this Agreement.

2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the
later to occur of (a) the date on which Hicks, Muse, Tate & Furst Equity Fund
III, L.P. ("HMTF") and its affiliates no longer own beneficially, directly or
indirectly, at least 10% of the issued and outstanding shares of common stock
of Holdings and (b) the date on which HMTF and its affiliates no longer own
beneficially, directly or indirectly, shares of common stock or other
securities of Holdings or Holding's successors with an aggregate value at least
$1,000,000.

3. Compensation.

(a) As compensation for HMCo's services to Holdings and
the Company under this Agreement, Holdings and the Company hereby irrevocably
agree to pay to HMCo, and Holdings agrees to cause the Company to pay, an
annual fee (the "Monitoring Fee") of $350,000 (the "Base Fee"), subject to
adjustment pursuant to paragraphs (b) and (c) below and prorated on a daily
basis for any partial calendar year during the term of this Agreement. The
Monitoring Fee shall be payable in equal quarterly installments on each January
1, April 1, July 1 and October 1 during the term of this Agreement (each a
"Payment Date"), beginning with the first Payment Date following the date
hereof. All payments shall be made by wire transfer of immediately available
funds to the account described on Exhibit A hereto (or such other account as
HMCo may hereafter designate in writing).
<PAGE> 2
(b) On January 1 of each calendar year during the term of
this Agreement, the Monitoring Fee shall be adjusted to an amount equal to (i)
the sum of (A) the Monitoring Fee in effect at the beginning of the immediately
preceding calendar year plus (B) the aggregate amount of all Acquisition
Increments (as defined below) with respect to such immediately preceding
calendar year, multiplied by (ii) the percentage increase in the Consumer Price
Index during the immediately preceding calendar year; provided, however, that
in no event shall the annual Monitoring Fee be less than the Base Fee.

(c) On each occasion that the Company or any of its
subsidiaries shall acquire another entity or business (a "Target") during the
term of this Agreement, the Monitoring Fee for the remainder of the calendar
year in which such acquisition occurs shall be increased by an amount equal to
(i) (A) the consolidated annual net sales of the Target and its subsidiaries
for the trailing twelve-month period multiplied by (B) 0.2% (such multiple
being an "Acquisition Increment"), multiplied by (ii) the quotient obtained by
dividing (A) the number of days remaining in such calendar year by (B) 365 or
366, as applicable.

(d) All past due payments in respect of the Monitoring
Fee shall bear interest at the lesser of the highest rate of interest which may
be charged under applicable law or the prime commercial lending rate per annum
of The Chase Manhattan Bank or its successors (which rate is a reference rate
and is not necessarily its lowest or best rate of interest actually charged to
any customer) (the "Prime Rate") as in effect from time to time, plus five
percent (5%), from the due date of such payment to and including the date on
which payment is made to HMCo in full, including such interest accrued thereon.

4. Reimbursement of Expenses. In addition to the compensation to
be paid pursuant to Section 3 hereof, Holdings and the Company agree to pay or
reimburse HMCo for all "Reimbursable Expenses," which shall consist of (i) all
reasonable disbursement and out-of-pocket expenses (including without
limitation, costs of travel, postage, deliveries, communications, etc.)
incurred by HMCo or its affiliates for the account of Holdings or the Company
or in connection with the performance by HMCo of the services contemplated by
Section 1 hereof and (ii) Holdings' Pro Rata Share of Allocable Expenditures as
defined in Exhibit B hereto. Promptly (but not more than 10 days) after
request by or notice from HMCo, Holdings and the Company shall, and Holdings
shall cause the Company to, pay HMCo, by wire transfer of immediately available
funds to the account described on Exhibit A hereto (or such other account as

2
<PAGE> 3
HMCo may hereafter designate in writing), the Reimbursable Expenses for which
HMCo has provided Holdings and the Company invoices or reasonably detailed
descriptions. All past due payments in respect of the Reimbursable Expenses
shall bear interest at the lesser of the highest rate of interest which may be
charged under applicable law or the Prime Rate plus 5% from the Payment Date to
and including the date on which such Reimbursable Expenses plus accrued
interest thereon are fully paid to HMCo.

5. Indemnification. Holdings and the Company jointly and
severally shall indemnify and hold harmless each of HMCo, its affiliates, and
their respective directors, officers, controlling persons (within the meaning
of Section 15 of the Securities Act of 1933 or Section 20(a) of the Securities
Exchange Act of 1934), if any, agents and employees (HMCo, its affiliates, and
such other specified persons being collectively referred to as "Indemnified
Persons," and individually as an "Indemnified Person") from and against any and
all claims, liabilities, losses, damages and expenses incurred by any
Indemnified Person (including those arising out of an Indemnified Person's
negligence and reasonable fees and disbursements of the respective Indemnified
Person's counsel) which (A) are related to or arise out of (i) actions taken or
omitted to be taken (including any untrue statements made or any statements
omitted to be made) by Holdings and/or the Company or (ii) actions taken or
omitted to be taken by an Indemnified Person with Holdings' or the Company's
consent or in conformity with Holdings' or the Company's instructions or
Holdings' or the Company's actions or omissions or (B) are otherwise related to
or arise out of HMCo's engagement, and will reimburse each Indemnified Person
for all costs and expenses, including reasonable fees and disbursements of any
Indemnified Person's counsel, as they are incurred, in connection with
investigating, preparing for, defending, or appealing any action, formal or
informal claim, investigation, inquiry or other proceeding, whether or not in
connection with pending or threatened litigation, caused by or arising out of
or in connection with HMCo's acting pursuant to HMCo's engagement, whether or
not any Indemnified Person is named as a party thereto and whether or not any
liability results therefrom. Neither Holdings nor the Company will, however,
be responsible for any claims, liabilities, losses, damages or expenses
pursuant to clause (B) of the preceding sentence that have resulted primarily
from HMCo's bad faith, gross negligence or willful misconduct. Holdings and
the Company also agree that neither HMCo nor any other Indemnified Person shall
have any liability to Holdings or the Company for or in connection with such
engagement except for any such liability for claims, liabilities, losses,
damages or

3
<PAGE> 4
expenses incurred by Holdings and/or the Company that have resulted primarily
from HMCo's bad faith, gross negligence or willful misconduct. Holdings and
the Company further agree that neither of them will, without the prior written
consent of HMCo, settle or compromise or consent to the entry of any judgment
in any pending or threatened claim, action, suit or proceeding in respect of
which indemnification may be sought hereunder (whether or not any Indemnified
Person is an actual or potential party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of HMCo and each other Indemnified Person hereunder from
all liability arising out of such claim, action, suit or proceeding. HOLDINGS
AND THE COMPANY HEREBY ACKNOWLEDGE THAT THE FOREGOING INDEMNITY SHALL BE
APPLICABLE TO ANY CLAIMS, LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE
RESULTED FROM OR ARE ALLEGED TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE
SOLE, JOINT OR CONCURRENT ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED
PERSON.

The foregoing right to indemnity shall be in addition to any rights
that HMCo and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. Holdings and the Company hereby consent to
personal jurisdiction and to service and venue in any court in which any claim
which is subject to this Agreement is brought against HMCo or any other
Indemnified Person.

It is understood that, in connection with HMCo engagement, HMCo may
also be engaged to act for Holdings and/or the Company in one or more
additional capacities, and that the terms of this engagement or any such
additional engagement(s) may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
the first paragraph hereof as well as to any such additional engagement(s)
(whether written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and effect following
the completion or termination of said engagement or such additional
engagements.

Holdings and the Company further understand and agree that if HMCo is
asked to furnish Holdings and/or the Company a financial opinion letter or act
for Holdings and/or the Company in any other formal capacity, such further
action may be subject to a separate agreement containing provisions and terms
to be mutually agreed upon.

4
<PAGE> 5
6. Confidential Information. In connection with the performance
of the services hereunder, HMCo agrees not to divulge any confidential
information, secret processes or trade secrets disclosed by Holdings or the
Company or any of their respective subsidiaries to it solely in its capacity as
a financial advisor, unless Holdings and the Company consent to the divulging
thereof or such information, secret processes or trade secrets are publicly
available or otherwise available to HMCo without restriction or breach of any
confidentiality agreement or unless required by any governmental authority or
in response to any valid legal process.

7. Governing Law. This Agreement shall be construed, interpreted
and enforced in accordance with the laws of the State of Texas, excluding any
choice-of-law provisions thereof.

8. Assignment. This Agreement and all provisions contained
herein shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns; provided, however, neither
this Agreement nor any of the rights, interests or obligations hereunder shall
be assigned (other than with respect to the rights and obligations of HMCo,
which may be assigned to any one or more of its principals or affiliates) by
any of the parties without the prior written consent of the other parties.

9. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument, and the signature of any
party to any counterpart shall be deemed a signature to, and may be appended
to, any other counterpart.

10. Other Understandings. All discussions, understanding and
agreements heretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto. All calculations of
the Monitoring Fee and Reimbursable Expenses shall be made by HMCo and, in the
absence of mathematical error, shall be final and conclusive.

11. Notice of Indemnity Provisions. THIS AGREEMENT CONTAINS
INDEMNIFICATION PROVISIONS IN PARAGRAPH 5, NOTICE OF WHICH IS HEREBY GIVEN.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]

5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date and year first above written.

HICKS, MUSE & CO. PARTNERS, L.P.

By: HM PARTNERS INC.,
its General Partner

By: /s/ LAWRENCE D. STUART, JR.
---------------------------------
Name: Lawrence D. Stuart, Jr.
Title:Managing Director

COOPERATIVE COMPUTING, INC.

By: /s/ GLENN E. STAATS
-------------------------------------
Name: Glenn E. Staats
Title:President

COOPERATIVE COMPUTING HOLDING
COMPANY, INC.

By: /s/ GLENN E. STAATS
-------------------------------------
Name: Glenn E. Staats
Title:President

[SIGNATURE PAGE FOR MONITORING AND OVERSIGHT AGREEMENT]

S-1

<PAGE> 1
EXHIBIT 10.16

FINANCIAL ADVISORY AGREEMENT

THIS FINANCIAL ADVISORY AGREEMENT (this "Agreement") is made and
entered into effective as of February 27, 1997 among Cooperative Computing
Holding Company, Inc. (formerly named Cooperative Computing, Inc.), a Texas
corporation (together with its successors, "Holdings"), Cooperative Computing,
Inc. (formerly named Triad Systems Corporation), a Delaware corporation
(together with its successors, the "Company"), and Hicks, Muse & Co. Partners,
L.P., a Texas limited partnership (together with its successors, "HMCo").

WHEREAS, Hicks, Muse, Tate & Furst Equity Fund III, L.P. ("HMTF"), an
affiliate of HMCo., is simultaneously with the execution of this Agreement,
purchasing 9,600,000 shares of the common stock, $.01 par value per share
("Common Stock"), of Holdings pursuant to a Securities Purchase Agreement (the
"Securities Purchase Agreement") dated October 16, 1996, among HMTF, Holdings,
Company and the other parties thereto (the "Equity Investment"), as a result of
which HMTF will own 54.55% of the outstanding shares of common stock of
Holdings;

WHEREAS, pursuant to the Securities Purchase Agreement, all of the
outstanding capital stock of CCI Acquisition Corp., a Delaware Corporation
("Acquisition Corp"), has been contributed to Holdings and Acquisition Corp is
now a wholly-owned subsidiary of Holdings;

WHEREAS, pursuant to an Agreement and Plan of Merger (the "Merger
Agreement"), dated as of October 17, 1996, among Holdings, the Company and
Acquisition Corp, Acquisition Corp has acquired a majority of the shares of
common stock of the Company pursuant to a tender offer first commenced on
October 23, 1996 (the "Tender Offer");

WHEREAS, pursuant to the Merger Agreement, Acquisition Corp is being
merged (the "Merger") with and into the Company, with the Company being the
surviving corporation and thereby becoming a wholly owned-subsidiary of
Holdings;

WHEREAS, Holdings and the Company have requested that HMCo. render,
and HMCo. has rendered, financial advisory services to them in connection with
the negotiation of the Equity Investment, the Tender Offer, the Merger and the
debt and equity financing transactions related thereto (collectively with the
Equity Investment, the Tender Offer and the Merger, the "Transaction"); and
<PAGE> 2
WHEREAS, Holdings and the Company have requested that HMCo. render
financial advisory, investment banking, and other similar services to them with
respect to future proposals for a tender offer, acquisition, sale, merger,
exchange offer, recapitalization, restructuring, or other similar transaction
directly or indirectly involving Holding, the Company or any of their
respective subsidiaries, and any other person or entity, excluding, however,
any acquisition which does not involve the use of (or any waiver or consent
under) any debt or equity financing and in which neither HMCo nor any other
person or entity provides financial advisory investment banking or similar
services (collectively, "Add-on Transactions");

NOW, THEREFORE, in consideration of the services rendered and to be
rendered by HMCo to Holdings and the Company, and to evidence the obligations
of Holdings and the Company to HMCo and the mutual covenants herein contained,
Holdings and the Company hereby jointly and severally agree with HMCo as
follows:

1. Retention.

(a) Holdings and the Company hereby acknowledge that they
have retained HMCo, and HMCo acknowledges that it has acted, as financial
advisor to Holdings and the Company in connection with the Transaction.

(b) Each of Holdings and the Company acknowledges that it
has retained HMCo as its exclusive financial advisor in connection with any
Add-on Transactions that may be consummated during the term of this Agreement,
and that Holdings and the Company will not retain any other person or entity to
provide such services in connection with any such Add-on Transaction without
the prior written consent of HMCo. HMCo agrees that it shall provide such
financial advisory, investment banking and other similar services in connection
with any such Add-on Transaction as may be requested from time to time by the
board of directors of Holdings.

2. Term. The term of this Agreement shall continue until the
earlier to occur of (i) the tenth anniversary of the date hereof or (ii) the
later to occur of (a) the date on which HMTF and its affiliates no longer own
beneficially, directly or indirectly, at least 10% of the issued and
outstanding shares of common stock of Holdings and (b) the date on which HMTF
and its affiliates no longer own beneficially, directly or indirectly, shares
of common stock or other securities of Holdings or Holding's successors with an
aggregate value of at least $1,000,000.

2
<PAGE> 3
3. Compensation.

(a) As compensation for HMCo's services as financial
advisor to Holdings and the Company in connection with the Transaction, the
Company hereby irrevocably agrees to pay, and Holdings hereby agrees to cause
the Company to pay, to HMCo a cash fee equal to 1.5% of the combined enterprise
value (which shall include all equity, assumed debt, if not otherwise
refinanced, and all additional debt incurred or refinanced in connection with
the Equity Investment, the Tender Offer or the Merger) of the Company to be
paid at the closing of the Tender Offer, which will occur substantially
simultaneously with the execution of this Agreement. The parties hereto agree
that the compensation due pursuant to this Section 3(a) shall be allocated
among the segments of the financing for the Transaction in proportion to the
dollar amount of each such segment.

(b) In connection with any Add-on Transaction consummated
during the term of this Agreement, Holdings and the Company shall, and Holdings
shall cause the Company to, pay to HMCo, at the closing of any such Add-on
Transaction, a cash fee in the amount of 1.5% of the Transaction Value of such
Add-on Transaction. As used herein, the term "Transaction Value" means the
total value of the Add-on Transaction, including, without limitation, the
aggregate amount of the funds required to complete the Add-on Transaction
including the amount of any indebtedness, preferred stock or similar items
assumed (or remaining outstanding).

4. Reimbursement of Expenses. In addition to the compensation to
be paid pursuant to Section 3 hereof, Holdings and the Company agree to, and
Holdings shall cause the Company to, reimburse HMCo, promptly following demand
therefor, together with invoices or reasonably detailed descriptions thereof,
for all reasonable disbursements and out- of-pocket expenses (including fees
and disbursements of counsel) incurred by HMCo (i) as financial advisor to
Holdings and the Company in connection with the Transaction or (ii) in
connection with the performance by it of the services contemplated by Section
1(b) hereof.

5. Indemnification. Holdings and the Company jointly and
severally shall indemnify and hold harmless each of HMCo, its affiliates and
their respective directors, officers, controlling persons (within the meaning
of Section 15 of the Securities Act of 1933 or Section 20(a) of the Securities
Exchange Act of 1934), if any, agents and employees (HMCo, its affiliates, and
such other specified persons being collectively referred to as "Indemnified
Persons" and individually as an "Indemnified Person") from and

3
<PAGE> 4
against any and all claims, liabilities, losses, damages and expenses incurred
by an Indemnified Person (including those arising out of an Indemnified
Person's negligence and reasonable fees and disbursements of the respective
Indemnified Person's counsel) which (A) are related to or arise out of (i)
actions taken or omitted to be taken (including any untrue statements made or
any statements omitted to be made) by Holdings and/or the Company or (ii)
actions taken or omitted to be taken by an Indemnified Person with Holdings' or
the Company's consent or in conformity with Holdings' or the Company's
instructions or Holdings' or the Company's actions or omissions or (B) are
otherwise related to or arise out of HMCo's engagement, and will reimburse each
Indemnified Person for all costs and expenses, including reasonable fees and
disbursements of any Indemnified Person's counsel, as they are incurred, in
connection with investigating, preparing for, defending, or appealing any
action, formal or informal claim, investigation, inquiry or other proceeding,
whether or not in connection with pending or threatened litigation, caused by
or arising out of or in connection with HMCo's acting pursuant to the
engagement, whether or not any Indemnified Person is named as a party thereto
and whether or not any liability results therefrom. Neither Holdings nor the
Company will, however, be responsible for any claims, liabilities, losses,
damages or expenses pursuant to clause (B) of the preceding sentence that have
resulted primarily from HMCo's bad faith, gross negligence or willful
misconduct. Holdings and the Company also agree that neither HMCo nor any
other Indemnified Person shall have any liability to Holdings or the Company
for or in connection with such engagement except for any such liability for
claims, liabilities, losses, damages or expenses incurred by Holdings and/or
the Company that have resulted primarily from HMCos' bad faith, gross
negligence or willful misconduct. Holdings and the Company further agree that
neither of them will, without the prior written consent of HMCo, settle or
compromise or consent to the entry of any judgment in any pending or threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not any Indemnified Person is an actual or
potential party to such claim, action, suit or proceeding) unless such
settlement, compromise or consent includes an unconditional release of HMCo and
each other Indemnified Person hereunder from all liability arising out of such
claim, action, suit or proceeding. HOLDINGS AND THE COMPANY EACH HEREBY
ACKNOWLEDGE THAT THE FOREGOING INDEMNITY SHALL BE APPLICABLE TO ALL CLAIMS,
LIABILITIES, LOSSES, DAMAGES OR EXPENSES THAT HAVE RESULTED FROM OR ARE ALLEGED
TO HAVE RESULTED FROM THE ACTIVE OR PASSIVE OR THE SOLE, JOINT OR CONCURRENT
ORDINARY NEGLIGENCE OF HMCO OR ANY OTHER INDEMNIFIED PERSON.

4
<PAGE> 5
The foregoing right to indemnity shall be in addition to any rights
that HMCo and/or any other Indemnified Person may have at common law or
otherwise and shall remain in full force and effect following the completion or
any termination of the engagement. Holdings and the Company hereby consent to
personal jurisdiction and to service and venue in any court in which any claim
which is subject to this Agreement is brought against HMCo or any other
Indemnified Person.

It is understood that, in connection with HMCo's engagement, HMCo may
also be engaged to act for Holdings and/or the Company in one or more
additional capacities, and that the terms of this engagement or any such
additional engagements may be embodied in one or more separate written
agreements. This indemnification shall apply to the engagement specified in
the first paragraph hereof as well as to any such additional engagement(s)
(whether written or oral) and any modification of said engagement or such
additional engagement(s) and shall remain in full force and effect following
the completion or termination of said engagement or such additional
engagements.

6. Confidential Information. In connection with the performance
of the services hereunder, HMCo agrees not to divulge any confidential
information, secret processes or trade secrets disclosed by Holdings or the
Company or any of their respective subsidiaries to it solely in its capacity as
a financial advisor, unless Holdings and the Company consent to the divulging
thereof or such information, secret processes or trade secrets are publicly
available or otherwise available to HMCo without restriction or breach of any
confidentiality agreement or unless required by any governmental authority or
in response to any valid legal process.

7. Governing Law. This Agreement shall be construed,
interpreted, and enforced in accordance with the laws of the State of Texas,
excluding any choice-of-law provisions thereof.

5
<PAGE> 6
rights, interests or obligations hereunder shall be assigned (other than with
respect to the rights and obligations of HMCo, which may be assigned to any one
or more of its principals or affiliates) by any of the parties without the
prior written consent of the other parties.

10. Other Understandings. All discussions, understandings and
agreements heretofore made between any of the parties hereto with respect to
the subject matter hereof are merged in this Agreement, which alone fully and
completely expresses the Agreement of the parties hereto.

11. Notice of Indemnity Provisions. THIS AGREEMENT CONTAINS
INDEMNIFICATION PROVISIONS IN PARAGRAPH 5, NOTICE OF WHICH IS HEREBY GIVEN.

[THE REMAINDER OF THIS PAGE IS INTENTIONALLY BLANK.]

6
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.

HICKS, MUSE & CO. PARTNERS, L.P.

By: HM PARTNERS INC.,
its General Partner

By: /s/ LAWRENCE D. STUART, JR.
-----------------------------
Name: Lawrence D. Stuart, Jr.
Title: Managing Director

COOPERATIVE COMPUTING, INC.

By: /s/ GLENN E. STAATS
-------------------------------------
Name: Glenn E. Staats
Title: President

COOPERATIVE COMPUTING HOLDING COMPANY, INC.

By: /s/ GLENN E. STAATS
-------------------------------------
Name: Glenn E. Staats
Title: President

[SIGNATURE PAGE TO FINANCIAL ADVISORY AGREEMENT]

S-1

<PAGE> 1
EXHIBIT 10.17

---------------------------------------------

LOAN AND SECURITY AGREEMENT

dated as of September 25, 1997

between

TRIAD SYSTEMS FINANCIAL CORPORATION

as Borrower

and

MELLON US LEASING, A DIVISION OF
MELLON LEASING CORPORATION

as Lender

---------------------------------------------

$15,000,000.00

DISCOUNT LOAN FACILITY

----------------------------------

Loans Secured by Leases,
Lease Receivables and
Leased Equipment

---------------------------

<PAGE> 2
TABLE OF CONTENTS

1. DEFINITIONS........................................................ 1

1.1 "Anniversary Date".......................................... 1
1.2 "Business Day".............................................. 1
1.3 "Closing Date".............................................. 1
1.4 "Collateral"................................................ 1
1.5 "Discount Facility"......................................... 1
1.6 "Discount Facility Loan".................................... 2
1.7 "Discount Facility Rate".................................... 2
1.8 "Discount Facility Loan Value".............................. 2
1.9 "Effective Date"............................................ 2
1.10 "Eligible Equipment"........................................ 2
1.11 "Eligible Lease"............................................ 2
1.12 "Equipment"................................................. 3
1.13 "Event of Default".......................................... 3
1.14 "Excess Proceeds"........................................... 3
1.15 "Guaranty".................................................. 3
1.16 "Invoice Price"............................................. 3
1.17 "Late Payment Rate"......................................... 3
1.18 "Lease"..................................................... 3
1.19 "Lease Proceeds"............................................ 4
1.20 "Lessee".................................................... 4
1.21 "Loan"...................................................... 4
1.22 "Loan Repayment Amount"..................................... 4
1.23 "Loan Repayment Date"....................................... 4
1.24 "Obligations"............................................... 4
1.25 "Operating Agreement"....................................... 4
1.26 "Operative Documents"....................................... 4
1.27 "Prepayment Fee"............................................ 4
1.28 "Proceeds".................................................. 4
1.29 "Remarketing Expenses"...................................... 5
1.30 "Remarketing Proceeds"...................................... 5
1.31 "Rent"...................................................... 5
1.32 "Security Supplement"....................................... 5
1.33 "Standard Cost"............................................. 5
1.34 "Tangible Net Worth"........................................ 5
1.35 "CCI"....................................................... 5

i
<PAGE> 3

2. THE DISCOUNT FACILITY . . . . . . . . . . . . . . . . . . . . . . . . . 6

2.1 Total Facility . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.2 Interest Calculation . . . . . . . . . . . . . . . . . . . . . . 6
2.3 Minimum Loan . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3. THE LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6

3.1 Request for Loans . . . . . . . . . . . . . . . . . . . . . . . . 6
3.2 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
3.3 Disbursement of Discount Facility Loan . . . . . . . . . . . . . 7
3.4 Loan Payments and Amortizations . . . . . . . . . . . . . . . . . 7
3.5 Upgrades and Additions . . . . . . . . . . . . . . . . . . . . . 8
3.6 Optional Prepayment; Lender Refusal to Finance Upgrades
or Additions . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
3.7 Mandatory Prepayment Termination of Lease . . . . . . . . . . . . 8
3.8 Mandatory Prepayment Casualty . . . . . . . . . . . . . . . . . . 9
3.9 Mandatory Prepayment Rent . . . . . . . . . . . . . . . . . . . . 9
3.10 No Other Prepayments Permitted . . . . . . . . . . . . . . . . . 9
3.11 Limited Recourse . . . . . . . . . . . . . . . . . . . . . . . . 9
3.12 Full Recourse . . . . . . . . . . . . . . . . . . . . . . . . . . 9

4. CONDITIONS PRECEDENT TO THE INITIAL LOAN . . . . . . . . . . . . . . . . 10

4.1 Evidence of Authority of TSFC . . . . . . . . . . . . . . . . . . . 10
4.2 Evidence of Authority of CCI . . . . . . . . . . . . . . . . . . . 10
4.3 Operating Agreement . . . . . . . . . . . . . . . . . . . . . . . . 10
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 10
4.5 TSFC Officer's Certificate . . . . . . . . . . . . . . . . . . . . 10
4.6 CCI Officer's Certificate . . . . . . . . . . . . . . . . . . . . . 11
4.7 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
4.8 Agreement of Admission of Additional Secured Parties . . . . . . . 11

5. CONDITIONS PRECEDENT TO ALL LOANS . . . . . . . . . . . . . . . . . . . 12

5.1 Notice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
5.2 Operating Agreement . . . . . . . . . . . . . . . . . . . . . . . . 12
5.3 Receipt of Certain Documents . . . . . . . . . . . . . . . . . . . 12
(a) Lease . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(b) Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
(c) Financing Statement Filed Against Lessees . . . . . . . . . . 12
(d) Financing Statements to be Filed Against TSFC . . . . . . . . 13
(e) Supplement . . . . . . . . . . . . . . . . . . . . . . . . . . 13

ii
<PAGE> 4
(f) Notice of Assignment............................. 13
(g) Acceptance Supplement............................ 13
(h) Other Documents.................................. 13

6. SECURITY AGREEMENT............................................... 13

6.1 Granting Clause........................................... 13
6.2 Appointment of Lender..................................... 14
6.3 Further Assurances........................................ 15
6.4 No Obligations Assumed by Lender.......................... 15
6.5 Release of Security Interest.............................. 15
6.6 Final Release by Lender................................... 16

7. ADMINISTRATION................................................... 16

7.1 Authorization to Collect Rent............................. 16
7.2 Collections............................................... 16
7.3 Remittance................................................ 16
7.4 Lease Receivables Statements.............................. 16
7.5 First Loss Provision Statements........................... 16
7.6 Account Status Statements................................. 17

8. INDEMNITIES, INSURANCE, FIRST LOSS............................... 17

8.1 Indemnities............................................... 17
8.2 Indemnity Payment......................................... 18
8.3 Insurance................................................. 19
8.4 First Loss Provision...................................... 19
8.5 Excess Proceeds........................................... 19

9. REPRESENTATIONS, WARRANTIES AND COVENANTS........................ 20

9.1 Due Organization.......................................... 20
9.2 Authority................................................. 20
9.3 Principal Place of Business............................... 20
9.4 Binding Obligations....................................... 20
9.5 Approvals and Consents.................................... 20
9.6 Compliance with Laws...................................... 20
9.7 Clear Ownership........................................... 21
9.8 Filings................................................... 21
9.9 Actions................................................... 21
9.10 Payment of Taxes.......................................... 22
9.11 Notices................................................... 22
9.12 Further Assurances; Enforcement of Leases................. 22
<PAGE> 5
9.13 Validity and Enforceability of Leases and Guaranties......... 22
9.14 Leases Duly Entered Into..................................... 22
9.15 Equipment Description........................................ 22
9.16 Leases Comply with Laws...................................... 22
9.17 No Impairment of Value or Rights............................. 23
9.18 No Lessor Liens.............................................. 23
9.19 Notifications................................................ 23
9.20 Books and Records Financial and Other Information............ 23
9.21 Audit........................................................ 24
9.22 Charges and Taxes............................................ 24
9.23 Financial Covenants.......................................... 25
9.24 Maximum Requests for Loans Per Month......................... 25

10. REPOSSESSION AND REMARKETING........................................ 25

10.1 Request to Repossess; Remarketing............................ 25
10.2 Remarketing Expenses......................................... 26
10.3 Assignment................................................... 26
10.4 No Guaranty.................................................. 26

11. EVENTS OF DEFAULT, REMEDIES......................................... 26

11.1 Events of Default............................................ 26
11.2 Remedies..................................................... 28

12. MISCELLANEOUS....................................................... 30

12.1 General...................................................... 30
12.2 Notices...................................................... 30
12.3 Waivers...................................................... 31
12.4 Costs and Expenses........................................... 31
12.5 Successors; Assigns.......................................... 31
12.6 Entire Agreement............................................. 31
12.7 Headings; Titles............................................. 32

iv
<PAGE> 6
LOAN AND SECURITY AGREEMENT entered into as of September 25,
1997 between TRIAD SYSTEMS FINANCIAL CORPORATION, a California corporation
("TSFC"), as borrower, and MELLON US LEASING, A DIVISION OF MELLON LEASING
CORPORATION, a Pennsylvania Corporation ("Lender"), as Lender.

I N T R O D U C T I O N

A. TSFC is a wholly owned subsidiary of COOPERATIVE COMPUTING,
INC. ("CCI"), a Delaware corporation. CCI manufactures and TSFC purchases
from CCI and leases to its customers computer systems and software, all in
accordance with an Operating and Support Agreement dated September 25, 1997
among CCI, TSFC and Lender.

B. Lender engages in the business of equipment lease financing.

C. Lender is willing to lend to TSFC amounts equal to the
discounted value of payments under certain of its customer leases of computer
systems and software, upgrades and add-ons or other equipment, and TSFC is
willing to grant a security interest in the lease payments, the leased computer
systems and software or other equipment and the interest of TSFC in the
leases, all subject to the terms and conditions of this Agreement.

NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows;

1. DEFINITIONS

When used in capitalized form herein, the following terms shall have
the meanings indicated:

1.1 "Anniversary Date" - September 25, 1998.

1.2 "Business Day" - any day other than a Saturday,
Sunday or a public or bank holiday or the equivalent for banks generally under
the laws of the State of California.

1.3 "Closing Date" - with respect to any Loan - the date
on which Lender makes a Loan to TSFC under this Agreement.

1.4 "Collateral" - as defined in Section 6.1.

1.5 "Discount Facility" - the credit facility provided by
Lender to TSFC pursuant to Section 2.

1
<PAGE> 7
1.6 "Discount Facility Loan" - a Loan made by Lender to
TSFC under the Discount Facility.

1.7 "Discount Facility Rate" - with respect to a Discount
Facility Loan - will be that rates determined by mutual agreement of TSFC and
Lender with respect to such Loan.

1.8 "Discount Facility Loan Value" - of a Lease at the
time a Discount Facility Loan is made - either one hundred percent (100%) or
ninety-eight percent (98%) of each payment of Rent remaining unpaid under the
Lease at that time (but excluding any past due Rent), discounted from the date
each such payment is due to such time at the Discount Facility Rate with
respect to such Discount Facility Loan.

1.9 "Effective Date" - the date of this Agreement.

1.10 "Eligible Equipment" - new or remanufactured
Equipment, including but not limited to, computer systems and related
components, software and accessories manufactured or sold by CCI or another
manufacturer or seller, having a Discount Facility Loan Value of not less than
One Thousand Dollars ($1,000.00) subject to an Eligible Lease and not subject
to a security interest or other encumbrance in favor of any corporation, firm
or other person other than a security interest in favor of Lender arising under
this Agreement or a Security Supplement.

1.11 "Eligible Lease" - a full payout net lease in the
form of Exhibit A-1, naming TSFC as lessor, that:

(a) has a noncancellable term of not less than 24
months nor more than 84 months excluding
renewals or extensions;

(b) provides for (i) Rent and casualty payments
in amounts sufficient to repay to Lender the
Loan made in respect of such lease and
interest on such Loan at the Discount
Facility Rate, (ii) interest on late payments
under such lease at a rate not less than the
Late Payment Rate and (iii) all payments to
be made in United States dollars;

(c) provides that the lessor's right to receive
payment is absolute and not contingent upon
the fulfillment of any condition whatsoever
other than the passage of time;

2
<PAGE> 8
(d) covers only Eligible Equipment subject to a
security interest in favor of Lender and
includes all hardware and any other systems
required to operate any included software;

(e) is not subject to any conditions, obligations
of, or any right or offset, counterclaim or
defense by, the Lessee thereunder;

(f) is a Lease under which the Lessee is not in
default; and

(g) is in all other respects satisfactory to
Lender.

1.12 "Equipment" - any and all Eligible Equipment leased
to a Lessee by TSFC under a Lease, located in the United States and made
subject to a security interest in favor of Lender by the execution and delivery
by TSFC to Lender of a Security Supplement specifically describing such
Eligible Equipment, together with (i) all accessions, replacements, parts,
repairs, fixtures and accessories incorporated therein or affixed thereto under
the Lease, and (ii) all upgrades, add-ons and additions incorporated therein or
affixed thereto to the extent they have been financed by Lender under this
Agreement.

1.13 "Event of Default" - as defined in Section 11.1.

1.14 "Excess Proceeds" - of an item of Equipment - any
excess of (i) the Remarketing Proceeds thereof, over (ii) the outstanding
principal balance of such Discount Facility Loan made to finance such Lease.

1.15 "Guaranty" - a guaranty, in the form of the guaranty
which comprises a part of Exhibit A-1, executed and delivered by a corporation,
firm or other person (a "Guarantor") satisfactory to Lender, assigned to Lender
as security by the execution and delivery by TSFC of a Security Supplement
specifically describing such guaranty.

1.16 "Invoice Price" - with respect to any Equipment - the
aggregate invoice prices of CCI, as manufacturer or seller, or any other
manufacturer or seller, net of taxes, transportation cost, delivery cost and
any acquisition or other fees payable by TSFC to CCI or any of its affiliates.

1.17 "Late Payment Rate" - with respect to a Discount
Facility Loan - two percent (2%) over the applicable Discount Facility Rate.

1.18 "Lease" - an Eligible Lease duly executed by the
Lessee, approved by Lender and assigned to Lender as security by the execution
and

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delivery by TSFC to Lender of a Security Supplement specifically describing
such Eligible Lease.

1.19 "Lease Proceeds" - with respect to any Lease - all
payments due from or with respect to the Lessee, such Lease or the Equipment
subject to such Lease, including, but not limited to, all Rent and any security
deposits held by TSFC, all casualty, early termination, purchase option and
indemnity payments, and all insurance and sales or lease proceeds of and
requisition payments for the Equipment subject to such Lease.

1.20 "Lessee" - a United States-domiciled corporation,
partnership or sole proprietorship that is the obligor for payment of Rent
under a Lease.

1.21 "Loan" - any advance of funds by Lender under this
Agreement to TSFC.

1.22 "Loan Repayment Amount" - with respect to a Loan at
any time - the aggregate unpaid principal of, and accrued interest (including
any interest accrued at the Late Payment Rate) on, such Loan.

1.23 "Loan Repayment Date" - with respect to any Loan -
the twentieth day of each calendar month, commencing with the first such day to
occur after the Closing Date for such Loan.

1.24 "Obligations" - as defined in Section 6.1.

1.25 "Operating Agreement" - the Operating and Support
Agreement dated as of September 25, 1997 among CCI, TSFC, and Lender, in the
form of Exhibit "B" attached hereto.

1.26 "Operative Documents" - this Agreement, each
Security Supplement and the Operating Agreement.

1.27 "Prepayment Fee" - a fee equal to two percent (2%) of
then unpaid principal amount due Lender under any Lease which is prepaid
pursuant to Section 3.7.

1.28 "Proceeds" - of an item of Equipment - the sum of (i)
the (a) gross cash proceeds of sale of such item or (b) aggregate Rent
obligation under a re-lease of such item discounted at the applicable Discount
Facility Rate, as the case may be, plus (ii) any past due Rent and any other
termination amount paid by the Lessee, or by TSFC on behalf of the Lessee, plus
(iii) any security deposit held by TSFC that reduces the Lessee's lease
termination payment.

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<PAGE> 10
1.29 "Remarketing Expenses" - with respect to an item of
Equipment - the sum of (i) reasonable costs of repossessing, transporting,
refurbishing and remarketing the item pursuant to Section 10, plus (ii) any
applicable sales, use or similar taxes imposed in connection with the sale or
re-lease of such item and not paid by the purchaser or lessee, plus (iii) in
the case of a Lease default, enforcement and collection costs.

1.30 "Remarketing Proceeds" - with respect to an item of
Equipment - the Proceeds minus the Remarketing Expenses.

1.31 "Rent" - under a Lease, the periodic charges
specified in the Lease for the use of the Equipment, excluding casualty or
early termination, purchase option and indemnity payments and any amounts a
Lessee may be required to pay for taxes, license fees, assessments or
maintenance.

1.32 "Security Supplement" - a supplement hereto
substantially in the form of Exhibit "C", executed and delivered to Lender by
TSFC, describing Equipment and Leases and subjecting the same to the security
interest in favor of Lender arising under Section 6.

1.33 "Standard Cost" - with respect to an item of
Equipment at any time - an amount equal to fifty percent (50%) of the Loan
Repayment Amount of the Lease calculated on the Loan Repayment Date.

1.34 "Tangible Net Worth" of TSFC - the gross book value
of TSFC's consolidated tangible assets less (a) reserves applicable thereto and
(b) all of TSFC's consolidated liabilities (including accrued and deferred
income taxes) other than indebtedness subordinated, in a manner satisfactory to
Lender, to TSFC's indebtedness to Lender. All determinations of the
characterization of assets and of the values comprising "Tangible Net Worth"
shall be made in accordance with generally accepted accounting principles
consistently applied.

1.35 "CCI" - Cooperative Computing, Inc., a Delaware
corporation, or any successor entity resulting from the sale or transfer of the
stock of Cooperative Computing, Inc. to another corporation as a result of the
merger, acquisition, consolidation, or dissolution of Cooperative Computing,
Inc. or resulting from the transfer of all or substantially all of the assets
of Cooperative Computing, Inc..

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<PAGE> 11
2. THE DISCOUNT FACILITY

2.1 Total Facility. Subject to the terms and conditions
hereof, from time to time, from (and including) the Effective Date to and
excluding the Anniversary Date (unless extended by Lender and TSFC), Lender may
with respect to each Lease, make a Loan to TSFC in a principal amount equal to
the Discount Facility Loan Value; provided, however, the aggregate principal
amount of all Loans outstanding at any time shall not exceed $15,000,000.00,
and provided further that neither TSFC or CCI suffers a material adverse change
in its business, condition (financial or other), performance, operations,
properties or prospects or in its ability to perform its obligations under the
Operative Documents to which it is a party or the Leases.

2.2 Interest Calculation. Interest on the Discount
Facility Loans shall be computed on the basis of a 360-day year of 12 30-day
months.

2.3 Minimum Loan. The aggregate principal amount of the
Loans made on any Closing Date shall be not less than Two Hundred Thousand
Dollars ($200,000.00).

2.4 Payments. Lender shall pay the proceeds of the Loans
in immediately available funds on the Closing Dates for such Loans. TSFC
shall make each payment due under this Agreement to Lender or its assignee in
immediately available funds to the account or address specified by Lender or
such assignee.

3. THE LOANS

3.1 Requests for Loans. No later than ten (10) Business
Days before the Closing Date relating to a Discount Facility Loan requested by
TSFC , TSFC shall submit to Lender Eligible Leases together with lease
schedules and other supporting documentation, and the following:

(a) the name of each Lessee under such Eligible
Leases, together with (i) unless previously
submitted to Lender, financial statements, to
the extent available, of each such Lessee, if
the equipment value is over Fifty Thousand
Dollars ($50,000.00), as of the end of such
Lessee's most recent fiscal year, and any
interim financial statements of such Lessee
readily available to TSFC, or CCI, all in form
and substance satisfactory to Lender, (ii) the
payment history of such Lessee under other
leases entered into between such Lessee and
TSFC, or CCI and (iii) such additional
financial

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<PAGE> 12
information pertaining to any Lessee as Lender
may request;

(b) the Rent schedule for each such Eligible Lease;
and

3.2 Approvals. Within ten (10) Business Days of receipt
of all information required to be submitted pursuant to Section 3.1, Lender
shall advise TSFC in writing if, in its sole and unlimited discretion, Lender
approves the proposed Eligible Lease and, if Lender requires the credit support
of a Guarantor, the credit of the proposed Guarantor. If Lender fails to give
such advice within such ten (10) day period, Lender shall be deemed to have
declined such credit. Lender may revoke any credit approval prior to making
the Discount Facility Loan relating to a proposed Lease if, in Lender's sole
judgment, the proposed Lessee or Guarantor suffers a material adverse change in
its business, condition (financial or other), performance, operations,
properties or prospects or in its ability to perform its obligations under the
Lease or the Guaranty, as the case may be, Lender shall promptly return all
credit packages to TSFC relative to any rejected lease transactions.

3.3 Disbursement of Discount Facility Loan. Subject to a
satisfaction of the conditions precedent set forth in Section 4 and Section 5,
Lender shall make Discount Facility Loans on the Closing Date proposed in
accordance with this Section. The Discount Facility Loans made on the Closing
Date shall be in an aggregate principal amount equal to the aggregate Discount
Facility Loan Values of the Eligible Leases submitted by TSFC pursuant to
Section 3.1 and approved by Lender pursuant to Section 3.2. If, for any
reason, a Discount Facility Loan is not made on a proposed Closing Date
notwithstanding compliance by TSFC with Section 3.1, the Closing Date may be
rescheduled to a date, within ten (10) Business Days of such Closing Date,
mutually agreed upon in writing by Lender and TSFC .

3.4 Loan Payments and Amortizations. Each Discount
Facility Loan shall bear interest at the Discount Facility Rate determined for
such Loan and shall be evidenced by a Security Supplement which shall set forth
the repayment terms with respect to such Discount Facility Loan in a manner
satisfactory to Lender and shall identify the Lease(s) with respect to which
such Discount Facility Loan is made. Principal of, and accrued interest on,
the Discount Facility Loans shall be payable in accordance with the Security
Supplement for such Discount Facility Loan. Each Discount Facility Loan shall
be amortized by the Lease Proceeds received by TSFC and paid by it to Lender
with respect to the Leases financed by such Loan, with such Lease Proceeds

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<PAGE> 13
applied first to accrued and unpaid interest, then to any other amounts due
under such Loan, and then to principal.

3.5 Upgrades and Additions. TSFC may, from time to
time, agree with a Lessee under a Lease that the Equipment subject to such
Lease shall be upgraded or that additional Eligible Equipment should be added
to such Lease. If TSFC and such Lessee amend such Lease to increase the Rent
payable thereunder in consideration of such upgrade or addition, TSFC may
request that Lender finance the upgrade or addition covered by such amendment (
the "Lease Amendment"). Not later than ten (10) Business Days after such
request, Lender shall give TSFC written advice as to whether Lender, in its
sole discretion, has elected to finance such upgrade or addition. If Lender
fails to give such advice within such ten (10) day period, Lender shall be
deemed to have declined to finance such upgrade or addition. If Lender agrees
to finance such upgrade or addition, Lender shall, subject to satisfaction of
the conditions precedent set forth in Sections 4 and 5, make a Discount
Facility Loan in an amount equal to the aggregate increase in Rent effected by
the Lease Amendment which remains unpaid as of the applicable Closing Date, but
excluding any such increase in Rent which is past due, discounted at the
Discount Facility Rate determined on the applicable Closing Date. The Closing
Date with respect to such Discount Facility Loan shall be a date agreed upon in
writing by Lender and TSFC. If Lender agrees to make such a Discount Facility
Loan, the Lease Amendment shall be considered a "Lease" for all purposes of
this Agreement (including, without limitation, Section 5).

3.6 Optional Prepayment: Lender Refusal to Finance
Upgrades or Additions. If Lender elects not to finance an upgrade or addition
pursuant to Section 3.5, TSFC may give Lender not less than ten (10) days prior
written notice of its intention to prepay the Discount Facility Loan made to
finance the Lease in respect of which an upgrade or addition has been made. On
the first Loan Repayment Date to occur after the ten (10) day notice period has
elapsed, TSFC shall pay to Lender the Loan Repayment Amount with respect to the
Loan made to finance such Lease. No Prepayment Fee shall be payable in respect
of an optional prepayment made pursuant to this Section 3.6.

3.7 Mandatory Prepayment: Termination of Lease. If a
Lessee voluntarily terminates a Lease before its scheduled expiration, TSFC
shall prepay the Discount Facility Loan made to finance such Lease on the Loan
Repayment Date immediately following such termination. On such Loan Repayment
Date, TSFC shall pay to Lender (i) the Loan Repayment Amount with respect to
the Loan made to finance such Lease and (ii) the Prepayment Fee.

3.8 Mandatory Prepayment: Casualty. If any Equipment
subject to a Lease is lost or damaged, and cannot be repaired or replaced with

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<PAGE> 14
substantially similar Equipment by the first Loan Repayment Date occurring not
less than thirty (30) days after such loss or damage, TSFC shall prepay the
Discount Facility Loan made to finance such Lease on such Loan Repayment Date.
On such Loan Repayment Date, TSFC shall (i) pay to Lender the Loan Repayment
Amount with respect to the Loan made to finance such Lease. No Prepayment Fee
shall be payable in respect to a mandatory prepayment made pursuant to this
Section 3.8.

3.9 Mandatory Prepayment: Rent Default. If any Rent
under any Lease financed or refinanced by a Discount Facility Loan shall remain
unpaid for a period of ninety (90) days from the date when due, TSFC shall
prepay such Loan in accordance with Section 8.4. No Prepayment Fee shall be
payable in respect to a mandatory prepayment made pursuant to this Section 3.9.

3.10 No Other Prepayments Permitted. No Discount Facility
Loan may be prepaid except as otherwise expressly provided in the Agreement
unless TSFC pays together with the Loan Repayment Amount for such Discount
Facility Loan the Prepayment Fee.

3.11 Limited Recourse. Lender agrees that, except as
provided in this Section 3.11 Section 3.12, Section 8 and Section 10, each
Discount Facility Loan is nonrecourse to TSFC and that the repayment of each
Discount Facility Loan shall be obtained solely from the Lease Proceeds of the
Leases, Proceeds of the Equipment and the other collateral in which Lender has
been granted a security interest pursuant to Section 6; provided, however, that
TSFC shall be fully liable (without any limitation on recourse) (i) if (a) TSFC
shall fail to pay over to Lender any Lease Proceeds received by TSFC due
Lender hereunder, in which case TSFC shall be liable for the amount of the
Lease Proceeds not so paid over plus interest accrued thereon at the Late
Payment Rate from the date the Lease Proceeds were required to be paid over to
Lender, or (b) the fees and payments paid by a Lessee to TSFC upon termination
of a Lease are less than the Loan Repayment Amount relating to such Lease, in
which case TSFC shall be liable for the difference between such Loan Repayment
Amount and the amount of such fees and payments paid over to Lender and (ii)
for all payments required to be made pursuant to Section 3.8, whether or not
insurance proceeds received by TSFC are at least equal to such payments.

3.12 Full Recourse. Notwithstanding anything set forth
herein, including, without limitation, any limitation on recourse against TSFC,
Discount Facility Loans may be with recourse to TSFC. Such Loans shall be
secured by Leases which are Eligible Leases except that the creditworthiness of
the Lessee may not otherwise be acceptable to Lender. A Discount Facility Loan
with recourse shall be designated as such by mutual written agreement of Lender

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<PAGE> 15
and TSFC, as the case may be, prior to the Closing Date of such Loans. Upon
occurrence at any time of any default under such Leases, TSFC shall repay the
Discount Facility Loan made to finance such Leases on the Loan Repayment Date
occurring not more than thirty (30) days after such default. On such Loan
Repayment Date, TSFC shall pay (i) the outstanding principal balance of the
Discount Facility Loan made to finance such Leases, and (ii) all accrued and
unpaid interest on such Discount Facility Loan to the date of payment. No
Prepayment Fee shall be payable in respect of any such prepayment. The amounts
paid to Lender by TSFC pursuant to this paragraph shall not be charged against
the First Loss Provision defined in Section 8.4.

4. CONDITIONS PRECEDENT TO THE INITIAL LOAN

Lender will not make the initial Loan hereunder until it has
received all of the following, in form and substance satisfactory to Lender:

4.1 Evidence of Authority of TSFC. Certified
resolutions of the Board of Directors of TSFC authorizing the execution,
delivery and performance of each of the Operative Documents to which it is a
party and any other document required hereunder together with an incumbency
certificate with respect to the officer or officers of TSFC executing any of
such Operative Documents and any document required hereunder.

4.2 Evidence of Authority of CCI. Certified resolutions
of the Board of Directors of CCI authorizing the execution, delivery and
performance of the Operating Agreement and any other document required
thereunder together with an incumbency certificate with respect to the officer
or officers of CCI executing the Operating Agreement and any document required
thereunder.

4.3 Operating Agreement. The Operating Agreement, duly
executed by CCI, TSFC, and Lender.

4.4 Financial Statements. The most recent consolidated
financial statements of CCI and TSFC.

4.5 TSFC Officer's Certificate. A certificate from a
duly authorized officer of TSFC, dated as of the first Closing Date, stating
that:

(a) all representations and warranties made by
TSFC under this Agreement and under the
Operating Agreement are true and correct as
of the date of the certificate;

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<PAGE> 16
(b) TSFC is in compliance with all covenants made
under this Agreement; and

(c) no event has occurred and is continuing that
is, or with the passage of time or giving of
notice or both would be, an Event of Default
or a default under or breach of the Operating
Agreement; and

(d) containing an express undertaking by TSFC to
give immediate notice to Lender it at any
time if any of the above statements are no
longer true.

4.6 CCI Officer's Certificate. A certificate from a duly
authorized officer of CCI, dated as of the first Closing Date, stating that:

(a) all representations and warranties made by
CCI under the Operating Agreement are true
and correct as of the date of the
certificate;

(b) CCI is in compliance with all covenants made
under the Operating Agreement;

(c) no event has occurred and is continuing that
is, or with the passage of time or giving of
notice or both would be, a default under or
breach of the Operating Agreement; and

(d) containing an express undertaking by CCI to
give immediate written notice to Lender if
at any time if any of the above statements
is no longer true.

4.7 Insurance. Evidence of the insurance required by
Section 8.3.

4.8 Agreement of Admission of Additional Secured Parties.
Evidence that the Agreement of Admission of Additional Secured Parties, in the
form previously executed by Lender has been duly executed and delivered by all
of the other parties thereto.

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<PAGE> 17
5. CONDITIONS PRECEDENT TO ALL LOANS

Lender will not make any Loan hereunder (including the initial
Loan) unless on the date thereof:

5.1 Notice. TSFC shall have given Lender verbal notice
of each Closing Date no later than five (5) Business Days prior to such Closing
Date.

5.2 Operating Agreement. The Operating Agreement shall
be in full force and effect and no defaults or breaches shall exist thereunder
as of the applicable Closing Date.

5.3 Receipt of Certain Documents. Lender shall have
received the following, in form and substance satisfactory to Lender:

a) Lease. (i) A signed fax copy or
original, manually executed counterparts in
the possession of CCI or TSFC on such
Closing Date of each Lease financed on such
Closing Date and the related Lease Schedule
substantially in the form contained in
Exhibit "A-1", in each case duly executed by
TSFC as lessor and by the Lessee
thereunder;

(b) Guaranty. If required by Lender,
signed fax copy or original, manually
executed counterparts in the possession of
CCI or TSFC on such Closing Date of each
Guaranty duly executed by the Guarantor;

(c) Financing Statements Filed Against
Lessees. Except in the case of Leases of
Equipment having an aggregate Invoice Price
less than Thirty-five Thousand Dollars
($35,000.00), either evidence of electronic
filing receipts, a search report from Dun &
Bradstreet listing, among other things,
filing numbers and filing dates or copy of
duly executed and filed Uniform Commercial
Code financing statements on form UCC-1
naming TSFC as secured party and the Lessees
under the Leases to be financed on the
Closing Date as debtors, identifying as
collateral the Equipment subject to such
Leases.

(d) Financing Statements to be Filed
Against TSFC. Copies of duly executed
Uniform Commercial Code financing statements
on form UCC-1, naming TSFC as

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<PAGE> 18
debtor and Lender, as secured party, and
identifying as collateral the Leases and any
Guaranties and Equipment to be assigned in
sufficient number to be filed in all
jurisdictions as may be necessary, in
Lender's judgment, to perfect Lender's
security interest in such collateral,
including, without limitation, jurisdictions
where TSFC has its chief executive offices
and maintain its records in respect to the
Leases;

(e) Supplement. A Security Supplement,
duly executed by TSFC relating to and
describing the Lease, and Guaranty and the
Equipment covered thereby;

(f) Notice of Assignment. An original
notice to the relevant Lessee of the
assignment to Lender of the relevant Lease,
signed by TSFC, substantially in the form of
Exhibit "D";

(g) Acceptance Supplement. A copy of
the original executed counterpart of the
delivery and acceptance certificate with
respect to each Lease where the Invoice
Price exceeds Fifty Thousand Dollars
($50,000.00) (substantially in the form
contained in Exhibit "A-1") containing a
complete description of the Equipment, duly
executed by the Lessee thereunder; and

(h) Other DocumentsSuch other documents,
instruments or agreements as Lender may
reasonably request.

6. SECURITY AGREEMENT

6.1 Granting Clause. In order to induce Lender to make
Loans from time to time to TSFC, and in order to secure (i) the prompt
repayment of the Loans and payment of all interest accrued thereon and any
applicable Prepayment Fee if any, (ii) the strict performance and observance by
TSFC of the obligations to be performed by it hereunder and (iii) all costs of
litigation, collection, reasonable attorneys' fees and other costs expended or
incurred in connection with the enforcement of Lender's rights hereunder and
with respect to the Leases and the Equipment (the obligations referred to in
clauses (i) through (iii) being collectively referred to as the "Obligations"),
TSFC hereby assigns, pledges and grants a continuing security interest to
Lender in all of its right, title and interest in and to the following
described properties, assets and rights (such properties, assets and rights
collectively called the "Collateral"):

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<PAGE> 19
(a) each Lease and all of TSFC's rights
thereunder including the right to receive
payments (including Rent and security
deposits) due to TSFC thereunder and the
right to exercise rights and remedies upon
default;

(b) every item or component of Equipment subject
to Leases, together with (i) all accessions,
replacements and substitutions thereto and
therefore and (ii) all upgrades, add-ons and
additions thereto and therefore to the
extent they have been financed by Lender
under this Agreement, and (iii) all of its
rights in the software and licenses related
thereto;

(c) each and every Guaranty, security interest,
mortgage or other security securing
(including security deposits) the payment
and performance of the Lessee's obligations
under the Leases;

(d) all Lease Proceeds and Proceeds of items or
components of Equipment; and

(e) all warranty and other rights TSFC may have
with respect to the Leases and the Equipment
subject thereto against the manufacturer(s)
of the Equipment, and

(f) the proceeds (whether cash or non-cash
proceeds), and products of all the
properties, assets and rights described in
paragraphs (a), (b),(c), (d) and (e) above
including without limitation, all insurance
payments, whether or not Lender is the loss
payee thereof; in each case whether now
owned or hereafter acquired.

6.2 Appointment of Lender. If Lender assumes
administration of collection of Rent pursuant to Section 11.2, TSFC
irrevocably appoints the Lender as its attorney-in-fact (such power being
coupled with an interest) to do, in its sole and unlimited discretion, any or
all of the following:

(a) to endorse or sign TSFC's ' name on all
checks, collections receipts, UCC's or other
documents related to the Leases;

(b) to take possession of and open mail
addressed to TSFC relating to such
collection and remove Rent and proceeds and
products of the Collateral;

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<PAGE> 20
(c) to ask, demand, collect, receive, sue for,
compound and give acquittance for any and
all payments assigned hereunder;

(d) to settle, adjust or compromise any claim
thereunder as fully as TSFCcould itself;

(e) to endorse its name on all checks and other
commercial paper given in payment or in part
payment thereof; and

(f) in its discretion, to file any claim or take
any other action or proceeding, either in
Lender's own name or in TSFC's name or
otherwise, that Lender may deem necessary or
appropriate to collect any and all sums that
may be or become due or payable under the
Leases or that may be necessary or
appropriate to protect the right, title and
interest of Lender in and to the Collateral
and the security intended to be afforded
thereby and hereby.

6.3 Further Assurances. TSFC will upon written
direction from Lender and at the expense of TSFC , do, execute, acknowledge and
deliver all and every further acts, deeds, conveyances, instruments, transfers
and assurances reasonably necessary or proper for the better assuring,
conveying, assigning and confirming unto Lender all of the Collateral, whether
now owned or hereafter acquired and shall not provide further assurances to any
other lender which may conflict with Lender's security interest or provide such
lender with a security interest superior to Lender's without first giving to
Lender the same further assurances.

6.4 No Obligations Assumed by Lender. Lender does not
assume, and its interest herein shall not be subject to, any obligations or
liabilities of TSFC under any Lease or any duty to collect money due
thereunder or to enforce collection thereof. Lender assumes no responsibility,
obligation or liability for any representation, warranty or obligation, express
or implied, made by any agent or employee of TSFC to a Lessee in connection
with any Lease.

6.5 Release of Security Interest. Upon payment in full
of all amounts due on a Loan and provided no Event of Default shall have
occurred and be continuing, Lender agrees to (i) release its security interest
in the Lease financed by such Loan and the Equipment subject thereto; (ii)
deliver to TSFC such other documents relating to released Leases and Equipment
prepared by

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<PAGE> 21
TSFC as TSFC may reasonably request, and (iii) deliver the foregoing items
within ten (10) days to TSFC after receipt of termination payment.

6.6 Final Release by Lender. Upon termination of
Lender's commitment to make Loans, repayment in full to Lender of all Loans,
and performance of all other Obligations, Lender will release its security
interest in the Collateral in the manner provided in Section 6.5.

7. ADMINISTRATION

7.1 Authorization to Collect Rent. Until such time as
there is an Event of Default hereunder or TSFC's authority to collect Rent is
terminated pursuant to Section 11, TSFC is authorized to and shall collect Rent
from Lessees. TSFC shall provide Lender with monthly Lease Receivable Report
relating to the immediately preceding month.

7.2 Collections. TSFC will undertake such collections as
an independent contractor and not as Lender's agent, and in connection
therewith will at its sole cost and expense, diligently perform all billing and
collecting for Rent due and to become due with respect to Leases and Equipment
financed under Discount Facility Loans. TSFC shall bill Lessees in accordance
with its standard billing procedures provided that each invoice sent with
respect to any Lease sold and assigned hereunder shall segregate the amount due
thereunder for maintenance, services and taxes.

TSFC shall deliver to Lender a list of all Leases then
outstanding, and a statement showing the delinquency under such Leases.

7.3 Remittances. TSFC shall, on or before the Loan
Repayment Date of each month, make payment to Lender of the amount due on each
Discount Facility Loan on such date regardless of whether or not any Rent under
applicable Leases shall have been collected by TSFC. Notwithstanding the
preceding sentence, during any period of time in which TSFC is not obligated to
perform its obligations under Section 8.4 by reason of the limitation on its
liability set forth therein, TSFC shall be obligated to make payments to Lender
on each Discount Facility Loan only to the extent that TSFC shall have
collected Rent under the applicable Leases.

TSFC shall provide Lender the first loss provision described
in Section 8.4 on a quarterly basis.

7.4 Lease Receivables Statements. As soon as available,
but no later than the twentieth day of each month, TSFC shall deliver to Lender
a list

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of all Leases then outstanding, and a statement showing payments, such Leases
both being complete and correct.

7.5 First Loss Provision Statements. On the last
Business Day of each January, April, July and October, TSFC shall provide
Lender with a quarterly statement as of such date of the First Loss Provision
described in Section 8.4, in the form attached hereto as Exhibit E.

7.6 Account Status Statements. As soon as available,
TSFC shall deliver to Lender any changes in account status for any Leases then
outstanding that TSFC becomes aware of from time to time. Account status shall
be defined, but not limited to, changes in Lessee billing address, equipment
locations, equipment, and/or legal name.

8. INDEMNITIES, INSURANCE, FIRST LOSS

8.1 Indemnities. Notwithstanding anything set forth
herein, including, without limitation, any limitation on recourse against TSFC
, TSFC shall indemnify, protect and defend Lender and hold it safe and
harmless from and against any and all losses, claims, demands, penalties,
actions, suits, proceedings, costs, expenses (including reasonable attorneys'
fees), damages and liabilities ("Indemnified Amount") (other than Indemnified
Amounts arising from or pertaining to the gross negligence or willful
misconduct by Lender) that may at any time be made, brought, incurred, assessed
or adjudged against Lender arising from or pertaining to:

(a) the manufacture, purchase, license,
subscription, financing, ownership, delivery,
rejection, nondelivery, possession, use,
dismantling, transportation, storage,
operation, maintenance, repair, return or other
disposition of the Equipment;

(b) breach of any covenant or warranty made by
TSFC, or CCI relating to any Equipment or Lease
or maintenance of any Equipment, including
qualification of any Equipment for any tax
benefit;

(c) any claim, action or proceeding involving
patent or trademark infringement or copyright
or trade secret violations relating to the
Equipment (including any interest or penalty)
whether or not such claim, action or proceeding
involves a claim of infringement or a
combination or design patent;

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<PAGE> 23
(d) failure of Lender, for whatever reason, to have
obtained a first priority perfected purchase
money security interest in and lien on the
Collateral, including, without limitation, the
Leases and the Equipment whether or not (i) the
Equipment is deemed to be an asset of a Lessee
as the result of a Lease being held to be a
security agreement rather than a true lease or
(ii) Uniform Commercial Code financing
statements on form UCC-1 were filed against a
Lessee with respect to the Equipment under
Section 5.3 (c);

(e) any misrepresentation made by any agent or
employee of TSFC, or CCI in the course of
negotiations regarding any Lease or Equipment;

(f) any breach of any warranty or covenant, or any
misrepresentation, of TSFC, or CCI in any
Lease, any Operative Document or any
certificate of an officer of TSFC, or CCI
delivered in accordance therewith;

(g) failure of any lease or Equipment to comply
with applicable laws, regulations or
contractual specifications or warranties, or to
be an Eligible Lease or Eligible Equipment, as
the case may be;

(h) any dispute, claim, offset, or defense of any
Lessee (other than payment by, or discharge in
bankruptcy of, such Lessee) to the payment of
any Rent;

(i) Lender having received from TSFC only a fax copy
(rather that the original, manually executed
copy) of any Lease or any Guaranty;

(j) failure of TSFC or CCI to pay when due any taxes
for which it is liable; and

(j) any wrongful or negligent acts or omissions of
TSFC, its agents or assigns, in carrying out
TSFC's obligations under Section 7 or Section 10.

TSFC shall assume, at its expense, full responsibility for the
defense and satisfaction of the foregoing, with counsel reasonably satisfactory
to Lender. All of the indemnities set forth in this Section 8.1 shall survive
the cancellation or termination of this Agreement.

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<PAGE> 24
8.2 Indemnity Payment. Upon the occurrence of any of the
events set forth in Section 8.1, TSFC unconditionally agrees to pay Lender,
upon written demand, the Indemnified Amount.

8.3 Insurance. With respect to all Equipment, TSFC
shall maintain in full effect, and shall deliver to Lender evidence of, (a)
liability insurance, with a combined single limit of at least Five Hundred
Thousand Dollars ($500,000.00) per occurrence, naming Lender as additional
insured, (b) property damage insurance including all- risk insurance, on all
Equipment, naming Lender as a loss payee, in an amount equal to actual cash
value or replacement value, with a deductible of not more than Two Hundred
Thousand Dollars ($200,000.00) per year for all Equipment and (c) such other
insurance as is usual in the business carried on by TSFC, which insurance shall
be satisfactory to Lender as to amount, form, nature and carrier.

8.4 First Loss Provision. If any Rent under any Lease
financed or refinanced by a Discount Facility Loan shall remain unpaid for a
period of ninety (90) days from the date when due, TSFC shall, on the next
succeeding Loan Repayment Date, upon written demand by Lender, pay to Lender
the Loan Repayment Amount of such Discount Facility Loan. The liability of
TSFC under this Section 8.4 on any Loan Repayment Date shall not exceed (i) ten
percent (10%) of the aggregate initial principal amount of all Loans made under
this Agreement as of such Loan Repayment Date plus (ii) the aggregate Standard
Cost of all Equipment financed with the Discount Facility Loans with respect to
which Lender has made demand pursuant hereto minus (iii) the aggregate Loan
Repayment Amounts paid by TSFC to Lender pursuant to this Section 8.4 with
respect to Discount Facility Loans as of such Loan Repayment Date minus (iv)
the aggregate of all amounts paid by TSFC to Lender under Section 7.3 without
having collected Rent under Leases financed by Discount Facility Loans which
Lender has demanded to be repaid under this Section 8.4 on such Loan Repayment
Date to the extent TSFC has been unable to collect such amounts from such
Lessees as of such Loan Repayment Date. The method of determining this amount
is described in Exhibit "E". Lender's rights under this Section 8.4 shall be
cumulative and in addition to all other rights to receive payment of the
Discount Facility Loans pursuant to this Agreement.

8.5 Excess Proceeds. If, on any Loan Repayment Date, all
or any portion of any Loan Repayment Amount shall not have been paid pursuant
to Section 8.4 due to the limitation on the liability of TSFC set forth in
that Section and TSFC thereafter realizes Excess Proceeds with respect to any
Equipment to Lender, the previously unpaid portion of all such Loan Repayment
Amounts shall be promptly paid by TSFC to Lender to the extent of such Excess
Proceeds.

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<PAGE> 25
9. REPRESENTATIONS, WARRANTIES AND COVENANTS

TSFC represents, warrants and covenants that:

9.1 Due Organization. It is a corporation duly organized
and validly existing in good standing under the laws of California, and is duly
qualified or otherwise authorized to do business wherever necessary to carry on
its present business and operations and to perform its respective obligations
under each Operative Document and each Lease.

9.2 Authority. It has the full power, authority and
legal right to enter into and perform its obligations under each Operative
Document.

9.3 Principal Place of Business. Its chief executive
office and the office where it maintains its records concerning payments under
the Leases is in Livermore, California, and it will not change such principal
place of business or remove therefrom such records, or any other records
relating to the Collateral or any Loan, or change its name, identity or
corporate structure, without at least thirty (30) days prior written notice to
Lender.

9.4 Binding Obligations. Each Operative Document has
been duly authorized and upon execution and delivery will constitute legal,
valid and binding obligations, enforceable against it in accordance with the
terms thereof.

9.5 Approvals and Consents. No stockholder approval, or
approval or consent of any trustee or holder of any indebtedness or obligation,
or authorization, consent, approval or license by, exemption from or
registration with, any court or governmental department, commission, board,
agency or instrumentality, domestic or foreign, is necessary in connection with
the execution, delivery and performance of its obligations under the Operative
Documents, and no consent of any owner, lessor or mortgagee of premises where
any Equipment is located is needed to permit Lender or TSFC to enforce the
rights of the lessor under the Leases or, if required, the same have been
obtained and certified copies have been delivered to Lender.

9.6 Compliance with Laws. There is no law, governmental
rule, regulation, judgment, decree or order binding on it that would be
contravened by the execution and delivery of, and performance under, the
Operative Documents. It will at all times comply with, or cause to be complied
with, all laws, statutes, rules, regulations, orders and directions of any
governmental authority having jurisdiction over it or its business if not
complied with, would have a material adverse effect on TSFC's business,
condition (financial or other), performance, operations, properties or
prospects or on its ability to perform its obligations under the Operative
Documents or the Leases.

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<PAGE> 26
9.7 Clear Ownership. It is, and will continue to be, the
record and beneficial owner of 100% of each Lease and all Equipment subject to
Leases in which it is named as Lessor free and clear to all mortgages, deeds of
trust, pledges and other liens, security interests, charges or encumbrances,
except for liens for taxes due but not yet payable and liens in favor of Lender
and shall promptly deliver to Lender any executed counterparts of Leases which
were not delivered to Lender pursuant to Section 5.3(a) and which have
subsequently come into its or CCI's possession. Notwithstanding the foregoing,
TSFC shall be entitled to transfer to CCI or a subsidiary corporation of CCI
record and beneficial ownership of any Equipment subject to Leases in which
TSFC is named as Lessor, provided that:

(a) TSFC remains fully bound under the Agreement
with respect to all Obligations, including the
Obligations assumed by the assignee;

(b) the assignee assumes in writing the Obligations
of TSFC under this Agreemen, subject to all
the terms and conditions hereof and Lender's
rights and remedies hereunder, and recognizes
the continuing validity and priority of the
lien of Lender in the Equipment;

(c) the assignee executes any documentation
reasonably required by Lender to facilitate the
foregoing provisions of this Section 9.7 and
the Operating Agreement; and

(d) the assignee and TSFC execute and file all
Uniform Commercial Code financing statements
and assignment statements necessary or
appropriate, in Lender's sole judgment, to
continue, perfect and protect Lender's first
priority security interest in the Collateral
hereunder.

9.8 Filings. This Agreement and the Uniform Commercial
Code filings made pursuant hereto create in favor of Lender a valid and
perfected first priority security interest in the Collateral securing the
Obligations.

9.9 Actions. There are no actions, suits, proceedings,
claims or disputes pending or, to its knowledge, threatened against or
affecting it or its properties before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
that, if determined adversely to it, would have a material adverse effect on
its business, condition (financial or other), performance, operations,
properties or prospects, its ability to perform its obligations under the
Operative Documents or the Leases or Lender's security interest in the
Collateral.

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<PAGE> 27
9.10 Payment of Taxes. It has filed and will file all tax
returns (federal, state and local) required to be filed and has paid all taxes
shown thereon to be due, including interest and penalties, unless it is
contesting the payment of certain taxes in good faith and has established
adequate reserves therefore.

9.11 Notices. It will send to Lender copies of all
significant notices, including, but not limited to, any notices with respect to
the terms of any Lease, and other instruments or communications required or
permitted to be given by the Lessee under any Lease.

9.12 Further Assurances; Enforcement of Leases. It will: (a)
preserve and maintain its corporate existence and all rights, privileges and
franchises now enjoyed and conduct its business in an orderly, efficient and
customary manner; and (b) from time to time, at its own expense, take all
actions reasonably necessary to establish, preserve, protect and perfect the
rights created by this Agreement, including, without limitation, (i) the full
and punctual performance of all of its obligations under the Leases; (ii) the
enforcement of the Leases without waiver, amendment or modification; and (iii)
the exercise of any and all rights of the lessor under the Leases as may be
necessary or advisable to assure full compliance with the terms and provisions
thereof and to protect Lender's security interest in the Collateral.

9.13 Validity and Enforceability of Leases and Guaranties.
Each Eligible Lease and Guaranty submitted to Lender pursuant to Section 5.3 is
genuine, valid and enforceable and is not subject to any offset, deduction,
counterclaim or lien.

9.14 Leases Duly Entered Into. All parties to each Lease
and Guaranty have full power, authority and legal right to enter into and
perform its obligations under such Lease or Guaranty, as the case may be. Each
Lease and Guaranty will be duly authorized, executed and delivered by the
parties thereto, will constitute legal, valid and binding obligations of the
parties thereto, enforceable in accordance with their respective terms and will
be in full force and effect on the Closing Date relating thereto, and no
default thereunder shall exist on such Closing Date. The entire agreement with
each Lessee is embodied solely in the executed counterparts of the applicable
Lease and other documentation furnished to Lender with respect to such Lease.

9.15 Equipment Description Each Lease describes the
Equipment leased to the Lessee named in such Lease, the Rent required for such
Equipment and any applicable early termination payments.

9.16 Leases Comply with Laws. Each Lease complies with
and does not violate applicable laws, regulations or contractual specifications
or

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<PAGE> 28
warranties, including without limitation, any applicable laws relating to
maximum rates of interest (whether or not imputed) or similar charges and all
required disclosures have been made with respect thereto under federal
truth-in- lending and truth-in-leasing regulations to the extent applicable.

9.17 No Impairment of Value or Rights. It will not do
anything that might impair the value of any Lease or Equipment or any of the
rights or obligations of the parties hereto under any Lease.

9.18 No Lessor Liens. No Lease submitted to Lender
pursuant to Section 5.3, or any Equipment subject thereto, or any other of its
rights therein, has been assigned to, or be subject to, any lien or security
interest in favor of, any person other than Lender.

9.19 Notifications. It will promptly notify Lender of:

(a) any Event of Default or event which, upon the
lapse of time or giving of notice, or both,
would become an Event of Default, or any event
which is, or upon the lapse of time or giving
of notice, or both, would become a default
under or breach of the Operating Agreement;

(b) any and all litigation or other matters or
events concerning it or any Lessee that has a
reasonable possibility of materially and
adversely affecting its or any Lessee's
business, condition (financial or other),
performance, operations, properties or
prospects or adversely affecting Lender's
security interest in the Collateral.

9.20 Books and Records Financial and Other Information.
It shall:

(a) maintain adequate books, accounts and records
and prepare all financial statements required
hereunder in accordance with generally accepted
accounting principles and practices
consistently applied and in compliance with the
regulations of any governmental regulatory body
having jurisdiction over it;

(b) give Lender and its representatives, at all
reasonable times and upon reasonable notice,
access to all records, files and books of
accounting pertaining to all transactions
subject to this Agreement, and permit

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<PAGE> 29
Lender and its representatives to inspect,
audit and make extracts therefrom;

(c) upon the occurrence of an Event of Default or
an event which, upon the lapse of time or
giving of notice, or both, would become an
Event of Default, permit Lender to exercise the
inspection rights of TSFC under the Leases, on
a non-exclusive basis;

(d) deliver to Lender in form and detail
satisfactory to Lender, and in such reasonable
number of copies as Lender may request:

(i) as soon as available, but no later than
thirty (30) days after the end of each
fiscal quarter, the quarterly financial
statements of TSFC and CCI, in each case
signed by the principal financial officer
of TSFC or CCI, as the case may be;

(ii) the lists of Lease receivables and
statements showing the aging of
receivables as required by Section 7.4;

(iii) the statement of first loss provision
required by Section 7.5;

(iv) such other information as Lender may
reasonably request; and

(e) Deliver to Lender, in such reasonable number of
copies as Lender may request, as soon as
available, but no later than ninety (90) days
after the end of each fiscal year, (i) the
audited annual financial statements of CCI and
(ii) the annual financial statements of TSFC,
audited or reviewed if available, or unaudited
but signed by the principal financial officer
of TSFC.

9.21 Audit. It shall permit Lender, from time to time,
upon reasonable request and at Lender's sole expense, to conduct an audit of
TSFC's accounting and operating procedures as they relate to the Leases,
provided such audit does not unreasonably interfere with TSFC's normal
business operation.

9.22 Charges and Taxes It shall make all filings in
respect of and pay (or reimburse Lender for, upon presentation of an invoice)
all charges and

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<PAGE> 30
local, state or federal taxes (other than net income taxes of the Lender or
franchise taxes levied upon Lender's net income), license fees, or other
assessments, charges, fines and penalties, together with interest payable with
respect thereto, levied or imposed upon or in connection with this Agreement,
the Leases, the Equipment, the Rent and the Proceeds. Upon request of Lender,
TSFC shall furnish Lender written evidence of such payment.

9.23 Financial Covenants.

(a) the Tangible Net Worth of TSFC shall at all
times be at least $17,500,000.00;

(b) the ratio of TSFC's total consolidated debt
(including subordinated debt) to TSFC's
Tangible Net Worth shall at all times be no
greater than 3 to 1;

Compliance with Section 9.23 shall be made in accordance with
generally accepted accounting principles, consistently applied, as to both
classification and amounts.

9.24 Maximum Requests for Loans Per Month. It will make
no more than a combined total of three (3) requests for Loans, under Section
3.1, during each thirty day period.

10. REPOSSESSION AND REMARKETING

10.1 Request to Repossess; Remarketing. In the event that
TSFC does not perform its obligations under Section 8.4 by reason of the
limitation on its liability set forth therein, upon Lender's determination that
a default exists under a Lease financed or refinanced by a Discount Facility
Loan, either through notification by TSFC pursuant to Section 9.19 or
otherwise, and that such default remains uncured within the time, if any, for
curing the same permitted by the Lease, Lender, as secured party under this
Agreement, may request TSFC to act as its agent, and upon such request TSFC
will, as such agent, use diligent efforts to repossess the Equipment subject to
such Lease as promptly and efficiently as is legally permissible. Thereafter
TSFC will repair, service, refurbish and update, as needed, and, for a period
of one hundred twenty (120) days or such other period as TSFC and Lender may
agree upon in writing from the date the Equipment is repossessed (the
"Remarketing Period"), attempt to sell or re-lease such Equipment on a
non-priority (but non-discriminatory) basis and on such terms and conditions as
reflect fair market value for similar equipment and are acceptable to Lender,
in its sole discretion. TSFC shall give no less priority to remarketing
Equipment pursuant to this Section 10.1 that it would similar equipment owned,
leased or managed by

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<PAGE> 31
TSFC. The obligations of TSFC to remarket such Equipment for sale or lease
shall include, but not be limited to, efforts to sell such Equipment,
preparation and supervision of the documentation of each transaction and an
accounting of the activities referred to in this Section 10.1, including
information relative to the status of negotiations for offers made in respect
of such Equipment.

If TSFC has not remarketed any Equipment at the conclusion of
the Remarketing Period, upon notice from Lender, TSFC's exclusive right to
remarket shall terminate and Lender shall have the right to remarket such
Equipment on terms and conditions satisfactory to it. If Lender remarkets the
Equipment, it shall retain Proceeds in an amount equal to the Loan Repayment
Amount applicable to the Loan financing the Lease to which such Equipment was
subject and any Remarketing Expenses incurred by Lender and shall remit the
Excess Proceeds to TSFC.

Nothing contained in this Section 10.1 shall be deemed to
constitute a release by Lender of its security interest in any of the
Collateral. Lender shall release its security interest in Equipment which has
been sold pursuant to this Section 10.1.

10.2 Remarketing Expenses. Remarketing Expenses shall be
for the account of the party incurring such expenses and shall be recoverable
from the Proceeds of such remarketing.

10.3 Assignment. The rights and obligations of any party
under this Section 10 may be assigned only with the written consent of all
parties.

10.4 No Guaranty. Notwithstanding anything contained
herein to the contrary, the obligations and duties of TSFC contained in this
Section 10 shall not be construed to include a guarantee by TSFC that the
Remarketing Proceeds with respect to any Equipment will equal or exceed the
Loan Repayment Amount relating to such Equipment.

11. EVENTS OF DEFAULT, REMEDIES

11.1 Events of Default. Any one of the following events
shall constitute an "Event of Default" hereunder:

(a) TSFC shall fail to remit to Lender when due
any Lease Proceeds or Proceeds of an item of
Equipment received by TSFC, or shall fail to
make any payment required hereunder, in each
case within five (5) days of the date due
thereof; or

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<PAGE> 32
(b) TSFC shall fail to observe or perform any
other obligation hereunder, or under any other
agreement between Lender and TSFC, which is not
corrected within thirty (30) days of written
notice from Lender; provided, however, that if
(1) such failure is curable, (2) such failure
cannot be remedied within the 30-day period,
(3) TSFC commences diligent efforts to effect
such remedy within the 30-day period and
actively and diligently pursues such efforts,
and (4) such failure does not involve any risk
of the sale, forfeiture or loss of the
Equipment or any part thereof or any interest
therein of Lender; then TSFC shall have an
additional period of 60 days beyond such 30
days to effect such remedy, failing which an
Event of Default shall occur hereunder; or

(c) any covenant, representation or warranty made
by TSFC or CCI to Lender in any Operative
Document or in any certificate delivered
pursuant thereto shall be untrue in any
material respect when made or during any period
of time for which it is enforceable or shall be
breached by TSFC or CCI. Notwithstanding the
foregoing, to the extent that such a breach
occurs, and such breach relates to an
individual Lease, TSFC shall have thirty (30)
days from receipt of demand by Lender to
repurchase the Lease pursuant to the terms of
the Mandatory Prepayment clause set forth at
Paragraph 3.7 herein. TSFC's failure to
repurchase such a Lease within said thirty (30)
day period shall then constitute an Event of
Default under this subparagraph; or

(d) an injunction, attachment or other legal
process shall issue against any material part
of TSFC's property or a material judgment or
lien shall be filed against TSFC which is not
stayed, vacated, bonded, or otherwise
discharged within ninety (90) days after the
date of entry thereof; or

(e) TSFC or CCI shall cease to do business as a
going concern, shall become bankrupt, shall
make an assignment for the benefit of creditors
or otherwise take advantage of the bankruptcy
or any other law for the relief of debtors; a
trustee or receiver for TSFC or CCI shall be
appointed or there shall be filed by or against
TSFC any petition under any provision of the

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<PAGE> 33
Federal Bankruptcy Code, as amended, and, in
the case of a petition filed against TSFC or
CCI, such petition shall not be dismissed,
withdrawn, or otherwise eliminated within
ninety (90) days after the filing thereof; or

(f) any ERISA plan of CCI shall terminate, or CCI
or TSFC shall fully or partially withdraw from
such a plan or plan which could result in
liability of CCI or TSFC to the Pension
Benefit Guaranty Corporation or to such plan or
plans in the Aggregate amount of One Million
Dollars ($1,000,000) or more (in excess of any
applicable insurance).

11.2 Remedies. If an Event of Default shall have
occurred, and such Event of Default had not been cured within an applicable
cure period, and further upon notice of such Event of Default to TSFC Lender
shall have the right to do any or all of the following:

(a) complete and deliver to the Lessees the notices
received by Lender from TSFC pursuant to
Section 5.3(f) and to commence direct
collection of the Rents until such time as
Lender has received the total Loan Repayment
Amount of all Loans due under the Agreement, an
administrative fee in an amount reasonably
determined by Lender to reimburse it for its
anticipated costs and expenses of directly
billing and collecting the Lessees for Rent
(the "Administrative Fee"), any late charges,
or other costs or expenses incurred by Lender
and due hereunder:

(b) (i) exercise of any of the Lessor's rights
under any of the Leases, or (ii) by written
notice, require TSFC to exercise on behalf of
Lender as secured party under this Agreement
any and all of the rights available to the
Lessor under any Lease to the extent not
already exercised by TSFC, whereupon TSFC shall
immediately take all requested action;

(c) discontinue making Loans and as liquidated
damages and not a penalty, to assess the
Administrative Fee and to accelerate the
balance due under the First Loss Provision
pursuant to Section 8.4 of the Agreement to be
due and payable immediately, or

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<PAGE> 34
(d) proceed against TSFC, CCI or both of them, for
all rights and remedies Lender may have under
this Agreement and/or the Operating Agreement
or provided by applicable law or otherwise
available at law or in equity.

Upon the occurrence of an Event of Default, or upon the
failure of a Lessee to perform its obligations under a Lease, Lender shall have
and may exercise all the rights and remedies of a secured party under the
California Uniform Commercial Code (expressly including, but not limited to,
those granted under 9-502(1) and 9-306 dealing with retention of cash
proceeds); and any other applicable laws (including but not limited to the
right to assume direct collection of any and all Leases and retain any and all
cash proceeds collected under the Leases until such time that Lender has
received the total Loan Repayment Amount of all Loans due under this Agreement,
plus the Administrative Fee, late charges or other costs and expenses incurred
by lender and due hereunder); provided, however, that so long as Lessee under a
Lease is not in default thereunder, Lender shall not take any action or
exercise any right that would disturb such Lessee's full and quiet enjoyment of
all of such Lessee's rights under that Lease. Lender will give TSFC reasonable
notice of the time and place of any public sale of any Collateral or of the
time after which any public or private sale of such Collateral or any other
intended disposition thereof is to be made. Unless otherwise provided by law,
the requirement of reasonable notice shall be met if such notice is delivered
at least ten (10) days before or mailed, postage prepaid, to TSFC , at least
twenty (20) days before the time of such sale or disposition. Subject to
applicable provisions of this Agreement, Collateral proceeds including, but not
limited to, the proceeds of any sale or disposition of Collateral shall be
applied: first, to the expense of settling all liens and claims against such
Collateral and all reasonable costs, charges and expenses incurred by Lender in
connection with the Event of Default, Lender's exercise of remedies under this
Section 11.2 (including without limitation those described in Section 12.4),
and in taking, removing, holding, preparing for sale and selling the Equipment;
second, to the payment of the remaining total Loan Repayment Amount of all
Loans; third, to any other unpaid obligations of TSFC hereunder and of CCI
under the Operating Agreement; and fourth, any remaining proceeds shall be paid
to TSFC.

TSFC shall pay to Lender all fees, costs and expenses incurred
by Lender in enforcing any term of condition of this Agreement, including
without limitation, Lender's attorney's fees.

Notwithstanding the foregoing, Lender shall have the right to
discontinue making Loans at any time in its sole discretion, whether or not an
Event of Default has occurred.

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<PAGE> 35
Nothing contained in this Section 11.2 shall entitle Lender to
recourse against TSFC with respect to payment of the Loans which is not
expressly granted to Lender by this Agreement.

12. MISCELLANEOUS

12.1 General. Waiver of any particular default shall not
be a waiver of any other default. All Lender's rights are cumulative and not
alternative. No waiver or change, modification or amendment in this Agreement
shall bind Lender or TSFC unless an officer of Lender and TSFC , has agreed to
such waiver or change, modification or amendment in writing. Any provision of
this Agreement contrary to, prohibited by or invalid under applicable laws or
regulations shall be inapplicable and deemed omitted herefrom, but shall not
invalidate the remaining provisions hereof. No oral agreement, guaranty or
warranty shall be binding. This Agreement shall be governed by the laws of
California.

12.2 Notices. All notices, demands, directions, consents
and approvals hereunder shall be in writing and shall be delivered in person,
by telecopy, by overnight courier or by prepaid certified mail, addressed to
the party for whom it is intended, if to

Triad Systems Financial Corporation
3055 Triad Drive
Livermore, California, 94550
Telecopy No. 510-449-6962
Attention: Ronald D. Lindberg, Vice President

With a copy to: Matt Hale, Vice President
Finance & CFO Cooperative Computing, Inc.
6207 Bee Cave Road
Austin, Texas 78746
Telecopy No. 512/328-6461
and if to

Mellon US Leasing, a Division of
Mellon Leasing Corporation
525 Market Street, Suite 3500
San Francisco, California 94105
Attention: President
Telecopy No.: 415/538-9611

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<PAGE> 36
and shall be deemed delivered on the day of actual receipt. Either party may
change its address for the receipt of notices, demands, directions, consents,
and approvals by notice duly given to the other party pursuant to this Section
12.2.

Notices may also effectively be given by transmitting over
electronic devices such as facsimile machine, if either party to whom such
notice is being sent has such device in its office. Notices given by
electronic transmitting devices shall be deemed effective on the date of
transmission.

12.3 Waivers. TSFC hereby waives demand, presentment,
protest and notice thereof with respect to any and all instruments, notice of
acceptance hereof, and all other demands and notices of any description, except
as expressly provided herein. No delay or omissions on the part of either
party in exercising any right, remedy, option, or notice of default, except as
any pertinent statute of limitations which may apply, on any one occasion,
shall be construed as a bar to or waiver of any other default, right, remedy or
option, or the same default, right, remedy or option any future occasion.

12.4 Costs and Expenses. In any case where Lender or TSFC
is entitled hereunder to reimbursement of costs and expenses, such costs and
expenses shall include interest on any judgment and court costs, reasonable
legal fees and expenses (including allocated fees of internal counsel).

12.5 Successors; Assigns. This Agreement shall inure to
the benefit of and be binding upon Lender and TSFC and their respective
successors and permitted assigns. Neither party may assign this Agreement
without the other party's consent, unless such assignment is to any wholly
owned subsidiary, parent or affiliate of the assigning party. If either party
does not consent to such proposed assignment, TSFC shall have the option to
prepay the outstanding aggregate Loan Repayment Amount to Lender at a price to
be determined by mutual agreement of the parties.

12.6 Entire Agreement. The terms and conditions herein
contained constitute the entire agreement between Lender and TSFC with respect
to the subject matter hereof, except to the extent other agreements are
referred to herein or contemplated hereby or executed contemporaneously
herewith, and supersede all previous communications whether oral or written
between Lender and TSFC with respect to such subject matter. No agreement or
understanding varying or extending any rights or obligations hereunder of
either of the parties shall be binding unless in a writing signed by a duly
authorized officer or representative of the party against which such variance
or extension is sought to be enforced.

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<PAGE> 37
12.7 Headings; Titles. The cover, table of contents and
titles for Sections used in this Agreement are intended to be descriptive only
and shall not be deemed to limit, extend or in any way modify the meaning of
the text of this Agreement

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their officers thereunto duly authorized as of the day and
year first above written.

TRIAD SYSTEMS FINANCIAL CORPORATION,
a California Corporation

By: /S/ PATRICK J. KERNAN
----------------------------------------
General Counsel
Its: Authorized Signatory

MELLON US LEASING, A DIVISION OF
MELLON LEASING CORPORATION,
a Pennsylvania Corporation

By: /S/ JOHN P. SETTANO
-----------------------------------------
Vice President
Its: Authorized Signatory

<PAGE> 1
EXHIBIT 10.18
================================================================================

ASSET PURCHASE AGREEMENT

BETWEEN

ADP CLAIMS SOLUTIONS GROUP, INC.

AND

COOPERATIVE COMPUTING, INC

DATED AS OF NOVEMBER 20, 1997
================================================================================
<PAGE> 2
ASSET PURCHASE AGREEMENT

AGREEMENT dated as of November 20, 1997 by and between ADP Claims
Solutions Group, Inc., a Delaware corporation ("Seller"), and Cooperative
Computing, Inc., a Delaware corporation, or a wholly-owned subsidiary thereof
("Buyer").

WHEREAS, prior to acquiring the ARISB Business (as hereinafter
defined) Seller, through its affiliate ADP Hollander, Inc., was in the business
of providing (i) inventory and business management systems, (ii) parts locating
networks, and (iii) parts interchange information to the automotive recycling
industry in the United States and Canada, through its Hollander Yard Management
System ("HYMS"), EDEN Parts Locating Network and Hollander Interchange Manuals
(collectively, the "Original Business"); and

WHEREAS, in April 1995 Seller acquired certain assets from AutoInfo,
Inc., including the AutoInfo Interchange, the AutoInfo Yard Management System,
the AutoInfo Communication Systems, the AutoInfo Parts Locator, Compass and the
ARA Database Collector (collectively, the "Acquired Business") to augment the
Original Business and provide additional services to the automotive recycling
industry in the United States and Canada; and

WHEREAS, Seller began operating the Original Business and the Acquired
Business as a combined business (the "Business") without maintaining separate
books and records for the Original Business and the Acquired Business; and

WHEREAS, Seller has decided to sell Compass and Seller has entered
into a Consent Order (as hereinafter defined) with the Federal Trade Commission
(the "FTC"), pursuant to which Seller has agreed to divest itself of specified
assets and properties from the Acquired Business -- the AutoInfo Interchange,
the AutoInfo Yard Management System, the AutoInfo Communication Systems and the
AutoInfo Parts Locator (collectively with Compass, the "ARISB Business") -- but
may retain the remainder of the Business, including all assets and properties
comprised by the Original Business (the "Retained Business"); and

WHEREAS, Seller is, as of the date hereof, operating the ARISB
Business as a separate entity; and

WHEREAS, Seller desires to sell, and Buyer desires to purchase, all of
the assets and properties specified in this Agreement as belonging to the ARISB
Business, and not otherwise excluded by the terms of this Agreement, and in
connection therewith, Buyer has agreed to assume certain specified liabilities
of Seller relating to the Assets (as hereinafter defined), all on the terms set
forth herein; and

WHEREAS, certain terms used herein have the meanings ascribed to such
terms in Section 12.1 hereof.
<PAGE> 3
NOW, THEREFORE, in consideration of the foregoing and of the
respective promises, covenants, representations and warranties herein
contained, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, it is agreed:

1. Purchase of Assets and Assumption of Liabilities.

1.1 Purchase of Assets. On the terms and subject to the conditions
set forth in this Agreement and except as provided in Section 1.2, on the
Closing Date, Seller agrees to sell, transfer, assign, convey and deliver to
Buyer, and Buyer agrees to purchase, acquire and accept from Seller, all of
Seller's right, title and interest in and to the following assets, properties
and rights, wherever located, of Seller owned, used or held for use by Seller in
the ARISB Business, other than those which are specifically excluded pursuant to
Section 1.2, as and to the extent existing on the Closing Date, free and clear
of all Liens other than Permitted Liens (such assets, properties and rights are
hereinafter collectively referred to as the "Assets"):

(a) Accounts Receivable. All trade accounts receivable and all notes,
bonds and other evidences of indebtedness of and rights to receive payments
listed on Schedule 1.1(a), and the security agreements related thereto,
including any rights of Seller with respect to any third party collection
proceedings or any other Actions or Proceedings which have been commenced in
connection therewith and all trade accounts receivable and all notes, bonds and
other evidences of indebtedness of and rights to receive payments arising solely
in the conduct of the ARISB Business between the date hereof and the Closing
Date (collectively, the "Accounts Receivable");

(b) Tangible Property. All office, computer and other equipment,
furniture, trade fixtures, office supplies, other miscellaneous supplies,
machinery, tools, spare and maintenance parts, vehicles and all other tangible
property, including any of the foregoing purchased subject to any conditional
sales or title retention agreement, set forth on Schedule 1.1(b), together with
all additions thereto in the ordinary course of business between the date hereof
and the Closing Date (collectively the "Tangible Property");

(c) Inventory. All of Seller's inventories utilized solely in the
conduct of the ARISB Business, wherever located, including without limitation,
all raw materials, components, work-in-process, finished products, packaging
materials, stores and supplies, spare parts, spares and samples, together with
all additions to or subtractions therefrom in the ordinary course of business
between the date hereof and the Closing Date (collectively, the "Inventory"). A
current list of all Inventory is attached hereto as Schedule 1.1(c);

(d) Tangible Property Leases. All rights and incidents of interest of
Seller in and to all the leases and subleases of Tangible Property set forth on
Schedule 1.1(d) together with any options to purchase the underlying property,
together with all additions thereto in the ordinary course of business between
the date hereof and the Closing Date (collectively, the "Tangible Property
Leases");

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<PAGE> 4
(e) Contracts. All rights and incidents of interest in and to all
contracts and other agreements set forth on Schedule 1.1(e), together with all
additions to or subtractions therefrom in the ordinary course of business
between the date hereof and the Closing Date (the "Contracts");

(f) Licenses. All rights and incidents of interest in and to all
licenses, permits, franchises, approvals and authorizations (including
applications therefor) issued to Seller by any Governmental or Regulatory Body
as set forth on Schedule 1.1(f) (the "Business Licenses");

(g) Prepaid Expenses. All prepaid expenses included in the Financial
Statements or set forth on Schedule 1.1(g);

(h) Intangible Property. All rights and incidents of interest in and
to all intellectual property listed on Schedule 1.1(h), including any domestic
and foreign letters patent, any patents and applications therefor, patent
applications, patent licenses, any copyrights and applications therefor
(including rights to renew), any trademarks and applications therefor, any trade
names and applications therefor, any service marks and applications therefor,
any franchises, any know-how, any computer software including object and source
codes, all trade secrets, technical knowledge and other confidential proprietary
information and related ownership use and other rights, together with all
additions thereto in the ordinary course of business between the date hereof and
the Closing Date (collectively, the "Intangible Property");

(i) Books and Records. Copies of all the books and records of Seller
relating to employees, the purchase of materials, supplies and services,
financial, accounting and operations matters, product engineering, research and
development, manufacture and sale of products, all customer and vendor lists,
correspondence and other files and records, including such items stored in
computer memories or disks of Seller relating to the Assets or pertaining to the
conduct of the ARISB Business;

(j) Goodwill. All of Seller's goodwill in the ARISB Business;

(k) Claims. Except as set forth on Schedule 1.1(k), all rights,
privileges, claims, causes of action, rights of recovery and rights of set-off
relating to the Assets or arising out of the conduct of the ARISB Business;

(l) Business Names. All of Seller's rights to the "Orion," "Compass"
and "Checkmate" names, and any derivatives or variances thereof and all of
Seller's rights in the logos, trademarks and tradenames used or held for use in
the conduct of the ARISB Business, including without limitation those set forth
on Schedule 1.1(l); and

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<PAGE> 5
(m) Manufacturer's and Vendor's Warranties. All rights, remedies and
claims of Seller under express or implied warranties against any manufacturer,
vendor or other person with respect to the Assets or relating to the ARISB
Business (a current list of all express warranties is attached hereto as
Schedule 1.1(m)).

Except as otherwise specified herein, in the event that any right,
property or asset is utilized in the conduct of the ARISB Business and not
otherwise conveyed to Buyer pursuant to this Section 1.1 and is also used in any
of Seller's other businesses, the parties agree that such Assets shall remain
with Seller subject to a non-exclusive license allowing Buyer to use such items
in the conduct of the ARISB Business.

1.2 Excluded Assets. Any provision of this Agreement to the
contrary notwithstanding, Buyer shall not acquire, and there shall be excluded
from the Assets, the following (the "Excluded Assets"):

(a) Cash. All cash on hand or in banks, marketable and non-marketable
securities and other investments, commercial paper, certificates of deposit and
other bank deposits, treasury bills and other cash equivalents and all rights in
any funds of any nature (including, without limitation, funds relating to
vacation pay, workers' compensation, unemployment compensation and other
employee benefits);

(b) [Intentionally Omitted].

(c) Bank Accounts. All rights of Seller with respect to the bank and
security accounts, safe deposit boxes and vaults set forth on Schedule 1.2(c);

(d) Goodwill. All of Seller's goodwill in the Retained Business;

(e) Certain Names. Except to the extent provided in the Hollander
License Agreement, all rights to use the names "Hollander," "Hollander
Interchange," "Hollander Yard Management System," "Smart Bid," "Accupart,"
"EDEN," "AutoInfo Interchange" and "ADP" or any derivatives or variances
thereof;

(f) Claims. All claims, causes of action, rights of recovery and
rights of set-off (i) arising out of the conduct of the Retained Business and
(ii) set forth on Schedule 1.1(k);

(g) Insurance. Except for Buyer's right to receive proceeds therefrom
pursuant to Section 9.8, all insurance policies of Seller and all rights of
every nature and description under or arising out of such policies;

4
<PAGE> 6
(h) Benefit Plans. All Plans of Seller; and

(i) Other Matters. All rights of Seller under this Agreement and the
agreements and instruments delivered to Seller by Buyer pursuant to this
Agreement.

1.3 Assumed Liabilities. Subject to the terms and conditions set
forth in this Agreement and except as provided in Section 1.4, Buyer agrees
that, on the Closing Date, Buyer shall assume and thereafter pay, perform and
discharge when due the following obligations and liabilities of Seller with
respect to the ARISB Business as and to the extent existing on the Closing Date
(the "Assumed Liabilities") and no further liabilities or obligations:

(a) [Intentionally Omitted].

(b) Warranty Claims. All obligations of Seller for replacement of, or
refund for, damaged, defective or other returned products or for warranty claims
in respect of products sold in the conduct of ARISB Business on or after the
Closing Date which were not held in the inventory of the ARISB Business on the
Closing Date;

(d) Obligations Under Business Licenses. All obligations of Seller
under the Business Licenses;

(e) Obligations Under Tangible Property Leases. All obligations of
Seller under the Tangible Property Leases;

(f) Other Liabilities. All liabilities of Seller for accounts payable,
accrued expenses and other liabilities accrued or reserved for in the Interim
Financial Statements, but only if and to the extent that the same remain unpaid
and undischarged on the Closing Date, together with all additions to or
subtractions therefrom in the ordinary course of business between the date
thereof and the Closing Date; provided, however, that notwithstanding anything
to the contrary contained in this Section 1.3, Buyer shall not assume or agree
to pay, discharge or perform any liability or obligation of Seller in respect of
the Contracts, Business Licenses or Tangible Property Leases (i) existing as of
the Interim Financial Statement Date, and which under GAAP should have been
accrued or reserved for on a balance sheet or the notes thereto as a liability
or obligation, if and to the extent that the same were not accrued or reserved
for on the Interim Financial Statement Date; (ii) existing as of the Closing
Date, and which under GAAP applied in a manner consistent with the application
of those principles in the Interim Financial Statement Date should have been
accrued or reserved for on a balance sheet or the notes thereto as a liability
or obligation, if and to the extent that the same were not accrued or reserved
for on

5
<PAGE> 7
the Statement of Net Assets; (iii) that is not assigned to Buyer consistent with
the provisions of Section 4, except to the extent Buyer has realized the full
financial and business benefits and other rights thereunder as contemplated by
Section 4; or (iv) arising out of any breach by Seller of any provision of any
Contract, Business License, or Tangible Property Lease, including but not
limited to liabilities or obligations arising out of Seller's failure to perform
any contract or other agreement, commitment or lease in accordance with its
terms prior to the Closing.

1.4 Liabilities Not Assumed. Anything contained in this Agreement
to the contrary notwithstanding, Buyer shall not assume and there shall be
excluded from the Assumed Liabilities the following liabilities (the "Excluded
Liabilities"):

(a) Excluded Assets. All liabilities or obligations of Seller or any
predecessor or Affiliate of Seller which relate to any of the Excluded Assets;

(b) Taxes. Any liability or obligation of Seller relating to Taxes
arising from the conduct of the ARISB Business for any period ending on or prior
to the Closing Date (or any portion of a period through the Closing Date) and
any Transfer Taxes, except to the extent accrued for in the balance sheet
included in the Financial Statements;

(d) Benefit Plans. All claims for severance, other employee benefits
(including without limitation benefits mandated by Law) or other compensation or
damages by or on behalf of any employees (present or former), agents or
independent contractors of Seller or by or on behalf of any Governmental or
Regulatory Body in respect of employees (present or former), agents or
independent contractors of Seller involving any alleged employment loss,
violation of any Law or termination of employment actually or constructively (by
operation of Law or pre-existing contract, including, without limitation, any
liability for severance), all liabilities and obligations of Seller or any
predecessor or Affiliate of Seller with respect to employees (present or
former), agents or independent contractors of Seller under any Plan, or in
respect of payments for unemployment compensation or unemployment insurance, all
liabilities and obligation with respect to physical, mental or other health
conditions of employees (present or former), agents or independent contractors
of Seller existing prior to or at the Closing and all other obligations in
respect of employees (present or former), agents or independent contractors of
Seller relating to periods of employment ending on or prior to the Closing Date;

(e) Borrowed Money. Any liability or obligation of Seller or the ARISB
Business for borrowed money;

6
<PAGE> 8
(f) Returns, Warranties. All liabilities and obligations of Seller
with respect to any return, warranty or similar liabilities relating to products
which were produced or sold by Seller or any predecessor or Affiliate of Seller
on or prior to the Closing Date or which were held in the inventory of the ARISB
Business on the Closing Date;

(g) Violation of Law. All liabilities and obligations of Seller or any
predecessor or Affiliate or Seller resulting from, caused by or arising out of,
directly or indirectly, the conduct of the ARISB Business or ownership or lease
of any of the Assets or any properties or assets previously used in the ARISB
Business at any time prior to or on the Closing Date, including without
limitation such of the foregoing as constitute, may constitute or are alleged to
constitute a tort, breach of contract or violation or requirement of any Law of
any Governmental or Regulatory Body, or which relate to, result in or arise out
of the existence or imposition of any liability or obligation to remediate or
contribute or otherwise pay any amount under or in respect of any environmental,
superfund or other environmental cleanup or remedial Laws, occupational safety
and health Laws or other Laws;

(h) InterSystems Settlement. Any liability or obligation arising out
of the Settlement Agreement between InterSystems Corporation (an affiliate of
DataTree, Inc.) and AutoInfo, dated December 28, 1994 (the "Settlement
Agreement"), or otherwise relating to any infringement of InterSystems property
rights as set forth in Schedule 5.4(b)(ii), including, without limitation,
license fees owed to InterSystems and costs associated with any additional
hardware or software necessary to upgrade customer sites pursuant to the
Settlement Agreement;

(i) Crawford Class Action. Any liability or obligation of Seller
arising out of the Crawford Class Action suit, as more fully described on
Schedule 5.10, or any settlement agreement entered into in connection therewith;

(j) Nusbaum Litigation. Any liability or obligation of Seller arising
out of the litigation with Howard G. Nusbaum described on Schedule 5.10, or
otherwise relating to any infringement of Howard G. Nusbaum's property rights;

(k) This Agreement. Any liability or obligation of Seller arising out
of or in connection with or attributable to the negotiation and preparation of
this Agreement and the consummation and performance of the transactions
contemplated hereby, including without limitation, legal, accounting, investment
banking, brokerage or similar fees or expenses; and

(l) Other Matters. Without limitation by the specific enumeration of
the foregoing, any liabilities not expressly assumed by Buyer pursuant to the
provisions of Section 1.3.

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<PAGE> 9

Seller shall pay and discharge when due, or contest in good faith, all of those
liabilities of Seller, the ARISB Business and the Retained Business which Buyer
has not specifically agreed to assume pursuant to the provisions of Section 1.3.

2. Purchase Price.

2.1 Amount. The purchase price (the "Purchase Price") for the
Assets shall be (i) $9.1 million (the "Cash Payment"), plus (ii) the assumption
by Buyer of the Assumed Liabilities, plus or minus (iii) any adjustment required
to be made to the Purchase Price in accordance with Section 3.3.

2.2 Allocation. The Purchase Price shall be allocated among the
Assets as agreed to by the parties hereto on or prior to the Closing Date. Such
purchase price allocation shall be made consistent with Section 1060 of the Code
and the regulations thereunder. Each of the parties hereto shall not, and shall
not permit any of its Affiliates to, take a position (except as required
pursuant to any Order) on any Tax Return, before any Governmental or Regulatory
Body charged with the collection of any Tax, or in any judicial proceeding, that
is in any way inconsistent with the Purchase Price allocation for the Assets
determined in accordance with this Section 2.2 subject to appropriate
adjustments with respect to the adjustment to the purchase price under Section
3.3 and with respect to any indemnification payments hereunder and will
cooperate with each other in a timely filing consistent with such allocation on
Form 8594 with the IRS.

2.3 Proration of Lease Payments, Utility Charges and Other
Payments. If the Closing Date shall fall on a date other than the date on which
payments are due with respect to (i) any Tangible Property Lease or (ii) utility
or similar regular periodic charges with respect to the Assets for which a final
billing has not been received by Seller, any installment of rental payments and
any such utility or similar charge payable with respect to the current period in
which the Closing Date occurs shall be paid by Seller on the basis of the actual
number of days elapsed from the first day of such period to the Closing Date and
the balance shall be paid by Buyer.

2.4 Proration of Taxes. All property taxes, ad valorem taxes and
special assessments payable with respect to a taxable period beginning and
ending before the Closing Date, but not yet due as of the Closing Date, with
respect to any Assets shall be paid by Seller. In the case of any such taxes or
assessments payable with respect to a taxable period beginning before the
Closing Date and ending after the Closing Date, but not yet due as of the
Closing Date, Seller shall pay that portion of such taxes times a fraction, the
numerator of which is the number of days from the beginning of such taxable
period through and including the Closing Date, and the denominator of which is
365, and the balance shall be paid by Buyer.

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<PAGE> 10
3. Closing Date; Consideration; Purchase Price Adjustment.

3.1 Closing. The closing hereunder (the "Closing") shall take place
at 10:00 a.m., New York time, at the offices of Rogers & Wells, 200 Park Avenue,
New York, New York 10166 on December 26, 1997 or at such other date or at such
other place or time as the parties may mutually agree upon, but not later than
five Business Days after all conditions to the respective obligations of the
parties have been satisfied or waived (such date of the Closing is hereinafter
referred to as the "Closing Date").

3.2 Cash Payment. At the Closing, Buyer will pay the Cash Payment
by bank wire transfer in immediately available funds to a bank account
designated in writing to Buyer by Seller not less than two Business Days before
the Closing Date.

3.3 Purchase Price Adjustment.

(a) After the Closing, the Purchase Price shall be adjusted as
follows:

(i) The Purchase Price shall be reduced by, and Seller shall pay
to Buyer, the amount, if any, by which the Closing Date Net Assets (as
hereinafter defined) are less than $1,600,000; or

(ii) The Purchase Price shall be increased by, and Buyer shall
pay to Seller, the amount, if any, by which the Closing Date Net
Assets are greater than $1,600,000.

Such adjustment of the Purchase Price shall be determined and paid in
the manner hereafter set forth in this Section 3.3.

(b) Within 60 days after the Closing Date, Buyer will prepare a
calculation of the Closing Date Net Assets (the "Statement of Net Assets"). The
Statement of Net Assets will present the Closing Date Net Assets in sufficient
detail to determine any amounts owing to Buyer or Seller under Section 3.3(a)
and shall be presented in substantially the form of Exhibit A. The Statement of
Net Assets (i) shall be prepared in a manner consistent with the application of
those principles in the Interim Balance Sheet and (ii) shall present fairly the
Closing Date Net Assets as of the date thereof; provided, however, that (A) no
liabilities or reserves related to Accounts Receivable reflected on the
Statement of Net Assets shall be reduced or eliminated prior to the date of the
Statement of Net Assets except by reason of payment or credit occurring in the
ordinary course of the ARISB Business consistent with past practice, (B) all
Excluded Liabilities and Excluded Assets shall be excluded from the Statement of
Net Assets, and (C) no prepaid expense shall be included on the Statement of Net
Assets unless Buyer will actually realize the benefit thereof subsequent to the
Closing Date.

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<PAGE> 11
A copy of the Statement of Net Assets shall be delivered to Seller
within 60 days after the Closing Date. Not later than 15 days after the date the
Statement of Net Assets is delivered to Seller, Seller shall notify Buyer in
writing whether Seller disagrees with the Statement of Net Assets. Such notice
shall specify with reasonable detail the items on the Statement of Net Assets
with which Seller disagrees. If Seller shall fail to give Buyer such notice
within such 15-day period, Seller shall be deemed to have agreed with Buyer as
to the Statement of Net Assets. Seller shall have the right to review any work
papers of Buyer in preparing the Statement of Net Assets as are reasonably
necessary to verify the accuracy of presentation of the Statement of Net Assets.

(c) In the event that Seller notifies Buyer of its disagreement with
Seller as to the Statement of Net Assets within the 15-day period referred to
above, Seller and Buyer shall use reasonable efforts to resolve any such
dispute, but if a final resolution is not obtained within 30 days after the
Statement of Net Assets is delivered to Buyer, any remaining dispute shall be
resolved by a mutually acceptable, nationally recognized independent accounting
firm (the "Independent Accountant") which does not then have a relationship with
either Seller or Buyer. If Seller and Buyer are unable to mutually agree upon
the Independent Accountant within 10 days after the expiration of such 30-day
period, then Seller and Buyer shall request the American Arbitration
Association, New York, New York, to appoint an independent accounting firm. The
chosen accounting firm may examine all work papers utilized in connection with
the accounting and preparation of the Statement of Net Assets but the scope of
its engagement will be limited to resolving those items which the Seller
identified in its notice to Buyer as to which Seller disagreed and determining
whether such items were properly reflected on the Statement of Net Assets in
accordance with the requirements of this Section 3.3. The decision of such
accounting firm (the "Final Determination") shall be delivered in a written
report addressed to Seller and Buyer and shall be binding and conclusive upon
the parties hereto. The costs and fees of such accounting firm and, if
applicable, its selection, shall be borne one-half by Seller and one-half by
Buyer.

On the fifth Business Day following agreement by Seller and Buyer to
the Statement of Net Assets or the delivery of the Final Determination, as the
case may be, Seller shall pay to Buyer or Buyer shall pay to Seller, in either
case in cash, the amount due under Section 3.3(a).

4. Nonassignable Assets. Without limiting or otherwise affecting
the rights of Buyer pursuant to Sections 8 or 10 hereof, to the extent that
assignment hereunder by Seller to Buyer of any Tangible Property Lease, Business
License or Contract is not permitted or is not permitted without the consent of
any third party, this Agreement shall not be deemed to constitute an undertaking
to assign the same if such consent is not given or if such an undertaking
otherwise would constitute a breach of or cause a loss of benefits thereunder.
Seller will use its best efforts to obtain any and all such third party
consents. If any such third party consent is not obtained before the Closing,
Seller will cooperate with Buyer in any reasonable arrangement designed to
provide to Buyer after the Closing the benefits under the applicable Tangible
Property Lease,

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<PAGE> 12
Business License or Contract, including enforcement for the benefit of Buyer of
any and all rights of Seller against any other Person arising out of breach or
cancellation by such other Person of the Tangible Property Lease, Business
License or Contract and including, if so requested by Buyer, acting as an agent
on behalf of Buyer, or as Buyer shall otherwise reasonably request.

5. Representations and Warranties of Seller. Notwithstanding any
right of Buyer (whether or not exercised) to investigate the ARISB Business or
any right of any party (whether or not exercised) to investigate the accuracy of
the representations and warranties of the other party contained in this
Agreement, Buyer has the right to rely fully upon the representations,
warranties, covenants and agreements of Seller contained in this Agreement.
Seller represents and warrants to Buyer as follows:

5.1 Organization and Qualification. Seller is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate power and
authority to own, lease and operate its properties, including the Assets, and to
carry on the ARISB Business as now being conducted. Seller is duly qualified or
licensed and in good standing to conduct the ARISB Business in each jurisdiction
in which the conduct of the ARISB Business makes such qualification or licensing
necessary. Such of the foregoing states are listed on Schedule 5.1.

5.2 Due Authorization. Seller has all requisite power and
authority to enter into, execute and deliver this Agreement and to perform its
obligations hereunder. The execution and delivery by Seller of this Agreement,
the performance by it of its obligations hereunder, and the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate and stockholder action on the part of Seller. This Agreement has been
duly and validly executed and delivered by Seller and constitutes, and upon the
execution and delivery by Seller of any agreements required for Closing such
agreements will constitute, the legal, valid and binding obligation of Seller
enforceable in accordance with its terms, except as such enforcement may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting the rights and remedies of creditors and (ii)
general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law).

5.3 Freedom to Contract; Third Party Options; Interests in Other
Entities.

(a) Freedom to Contract. Except as set forth on Schedule 5.3(a), the
execution and delivery of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, (i) violate or conflict with the
provisions of the certificate of incorporation or by-laws of Seller, (ii) result
in the imposition of any Lien under, cause the acceleration of any obligation
under, or violate or conflict with the terms, conditions or provisions of, or
constitute a default (with or without notice or lapse of time or both) under, or
give rise to a right of termination or cancellation or loss of a benefit under
any ARISB Contract (as hereinafter defined)

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or Business Licenses to which Seller is a party or by which it or any of its
properties is bound, or require Seller to obtain any consent, approval or
action of, make any filing with or give any notice to any Person as a result of
or under the terms of, any ARISB Contract, Tangible Property Lease or Business
License to which Seller is a party or by which any of the Assets are bound,
except for filings with Governmental or Regulatory Bodies as described in
Section 7.2 and the expiration of the applicable waiting period, if any, under
the HSR Act, (iii) result in a breach or violation by Seller of any of the
terms, conditions or provisions of any Law or Order.

(b) No Third Party Options. There are no existing agreements with,
options or rights of, or commitments to any person to acquire any of the Assets
or any interest therein, except for those contracts entered into in the normal
course of business consistent with past practice for the sale of Inventory.

(c) No Interest in Other Entities. Except for interests in the
entities described in Schedule 5.3(c), no shares of any corporation of any
ownership or other investment interest, either of record, beneficially or
equitably, in any association, partnership, joint venture or other legal entity
are included in the Assets.

5.4 Assets.

(a) Tangible Property Leases. Seller has heretofore delivered or made
available to Buyer true, correct and complete copies of all of the Tangible
Property Leases listed on Schedule 1.1(d). The Tangible Property Leases are
valid and enforceable in accordance with their terms and in full force and
effect. Seller is, and to Seller's knowledge the other parties thereto are, in
compliance with the provisions thereof and not in default in the performance,
observance or fulfillment of any obligation, covenant or condition contained
therein and Seller has not received any notice of default or termination
thereunder. Except as set forth on Schedule 5.4(a), no approval or consent of
any Person is needed so that the interest of Seller in the Tangible Property
shall continue to be in full force and effect and all of Seller's rights under
the Tangible Property Leases will be conveyed to Buyer upon consummation of the
transactions contemplated by this Agreement.

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(b) Intangible Property; Software.

(i) Schedule 5.4(b)(i) hereto sets forth a true, correct and
complete list, as of the date of this Agreement, of all intangible property
of the types described in Section 1.1(h) of this Agreement, and any
Business Licenses relating to the intangible property (other than trade
secrets, know- how and goodwill attendant to the intangible property and
other intellectual property rights not reducible to schedule form) owned,
licensed to or used by Seller with respect to the conduct of the ARISB
Business, true, correct and complete copies of which have been delivered or
made available to Buyer. Seller warrants that the occurrence in or use by
the Software of dates on or after January 1, 2000 will not have a material
adverse effect on the performance of the Software with respect to
date-dependent data, computations, output, or other functions (including,
without limitation, calculating, comparing and sequencing); and

(ii) except as set forth on Schedule 5.4(b)(ii), there are no
pending or, to the knowledge of Seller, threatened claims or actions of any
nature affecting the Intangible Property or any rights therein, and, to the
knowledge of Seller, none of the Intangible Property infringes upon the
rights of any other Person; to the knowledge of Seller, such Intangible
Property is not infringed upon by any other Person. Except as set forth on
Schedule 5.4(b)(ii), Seller has (i) all right, title and interest in, or a
valid and binding license to use, the Intangible Property, as indicated on
Schedule 5.4(b)(ii); (ii) Seller has the right to use the Intangible
Property; (iii) all registrations with and applications to Governmental or
Regulatory Bodies in respect of the Intangible Property are valid and in
full force and effect and are not subject to the payment of any Taxes or
maintenance fees or the taking of any other actions by Seller to maintain
their validly or effectiveness; (iv) there are no restrictions (other than
those which have been complied with or waived) on the direct or indirect
transfer of any license, or any interest therein, held by Seller in respect
of the Intangible Property; (v) Seller has delivered to Buyer prior to the
execution of this Agreement documentation with respect to any invention,
process, design, computer program or other know-how or trade secret
included in the Intangible Property, which documentation is accurate in all
material respects and reasonably sufficient in detail and content to
identify and explain such invention, process, design, computer program or
other know-how or trade secret and to facilitate its use without reliance
on the special knowledge or memory of any Person; (vi) Seller has taken
reasonable measures to protect the secrecy, confidentiality and value of
its trade secrets in respect of the ARISB Business; (vii) Seller is not,
nor has it received any notice that it is, in default (or with the giving
of notice or lapse of time or both, would be in default) under any license
to use the Intangible Property; (viii) Seller does not have any knowledge
that such Intellectual Property is being infringed upon by any other
Person; (ix) no claim is pending or, to the knowledge of Seller, has been
made that Seller is infringing any rights of any other Person in connection
with the Intangible Property nor is there a reasonable

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basis upon which any such claim may be asserted; and (x) all of the
Intangible Property is valid and in good standing. Except as separately
identified on Schedule 5.4(b)(ii), no approval or consent of any Person is
needed so that the interest of Buyer in the Intangible Property shall
continue to be in full force and effect following the transactions
contemplated by this Agreement;

(iii) Schedule 5.4(b)(i) separately lists and identifies all (A)
computer programs, (B) computer databases (including, but not limited to,
databases used in conjunction with such computer programs) and (C)
documentation, specifications, manuals and materials associated therewith,
owned or licensed by Seller and used in the conduct of the ARISB Business,
excluding generally available off-the-shelf microcomputer and work station
software (collectively, the "Software Rights"). Except as set forth in
Schedule 5.4(b)(iii), all right, title and interest in and to the Software
(as hereinafter defined) is owned by Seller free and clear of all Liens,
are fully transferable to Buyer, and no party other than Seller has any
interest in the Software. Seller owns, or is licensed to, or otherwise has,
the right to use all Software Rights set forth on Schedule 5.4(b)(i).
Except as set forth on Schedule 5.4(b)(iii), Seller has not received
written notice of any adversely held patent, invention, trademark, service
mark or trade name of any other Person, or notice of any charge or claim of
any Person relating to such Software Rights or any process or confidential
information of Seller nor is there a reasonable basis upon which such a
claim or charge may be asserted;

(iv) Except under agreements listed on Schedule 5.4(b)(iv), no
licensing fees, royalties or payments are due or payable by Seller in
connection with the use of the Intangible Property, other than maintenance
fees;

(v) The computer software included in the Software Rights (the
"Software") performs in accordance with the documentation and other written
materials used in connection with the Software and is free from material
defects in programming and operations, is in machine readable form,
contains all current revisions of such Software, and includes all computer
programs, materials, tapes, know- how, object and source codes, other
written materials, know-how and processes related to the Software. Seller
has delivered to Buyer complete and correct copies of the Software in its
current form and all user and technical documentation related thereto;

(vi) All copies of the Software embodied in physical form are
being delivered to Buyer at or prior to the Closing;

(vii) Seller has kept secret and has not disclosed the source
code for the Software to any person or entity other than certain employees
of Seller who are subject to the terms of a binding confidentiality
agreement with respect thereto. Seller has

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taken all appropriate measures to protect the confidentiality and
proprietary nature of the Software, including without limitation, the use
of the confidentiality agreements with all of its employees having access
to the Software source and object code; and

(viii) No employee of Seller, with the exception of Howard G.
Nusbaum, is in default under, and the consummation of the transactions
contemplated by this Agreement will not result in a default of, any term of
any employment contract, agreement or arrangement relating to the Software
or any noncompetition arrangement, or any other ARISB Contract or any
restrictive covenant relating to the Software or its development or
exploitation. Seller does not have any obligation to compensate any Person,
with the possible exception of Howard G. Nusbaum, for the development, use,
sale or exploitation of the Software nor has Seller granted to any other
Person or entity any license, option or other rights to develop, use, sell
or exploit in any manner the Software whether requiring the payment of
royalties or not.

(d) Contracts. Schedule 5.4(d) sets forth all of the contracts and
other agreements and Tangible Property Leases with respect to the ARISB Business
(collectively, the "ARISB Contracts"). True, correct and complete copies (or if
oral, then reasonably complete and accurate written descriptions) of all of the
ARISB Contracts, together with all amendments and supplements thereto and all
waivers of any terms thereof, have been delivered by Seller to Buyer. Except as
disclosed on Schedule 5.4(d), all of the ARISB Contracts are legal, valid, in
full force and effect and binding upon Seller and, to the knowledge of Seller,
the other parties thereto in accordance with their terms, subject to the
qualifications that enforcement of the rights and remedies created thereby is
subject to: (i) bankruptcy, insolvency, reorganization, moratorium and other
laws of general application affecting the rights and remedies of creditors and
(ii) general principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law) and Seller has satisfied in full
or provided for all of its liabilities and obligations thereunder requiring
performance prior to the date hereof in all material respects, is not, and has
not received notice that it is, in default under any of them, nor does any
condition exist that with notice or lapse of time or both would constitute such
a default. To the knowledge of Seller, no other party to any such ARISB Contract
is in default thereunder, nor does any condition exist that with notice or lapse
of time or both would constitute such a default. Except as separately identified
on Schedule 5.4(d), no ARISB Contract requires the consent of any party to its
assignment in connection with the transactions contemplated hereby.

Subject to the limitations contained in Section 4, all of Seller's
rights under the ARISB Contracts will be conveyed to Buyer, upon consummation of
the transactions contemplated by this Agreement, and except as set forth on
Schedule 5.4(d), such consummation

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will not (A) result in or give to any Person any right of termination,
cancellation, acceleration or modification in or with respect to, (B) result in
or give to any Person any additional rights or entitlement to increased,
additional, accelerated or guaranteed payments under, or (C) result in the
creation or imposition of any Lien upon any of the Assets. Seller is not a
party to or bound by any ARISB Contract that has had or could reasonably be
expected to have, a Material Adverse Effect.

(e) Licenses. Schedule 1.1(f) contains a true and complete list of all
licenses, permits, franchises, approvals and authorizations issued by any
Governmental or Regulatory Body in any manner necessary to Seller to conduct the
ARISB Business. Seller has delivered to Buyer true and complete copies of all
such licenses, permits, franchises, approvals and authorizations. Except as
disclosed in Schedule 5.4(e), (i) Seller owns or validly holds all licenses,
permits, franchises, approvals and authorizations issued by any Guarantors or
Regulatory Body that are in any manner necessary for Seller to conduct the ARISB
Business; (ii) each License is valid, binding and in full force and effect;
(iii) Seller is not, nor has it received any notice that it is, in default (or
with the giving of notice or lapse of time or both, would be in default) under
any License; and the execution, delivery and performance by Seller of this
Agreement and the transactions contemplated hereby will not (A) result in or
give to any Person any right of termination, cancellation, acceleration or
modification in or with respect to, (B) result in or give any Person any
additional rights or entitlement to increased, additional, accelerated or
guaranteed payments under, or (C) result in the creation or imposition of any
Lien upon Seller, or any of the Assets. All such Licenses are renewable by their
terms in the ordinary course of business without the need to comply with any
special qualification procedures or to pay any amounts other than routine filing
fees.

(f) Accounts Receivable. The Accounts Receivable described on Schedule
1.1(a) constitute all accounts receivables, notes, bonds and other evidences of
indebtedness of and rights relating to or arising from the ARISB Business.
Except as set forth in Schedule 5.4(f), the Accounts Receivable (i) arose from
bona fide sales transactions in the ordinary course of business and are payable
on ordinary trade terms, (ii) are not subject to any valid set-off or
counterclaim, (iii) do not represent obligations for goods sold on consignment,
on approval or on a sale-or-return basis or subject to any other repurchase or
return arrangement, (iv) are collectible in the ordinary course of business
consistent with past practice in the aggregate recorded amounts thereof, net of
any applicable reserve reflected in the balance sheet included in the Financial
Statements, and (v) are not the subject of any Actions or Proceedings brought by
or on behalf of Seller. The allowance for collection losses on the Financial
Statements has been determined in accordance with GAAP consistent with past
practices.

(g) Entire Business. Except as set forth on Schedule 5.4(g), the
Assets collectively comprise all of the rights, properties and assets currently
used, necessary or appropriate to operate the ARISB Business in the manner in
which that business was operated

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immediately prior to Closing. The sale of the Assets by Seller to Buyer
pursuant to this Agreement will effectively convey to Buyer the entire ARISB
Business and all of the tangible and intangible property used or held for use
by Seller (whether owned, leased or held under license by Seller, by any of
Seller's Affiliates or by others) in connection with the conduct of the ARISB
Business as heretofore conducted by Seller (except for the Excluded Assets).
Except as set forth in Schedule 5.4(g), there are no shared facilities, rights,
assets or services which are used in connection with the ARISB Business and any
business or other operations of Seller or any of Seller's Affiliates other than
the ARISB Business.

(h) Tangible Property. The Tangible Property described in Schedule
1.1(b) constitutes all the items of tangible personal property owned by, in the
possession of, or used by Seller solely in connection with the ARISB Business,
except Inventory. The Tangible Property listed in Schedule 1.1(b) plus the
Inventory constitute all tangible personal property used solely for the conduct
by Seller of the ARISB Business as now conducted. All Tangible Property of
Seller necessary for the operation of the ARISB Business is in good operating
condition and repair, ordinary wear and tear excepted. Except as stated on
Schedule 1.1(b), no Tangible Property is held under any lease, security
agreement, conditional sales contract, or other title retention or security
arrangement, or is located other than in the possession of Seller.

(i) Inventory. All Inventory was acquired and has been maintained in
the ordinary course of the ARISB Business; (i) is of good and merchantable
quality; (ii) consists substantially of a quality, quantity and condition
usable, leasable or saleable in the ordinary course of the ARISB Business; (iii)
is valued at the lower of cost or market; and (iv) is not subject to any
write-down or write-off. Seller is not under liability or obligation with
respect to the return of inventory in the possession of wholesalers, retailers
or other customers.

5.5 Financial Information.

(a) In Seller's opinion, except as set forth on Schedule 5.5(a), the
pro forma financial statements attached to Schedule 5.5(a) (the "Financial
Statements") fairly present the results of operations that would have occurred
if the portion of the Business comprising the ARISB Business had been operated
during the periods indicated in a separate entity. The Financial Statements were
prepared from and are consistent with the financial records of Seller using the
assumptions set forth on Schedule 5.5(a).

(b) The interim period financial statements attached as Schedule
5.5(b) (the "Interim Financial Statements") fairly present the financial
condition and results of operations of the ARISB Business as of the respective
dates thereof and for the respective periods covered thereby.

(c) Seller has no liabilities or obligations with respect to the ARISB
Business, either direct or indirect, matured or unmatured or absolute,
contingent or otherwise, except:

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(i) those liabilities or obligations set forth on the Interim
Financial Statements and not heretofore paid or discharged;

(ii) liabilities arising in the ordinary course of business under
any ARISB Contract; and

(iii) those liabilities or obligations incurred, consistently
with past business practice, in or as a result of the normal and
ordinary course of business since the date of the Interim Financial
Statements (the "Interim Financial Statement Date").

For purposes of this Agreement, the term "liabilities" shall include, without
limitation, any direct or indirect indebtedness, guaranty, endorsement, claim,
loss, damage, deficiency, cost, expense, obligation or responsibility, whether
fixed or contingent, known or unknown, asserted or unasserted, choate or
inchoate, liquidated or unliquidated, secured or unsecured.

5.6 Title to Assets. Seller has, and at the Closing Seller will
convey to Buyer, good, valid and marketable title (or in the case of contract
rights, all rights) to all of the Assets free and clear of all Liens, except for
Permitted Liens.

5.7 Employment and Similar Arrangements.

(a) Schedule 5.7 contains a true and complete list of all persons
employed by Seller in connection with the ARISB Business and a list of any and
all agreements, arrangements or understandings affecting such persons. Schedule
5.7 includes a complete list of all non-clerical employees of Seller who have
been involved in the development, production, distribution or sale of the Assets
or the Hollander Interchange at any time during the period from January 1, 1994
until the date hereof, including their respective positions and complete
addresses. Except as set forth on Schedule 5.7, there are no employment or
severance arrangements, agreements or understandings between Seller or its
Affiliates, on the one hand, and any of the employees of Seller listed on
Schedule 5.7, on the other hand, with respect to the conduct of the ARISB
Business. Except as disclosed on Schedule 5.7, Seller has complied in all
material respects with its obligations related to, and is not in breach of or in
default under, any of the foregoing agreements and there are no complaints,
grievances or arbitration, employment related litigation, administrative
proceedings or controversies either pending or, to the knowledge of Seller,
threatened, involving any employee listed on Schedule 5.7. Neither Seller nor
any Affiliate of Seller is a party to or bound by any employment or consulting
agreement or any collective bargaining agreement or other labor agreement, or
any pension, retirement, stock option, stock purchase, savings, profit sharing,
deferred compensation, bonus, group insurance or other incentive or welfare
contract, plan or arrangement relating to the ARISB Business except as set forth
on Schedule 5.7.

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Seller has not agreed to recognize any union or other collective
bargaining unit, nor has any union or other collective bargaining unit been
certified as representing any of Seller's employees. Seller has no knowledge of
any organizational effort currently being made or threatened by or on behalf of
any labor union with respect to employees of the Seller. There is no labor
strike, slowdown, work stoppage or lockout actually pending or threatened
against or affecting Seller.

Except as listed or described on Schedule 5.7, Seller, with respect to
employees of the ARISB Business, (i) is and has been in compliance for the past
five years with all applicable Laws regarding employment and employment
practices, including without limitation, the Employee Retirement Income Security
Act of 1974, as amended ("ERISA"), and those laws relating to terms and
conditions of employment, wages and hours, occupational safety and health and
workers' compensation and is not engaged in any unfair labor practices, (ii) has
no unfair labor practice charges or complaints pending or threatened against it
before the National Labor Relations Board, (iii) has no grievances pending or
threatened against it, and (iv) has no charges pending before the Equal
Employment Opportunity Commission of any state or local agency responsible for
the prevention of unlawful employment practices.

5.8 Condition of Assets. All the Assets are in good operating
condition and repair, subject to normal wear and maintenance, are useable in the
regular and ordinary course of business and conform to applicable Laws and
Business Licenses relating to their construction, use and operation.

5.9 Transactions with Affiliates. Except as set forth on Schedule
5.9, none of the Assumed Liabilities comprises any obligation to Seller or any
of its Affiliates.

5.10 Litigation. Except as described in Schedule 5.10, (a) there is
no Action or Proceeding pending or, to the knowledge of Seller, threatened
against Seller which relates to the ARISB Business, the Assets or the Assumed
Liabilities, which, if adversely determined, could reasonably be expected to
have a Material Adverse Effect or result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement; and (b)
there is no Order to which Seller is subject which relates to the Acquired
Business, the Assets or the Assumed Liabilities and which has or could
reasonably be expected to have a Material Adverse Effect.

5.11 Compliance with Law. Except as set forth on Schedule 5.11, (i)
Seller is not in violation of any Law or Order to which the ARISB Business or
the Assets or the Assumed Liabilities are subject; and (ii) the Business
Licenses comprise all such licenses, permits, franchises, approvals and
authorizations necessary for the conduct of the ARISB Business or the ownership
or use of the Assets.

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5.12 Taxes. Except as set forth on Schedule 5.12, (i) all Tax
Returns required to be filed by or with respect to Seller have been duly and
timely filed, and all such Tax Returns are true, correct and complete in all
material respects; (ii) Seller has duly and timely paid all Taxes that are due,
or claimed or asserted by any taxing authority to be due, from or respect to it;
(iii) no claim for assessment or collection of Taxes has been asserted against
Seller or any of the Assets; (iv) no audit or other proceeding by any court,
governmental or regulatory authority, or similar person is pending or, to the
knowledge of Seller, threatened with respect to any Taxes due from or with
respect to Seller; (v) no claim has been made within the past three years by any
taxing authority where Seller does not currently file Tax Returns with respect
to the ARISB Business that the ARISB Business is or may be subject to taxation
by that jurisdiction; (vi) Seller has withheld and paid all Taxes required to be
withheld in connection with any amounts paid or owing with respect to the ARISB
Business to any employee, creditor, independent contractor or other third party;
(vii) Seller is not a foreign person for purposes of Section 1445 of the
Internal Revenue Code of 1986, as amended (the "Code"); and (viii) none of the
Tangible Property Leases is a Section 467 rental agreement for purposes of
Section 467 of the Code.

5.13 Environmental Matters. (i) No Order has been issued, no
Environmental Claim has been filed, no penalty has been assessed and no
investigation or review is pending or threatened by any Governmental or
Regulatory Body with respect to any alleged failure by Seller to have any
license required under applicable Environmental Laws in connection with the
conduct of the ARISB Business and there are no facts or circumstances in
existence which could reasonably be expected to form the basis for any of the
foregoing; (ii) no Hazardous Materials are or, to the knowledge of Seller, have
been present on any of the real properties operated or leased by Seller in
connection with the conduct of the ARISB Business where such presence or release
would result in any liability of Buyer after the Closing; and (iii) Seller is
not in violation of, and has not received any claim or notice that it is in
violation of, any Environmental Law in connection with the conduct of the ARISB
Business.

5.14 Books and Records. The books, records and accounts of Seller
maintained with respect to the ARISB Business accurately and fairly reflect, in
reasonable detail, the transactions and the assets and liabilities of Seller
with respect to the ARISB Business. Seller has not engaged in any transaction
with respect to the ARISB Business, maintained any bank account for the ARISB
Business or used any of the funds of Seller in the conduct of the ARISB Business
except for transactions, bank accounts and funds which have been and are
reflected in the normally maintained books and records of the ARISB Business.

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5.15 Brokers. Except for Lehman Brothers, whose fees, commissions
and expenses are the sole responsibility of Seller, all negotiations relative to
this Agreement and the transactions contemplated hereby have been carried out by
Seller directly with Buyer without the intervention of any Person on behalf of
Seller in such manner as to give rise to any valid claim by any Person against
Buyer for a finder's fee, brokerage commission or similar payment.

5.16 Nusbaum. Except for the interests of Howard Nusbaum under the
Nusbaum Agreement, Seller has the full right, title and interest to the
intellectual property used in developing, maintaining or operating the products
described in Schedule 8.1(j) hereof, free and clear of all Liens. Seller has
full authority to grant to Buyer the license contemplated by Section 8.1(j) of
this Agreement, without the consent of any Person, and the rights granted
pursuant to such license are fully transferable by Seller to Buyer. The grant of
the license contemplated by Section 8.1(j) hereof and the proposed use thereof
by Buyer does not infringe upon or violate the rights or interests of any
Person, including the rights of Howard G. Nusbaum.

5.17 Conduct of the Business Since the Interim Financial Statements
Date. Since the Interim Financial Statements Date, Seller has not with respect
to the ARISB Business:

(a) incurred any liabilities, other than liabilities incurred in the
ordinary course of business consistent with past practice, or discharged or
satisfied any lien or encumbrance, or paid any liabilities, other than in the
ordinary course of business consistent with past practice, or failed to pay or
discharge when due any liabilities of which the failure to pay or discharge has
caused or will cause any material damage or risk of material loss to it or any
of its assets or properties;

(b) sold, encumbered, assigned or transferred any assets or properties
which would have been included in the Assets, except for the sale of Inventory
in the ordinary course of business consistent with past practice;

(c) created, incurred, assumed or guaranteed any indebtedness for
money borrowed, or mortgaged, pledged or subjected any of its Assets to any
mortgage, lien, pledge, security interest, conditional sales contract or other
encumbrance of any nature whatsoever, except for Permitted Liens;

(d) made or suffered any amendment or termination of any material
agreement, contract, commitment, lease or plan to which it is a party or by
which it is bound, or cancelled, modified or waived any substantial debts or
claims held by it or waived any rights of substantial value, whether or not in
the ordinary course of business;

(e) declared, set aside or paid any dividend or made or agreed to make
any other distribution or payment in respect of its capital shares or redeemed,
purchased or otherwise acquired or agreed to redeem, purchase or acquire any of
its capital shares;

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(f) suffered any damage, destruction or loss, whether or not covered
by insurance, (i) materially and adversely affecting its business, operations,
assets, properties or prospects or (ii) of any item or items carried on its
books of account individually or in the aggregate at more than $10,000, or
suffered any repeated, recurring or prolonged shortage, cessation or
interruption of supplies or utility or other services required to conduct its
business and operations;

(g) received notice or had knowledge of any actual or threatened
strike or other occurrence, event or condition of any similar character which
has had or might have an adverse effect on its business, operations, assets,
properties or prospects;

(h) made commitments or agreements for capital expenditures or capital
additions or betterments exceeding in the aggregate $10,000 except such as may
be involved in ordinary repair, maintenance or replacement of its assets;

(i) increased the salaries or other compensation of, or made any
advance (excluding advances for ordinary and necessary business expenses and
salary increases following annual reviews conducted in the ordinary course of
business) or loan to, any of its employees or made any increase in, or any
addition to, other benefits to which any of its employees may be entitled;

(j) changed any of the accounting principles followed by it or the
methods of applying such principles;

(k) entered into any transaction other than in the ordinary course of
business consistent with past practice; or

(l) suffered any material adverse change in its business, operations,
assets, properties, prospects or condition (financial or otherwise).

5.18 Memorandum of Understanding. The final settlement agreement
relating to the memorandum of understanding in connection with the settlement of
the Crawford class action litigation, as more fully described on Schedule 5.10,
will apply the fees on a per yard, per user basis.

5.19 Disclosure. No representation or warranty made by Seller in
this Agreement and no written statement, list, document or other written
material furnished to Buyer by Seller contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements therein, in light of the circumstances in which they were made, not
misleading.

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5.20 No Other Representations. Seller shall not be deemed to have
made to Buyer any representation or warranty other than as expressly made by
Seller in Section 5 hereof. Without limiting the generality of the foregoing,
and notwithstanding any otherwise express representations and warranties made by
Seller in this Section 5, Seller makes no representation or warranty to the
Buyer with respect to:

(a) any projections, estimates or budgets heretofore delivered to or
made available to Buyer of future revenues, expenses or expenditures or future
results of operations of the ARISB Business; or

(b) except as expressly covered by a representation and warranty
contained in this Section 5, any other information or documents (financial or
otherwise) made available to Buyer or its counsel, accountants or advisers with
respect to the ARISB Business.

6. Representation and Warranties of Buyer. Buyer represents and
warrants to Seller that:

6.1 Organization, Power and Standing. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Buyer has all requisite corporate power and authority and all
necessary licenses and permits to carry on its business as it has been and is
currently being conducted, and to own, lease and operate the properties and
assets used in connection therewith and to be acquired pursuant hereto.

6.2 Authorization. The execution and delivery of this Agreement by
Buyer and the performance by it of its obligations hereunder and the
transactions contemplated hereby, have been duly and validly authorized by all
necessary action on the part of Buyer. This Agreement has been duly executed and
delivered by Buyer and is a valid and binding obligation of Buyer enforceable in
accordance with its terms, except as such enforcement may be limited by (i)
bankruptcy, insolvency, reorganization, moratorium and other laws of general
application affecting the rights and remedies of creditors and (ii) general
principles of equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law).

6.3 Freedom to Contract. The execution and delivery of this
Agreement do not, and the consummation of the transactions contemplated hereby
will not, (i) violate or conflict with the provisions of the certificate of
incorporation or by-laws or other similar governing instrument of Buyer, (ii)
result in the imposition of any lien under, cause the acceleration of any
obligation under, or violate or conflict with the terms, conditions or
provisions of any note, indenture, mortgage, lease, guaranty, employment
agreement, non-competition agreement or other agreement or instrument to which
Buyer is a party or by which it is bound, (iii) result in a breach by Buyer of
any of the terms, conditions or provisions of any Law or Order or (iv) except
for filings with any Governmental or Regulatory Body as described in Section
7.2, and the expiration of the applicable waiting period under the HSR Act, if
any, require any consent or approval of, filing with or notice to any
Governmental or Regulatory Body.

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6.4 Litigation. Buyer is not a party to any Action or Proceeding
pending or, to the knowledge of Buyer, threatened, which, if adversely
determined, would reasonably be expected to adversely affect or restrict the
ability of Buyer to consummate the transactions contemplated by this Agreement.
There is no Order to which Buyer is subject which would reasonably be expected
to adversely affect or restrict the ability of Buyer to consummate the
transactions contemplated by this Agreement.

6.5 Brokers. All negotiations relative to this Agreement and the
transactions contemplated hereby have been carried out by Buyer directly with
Seller without the intervention of any Person on behalf of Buyer in such manner
as to give rise to any valid claim by any Person against Seller for a finder's
fee, brokerage commission or similar payment.

7. Pre-Closing Covenants.

7.1 Transactions and Conduct of Business Pending the Closing.

(a) Examinations and Investigations. At any time prior to the Closing
Date, Buyer and its lenders, if any, shall be entitled, through their employees
and representatives to make such investigation of the assets, properties,
business and operations of the ARISB Business, and such examination of the
books, records, financial condition and operations of the ARISB Business as
Buyer or its lenders, if any, may reasonably request. Any such investigation and
examination shall be conducted at reasonable times and under reasonable
circumstances; provided, however, that such investigation shall not unreasonably
interfere with the business operations of Seller. All information provided to
Buyer pursuant to this Section 7.1(a) shall be subject to the provisions of the
Confidentiality Agreement.

(b) Conduct of. During the period from the date of the Agreement and
continuing until the Closing Date, Seller will, in respect of its conduct of the
ARISB Business, and will cause its Affiliates to:

(i) use their respective best efforts to (i) carry on the ARISB
Business in the usual, regular and ordinary course as presently conducted
and consistent with past practice, (ii) keep the ARISB Business intact,
(iii) keep available the services of the present employees of the ARISB
Business, and (iv) use best efforts to maintain the goodwill associated
with the ARISB Business, including but not limited to preserving the
relationships of customers, suppliers and others having business dealings
with the ARISB Business;

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(ii) maintain the Assets in good condition, and except for sales of
products in the ordinary course of business, not move any Asset to any
location other than the facilities used in the conduct of the ARISB
Business;

(iii) not sell, lease or dispose of, or make any contract for the
sale, lease or disposition of, or subject to Lien, any Assets other than
sales of products in the ordinary course of the Business;

(iv) not intentionally incur any liability or obligation (absolute,
accrued, contingent or otherwise) or assume, guarantee, endorse or
otherwise as an accommodation become responsible for the obligations of any
other person, other than in the ordinary course of business;

(v) not amend or terminate any Contract or other agreement, other than
in the ordinary course of business consistent with past practices;

(vi) not make any change in financial or tax accounting methods,
principles or practices unless required by GAAP or applicable law;

(vii) not extend credit in the sale of products, collection of
receivables or otherwise, other than in the ordinary course of business
consistent with past practices;

(viii) not fail to maintain its books, accounts and records in the
usual, regular and ordinary manner on a basis consistent with prior
periods;

(ix) not grant to any employee of the ARISB Business any increase in
compensation or in severance or termination pay, grant any severance or
termination pay, or enter into any employment agreement with any employee,
other than as a result of such employee's annual review conducted in the
ordinary course of business consistent with past practice and except as may
be required under employment or termination agreements in effect on the
date of this Agreement;

(x) not enter into any agreement, including an agreement to purchase
or lease Assets, which includes an aggregate payment or commitment on the
part of either party of more than $50,000;

(xi) not adopt or amend any Plan or collective bargaining agreements,
except as required by Law; and

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<PAGE> 27
(xii) not take or omit to take any action as a result of which any
representation or warranty of Seller would be rendered untrue or incorrect
if such representation or warranty were made immediately following the
taking or failure to take such action.

(c) Notice of Events. Seller shall promptly notify Buyer of (i) any
Action or Proceeding pending, or to Seller's knowledge, threatened which
challenges the transactions contemplated hereby, (ii) any event, condition or
circumstance occurring from the date hereof through the Closing Date that would
constitute a violation or breach of this Agreement, or (iii) any event,
occurrence, transaction or other item which would have been required to have
been disclosed on any schedule or statement delivered hereunder had such event,
occurrence, transaction or item existed on the date hereof. However, such notice
shall not operate to cure any breach of any such representation of warranty made
in this Agreement or the Exhibits and Schedules a part hereof.

(d) Third Party Consents. Seller and Buyer agree to use commercially
reasonable efforts to take, or cause to be taken, all actions and to do, or
cause to be done, all things necessary, proper or advisable to consummate and
make effective as promptly as practicable the transactions contemplated by this
Agreement, including, without limitation, the obtaining of all necessary
waivers, consents and approvals and the continuance in full force and effect of
the permits, contracts and other agreements set forth on the Schedules to this
Agreement and the fulfillment of each condition to the other party's obligations
set forth in Section 8.

(e) Acquisition Proposal. From and after the date of this Agreement,
Seller shall not, nor shall it authorize or permit any officer, director or
employee of, or any investment banker, attorney, accountant or other
representative retained by Seller to, solicit, initiate or encourage submission
of any proposal or offer (including by way of furnishing information) from any
person which constitutes, or may reasonably be expected to lead to, any
Acquisition Proposal. As used in this Agreement, "Acquisition Proposal" shall
mean any proposal for a merger or other business combination involving the ARISB
Business or any proposal or offer to acquire in any manner a substantial equity
interest in, or a substantial portion of the assets of the ARISB Business.

7.2 Regulatory and Other Approvals. Seller and Buyer will (a) take
all commercially reasonable steps necessary or desirable, and proceed diligently
and in good faith and use all commercially reasonable efforts, as promptly as
practicable to obtain all consents, approvals or actions of, to make all filings
with and to give all notices to Governmental or Regulatory Bodies required of
such parties or their Affiliates to consummate the transactions contemplated
hereby (including but not limited to reports, consents and any other information
requested or deemed necessary by the FTC to approve the transactions
contemplated hereby, all

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<PAGE> 28
as required by that certain Agreement Containing Consent Order, dated as of May
23, 1997 (the "Consent Order"), by and between the FTC and ADP), (b) provide
such other information and communications to such Governmental or Regulatory
Bodies as such parties or such Governmental or Regulatory Bodies may reasonably
request in connection therewith and (c) cooperate with each other as promptly
as practicable in connection with the foregoing. Each party hereto will
provide prompt notification to the other party hereto or its Affiliates when
any such consent, approval, action, filing or notice referred to in clause (a)
above is obtained, taken, made or given, as applicable, and will advise each
other party hereto of any communications (and, unless precluded by Law, provide
copies to each other party hereto of any such communications that are in
writing) with any Governmental or Regulatory Body regarding any of the
transactions contemplated by this Agreement. In addition to and not in
limitation of the foregoing, Seller and Buyer will (a) take promptly all
actions necessary to make the filings required of each of them or their
Affiliates under the HSR Act, (b) comply at the earliest practicable date with
any request for additional information received by each of them or their
Affiliates from the FTC or the Antitrust Division of the Department of Justice
pursuant to the HSR Act and (c) cooperate with each other in connection with
any filing under the HSR Act and in connection with resolving any investigation
or other inquiry concerning the transactions contemplated by this Agreement
commenced by either the FTC, the Antitrust Division of the Department of
Justice or state attorneys general.

7.3 Publicity. Prior to the Closing, neither party will issue or
cause the publication of any press release or other public announcement with
respect to this Agreement or the transactions contemplated hereby without the
prior consent of the other party, which consent will not be unreasonably
withheld; provided, however, that nothing herein will prohibit either party from
issuing or causing publication of any such press release or public announcement
to the extent that such party determines such action to be required by Law or
the rules of any national stock exchange applicable to it or its Affiliates, in
which event the party making such determination will, if practicable in the
circumstances, use reasonable efforts to allow the other party reasonable time
to comment on such release or announcement in advance of its issuance.

7.4 Notification.

(a) Seller shall notify Buyer, and Buyer shall notify Seller, of any
litigation, arbitration or administrative proceeding pending or, to its
knowledge, threatened against the Seller or Buyer, as the case may be, which
challenges the transactions contemplated hereby.

(b) Seller will provide prompt written notice to Buyer of any change
in any of the information contained in its representations and warranties made
in this Agreement or any Exhibits or Schedules referred to herein or attached
hereto and shall promptly furnish any information which Buyer may reasonably
request in relation to such change; provided, however, that such notice shall
not operate to cure any breach of the representations and warranties made in
this Agreement or any Exhibits or Schedules referred to herein or attached
hereto.

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8. Conditions Precedent to Closing.

8.1 Conditions Precedent to the Obligations of Buyer to Complete
the Closing. The obligations of Buyer to enter into and complete the Closing are
subject to the fulfillment on or prior to the Closing Date of the following
conditions, any one or more of which may be waived by Buyer:

(a) Representations, Warranties and Covenants. The representations and
warranties of Seller contained in this Agreement or in any Exhibit, Schedule or
document delivered pursuant hereto shall be true, correct and complete in all
material respects on and as of the Closing Date with the same force and effect
as though made on and as of the Closing Date (without regard to any schedule
updates furnished by Seller after the date hereof) except as expressly stated
herein to be made as of a specified date, and any representation or warranty
made as of a specified date earlier than the Closing Date shall have been true
and correct in all material respects on and as of such earlier date. Seller
shall have performed and complied in all material respects with all covenants
and agreements required by this Agreement to be performed or complied with by it
on or prior to the Closing Date.

(b) Consents, Waivers, Licenses, Filings, etc. All consents,
approvals, authorizations, licenses, registrations, declarations or filings
listed on Schedule 5.3(a) (a) shall have been duly obtained, made or given, (b)
shall be in form and substance reasonably satisfactory to Buyer, (c) shall not
be subject to the satisfaction of any condition that has not been satisfied or
waived and (d) shall be in full force and effect, and all terminations or
expirations of waiting periods imposed by any Governmental or Regulatory Body
necessary for the consummation of the transactions contemplated by this
Agreement shall have occurred. The applicable waiting period, if any, under the
HSR Act in respect of the transactions contemplated hereby shall have expired
and the transactions contemplated hereby shall have been approved by the FTC.

(c) Injunction, etc. At the Closing, there shall not be any Order
outstanding against any party hereto or Law promulgated that prevents the
consummation of, and no Action or Proceeding shall be pending or threatened
against a party hereto which questions the legality of, seeks to restructure or
to restrain or prevent the consummation of, the transactions contemplated by
this Agreement or any of the conditions to the consummation of the transactions
contemplated by this Agreement which, in the case of any such Order, Law or
Action or Proceeding, would reasonably be expected to materially adversely
affect Buyer or to have a Material Adverse Effect.

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(d) Closing Certificates of Seller.

(i) Seller shall have delivered to Buyer certificates signed by an
authorized officer of Seller, dated the Closing Date, as to the matters set
forth in Section 8.1(a) and in form and substance reasonably satisfactory
to Buyer.

(ii) Seller shall have delivered a statement signed by the Secretary
of the Seller, dated the Closing Date, (A) certifying the Seller's
certificate of incorporation, (B) by-laws in effect at the Closing Date,
and (C) all corporate resolutions adopted in respect of this transactions
contemplated by this Agreement.

(e) Transitional Services Agreement and Sublease. Seller shall have
executed and delivered to Buyer (i) a Transitional Services Agreement (the
"Transitional Services Agreement") and (ii) Subleases (the "Subleases"), in each
case, in such form as to which Buyer and Seller shall mutually agree.

(f) Hollander Interchange License. Seller shall have executed and
delivered to Buyer a paid-up, perpetual, non-exclusive license to the Hollander
Interchange (the "Hollander Interchange License"), with no continuing royalties
and with unlimited rights to sub-license, including but not limited to a (alpha)
and b (beta) and any other releases of any updates prepared by or for Seller or
ADP for a period of five years from the Closing Date, with a perpetual extension
thereof at a cost of the lesser of $400,000 per year and the lowest current rate
charged by Seller to salvage yard customers and/or software vendors, on a per
screen basis, multiplied by the number of Buyer customers, on a per screen
basis, and including covenants for proper upkeep, and the right to use the name
"Hollander Interchange" in reference to the Hollander Interchange and the
updates thereto, in such form as Buyer and Seller shall mutually agree.
Hollander Interchange updates shall be provided to Buyer, pursuant to the
Hollander Interchange License, no later than such updates are provided to
Seller's salvage yard customers. In addition, as part of such license, Seller
shall agree to provide Buyer with information and specifications sufficient to
build a communications interface for use in connection with Seller's Yard
Management System.

(g) Buyer's Additional Licenses. Seller shall also provide to Buyer a
copy of, and non- exclusive license to, all computer programs and databases, and
a list of and sources for all information, used by Seller to update the
Hollander Interchange; provided, however, such license shall prevent Buyer from
reproducing and selling the copyright protected format of Seller's printed, book
form of the Hollander Interchange, though such license shall not otherwise
restrict Buyer from producing and selling the Hollander Interchange in any form,
including printed, book form.

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(h) Conveyancing Documents. Seller shall have executed and delivered
to Buyer an Assignment and Assumption Agreement (the "Assignment and Assumption
Agreement") and a Bill of Sale (the "Bill of Sale"), in each case, in such form
as Buyer and Seller shall mutually agree, and such other good and sufficient
instruments of transfer as Buyer may reasonably request and conveying and
transferring to Buyer title to the Assets.

(i) [Intentionally Omitted].

(j) Nusbaum License. Seller shall have granted to Buyer an exclusive
license, which excludes Seller's use thereof, to its interest in the products
described on Schedule 8.1(j) hereof at the respective costs specified in
Schedule 8.1(j) hereof.

(k) Lien Searches. Seller shall have delivered to Buyer lien searches
for federal and state tax liens, judgment liens, and other liens on standard
form of Request for Information (Uniform Commercial Code Form UCC-1) for entries
in the name of Seller (including under any assumed names) completed and
certified by the Secretaries of State of the states of Alabama and Minnesota and
the Clerks for the counties of Lauderdale and Hennepin, respectively, dated no
earlier than thirty days prior to Closing Date and showing the absence of any
such liens on the Assets (other than Permitted Liens).

(l) Other Documents. Seller shall have delivered such additional
information and materials as Buyer shall reasonably request.

8.2 Conditions Precedent to the Obligations of Seller to Complete
the Closing. The obligations of Seller to enter into and complete the Closing
are subject to the fulfillment on or prior to the Closing Date, of the following
conditions, any one or more of which may be waived by Seller:

(a) Representations, Warranties and Covenants. The representations and
warranties of Buyer contained in this Agreement shall be true, correct and
complete in all material respects on and as of the Closing Date with the same
force and effect as though made on and as of the Closing Date except as
expressly stated herein to be made as of a specified date, and any
representation or warranty made as of a specified date earlier than the Closing
Date shall have been true and correct in all material respects on and as of such
earlier date. Buyer shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement to be performed or
complied with by it on or prior to the Closing Date.

(b) Consents, Waivers, Licenses, Filings, etc. All consents,
approvals, authorizations, licenses, registrations, declarations or filings
necessary to permit Buyer and Seller to perform their obligations under this
Agreement and to consummate the transactions contemplated hereby (a) shall have
been duly obtained, made or given, (b) shall be in form and

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substance reasonably satisfactory to Buyer, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (d)
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Body necessary for
the consummation of the transactions contemplated by this Agreement shall have
occurred, except where the failure to obtain, do or achieve or make any of the
foregoing (or in lieu thereof waivers) would not reasonably be expected,
individually or in the aggregate with other such failures, to materially
adversely affect Seller. The applicable waiting period, if any, under the HSR
Act in respect of the transactions contemplated hereby shall have expired and
the transactions contemplated hereby shall have been approved by the FTC.

(c) Injunction, etc. At the Closing, there shall not be any Order
outstanding against any party hereto or Law promulgated that prevents the
consummation, and no Action or Proceeding shall be pending or threatened against
a party hereto which questions the legality of, seeks to restructure or to
restrain or prevent the consummation of, the transactions contemplated by this
Agreement or any of the conditions to the consummation of the transaction
contemplated by this Agreement which, in the case of any such Order, Law or
Action or Proceeding, would reasonably be expected to materially adversely
affect Seller.

(d) Closing Certificate of Buyer.

(i) Buyer shall have delivered to Seller a certificate signed by an
authorized officer of Buyer, dated the Closing Date, as to the matters set
forth in Section 8.2(a) and in form and substance reasonably satisfactory
to Seller.

(ii) Buyer shall have delivered to Seller a statement signed by the
Secretary of the Buyer, dated the Closing Date, (A) certifying the Buyer's
certificate of incorporation, (B) by-laws in effect at the Closing Date,
and (C) all corporate resolutions adopted in respect of this transactions
contemplated by this Agreement.

(e) Conveyancing Documents. Buyer shall have executed and delivered to
Seller the Assignment and Assumption Agreement and the Bill of Sale.

(f) AutoInfo Interchange License. Buyer shall have executed and
delivered to Seller a non-exclusive, paid-up license to the AutoInfo Interchange
as in existence on the date hereof, excluding supplier and service contracts,
research and development and other tangible and intangible assets used in the
development and maintenance of the AutoInfo Interchange, in such form as Buyer
and Seller shall mutually agree.

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9. Post Closing Agreements.

9.1 Employee Benefits. Seller shall pay directly to each employee
of the ARISB Business that portion of all benefits (including the arrangements,
plans and programs set forth in Schedule 5.7) which has been accrued on behalf
of that employee (or is attributable to expenses properly incurred by that
employee) as of the Closing Date, and Buyer shall assume no liability therefor.
No portion of the assets of any Plan or any other plan, fund, program or
arrangement, written or unwritten, heretofore sponsored or maintained by Seller
(and no amount attributable to any such plan, fund, program or arrangement)
shall be transferred to Buyer, and Buyer shall not be required to continue any
such plan, fund, program or arrangement after the Closing Date. The amounts
payable on account of all benefit arrangements (other than as specified in the
following subsections) shall be determined with reference to the date of the
event by reason of which such amounts become payable, without regard to
conditions subsequent, and Buyer shall not be liable for any claim for
insurance, reimbursement or other benefits payable by reason of any event which
occurs prior to the Closing Date. All amounts payable directly to employees, or
to any fund, program, arrangement or plan maintained by Seller therefor shall be
paid by Seller within 30 days after the Closing Date to the extent that such
payment is not inconsistent with the terms of such fund, program, arrangement or
plan. All employees of Seller who are employed by Buyer on or after the Closing
Date shall be new employees of Buyer and any prior employment by Seller of such
employees shall not affect entitlement to, or the amount of, salary or other
cash compensation, current or deferred, which Buyer may make available to its
employees.

9.2 Further Information. Following the Closing, each party will
afford to the other party, its counsel and its accountants, during normal
business hours, reasonable access to the books and records relating to the
Assets or the Assumed Liabilities in its possession with respect to periods
prior to the Closing and the right to make copies and extracts therefrom, to the
extent that such access may be reasonably required by the requesting party (i)
to facilitate the investigation, litigation and final disposition of any claims
which may have been or may be made against any party or its Affiliates, (ii) to
facilitate the preparation of Tax Returns, or (iii) for any other reasonable
business purpose. Each party hereto and its agents shall keep confidential and
not disclose any information learned as a result of any examination conducted
pursuant to this Section 9.1 to any other Person without the prior consent of
the other party unless (i) the disclosure is in response to legal order or
subpoena; or (ii) the terms are readily ascertainable from public or published
information, or trade sources (without violation of the foregoing provisions of
this sentence).

9.3 Record Retention. Each party agrees that for a period of not
less than seven years following the Closing Date, it shall not destroy or
otherwise dispose of any of the books and records relating to the Assets or the
Assumed Liabilities in its possession with respect to periods prior to the
Closing. Each party shall have the right to destroy all or part of such books
and records after the seventh anniversary of the Closing Date or, at an earlier
time by giving each other party hereto thirty days prior written notice of such
intended disposition and by offering to deliver to the other party, at the other
party's expense, custody of such books and records as such first party may
intend to destroy.

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9.4 Employees.

(a) Seller shall not prevent, prohibit or restrict or threaten to
prevent, prohibit or restrict any person who was employed by Seller in
connection with the operation of the Business, or formerly by AutoInfo, Inc., at
any time since January 1, 1995, from working for Buyer and shall use its best
efforts to assist Buyer in employing as new employees of Buyer, all persons
presently engaged in the ARISB Business who are identified by Buyer prior to the
Closing Date. Seller shall terminate effective as of the Closing Date all
employment arrangements it has with any such employees. Seller shall not offer
any incentive to any such employee to decline employment with Buyer or to accept
other employment by Seller or its Affiliates, and shall remove any
non-competition or confidentiality restrictions with respect to employment of
such employees by Buyer.

(b) Seller will not offer employment to any employee identified on
Schedule 5.7 for a period of one year from the date on which such employment
with Buyer commenced.

9.5 Transfer Taxes. Seller shall file all necessary documentation
and returns with respect to sales, use, transfer, real property transfer,
recording, gains, stock transfer and other similar taxes and fees (such taxes
and fees, including any interest or penalties thereon, are herein sometimes
called "Transfer Taxes"). Seller agrees to indemnify, defend and hold harmless
Buyer for any Transfer Taxes arising out of or in connection with the
transactions effected pursuant to this Agreement.

9.6 Use of Names. Except only for the items listed on Schedule
1.1(l) and the rights granted to Buyer pursuant to the Hollander License
Agreement, no interest in or right to use any of the names "Hollander,"
"Hollander Interchange," "Hollander Yard Management System," "EDEN," "ADP Parts
Services" or "ADP" or any derivation thereof or any logo, trademarks or trade
name in which Seller has any interest (collectively, the "Retained Names and
Marks") is being transferred to Buyer pursuant to the transactions contemplated
hereby. Buyer will, within 60 days following the Closing Date, remove or
obliterate all the Retained Names and Marks from its signs, purchase orders,
invoices, sales orders, labels, letterheads, shipping documents, business cards
and other materials, and Buyer shall not put into use after the Closing Date any
such materials not in existence on the Closing Date that bear any Retained Name
or Mark, provided, that Buyer shall be entitled (i) for a period of 30 days
following the Closing Date to use any signs, purchase orders, invoices, sales
orders, labels, letterheads or shipping documents existing on the Closing Date
that bear any Retained Name or Mark, in each case where the removal of any such
Retained Name or Mark would be impractical and (ii) for a period of 45

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days following the Closing Date, to sell items currently in Inventory that bear
any Retained Name or Mark; provided, however, that Buyer shall place a stamp,
mark or other notation on any such item that identifies the Business as a
business of the Buyer (and not Seller) and if applicable, that such Retained
Name or Mark is a registered trademark or trade name.

9.7 Payments Received. Seller and Buyer each agree that after the
Closing they will hold and will promptly transfer and deliver to the other, from
time to time as and when received by them, any cash, checks with appropriate
endorsements (using their best efforts not to convert such checks into cash), or
other property that they may receive on or after the Closing which properly
belongs to the other party, including without limitation any insurance proceeds,
and will account to the other for all such receipts. From and after the Closing,
Buyer shall have the right and authority to endorse without recourse the name of
Seller on any check or any other evidences of indebtedness received by Buyer on
account of the ARISB Business and the Assets transferred to Buyer hereunder.

9.8 Insurance. With respect to any loss, liability or damage
relating to, resulting from or arising out of the conduct of the ARISB Business
on or prior to the Closing Date for which Seller would be entitled to assert, or
cause any Affiliate or other person or entity to assert, a claim for recovery
under any policy of insurance maintained by or for the benefit of Seller or any
Affiliate thereof in respect of the ARISB Business or the Assets, at the request
of Buyer, Seller will use reasonable efforts to assert, or to assist Buyer to
assert, one or more claims under such insurance covering such loss, liability or
damage if Buyer is not itself entitled to assert such claim but Seller is so
entitled. In the case of any damage to or destruction of the Assets occurring
prior to Closing that is covered by insurance maintained by Seller or any
Affiliate of Seller, Seller shall deliver all insurance proceeds realized
therefrom to Buyer at Closing or as soon thereafter as collected by Seller or
such Affiliate.

9.9 Confidentiality. Seller agrees that for a period of two years
after the Closing Date, neither it nor any of its Affiliates will, directly or
indirectly, disclose, reveal, divulge or communicate to any person or entity
other than authorized officers, directors and employees of Buyer, or use or
otherwise exploit for its own benefit or for the benefit of anyone other than
Buyer, any Confidential Information (as defined below). Seller shall not have
any obligation to keep confidential any Confidential Information if and to the
extent disclosure thereof is specifically required by law; provided, however,
that in the event of disclosure is required by applicable law, Seller shall, to
the extent reasonably possible, provide Buyer with prompt notice of such
requirement prior to making any disclosure so that Buyer may seek an appropriate
protective order. For purposes of this Section 9.9, "Confidential Information"
shall mean any confidential information with respect to the conduct or details
of the ARISB Business, including, without limitation, methods of operation,
customers, and customer lists, products, proposed products, former products,
proposed, pending or completed acquisitions of any company, division, product
line or other business unit, prices, fees, costs, plans, designs,

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technology, inventions, trade secrets, know-how, software, marketing methods,
policies, plans, personnel, suppliers, competitors, markets or other
specialized information or proprietary matters, except for purposes of this
Section 9.9 to the extent such Confidential Information relates to the
Hollander Interchange, Seller shall be entitled to use for its own benefit such
Confidential Information. The parties hereto specifically acknowledge and
agree that the remedy at law for any breach of the foregoing will be inadequate
and that the Buyer, in addition to any other relief available to it, shall be
entitled to temporary and permanent injunctive relief without the necessity of
proving actual damage or posting any bond whatsoever. In the event that the
provisions of this Section 9.9 should ever be deemed to exceed the limitation
provided by applicable law, then the parties hereto agree that such provisions
shall be reformed to set forth the maximum limitations permitted.

9.10 Assistance.

(a) Until the first anniversary of the Closing Date, upon reasonable
notice from Buyer, Seller shall provide, at reasonable times and levels, subject
to the cost restrictions set forth below, such personnel, information, technical
assistance, advice and training to Buyer as are necessary to transfer the Assets
and to assist Buyer in developing, maintaining and conducting the ARISB Business
as a viable, on-going business. Such assistance shall include reasonable
consultation with knowledgeable employees of ADP to satisfy Buyer's management
that its personnel are appropriately trained; provided, however, that such
assistance shall only be provided to the extent ADP has the ability to do so
after the transactions contemplated hereby are complete. Seller shall be
entitled to charge Buyer a rate equal to or less than its own direct cost for
providing such assistance to Buyer.

(b) For a period of ten (10) years following the Closing Date, Seller
shall not prohibit, prevent or restrict, or threaten to prohibit, prevent,
restrict or enforce any contractual arrangements that have the effect of
prohibiting, preventing, or restricting any customer or licensee of the
Hollander Interchange from accessing, connecting with, or communicating data
through, the products of Buyer or its licensees, or the ARA Database Collector,
including but not limited to the AutoInfo Communication Systems or any
communication system licensed or sold by Buyer or its licensees, the AutoInfo
YMS or any yard management systems licensed or sold by Buyer or its licensees,
or data collection systems provided by Buyer or its licensees. Seller shall
provide to Buyer, for use by Buyer and its licensees, all specifications and
information reasonably necessary for Buyer and its licensees to create
interfaces with Seller's yard management and communications systems and a
paid-up, perpetual, non-exclusive license to Buyer and its licensees to use the
Hollander Interchange and future updates of the Hollander Interchange in
connection with collection or searching inventory data; and nothing in this
paragraph (b) shall require Seller to extend to Buyer or its licensees rights to
sell or distribute updates of the Hollander Interchange other than the rights
specified in Section 8.1(f); and nothing in this paragraph (b) shall require
Seller to create or modify application program interfaces or to

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alter Seller's existing products other than the rights specified in Section
8.1(f); and nothing in this paragraph (b) shall prohibit Seller from
restricting transmission of Hollander Interchange numbers to persons other than
Buyer or its licensees; and nothing in this paragraph (b) shall require Seller
to repair any customer's HYMS or EDEN product in the event such product's
functionality is damaged by the use of any product of Buyer or its licensees.

9.11 Customer's Right to Switch Systems. Seller shall, until 18
months following the Closing Date, allow, without penalty, any customer who
entered into a contract for HYMS or EDEN between April 1, 1995 and the Closing
Date, to switch from HYMS to an AutoInfo Yard Management System or any yard
management system licensed or sold by Buyer and/or switch from EDEN to the
AutoInfo Communication Systems or to any communications systems licensed or sold
by Buyer

9.12 ARA Database Agreement. Seller shall take all action necessary
and appropriate, including without limitation providing all notices necessary to
the appropriate parties, to (a) terminate the ARA Database Agreement and (b)
cease acting as the ARA Database Collector, or otherwise acting as the database
collector, as soon as reasonably practicable, but in no event later than
September 30, 1998.

9.13 Bluebird License. Seller shall assist Buyer in obtaining a
license for the Superdos operating system from Bluebird Systems.

9.14 Loss of URG Members. On each of the dates which are six,
twelve, eighteen and twenty- four months after the Closing Date, Buyer shall
provide Seller with written notice of all members of the class of plaintiffs in
the Crawford class action litigation, as more fully described on Schedule 5.10,
who used the Hollander Interchange as of the date hereof, who have discontinued
being customers of the ARISB Business and who have purchased or are using an
inventory management system provided by the United Recyclers Group, or any
successor thereto, within the prior six-month period; provided, however, no such
member may be counted more than once. Upon receiving such written notice, Seller
shall promptly pay, but in any event within 30 days after receiving such written
notice, to Buyer an amount in cash equal to $14,384 for each customer listed on
such written notice, less the amounts charged by Buyer, directly or indirectly,
to such customers in connection with the licensing of the Hollander Interchange
for a period of one year; provided, however, that the aggregate amount of such
payments shall not, in any event, exceed $2.1 million.

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10. Survival After Closing; Indemnification

10.1 Indemnification of Buyer.

(a) Subject to the limitations contained in this Section 10, Seller
agrees to indemnify, defend and hold harmless Buyer and any of its Affiliates,
directors, officers, employees, agents, successors and assigns (each, a "Buyer
Indemnified Party") from and against any and all losses, liabilities, and
damages (including punitive or exemplary damages and fines or penalties and any
interest thereon), costs and expenses (including reasonable fees and
disbursements of counsel) (hereinafter individually, a "Loss" and collectively,
"Losses") which arise out of, or result from, (i) any material inaccuracy in or
any material breach of any representation, warranty, covenant or agreement of
Seller contained in this Agreement or in the officer's certificate delivered by
Seller pursuant to Section 8.1(e), (ii) any Excluded Liability, (iii) any
failure to comply with any "bulk sales" laws applicable to the transactions
contemplated hereby, (iv) the conduct of the ARISB Business or any portion
thereof or the use or ownership of any of the Assets prior to the Closing Date;
and (v) the license arrangement contemplated by Section 8.1(j) hereof, including
without limitation any claims of infringement, tortious interference, breach of
contract or otherwise by and Person.

(b) No claim may be made against Seller for indemnification pursuant
to this Section 10.1 with respect to any breach of a representation or warranty,
unless the aggregate of all Losses in respect of breaches of representations and
warranties of the Buyer Indemnified Parties shall exceed $150,000 and thereafter
Seller shall be liable only for such Losses in excess of $150,000; provided,
however, that the limitations set forth in this sentence shall not apply to a
breach of Seller's representation and warranty contained in the first sentence
of Section 5.4(b)(v), Section 5.6, Section 5.16 or Section 5.18. For the
purposes of this Section 10, in computing such individual or aggregate amounts
of Losses, the amount of each Loss shall be deemed to be an amount net of any
insurance proceeds and any indemnity, contribution or other similar payment
payable by any third party with respect thereto.

(c) Each Buyer Indemnified Party shall give Seller prompt written
notice of any claim, assertion, event or proceeding (collectively, a "Buyer
Claim") by or in respect of a third party of which such Buyer Indemnified Party
has knowledge concerning any Loss as to which such Buyer Indemnified Party may
request indemnification hereunder or any Loss as to which the $150,000 amount
referred to in subsection (b) of this Section 10.1 may be applied. Seller shall
have the right to direct, through counsel of its own choosing, the defense or
settlement of any such Buyer Claim at its own expense. If Seller elects to
assume the defense of any such Buyer Claim, such Buyer Indemnified Party may
participate in such defense, but in such case Seller shall retain the right to
direct, through counsel of its own choosing, the defense or settlement of any
such Buyer Claim and the expenses of such Buyer Indemnified Party shall be paid
by such Buyer Indemnified Party. Such Buyer Indemnified Party shall provide
Seller with

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access to its records and personnel relating to any such Buyer Claim during
normal business hours and shall otherwise cooperate with Seller in the defense
or settlement thereof, and Seller shall reimburse such Buyer Indemnified Party
for all its reasonable out-of-pocket expenses in connection therewith. If
Seller elects to direct the defense of any such Buyer Claim, such Buyer
Indemnified Party shall not pay, or permit to be paid, any part of any Loss
arising from such Buyer Claim, unless Seller consents in writing to such
payment or unless Seller, subject to the last sentence of this subsection (c),
withdraws from the defense of such asserted liability, or unless a final
judgment from which no appeal may be taken by or on behalf of Seller is entered
against the Buyer Indemnified Party for such Loss. If Seller shall fail to
defend any Buyer Claim, or if, after commencing or undertaking any such
defense, fails to prosecute or withdraws from such defense, such Buyer
Indemnified Party shall have the right to undertake the defense or settlement
thereof, at Seller's expense. If such Buyer Indemnified Party assumes the
defense of such Buyer Claim pursuant to this subsection (c) and proposes to
settle such Buyer Claim prior to a final judgment thereof or to forego appeal
with respect thereto, then such Buyer Indemnified Party shall give Seller
prompt written notice thereof and Seller shall have the right to participate in
the settlement or assume or reassume the defense of such Buyer Claim.

10.2 Indemnification of Seller.

(a) Subject to the limitations contained in this Section 10 and
without gross-up for Taxes, Buyer agrees to indemnify, defend and hold harmless
Seller and any of its Affiliates, directors, officers, employees, agents,
successors and assigns (each, a "Seller Indemnified Party") from and against any
and all Losses which arise out of, or result from, (i) any material inaccuracy
in or any material breach of any representation, warranty, covenant or agreement
of Buyer contained in this Agreement or in the officer's certificate delivered
by Buyer pursuant to Section 8.2(e) or (ii) any Assumed Liability.

(b) No claim may be made against Buyer for indemnification pursuant to
this Section 10.2 with respect to a breach of a representation or warranty,
unless the aggregate of all Losses in respect of breaches of representations and
warranties of the Seller Indemnified Parties shall exceed $150,000 and
thereafter Buyer shall be liable only for such Losses in excess of $150,000.
Payments by Buyer to a Seller Indemnified Party pursuant to subsection (a) of
this Section 10.3 shall be limited to the amount of any Loss that remains after
deducting therefrom any insurance proceeds and any indemnity, contribution or
other similar payment payable to such Seller Indemnified Party by any third
party with respect thereto.

(c) Each Seller Indemnified Party shall give Buyer prompt written
notice of any claim, assertion, event or proceeding (collectively, a "Seller
Claim") by or in respect of a third party of which such Seller Indemnified Party
has knowledge concerning any Loss as to which such Seller Indemnified Party may
request indemnification hereunder or any Loss as to which the $150,000 amount
referred to in subsection (b) of this Section 10.2 may be applied. Buyer shall

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have the right to direct, through counsel of its own choosing, the defense or
settlement of any such Seller Claim at its own expense. If Buyer elects to
assume the defense of any such Seller Claim, such Seller Indemnified Party may
participate in such defense, but in such case the expenses of such Seller
Indemnified Party shall be paid by such Seller Indemnified Party. Such Seller
Indemnified Party shall provide Buyer with access to its records and personnel
relating to any such Seller Claim during normal business hours and shall
otherwise cooperate with Buyer in the defense or settlement thereof, and the
Buyer shall reimburse such Seller Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If Buyer elects to direct the
defense of any such Seller Claim, Buyer shall not pay, or permit to be paid,
any part of any Loss arising from such Seller Claim, unless Buyer consents in
writing to such payment or unless Buyer, subject to the last sentence of this
subsection (c), withdraws from the defense of such asserted liability, or
unless a final judgment from which no appeal may be taken by or on behalf of
Buyer is entered against such Seller Indemnified Party for such Loss. If Buyer
shall fail to defend any Seller Claim, or if, after commencing or undertaking
any such defense, fails to prosecute or withdraws from such defense, such
Seller Indemnified Party shall have the right to undertake the defense or
settlement thereof, at Buyer's expense. If such Seller Indemnified Party
assumes the defense of any such Seller Claim pursuant to this subsection (c)
and proposes to settle such Seller Claim prior to a final judgment thereon or
to forego appeal with respect thereto, then such Seller Indemnified Party shall
give Buyer prompt written notice thereof and Buyer shall have the right to
participate in the settlement or assume or reassume the defense of such Seller
Claim.

10.3 Exclusive Provisions; No Rescission. The right to
indemnification under Sections 10.1 and 10.2 shall be the sole remedy following
the Closing for any breach of any representation. Anything herein to the
contrary not withstanding, no breach of any representation, warranty, covenant
or agreement contained herein shall give rise to any right on the part of Buyer
or Seller, after the consummation of the transactions contemplated hereby, to
rescind this Agreement or any of the transactions contemplated hereby.

10.4 Survival After Closing. The representations, warranties,
covenants and agreements of Seller and Buyer contained in this Agreement will
survive the Closing (a) indefinitely with respect to the representations and
warranties contained in Sections 5.1, 5.2, 5.6, 5.15, 5.16, 6.1, 6.2 and 6.5,
(b) until the fifth anniversary of the Closing Date with respect to the
representations and warranties contained in Section 5.13, (c) until sixty (60)
calendar days after the expiration of all applicable statutes of limitation
(including all periods of extension, whether automatic or permissive) with
respect to matters covered by Section 5.12, (d) until the second anniversary of
the Closing Date in the case of all other representations and warranties
contained in this Agreement or any Exhibit or Schedule or other document
delivered in connection with the consummation of the transaction contemplated by
this Agreement, except that any representation or warranty that would otherwise
terminate in accordance with clause (b), (c) or (d) above will continue to
survive if a Buyer Claim or Seller Claim (as applicable) shall have been

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timely given on or prior to such termination date, until the related claim for
indemnification has been satisfied or otherwise resolved hereunder. Unless a
specified period is set forth in this Agreement (in which event such specified
period will control), the covenants and agreements in this Agreement will
survive the Closing and remain in effect indefinitely.

10.5 Adjustment to Purchase Price. Any indemnification payment
under this Article 10 shall be treated by Seller and Buyer as an adjustment to
the Purchase Price.

11. Termination of Agreement; Survival.

11.1 Termination. This Agreement may be terminated prior to the
Closing as follows:

(a) By the mutual written consent of Seller and Buyer;

(b) By either Seller or Buyer, if the Closing shall not have occurred
by January 31, 1998; provided, however, that the right to terminate this
Agreement under this Section 11.1(b) shall not be available to any party whose
failure to fulfill any obligation under this Agreement shall have been the cause
of, or resulted in, the failure of the Closing to occur prior to such date; or

(c) By either Seller or Buyer, if, pursuant to the authority granted
to the FTC in the Consent Order, the FTC does not approve the transactions
contemplated by this Agreement.

11.2 Survival. In the event this Agreement is terminated pursuant
to Section 11.1, (i) this Agreement shall become null and void and of no further
force and effect, except for the provisions of Section 12.2 and 12.4 and (ii)
except for such provisions, there shall be no liability on the part of Seller or
Buyer or their respective officers, directors or Affiliates; provided, however,
that if such termination shall result from the wilful breach by a party of the
provisions contained in this Agreement such party shall be fully liable for any
and all damages, costs and expenses sustained or incurred by the other party
hereto as a result of such breach.

12. Miscellaneous.

12.1 Certain Definitions. As used in this Agreement, the following
terms have the following meanings unless the context otherwise requires:

"Accounts Receivable" has the meaning set forth in Section 1.1(a)

"Acquired Business" has the meaning set forth in the forepart of this
Agreement.

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"Acquisition Proposal" has the meaning set forth in Section 7.1(e).

"Action or Proceeding" means any action, suit, proceeding or
arbitration by any Person, or any investigation or audit by any Governmental or
Regulatory Body.

"Affiliate," means with respect to any Person, any other Person
controlling, controlled by or under common control with such first Person.

"Assets" has the meaning set forth in Section 1.1.

"Assignment and Assumption Agreement" has the meaning set forth in
Section 8.1(h).

"Assumed Liabilities" has the meaning set forth in Section 1.3.

"AutoInfo Communication Systems" means the ORION, ORION/RTS,
AutoMatch, AutoXchange and ORION Exchange communication systems used for the
buying and selling of used auto parts and assemblies, including source codes,
application program interfaces, data formats and communication protocols,
customer, supplier and service contracts, goodwill, research and development and
other tangible and intangible assets relating thereto, and Seller's rights and
obligations with respect to current and former subscribers to CalQwik.

"AutoInfo Interchange" means the numeric indexing system used to
identify automotive parts and assemblies and their ability to be interchanged
and includes all updates to the AutoInfo Interchange and includes supplier and
service contracts, research and development, and other tangible and intangible
assets used in the development and maintenance of the AutoInfo Interchange.

"AutoInfo Parts Locator" means the AutoInfo Parts Locator, a
computerized on-line telephone service that is offered to the automobile
casualty insurance industry, which uses ORION/RTS, and software that provides
access to the ORION/RTS database, customer, supplier and service contracts,
customer lists, goodwill, research and development and other tangible and
intangible assets used in the development, maintenance, sale or licensing of the
AutoInfo Parts Locator.

"AutoInfo Yard Management System" means Checkmate, Checkmate Jr.,
Classic, the BidPad, PartPad, accounting and management modules and any other
salvage yard management systems developed, maintained, sold or licensed by
AutoInfo, Inc., and subsequently by Seller, including source codes, application
program interfaces, data formats and communication protocols, customer, supplier
and service contracts, goodwill, research and development and other tangible and
intangible assets relating thereto.

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"ADP" means Automatic Data Processing, Inc.

"ARA" means the Automotive Recyclers Association.

"ARA Database Agreement" means the February 27, 1996, "Amended and
Restated Agreement Regarding the ARA International Database by and between
Automotive Recyclers Association and ADP Claims Solutions Group, Inc." and any
addenda thereto.

"ARA Database Collector" means the rights and obligations to act as
the manager and operator of the Automotive Recyclers Association International
Database pursuant to the ARA Database Agreement.

"ARISB Business" has the meaning set forth in the forepart of this
Agreement.

"ARISB Contracts" has the meaning set forth in Section 5.4(d).

"Bill of Sale" has the meaning set forth in Section 8.1(h).

"Business" has the meaning set forth in the forepart of this
Agreement.

"Business Day" means any day on which commercial banks are not
authorized or required by law to close in New York, New York.

"Business Licenses" has the meaning set forth in Section 1.1(f).

"Buyer" has the meaning set forth in the forepart of this Agreement.

"Buyer Claim" has the meaning set forth in Section 10.1(c).

"Buyer Indemnified Party" has the meaning set forth in Section
10.1(a).

"Cash Payment" has the meaning set forth in Section 2.1.

"Closing" has the meaning set forth in Section 3.1.

"Closing Date" has the meaning set forth in Section 3.1.

"Closing Date Net Assets" means the excess of (i) the current assets
included in the Assets at the Closing Date over (ii) the current liabilities
included in the Assumed Liabilities as of the Closing Date.

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"Code" means the Internal Revenue Code of 1986, as amended.

"Compass" means the Compass Communications Network, the group of voice
communication, data, and buying networks to the automobile salvage industry
formerly owned by AutoInfo, and customer, supplier and service contracts,
goodwill, research and development and other tangible and intangible assets used
in the development, maintenance, sale or licensing of the Compass communication
systems.

"Confidential Information" has the meaning set forth in Section 9.9.

"Confidentiality Agreement" means that certain Confidentiality
Agreement dated July 3, 1997 between Seller and Buyer.

"Consent Order" has the meaning set forth in Section 7.2.

"Contracts" has the meaning set forth in Section 1.1(e).

"contracts and other agreements" means all executory contracts,
agreements, understandings, indentures, notes, bonds, loans, instruments,
leases, mortgages, franchises, licenses or commitments which are legally
binding.

"EDEN" means the Electronic Data Exchange Network.

"Environmental Claim" means, with respect to any Person, any written
notice or claim by any other Person alleging or asserting such Person's
liability for investigatory costs, cleanup costs, Governmental or Regulatory
Body response costs, damages to natural resources or other property, personal
injuries, fines or penalties arising out of, based on or resulting from (a) the
presence or release into the environmental, of any Hazardous Material or (b)
circumstances forming the basis of any violation, or alleged violation, of any
Environmental Law.

"Environmental Law" means any Law or Order relating to the regulation
or protection of human health, safety or the environment or to emissions,
discharges, releases or threatened releases of pollutants, contaminants or toxic
or hazardous wastes into the environment.

"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.

"Excluded Assets" has the meaning set forth in Section 1.2.

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"Excluded Liabilities" has the meaning set forth in Section 1.4.

"FTC" means the Federal Trade Commission.

"Final Determination" has the meaning set forth in Section 3.3(c).

"Financial Statements" has the meaning set forth in Section 5.5.

"GAAP" means generally accepted accounting principles, consistently
applied throughout the specified period.

"Governmental or Regulatory Body" means any court, tribunal,
arbitrator or any government or political subdivision thereof, whether federal,
state, county, local or foreign, or any agency, authority, official or
instrumentality of any such government or political subdivision.

"Hazardous Material" means any chemicals or other materials or
substances which are defined as or included in the definition of "hazardous
substances," hazardous wastes," "hazardous materials," "extremely hazardous
wastes," "restricted hazardous wastes," "toxic substances," "toxic pollutants"
or words of similar import under any Environmental Law.

"Hollander Interchange" means the numeric indexing system developed,
maintained and sold or licensed originally by Hollander, Inc., and subsequently
by ADP, and used to identify automotive parts and assemblies and their ability
to be interchanged and includes all updates prepared by or for ADP up to the
date of this Agreement, including but not limited to any interchange developed
or updated by ADP since the ARISB Acquisition from the then-existing Hollander
Interchange and AutoInfo Interchange data.

"Hollander Interchange License" has the meaning set forth in Section
8.1(f).

"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.

"HYMS" means the Hollander Yard Management System, originally
developed, maintained and sold or licensed by Hollander, Inc., and subsequently
developed, maintained and sold or licensed by Seller.

"Independent Accountant" has the meaning set forth in Section 3.3(c).

"Intangible Property" has the meaning set forth in Section 1.1(h).

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"Interim Financial Statements" has the meaning set forth in Section
5.5(b).

"Interim Financial Statements Date" has the meaning set forth in
Section 5.5(c)(iii).

"Inventory" has the meaning set forth in Section 1.1(c).

"IRS" means the Internal Revenue Service.

"Law" means any law, statute, rule, regulation, ordinance and other
pronouncement having the effect of law of the United States of America, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Body.

"Lien" means any lien, pledge, hypothecation, mortgage, security
interest, claim, lease, charge, option, right of first refusal, easement,
servitude, transfer restriction under a stockholders or similar agreement,
encumbrance or any other restriction or limitation whatsoever.

"Loss" and "Losses" have the meanings set forth in Section 10.1(a).

"Material Adverse Effect" means a material adverse effect on the
results of operation or condition (financial or otherwise) of the ARISB
Business.

"Nusbaum Agreement" means that certain letter agreement between Seller
and Howard G. Nusbaum dated January 1, 1994, as amended on January 1, 1995.

"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Body, in each case whether preliminary or
final.

"Original Business" has the meaning set forth in the forepart of this
Agreement.

"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings and for
which adequate reserves have been established in the Financial Statements in
accordance with GAAP, and (ii) any statutory Lien arising in the ordinary course
of business by operation of Law with respect to an obligation or liability that
is not yet due or delinquent.

"Person" means any individual, corporation, partnership, firm, joint
venture, association, joint-stock company, trust, unincorporated organization,
Governmental or Regulatory Body or other entity.

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"Plan" means an "employee benefit plan" for purposes of Section 3(3)
of ERISA maintained with respect to the Acquired Business and each other
employee benefit plan, contract and other arrangement maintained with respect to
the Acquired Business, whether or not subject to ERISA.

"Purchase Price" has the meaning set forth in Section 2.1.

"Retained Business" has the meaning set forth in the forepart of this
Agreement.

"Retained Names and Marks" has the meaning set forth in Section 9.6.

"Seller" has the meaning set forth in the forepart of this Agreement.

"Seller Claim" has the meaning set forth in Section 10.2(c).

"Seller Indemnified Party" has the meaning set forth in Section
10.2(a).

"Settlement Agreement" has the meaning set forth in Section 1.4(h).

"Software" has the meaning set forth in Section 5.4(b)(v).

"Software Rights" has the meaning set forth in Section 5.4(b)(iii).

"Statement of Net Assets" has the meaning set forth in Section 3.3(b).

"Subleases" has the meaning set forth in Section 8.1(e).

"Tangible Property" has the meaning set forth in Section 1.1(b).

"Tangible Property Leases" has the meaning set forth in Section
1.1(d).

"Tax" and "Taxes" means all taxes, charges, levies, fees or other
assessments imposed by any federal, state or local taxing authority, including,
without limitation, income, gross receipts, excise, property, sales, use, ad
valorem, withholding, payroll, employment and franchise taxes other than
Transfer Taxes, and any interest, fines, penalties, assessments, or additions to
Tax with respect thereto.

"Tax Return" means any return, report, information return, or other
document (including any related or supporting information) filed or required to
be filed with any federal, state, local or foreign governmental entity or other
authority in connection with the determination, assessment or collection of any
Tax or the administration of any laws, regulations or administrative
requirements relating to any Tax.

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"Transfer Taxes" has the meaning set forth in Section 9.5.

"Transitional Services Agreement" has the meaning set forth in Section
8.1(e).

12.2 Expenses. Except as otherwise expressly provided herein,
whether or not the transactions contemplated by this Agreement shall be
consummated, each of the parties hereto shall pay its own expenses (including,
without limitation, attorney's and accountants' fees and out-of-pocket expenses)
incident to this Agreement and the transactions contemplated hereby.

12.3 Notices. All notices, requests, demands and other
communications required or permitted to be given hereunder shall be in writing
and shall be given personally, telegraphed, telexed, sent by facsimile
transmission or sent by prepaid air courier or certified registered mail,
postage prepaid. Any such notice shall be deemed to have been given (a) when
received, if delivered in person, telegraphed, telexed, sent by facsimile
transmission and, in the case of facsimile, confirmed in writing within three
(3) Business Days thereafter, or sent by prepaid air courier or (b) three (3)
Business Days following the mailing thereof, if mailed by registered or
certified first class mail, postage prepaid, return receipt requested, in any
such case as follows (or to such other address or addresses as a party may have
advised the other in the manner provided in this Section 12.3):

If to Seller:

ADP Claims Solutions Group, Inc.
210 Crow Canyon Place
San Ramon, California 97583

Attention: President
Facsimile: (510) 866-1100

with a copy to:

Automatic Data Processing, Inc.
One ADP Boulevard
Roseland, New Jersey 07068

Attention: General Counsel
Facsimile: (201) 994-6700

47
<PAGE> 49

If to Buyer:

Cooperative Computing, Inc.
6207 Bee Cove Road
Austin, Texas 78746

Attention: Michael Lyons, Esq.
Facsimile: (512) 328-6461

with a copy to:

Hicks, Muse, Tate & Furst, Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201

Attention: Lawrence D. Stuart, Jr.
Facsimile: (214) 720-7888

and

Weil Gotshal & Manges LLP
100 Crescent Court, Suite 1300
Dallas, Texas 75201

Attention: Thomas A. Roberts
Facsimile: (214) 746-7777

12.4 Entire Agreement. This Agreement (including the Exhibits and
Schedules hereto) and the Confidentiality Agreement and the agreements,
certificates and other documents delivered pursuant to this Agreement contain
the entire agreement among the parties with respect to the transactions
described herein, and supersede all prior agreements, written or oral, with
respect thereto.

12.5 Waivers and Amendments. This Agreement may be amended,
superseded, cancelled, renewed or extended, and the terms hereof may be waived,
only by a written instrument signed by the parties or, in the case of a waiver,
by the party waiving compliance. No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof.

48
<PAGE> 50
12.6 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of law. Any judicial proceeding brought against any of
the parties to this Agreement on any dispute arising out of this Agreement or
any matter related hereto may be brought in the courts of the State of New York,
and, by execution and delivery of this Agreement, each of the parties hereto
accepts the non-exclusive jurisdiction of the aforesaid courts, and irrevocably
agrees to be bound by any judgment rendered thereby in connection with this
Agreement.

12.7 Binding Effect; No Assignment. This Agreement shall be binding
upon and inure to the benefit of the parties and their respective successors and
legal representatives. This Agreement is not assignable by any party hereto
without the prior written consent of the other parties hereto, which shall not
be unreasonably withheld, and any other purported assignment shall be null and
void; provided, however, that (a) nothing in this Agreement is intended to limit
Buyer's ability to sell or to transfer any or all of the Assets following the
Closing Date, (b) upon notice to Seller, Buyer may assign or delegate any or all
of its rights or obligations under this Agreement to any Affiliate thereof or to
any person or entity that acquires all or substantially all of the assets or
voting stock of Buyer, and (c) Buyer may make a collateral assignment of its
rights under this Agreement to any institutional lender who provides funds to
Buyer for the acquisition of the Assets. Seller agrees to execute
acknowledgements of such assignment(s) and collateral assignments in such forms
as Buyer or Buyer's institutional lender(s) may from time to time reasonably
request. In the event of such a proposed assignment by Buyer, the provisions of
this Agreement shall inure to the benefit of and be binding upon Buyer's
assigns.

12.8 Specific Performance. The parties recognize that if the
Seller refuses to perform under the provisions of this Agreement, monetary
damages alone will not be adequate to compensate Buyer for its injury. Buyer
shall therefore be entitled, in addition to any other remedies that may be
available, to obtain specific performance of the terms of this Agreement. If any
action is brought by Buyer to enforce this Agreement, the Seller shall waive the
defense that there is an adequate remedy at law. In the event of a default by
the Seller which results in the filing of a lawsuit for damages, specific
performances, or other remedies, Buyer shall be entitled to reimbursement by the
Seller of reasonable legal fees and expenses incurred by Buyer.

12.9 Variations in Pronouns. All pronouns and any variations
thereof refer to the masculine, feminine or neuter, singular or plural, as the
context may require.

12.10 Counterparts. This Agreement may be executed by the parties
hereto in separate counterparts, each of which when so executed and delivered
shall be an original, but all such counterparts shall together constitute one
and the same instrument. Each counterpart may consist of a number of copies
hereof each signed by less than all, but together signed by all of the parties
hereto.

49
<PAGE> 51
12.11 Rights of the Parties. Nothing expressed or implied in this
Agreement is intended or will be construed to confer upon or give any person or
entity other than the parties hereto and their respective Affiliates any rights
or remedies under or by reason of this Agreement or any transaction contemplated
hereby.

12.12 Brokers. Buyer hereby agrees to indemnify and hold harmless
Seller, and Seller hereby agrees to indemnify and hold harmless Buyer, against
any liability, claim, loss, damage or expense incurred by Buyer or by Seller,
respectively, relating to any fees or commissions owed to any broker, finder, or
financial advisor as a result of actions taken by Buyer or by Seller.

12.13 Further Assurances. From time to time, as and when requested
by either party, the other party will execute and deliver, or cause to be
executed and delivered, all such documents and instruments as may be reasonably
necessary to consummate the transactions contemplated by this Agreement.

12.14 Transfers. Buyer and Seller will cooperate and take such
action as may be reasonably requested by the other in order to effect an orderly
transfer of the Assets and the ARISB Business with a minimum of disruption to
the operations and employees of the businesses of Buyer and Seller.

12.15 Exhibits and Schedules. The Exhibits and Schedules are a part
of this Agreement as if fully set forth herein. All references herein to
Sections, subsections, clauses, Exhibits and Schedules shall be deemed
references to such parts of this Agreement, unless the context shall otherwise
require.

12.16 Headings. The headings in this Agreement are for reference
only, and shall not affect the interpretation of this Agreement.

12.17 Severability of Provisions. If any provision or any portion
of any provision of this Agreement or the application of such provision or any
portion thereof to any Person or circumstance, shall be held invalid or
unenforceable, the remaining portion of such provision and the remaining
provisions of this Agreement, or the application of such provision or portion of
such provision as is held invalid or unenforceable to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby.

12.18 No Third Party Beneficiary. The terms and provisions of this
Agreement are intended solely for the benefit of each party hereto and their
respective successors or permitted assigns, and it is not the intention of the
parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity hereunder.

50
<PAGE> 52
12.19 Bulk Sales Act. The parties hereby waive compliance with the
bulk sales act or comparable statutory provisions of each applicable
jurisdiction. Seller shall indemnify Buyer and its officers, directors,
employees, agents and Affiliates in respect of, and hold each of them harmless
from and against, any and all Losses suffered, occurred or sustained by any of
them or to which any of them becomes subject, resulting from, arising out of or
relating to the failure of Seller to comply with the terms of any such
provisions applicable to the transactions contemplated by this Agreement.

51
<PAGE> 53
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound
hereby, have duly executed this Agreement on the date first above written.

ADP CLAIMS SOLUTIONS GROUP, INC.

By: /s/ GLENN E. STAATS
----------------------------------
Name: Glenn E. Staats
Title: President

COOPERATIVE COMPUTING, INC.

By: /s/ ARTHUR WEINBACH
----------------------------------
Name: Arthur Weinbach
Title:

<PAGE> 1
EXHIBIT 10.19

COOPERATIVE COMPUTING, INC.

$100,000,000

9.0% Senior Subordinated Notes due 2008

PURCHASE AGREEMENT

February 5, 1998
CHASE SECURITIES INC.
NATIONSBANC MONTGOMERY SECURITIES LLC
c/o Chase Securities Inc.
270 Park Avenue, 4th floor
New York, New York 10017

Ladies and Gentlemen:

Cooperative Computing, Inc., a Delaware corporation (the
"Company"), proposes to issue and sell $100,000,000 aggregate principal amount
of its 9.0% Senior Subordinated Notes due 2008 (the "Notes"). The Notes will
be issued pursuant to an Indenture to be dated as of February 6, 1998 (the
"Indenture") between the Company and Norwest Bank Minnesota, National
Association, as trustee (the "Trustee"). The Company hereby confirms its
agreement with Chase Securities Inc. ("CSI") and NationsBanc Montgomery
Securities LLC (together, the "Initial Purchasers") concerning the purchase of
the Notes from the Company by the several Initial Purchasers.

The Notes will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance upon exemptions therefrom. The Company has
prepared a preliminary offering memorandum dated January 20, 1998 (the
"Preliminary Offering Memorandum") and an offering memorandum dated the date
hereof (the "Final Offering Memorandum") setting forth information concerning
the Company and the Notes. Copies of the Preliminary Offering Memorandum have
been, and copies of the Final Offering Memorandum will be, delivered by the
Company to the Initial Purchasers pursuant to the terms of this Agreement. Any
references herein to the Preliminary Offering Memorandum and the Final Offering
Memorandum shall be deemed to include all amendments and supplements thereto,
unless otherwise noted. The Company hereby confirms that it has authorized the
use of the Preliminary Offering Memorandum and the Final Offering Memorandum in
connection with the offering and resale of the Notes by the Initial Purchasers
in accordance with Section 2.
<PAGE> 2
-2-

Holders of the Notes (including the Initial Purchasers and
their direct and indirect transferees) will be entitled to the benefits of an
Exchange and Registration Rights Agreement, substantially in the form attached
hereto as Annex A (the "Registration Rights Agreement"), pursuant to which the
Company will agree to file with the Securities and Exchange Commission (the
"Commission") (i) a registration statement under the Securities Act (the
"Exchange Offer Registration Statement") registering an issue of senior
subordinated notes of the Company (the "Exchange Notes") which are identical in
all material respects to the Notes (except that the Exchange Notes will not
contain terms with respect to transfer restrictions) and (ii) under certain
circumstances, a shelf registration statement with respect to the resale of the
Notes pursuant to Rule 415 under the Securities Act (the "Shelf Registration
Statement").

The Notes are being offered concurrently in connection with
the refinancing of certain of the Company's outstanding indebtedness. In
connection with the offering of the Notes, the Company is amending and
restating its senior secured credit facility with The Chase Manhattan Bank (as
amended and restated, the "Senior Credit Facility"). The proceeds of the
offering and sale of Notes contemplated hereby together with borrowings under
the Senior Credit Facility will be used to refinance outstanding indebtedness
under the existing senior credit facility of the Company.

Capitalized terms used but not defined herein shall have the
meanings given to such terms in the Final Offering Memorandum.

1. Representations, Warranties and Agreements of the
Company. The Company represents and warrants to, and agrees with, the several
Initial Purchasers on and as of the date hereof and the Closing Date (as
defined in Section 3) that:

(a) Each of the Preliminary Offering Memorandum and the
Final Offering Memorandum, as of its respective date, did not, and on
the Closing Date the Final Offering Memorandum will not, contain any
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes
no representation or warranty as to information contained in or
omitted from the Preliminary Offering Memorandum or the Final Offering
Memorandum in reliance upon and in conformity with written information
relating to the Initial Purchasers furnished to the Company by or on
behalf of any Initial Purchaser expressly for use therein, as defined
in Section 16 hereof (the "Initial Purchasers' Information").
<PAGE> 3
-3-

(b) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 2 and their
compliance with the agreements set forth herein, it is not necessary,
in connection with the issuance and sale of the Notes to the Initial
Purchasers and the offer, resale and delivery of the Notes by the
Initial Purchasers in the manner contemplated by this Agreement and
the Final Offering Memorandum, to register the Notes under the
Securities Act or to qualify the Indenture under the Trust Indenture
Act of 1939, as amended (the "Trust Indenture Act").

(c) The Company and each of its subsidiaries have been
duly incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in good
standing as foreign corporations in each jurisdiction in which their
respective ownership or lease of property or the conduct of their
respective businesses requires such qualification and have all
corporate power and authority necessary to own or hold their
respective properties and to conduct the businesses in which they are
engaged, except where the failure to so qualify or have such power or
authority would not, singularly or in the aggregate, have a material
adverse effect on the condition (financial or otherwise), results of
operations or business or prospects of the Company and its
subsidiaries, taken as a whole (a "Material Adverse Effect").

(d) The authorized capital stock of the Company consists
of 1000 shares of common stock, par value $.01 per share; all of the
outstanding shares of capital stock of the Company have been duly and
validly authorized and issued and are fully paid and non-assessable;
and the capital stock of the Company conforms in all material respects
to the description thereof contained in the Final Offering Memorandum.
All of the outstanding shares of capital stock of each subsidiary of
the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned directly or indirectly by
the Company, free and clear of any lien, charge, encumbrance, security
interest, restriction upon voting or transfer or any other claim of
any third party (other than liens and security interests created
pursuant to the existing senior credit agreement or the Senior Credit
Facility).

(e) The Company has all requisite corporate power and
authority to execute and deliver this Agreement, the Indenture, the
Registration Rights Agreement, the Notes and the Senior Credit
Facility (collectively, the "Transaction Documents") and to perform
its obligations hereunder and thereunder; and all corporate action
required to be taken by the Company for the due and proper
authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated
thereby have been duly and validly taken.
<PAGE> 4
-4-

(f) This Agreement has been duly authorized, executed and
delivered by the Company and (assuming the due authorization,
execution and delivery of this Agreement by the Initial Purchasers)
constitutes a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with the terms hereof,
except to the extent that (i) such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law) and (ii) the enforceability of rights to indemnification and
contribution hereunder may be limited by federal or state securities
laws or regulations or the public policy underlying such laws or
regulations.

(g) The Registration Rights Agreement has been duly
authorized by the Company and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
to the extent that (i) such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting creditors' rights generally and by
general equitable principles (whether considered in a proceeding in
equity or at law) and (ii) the enforceability of rights to
indemnification and contribution thereunder may be limited by federal
or state securities laws or regulations or the public policy
underlying such laws or regulations.

(h) The Indenture has been duly authorized by the Company
and, when duly executed and delivered in accordance with its terms by
each of the parties thereto, will constitute a valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and except as to the
effect on the Notes of the laws of any jurisdiction other than federal
law and the law of the State of New York wherein any purchaser of the
Notes may be located or wherein enforcement may be sought which limits
the rate of interest legally chargeable or collectible.

(i) The Notes have been duly authorized by the Company
and, when duly executed, authenticated, issued and delivered as
provided in the Indenture and paid for as provided herein, will be
duly and validly issued and outstanding and will constitute valid and
legally binding obligations of the Company entitled to the benefits of
the Indenture, enforceable against the Company in accordance with
their terms, except to the extent that such enforceability may be
limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other similar laws affecting creditors' rights
generally and by general equitable principles (whether considered in a
proceeding in equity or at law) and except as to the effect on the
Notes of the laws of any jurisdiction other than federal law and the
law of the State of New York wherein any purchaser of the Notes may be
located or wherein enforcement may be sought which limits the rate of
interest legally chargeable or collectible.
<PAGE> 5
-5-

(j) The Exchange Notes have been duly authorized by the
Company and, when duly executed, authenticated, issued and delivered
as provided in the Indenture and the Registration Rights Agreement,
will be duly and validly issued and outstanding and will constitute
valid and legally binding obligations of the Company entitled to the
benefits of the Indenture, enforceable against the Company in
accordance with their terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law) and except as to the
effect on the Notes of the laws of any jurisdiction other than federal
law and the law of the State of New York wherein any purchaser of the
Notes may be located or wherein enforcement may be sought which limits
the rate of interest legally chargeable or collectible.

(k) The Senior Credit Facility has been duly authorized,
executed and delivered by the Company and constitutes a valid and
legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and by general equitable principles (whether
considered in a proceeding in equity or at law), other than the
set-off provisions contained therein, which may not be enforceable.

(l) Each Transaction Document conforms in all material
respects to the description thereof contained in the Final Offering
Memorandum.

(m) The execution, delivery and performance by the
Company of each of the Transaction Documents, the issuance,
authentication, sale and delivery of the Notes and compliance by the
Company with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents will not,
except as contemplated by the Transaction Documents, conflict with or
result in a breach or violation of any of the terms or the provisions
of, or constitute a default under, or, with notice or lapse of time or
both, constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, except for any such
conflict, breach, violation, default, lien, charge or encumbrance that
could not, singly or in the aggregate, reasonably be expected to
<PAGE> 6
-6-

have a Material Adverse Effect or any material adverse effect on the
ability of the Company to perform its obligations under the
Transaction Documents, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or any of
its subsidiaries or any statute or any judgment, order, decree, rule
or regulation of any court or arbitrator or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries
or any of their properties or assets, except for such violations that
could not, singly or in the aggregate, reasonably be expected to have
a Material Adverse Effect; and no consent, approval, authorization or
order of, or filing or registration with, any such court or arbitrator
or governmental agency or body under any such statute, judgment,
order, decree, rule or regulation is required for the execution,
delivery and performance by the Company of each of the Transaction
Documents, the issuance, authentication, sale and delivery of the
Notes and compliance by the Company with the terms thereof and the
consummation of the transactions contemplated by the Transaction
Documents, except for such consents, approvals, authorizations,
filings, registrations or qualifications (i) which shall have been
obtained or made prior to the Closing Date, (ii) which may be required
under the Trust Indenture Act of 1939, as amended, in connection with
the Exchange Notes, (iii) the failure of which to obtain or make could
not, singly or in the aggregate, reasonably be expected to have a
Material Adverse Effect or any material adverse effect on the ability
of the Company to perform its obligations under the Transaction
Documents and (iv) as may be required to be obtained or made under the
Securities Act and applicable state securities laws as provided in the
Registration Rights Agreement.

(n) Ernst & Young LLP are independent certified public
accountants with respect to the Company and its subsidiaries within
the meaning of Rule 101 of the Code of Professional Conduct of the
American Institute of Certified Public Accountants ("AICPA") and its
interpretations and rulings thereunder. The historical financial
statements contained in the Final Offering Memorandum have been
prepared in accordance with United States generally accepted
accounting principles consistently applied throughout the periods
covered thereby and fairly present in all material respects the
financial position of the entities purported to be covered thereby at
the respective dates indicated and the results of their operations and
their cash flows for the respective periods indicated; and the
financial information contained in the Final Offering Memorandum under
the headings "Summary--Summary Historical Financial Data",
"Capitalization", "Selected Financial Data" and "Management's
Discussion and Analysis of Results of Operations and Financial
Condition" are derived from the accounting records of entities
purported to be covered thereby and fairly present in all material
respects the information purported to be shown thereby. The unaudited
pro forma combined financial information contained in the Final
Offering Memorandum has been prepared on a basis consistent with the
historical financial statements of the Company contained in the Final
Offering Memorandum (except for the pro forma adjustments
<PAGE> 7
-7-

specified therein), include all material adjustments to the historical
financial statements required by Rule 11-02 of Regulation S-X under
the Securities Act and the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), to reflect the transactions described in the
Final Offering Memorandum, are based on assumptions made on a
reasonable basis and fairly present the transactions described in the
Final Offering Memorandum.

(o) There are no legal or governmental proceedings
(including, without limitation, before the Federal Trade Commission
(the "FTC")) pending to which the Company or any of its subsidiaries
is a party or of which any property or assets of the Company or any of
its subsidiaries is the subject which, singularly or in the aggregate,
if determined adversely to the Company or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect; and to
the best knowledge of the Company, no such proceedings are threatened
or contemplated by governmental authorities or threatened by others.

(p) The Company is not aware of any action that has been
taken or any statute, rule, regulation, injunction or order that has
been enacted, adopted or issued by any governmental agency or body
which prevents the issuance of the Notes or suspends the sale of the
Notes in any jurisdiction; no injunction, restraining order or order
of any nature by any federal or state court of competent jurisdiction
has been issued with respect to the Company or any of its subsidiaries
which would prevent or suspend the issuance or sale of the Notes or
the use of the Preliminary Offering Memorandum or the Final Offering
Memorandum in any jurisdiction; no action, suit or proceeding is
pending against or, to the best knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries before any
court or arbitrator or any governmental agency, body or official,
domestic or foreign, which could reasonably be expected to interfere
with or adversely affect the issuance of the Notes or in any manner
draw into question the validity or enforceability of any of the
Transaction Documents or any action taken or to be taken pursuant to
the Transaction Documents.

(q) Except as disclosed in the Final Offering Memorandum,
neither the Company nor any of its subsidiaries is (i) in violation of
its charter or by-laws, (ii) in default in any material respect, and
no event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or observance
of any term, covenant or condition contained in any material
indenture, mortgage, deed of trust, loan agreement or other material
agreement or instrument to which it is a party or by which it is bound
or to which any of its property or assets is subject or (iii) in
violation in any material respect of any law, ordinance, governmental
rule, regulation, order, judgment or decree to which it or its
property or assets may be subject.
<PAGE> 8
-8-

(r) The Company and each of its subsidiaries possess all
material licenses, certificates, authorizations and permits issued by,
and have made all declarations and filings with, the appropriate
federal, state, local or foreign regulatory agencies or bodies
(including, without limitation, the FTC) which are necessary for the
ownership of their respective properties or the conduct of their
respective businesses as described in the Final Offering Memorandum,
except where the failure to possess or make the same would not,
singularly or in the aggregate, have a Material Adverse Effect, and
neither the Company nor any of its subsidiaries has received
notification of any revocation or modification of any such license,
certificate, authorization or permit or has any reason to believe that
any such license, certificate, authorization or permit will not be
renewed in the ordinary course.

(s) The Company and each of its subsidiaries have filed
all federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes
due thereon, and no tax deficiency has been determined adversely to
the Company or any of its subsidiaries which has had (nor does the
Company or any of its subsidiaries have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have) a Material Adverse
Effect.

(t) Neither the Company nor any of its subsidiaries is an
"investment company" within the meaning of the Investment Company Act
of 1940, as amended (the "Investment Company Act"), and the rules and
regulations of the Commission thereunder.

(u) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide
reasonable assurance that (i) transactions are executed in accordance
with management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting
principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for
assets is compared with the existing assets at reasonable intervals
and appropriate action is taken with respect to any differences.

(v) The Company and each of its subsidiaries have
insurance covering their respective properties, operations, personnel
and businesses, which insurance is in amounts and insures against such
losses and risks as are adequate to protect the Company and its
subsidiaries and their respective businesses. Neither the Company nor
any of its subsidiaries has received notice from any insurer or agent
of such insurer that capital improvements or other expenditures are
required or necessary to be made in order to continue such insurance.
<PAGE> 9
-9-

(w) The Company and each of its subsidiaries own or
possess adequate rights to use all material patents, patent
applications, trademarks, service marks, trade names, trademark
registrations, service mark registrations, copyrights, licenses and
know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) necessary for the conduct of their respective businesses;
and the conduct of their respective businesses does not conflict in
any material respect with, and the Company and its subsidiaries have
not received any notice of any claim of conflict with, any such rights
of others.

(x) The Company and each of its subsidiaries have good
and marketable title in fee simple to, or have valid rights to lease
or otherwise use, all items of real and personal property which are
material to the business of the Company and its subsidiaries, taken as
a whole, in each case free and clear of all liens, encumbrances,
claims and defects and imperfections of title other than (i) liens,
encumbrances and claims securing the existing senior credit agreement
or Senior Credit Facility or (ii) liens, encumbrances, claims and
defects and imperfections of title that do not materially interfere
with the use made or proposed to be made of such property by the
Company or its subsidiaries or could not reasonably be expected to
have a Material Adverse Effect.

(y) No labor disturbance by or dispute with the employees
of the Company or any of its subsidiaries exists or, to the best
knowledge of the Company and its subsidiaries, is imminent which could
reasonably be expected to have a Material Adverse Effect.

(z) There has been no storage, generation,
transportation, handling, treatment, disposal, discharge, emission or
other release of any kind of any pollutant or contaminant, or any
toxic, hazardous or other substance, waste or constituent ("Material")
by, due to or caused by the Company or any of its subsidiaries (or, to
the best knowledge of the Company and its subsidiaries, any other
entity (including any predecessor) for whose acts or omissions the
Company or any of its subsidiaries is or could reasonably be expected
to be liable) at, upon, under or from any of the property now or
previously owned, leased or operated by the Company or any of its
subsidiaries (or any predecessor), or upon any other property, in
violation of any statute or any ordinance, rule, regulation, order,
judgment, decree or permit or which would, under any statute or any
ordinance, rule (including rule of common law), regulation, order,
judgment, decree or permit, give rise to any liability, except for any
violation or liability which could not reasonably be expected to have,
singularly or in the aggregate with all such violations and
liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto such
property or into the environment surrounding such property of any
Material with respect to which the Company or any of its subsidiaries
has knowledge, except for any such disposal, discharge, emission or
other release of any kind which could not reasonably be expected to
have, singularly or in the aggregate with all such discharges and
other releases, a Material Adverse Effect.
<PAGE> 10
-10-

(aa) On and immediately after the Closing Date, the
Company (after giving effect to the issuance of the Notes and the
other transactions related thereto as described in the Final Offering
Memorandum) will be Solvent. As used in this paragraph, the term
"Solvent" means, with respect to the Company at a particular time,
that at such time (i) the present fair market value (or present fair
saleable value) of the assets of the Company is not less than the
total amount required to pay the probable liabilities of the Company
on its total existing debts and liabilities (including contingent
liabilities) as they become absolute and matured, (ii) the Company has
not incurred and does not intend to incur debts or liabilities beyond
its ability to pay as such debts and liabilities as they mature and
(iii) the Company is not engaged in any business or transaction, and
does not intend to engage in any business or transaction, for which
its property would constitute unreasonably small capital. In
computing the amount of such contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount that, in
the light of all the facts and circumstances existing at such time,
represents the amount that can reasonably be expected to become an
actual or matured liability.

(bb) Except as described in the Final Offering Memorandum,
there are no outstanding subscriptions, rights, warrants, calls or
options to acquire, or instruments convertible into or exchangeable
for, or agreements or understandings with respect to the sale or
issuance of, any shares of capital stock of or other equity or other
ownership interest in the Company or any of its subsidiaries.

(cc) The statistical and market-related data included in
the Final Offering Memorandum are based on or derived from sources
which the Company believes to be reliable and accurate.

(dd) Neither the Company nor any of its subsidiaries owns
any "margin securities" as that term is defined in Regulations G and U
of the Board of Governors of the Federal Reserve System (the "Federal
Reserve Board"), and none of the proceeds of the sale of the Notes
will be used, directly or indirectly, for the purpose of purchasing or
carrying any margin security, for the purpose of reducing or retiring
any indebtedness which was originally incurred to purchase or carry
any margin security or for any other purpose which might cause any of
the Notes to be considered a "purpose credit" within the meanings of
Regulation G, T, U or X of the Federal Reserve Board.

(ee) Except as disclosed in the Final Offering Memorandum,
neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give
rise to a valid claim against the Company or the Initial Purchasers
for a brokerage commission, finder's fee or like payment in connection
with the offering and sale of the Notes.
<PAGE> 11
-11-

(ff) The Notes satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.

(gg) None of the Company, any of its affiliates or any
person acting on its or their behalf (excluding the Initial
Purchasers) has engaged or will engage in any directed selling efforts
(as such term is defined in Regulation S under the Securities Act
("Regulation S")), and all such persons have complied with the
offering restrictions requirement of Regulation S to the extent
applicable.

(hh) Neither the Company nor any of its affiliates has,
directly or through any agent (provided that no representation is made
as to the Initial Purchasers or any person acting on their behalf),
sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as such term is defined in the
Securities Act), which is or will be integrated with the sale of the
Notes in a manner that would require registration of the Notes under
the Securities Act.

(ii) Neither the Company nor any of its affiliates nor any
other person acting on its or their behalf (provided that no
representation is made as to the Initial Purchasers or any person
acting on their behalf) has solicited offers for, or has offered and
sold, the Notes in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act.

(jj) There are no holders of securities of the Company
who, by reason of the execution by the Company of any of the
Transaction Documents or the consummation of the transactions
contemplated therein (except as contemplated by the Registration
Rights Agreement), have the right to request or demand that the
Company register under the Securities Act any securities held by them.

(kk) The Company has not taken and will not take, directly
or indirectly, any action prohibited by Regulation M under the
Exchange Act in connection with the offering of the Notes.

(ll) No forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act)
contained in the Preliminary Offering Memorandum or the Final Offering
Memorandum has been made or reaffirmed without a reasonable basis or
has been made or reaffirmed other than in good faith.
<PAGE> 12
-12-

(mm) None of the Company or any of its subsidiaries does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Florida Statutes Section
517.075.

(nn) Since the date as of which information is given in
the Final Offering Memorandum, except as otherwise expressly stated
therein, (i) there has been no material adverse change or any
development involving a prospective material adverse change in the
condition (financial or otherwise), or in the earnings, business
affairs, management or business prospects of the Company and its
subsidiaries taken as a whole, whether or not arising in the ordinary
course of business, (ii) neither the Company nor any of its
subsidiaries has incurred any material liability or obligation, direct
or contingent, other than in the ordinary course of business, (iii)
neither the Company nor any of its subsidiaries has entered into any
material transaction other than in the ordinary course of business and
(iv) there has not been any change in the capital stock or long-term
debt (other than the refinancing of the Company's existing credit
facility and the execution of the Senior Credit Facility) of the
Company and its subsidiaries, or any dividend or distribution of any
kind declared, paid or made by the Company or any of its subsidiaries
on any class of its capital stock.

2. Purchase and Resale of the Notes. (a) On the basis
of the representations, warranties and agreements contained herein, and subject
to the terms and conditions set forth herein, the Company agrees to issue and
sell to each of the Initial Purchasers, severally and not jointly, and each of
the Initial Purchasers, severally and not jointly, agrees to purchase from the
Company, the principal amount of Notes set forth opposite the name of such
Initial Purchaser on Schedule I hereto at a purchase price equal to 97% of the
principal amount thereof. The Company shall not be obligated to deliver any of
the Notes except upon payment for all of the Notes to be purchased as provided
herein.

(b) The Initial Purchasers have advised the Company that they
propose to offer the Notes for resale upon the terms and subject to the
conditions set forth herein and in the Final Offering Memorandum. Each Initial
Purchaser, severally and not jointly, represents and warrants to, and agrees
with, the Company that (i) it is purchasing the Notes pursuant to a private
sale exemption from registration under the Securities Act, (ii) it has not
solicited offers for, or offered or sold, and will not solicit offers for, or
offer or sell, the Notes by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) of Regulation D or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (iii) it has solicited and will solicit offers for the Notes
only from, and has offered or sold and will offer, sell or deliver the Notes,
as part of its initial offering, only (A) within the United States to persons
whom it reasonably believes to be qualified institutional buyers ("Qualified
Institutional Buyers"), as defined in Rule 144A under the Securities Act ("Rule
144A"), or if any such person is buying for one or more institutional accounts
for which such person is acting as fiduciary or agent, only when such person
has represented
<PAGE> 13
-13-

to it that each such account is a Qualified Institutional Buyer to whom notice
has been given that such sale or delivery is being made in reliance on Rule
144A and in each case, in transactions in accordance with Rule 144A and (B)
outside the United States to persons other than U.S. persons in reliance on
Regulation S under the Securities Act ("Regulation S").

(c) In connection with the offer and sale of Notes in
reliance on Regulation S, each Initial Purchaser, severally and not jointly,
represents, warrants and agrees that:

(i) The Notes have not been registered under the Securities
Act and may not be offered or sold within the United States or to, or
for the account or benefit of, U.S. persons except pursuant to an
exemption from, or in transactions not subject to, the registration
requirements of the Securities Act.

(ii) Such Initial Purchaser has offered and sold the Notes,
and will offer and sell the Notes, (A) as part of their distribution
at any time and (B) otherwise until 40 days after the later of the
commencement of the offering of the Notes and the Closing Date, only
in accordance with Regulation S or Rule 144A or any other available
exemption from registration under the Securities Act.

(iii) None of such Initial Purchaser or any of its
affiliates or any other person acting on its or their behalf has
engaged or will engage in any directed selling efforts with respect to
the Notes, and all such persons have complied and will comply with the
offering restrictions requirement of Regulation S.

(iv) Such Initial Purchaser (i) has not offered or sold
and prior to the date six months after the Closing Date will not offer
or sell any Notes to persons in the United Kingdom except to persons
whose ordinary activities involve them in acquiring, holding, managing
or disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities
Regulations 1995; (ii) has complied and will comply with all
applicable provisions of the Financial Services Act 1986 and the
Public Offers of Securities Regulations 1995 with respect to anything
done by it in relation to the Notes in, from or otherwise involving
the United Kingdom and (iii) has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by
it in connection with the issue of Notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act 1986
(Investment Advertisements) (Exemptions) Order 1996 or is a person to
whom such document may otherwise lawfully be issued or passed on.

(iv) at or prior to the confirmation of sale of any Notes
sold in reliance on Regulation S, it will have sent to each
distributor, dealer or other person receiving a selling concession,
fee or other remuneration that purchase Notes from it during the
restricted period a confirmation or notice to substantially the
following effect:
<PAGE> 14
-14-

"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Securities
Act"), and may not be offered or sold within the United States
or to, or for the account or benefit of, U.S. persons (i) as
part of their distribution at any time or (ii) otherwise until
40 days after the later of the commencement of the offering of
the Notes and the date of original issuance of the Notes,
except in accordance with Regulation S or Rule 144A or any
other available exemption from registration under the
Securities Act. Terms used above have the meanings given to
them by Regulation S."

(v) it has not and will not enter into any contractual
arrangement with any distributor with respect to the distribution of
the Notes, except with its affiliates or with the prior written
consent of the Company.

Terms used in this Section 2(c) have the meanings given to them by Regulation S.

(d) Each Initial Purchaser, severally and not jointly, agrees
that, prior to or simultaneously with the confirmation of sale by the Initial
Purchaser to any purchaser of any of the Notes purchased by the Initial
Purchaser from the Company pursuant hereto, the Initial Purchaser shall furnish
to that purchaser a copy of the Final Offering Memorandum (and any amendment or
supplement thereto that the Company shall have furnished to the Initial
Purchaser prior to the date of such confirmation of sale). In addition to the
foregoing, the Initial Purchasers acknowledge and agree that the Company and,
for purposes of the opinions to be delivered to the Initial Purchasers pursuant
to Sections 5(d) and (e), counsel for the Company and for the Initial
Purchasers, respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their agreements
contained in this Section 2, and each Initial Purchaser hereby consents to such
reliance.

(e) The Company acknowledges and agrees that the Initial
Purchasers may sell Notes to any affiliate and that any such affiliate may sell
Notes purchased by it to an Initial Purchaser.

3. Delivery of and Payment for the Notes. (a) Delivery
of and payment for the Notes shall be made at the offices of Cahill Gordon &
Reindel, New York, New York, or at such other place as shall be agreed upon by
the Initial Purchasers and the Company, at 10:00 A.M., New York City time, on
February 6, 1998, or at such other time or date, not later than seven full
business days thereafter, as shall be agreed upon by the Initial Purchasers and
the Company (such date and time of payment and delivery being referred to
herein as the "Closing Date").
<PAGE> 15
-15-

(b) On the Closing Date, payment of the purchase price for
the Notes shall be made to the Company by wire or book-entry transfer of
same-day funds to such account or accounts as the Company shall specify prior
to the Closing Date or by such other means as the parties hereto shall agree
prior to the Closing Date against delivery to the Initial Purchasers of the
certificates evidencing the Notes. Time shall be of the essence, and delivery
of the Notes and payment of the purchase price at the time and place specified
pursuant to this Agreement is a further condition of the obligations of the
Initial Purchasers and the Company hereunder, respectively. Upon delivery, the
Notes shall be in global form, registered in such names and in such
denominations as CSI on behalf of the Initial Purchasers shall have requested
in writing not less than two full business days prior to the Closing Date. The
Company agrees to make one or more global certificates evidencing the Notes
available for inspection by CSI on behalf of the Initial Purchasers in New
York, New York at least 24 hours prior to the Closing Date.

4. Further Agreements of the Company. The Company
agrees with each of the several Initial Purchasers:

(a) to advise the Initial Purchasers promptly and, if
requested, confirm such advice in writing, of the happening of any
event which makes any statement of a material fact made in the Final
Offering Memorandum untrue or which requires the making of any
additions to or changes in the Final Offering Memorandum (as amended
or supplemented from time to time) in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; to advise the Initial Purchasers promptly of any order
preventing or suspending the use of the Preliminary Offering
Memorandum or the Final Offering Memorandum, of any suspension of the
qualification of the Notes for offering or sale in any jurisdiction
and of the initiation or threatening of any proceeding for any such
purpose; and to use its reasonable best efforts to prevent the
issuance of any such order preventing or suspending the use of the
Preliminary Offering Memorandum or the Final Offering Memorandum or
suspending any such qualification and, if any such suspension is
issued, to obtain the lifting thereof at the earliest possible time;

(b) to furnish to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of
the Preliminary Offering Memorandum and the Final Offering Memorandum
(and any amendments or supplements thereto) as may be reasonably
requested;

(c) prior to making any amendment or supplement to the
Final Offering Memorandum, to furnish a copy thereof to each of the
Initial Purchasers and counsel for the Initial Purchasers and not to
effect any such amendment or supplement to which the Initial
Purchasers shall reasonably object by notice to the Company after a
reasonable period to review, which shall not be in any case longer
than 5 business days after receipt of such copy;
<PAGE> 16
-16-

(d) if, at any time prior to completion of the resale of
the Notes by the Initial Purchasers, any event shall occur,
information shall become known or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Initial
Purchasers or counsel for the Company, to amend or supplement the
Final Offering Memorandum in order that the Final Offering Memorandum
will not include an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances existing at the time it is
delivered to a purchaser, not misleading, or if it is necessary to
amend or supplement the Final Offering Memorandum to comply with
applicable law, to promptly prepare (subject to Section 4(c) above)
such amendment or supplement as may be necessary to correct such
untrue statement or omission or so that the Final Offering Memorandum,
as so amended or supplemented, will comply with applicable law;

(e) for so long as the Notes are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Notes and prospective
purchasers of the Notes designated by such holders, upon request of
such holders or such prospective purchasers, the information required
to be delivered pursuant to Rule 144A(d)(4) under the Securities Act,
unless the Company is then subject to and in compliance with Section
13 or 15(d) of the Exchange Act (the foregoing agreement being for the
benefit of the holders from time to time of the Notes and prospective
purchasers of the Notes designated by such holders);

(f) for a period of three years after the Closing Date,
to furnish to the Initial Purchasers copies of any annual reports,
quarterly reports and current reports filed by the Company with the
Commission on Forms 10-K, 10-Q and 8-K, or such other similar forms as
may be designated by the Commission, and such other documents, reports
and information as shall be furnished by the Company to the Trustee or
to the holders of the Notes pursuant to the Indenture or the Exchange
Act or any rule or regulation of the Commission thereunder;

(g) to use its reasonable best efforts to qualify the
Notes for offering and sale under the state securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may designate and
to continue such qualifications in effect for so long as reasonably
required for the resale of the Notes; and to arrange for the
determination of the eligibility for investment of the Notes under the
laws of such jurisdictions as the Initial Purchasers may reasonably
request; provided, however, that the Company and its subsidiaries
shall not be obligated to qualify as foreign corporations in any
jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction;
<PAGE> 17
-17-

(h) to assist the Initial Purchasers in arranging for the
Notes to be designated Private Offerings, Resales and Trading through
Automated Linkages ("PORTAL") Market securities in accordance with the
rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Notes to be eligible for clearance and settlement
through The Depository Trust Company ("DTC");

(i) not to, and to cause its affiliates not to, sell,
offer for sale or solicit offers to buy or otherwise negotiate in
respect of any security (as such term is defined in the Securities
Act) which could be integrated with the sale of the Notes in a manner
which would require registration of the Notes under the Securities
Act;

(j) except following the effectiveness of the Exchange
Offer Registration Statement or the Shelf Registration Statement, as
the case may be, not to, and to cause its affiliates not to, and not
to authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Notes by means of any
form of general solicitation or general advertising within the meaning
of Regulation D or in any manner involving a public offering within
the meaning of Section 4(2) of the Securities Act; and not to offer,
sell, contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Notes as contemplated by this Agreement and the Final
Offering Memorandum;

(k) for a period of 90 days from the date of the Final
Offering Memorandum, not to offer for sale, sell, contract to sell or
otherwise dispose of, directly or indirectly, or file a registration
statement for, or announce any offer, sale, contract for sale of or
other disposition of any debt securities or guaranteed by the Company
or any of its subsidiaries (other than the Notes) without the prior
written consent of the Initial Purchasers;

(l) without the prior written consent of the Initial
Purchasers, not to resell any of the Notes that have been reacquired
by it, except for Notes purchased by the Company and resold in a
transaction registered under the Securities Act;

(m) in connection with the offering of the Notes, until
CSI on behalf of the Initial Purchasers shall have notified the
Company of the completion of the resale of the Notes, not to, and to
cause its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons,
bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Notes, or attempt
to induce any person to purchase any Notes; and not to, and to cause
its affiliated purchasers not to, make bids or purchase for the
purpose of creating actual, or apparent, active trading in or of
raising the price of the Notes;
<PAGE> 18
-18-

(n) in connection with the offering of the Notes, to make
its officers, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;

(o) to do and perform all things required to be done and
performed by it under this Agreement and the Registration Rights
Agreement that are within its control prior to or after the Closing
Date, and to use its reasonable best efforts to satisfy all conditions
precedent to the delivery of the Notes;

(p) to not take any action prior to the execution and
delivery of the Indenture which, if taken after such execution and
delivery, would have violated any of the covenants contained in the
Indenture;

(q) to not take any action prior to the Closing Date
which would require the Final Offering Memorandum to be amended or
supplemented pursuant to Section 4(d);

(r) prior to the Closing Date, not to issue any press
release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition, financial
or otherwise, or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary
course of business and consistent with the past practices of the
Company and of which the Initial Purchasers are notified), without the
prior written consent of the Initial Purchasers, unless in the
judgment of the Company and its counsel, and after notification to the
Initial Purchasers, such press release or communication is required by
law; and

(s) to apply the net proceeds from the sale of the Notes
as set forth in the Final Offering Memorandum under the heading "Use
of Proceeds."

5. Conditions of Initial Purchasers' Obligations. The
respective obligations of the several Initial Purchasers hereunder are subject
to the accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company contained herein, to the accuracy
of the statements of the Company and its officers made in any certificates
delivered pursuant hereto, to the performance by the Company of its obligations
hereunder, and to each of the following additional terms and conditions:

(a) The Final Offering Memorandum (and any amendments or
supplements thereto) shall have been printed and copies distributed to
the Initial Purchasers as promptly as practicable on or following the
date of this Agreement or at such other date and time as to which the
Initial Purchasers may agree; and no stop order suspending the sale of
the Notes in any jurisdiction shall have been issued and no proceeding
for that purpose shall have been commenced or shall be pending or
threatened.
<PAGE> 19
-19-

(b) The Initial Purchasers shall not have discovered and
disclosed to the Company on or prior to the Closing Date that the
Final Offering Memorandum or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of
counsel for the Initial Purchasers, is material or omits to state any
fact which, in the opinion of such counsel, is material and is
required to be stated therein and is necessary to make the statements
therein not misleading.

(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of each of the
Transaction Documents and the Final Offering Memorandum, and all other
legal matters relating to the Transaction Documents and the
transactions contemplated thereby (including any agreements or
documents executed and delivered in connection therewith), shall be
reasonably satisfactory in all material respects to the Initial
Purchasers, and the Company shall have furnished to the Initial
Purchasers all documents and information that they or their counsel
may reasonably request to enable them to pass upon such matters.

(d) Weil, Gotshal & Manges LLP shall have furnished to
the Initial Purchasers their written opinion, as counsel to the
Company, addressed to the Initial Purchasers and dated the Closing
Date, substantially to the effect set forth in Annex B hereto.

(e) The Initial Purchasers shall have received from
Cahill Gordon & Reindel, counsel for the Initial Purchasers, such
opinion or opinions, dated the Closing Date, with respect to such
matters as the Initial Purchasers may reasonably require, and the
Company shall have furnished to such counsel such documents and
information as they reasonably request for the purpose of enabling
them to pass upon such matters.

(f) The Company shall have furnished to the Initial
Purchasers a letter (the "Initial Comfort Letter") of Ernst & Young
LLP, addressed to the Initial Purchasers and dated the date hereof.

(g) The Company shall have furnished to the Initial
Purchasers a letter (the "Bring-Down Comfort Letter") of Ernst & Young
LLP, addressed to the Initial Purchasers and dated the Closing Date,
(i) confirming that they are independent public accountants with
respect to the Company and its subsidiaries within the meaning of Rule
101 of the Code of Professional Conduct of the AICPA and its
interpretations and rulings thereunder, (ii) stating, as of the date
of the Bring-Down Comfort Letter (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Final Offering
Memorandum,
<PAGE> 20
-20-

as of a date not more than three business days prior to the date of
the Bring-Down Comfort Letter), that the conclusions and findings of
such accountants with respect to the financial information and other
matters covered by the Initial Comfort Letter are accurate and (iii)
confirming in all material respects the conclusions and findings set
forth in the Initial Comfort Letter.

(h) The Company shall have furnished to the Initial
Purchasers on the date hereof copies of the independent accountants'
reports included in the Final Offering Memorandum signed by the
accountants rendering such reports.

(i) The Company shall have furnished to the Initial
Purchasers a certificate, dated the Closing Date, of a senior
executive officer stating that (i) such officer has reviewed the Final
Offering Memorandum, (ii) in his opinion, the Final Offering
Memorandum, as of its date, did not include any untrue statement of a
material fact and did not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein,
in the light of the circumstances under which they were made, not
misleading, and since the date of the Final Offering Memorandum, no
event has occurred which should have been set forth in a supplement or
amendment to the Final Offering Memorandum so that the Final Offering
Memorandum (as so amended or supplemented) would not include any
untrue statement of a material fact and would not omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading and (iii) to the best of his
knowledge, as of the Closing Date, the representations and warranties
of the Company in this Agreement are true and correct in all material
respects, the Company has complied in all material respects with all
agreements and satisfied in all material respects all conditions on
its part to be performed or satisfied hereunder on or prior to the
Closing Date, and subsequent to the date of the most recent financial
statements contained in the Final Offering Memorandum, there has been
no material adverse change in the financial position or results of
operations of the Company or any of its subsidiaries, or any material
adverse change, or any material adverse development including a
prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole, except as
expressly set forth in the Final Offering Memorandum.

(j) The Initial Purchasers shall have received a
counterpart of the Registration Rights Agreement which shall have been
executed and delivered by a duly authorized officer of the Company.

(k) The Indenture shall have been duly executed and
delivered by the Company and the Trustee, and the Notes shall have
been duly executed and delivered by the Company and duly authenticated
by the Trustee.
<PAGE> 21
-21-

(l) The Notes shall have been approved by the NASD for
trading in the PORTAL Market.

(m) If any event shall have occurred that requires the
Company under Section 4(d) to prepare an amendment or supplement to
the Final Offering Memorandum, such amendment or supplement shall have
been prepared, the Initial Purchaser shall have been given a
reasonable opportunity to comment thereon, and copies thereof shall
have been delivered to the Initial Purchasers reasonably in advance of
the Closing Date.

(n) There shall not have occurred any invalidation of
Rule 144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act
or the Exchange Act by the Commission or any amendment or proposed
amendment thereof by the Commission which in the reasonable judgment
of the Initial Purchasers would materially impair the ability of the
Initial Purchasers to purchase, hold or effect resales of the Notes as
contemplated hereby.

(o) Subsequent to the execution and delivery of this
Agreement or, if earlier, the dates as of which the relevant
information is given in the Final Offering Memorandum (exclusive of
any amendment or supplement thereto), other than as described in the
Final Offering Memorandum, there shall not have been any change in the
capital stock or long-term debt or any change, or any development
involving a prospective change, in or affecting the condition
(financial or otherwise), results of operations, business or prospects
of the Company and its subsidiaries taken as a whole, the effect of
which, in any such case described above, is, in the judgment of the
Initial Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the sale or delivery of
the Notes on the terms and in the manner contemplated in this
Agreement and the Final Offering Memorandum (exclusive of any
amendment or supplement thereto).

(p) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance, sale or resale of the Notes; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance, sale or resale of the
Notes.

(q) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating
accorded the Notes or any other debt securities or preferred stock of
the Company by any "nationally recognized statistical rating
organization," as such term is defined by the Commission for purposes
of Rule 436(g)(2) of the rules and regulations of the Commission under
the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review (other than an
announcement with positive implications of a possible upgrading), its
rating of the Notes or any of the Company's other debt securities or
preferred stock.
<PAGE> 22
-22-

(r) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange, the
American Stock Exchange or the over-the-counter market shall have been
suspended or limited, or minimum prices shall have been established on
any such exchange or market by the Commission, by any such exchange or
by any other regulatory body or governmental authority having
jurisdiction, or trading in any securities of the Company on any
exchange or in the over-the-counter market shall have been suspended,
or (ii) any moratorium on commercial banking activities shall have
been declared by federal or New York state authorities, or (iii) an
outbreak or escalation of hostilities or a declaration by the United
States of a national emergency or war or (iv) a material adverse
change in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in the
United States shall be such) the effect of which, in the case of this
clause (iv), is, in the judgment of the Initial Purchasers, so
material and adverse as to make it impracticable or inadvisable to
proceed with the sale or the delivery of the Notes on the terms and in
the manner contemplated in this Agreement and in the Final Offering
Memorandum (exclusive of any amendment or supplement thereto).

(s) The Initial Purchasers shall have received an
executed original of the Senior Credit Facility.

All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Initial Purchasers.

6. Termination. The obligations of the Initial
Purchasers hereunder may be terminated by the Initial Purchasers, in their
absolute discretion, by notice given to and received by the Company prior to
delivery of and payment for the Notes if, prior to that time, any of the events
described in Section 5(r) shall have occurred and be continuing.

7. Defaulting Initial Purchasers. (a) If, on the
Closing Date, either Initial Purchaser defaults in the performance of its
obligations under this Agreement, the non-defaulting Initial Purchaser may make
arrangements for the purchase of the Notes which such defaulting Initial
Purchaser agreed but failed to purchase by other persons satisfactory to the
Company and the non-defaulting Initial Purchaser, but if no such arrangements
are made within 36 hours after such default, this Agreement shall terminate
without liability on the part of the non-defaulting Initial Purchaser or the
Company, except that the Company will continue to be liable for the payment of
expenses to the extent set forth in Sections 8 and 12
<PAGE> 23
-23-

(but only those expenses incurred by the non-defaulting Initial Purchaser) and
except that the provisions of Sections 9 and 10 shall not terminate and shall
remain in effect. As used in this Agreement, the term "Initial Purchasers"
includes, for all purposes of this Agreement unless the context otherwise
requires, any party not listed in Schedule I hereto that, pursuant to this
Section 7, purchases Notes which a defaulting Initial Purchaser agreed but
failed to purchase.

(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Company or any
non-defaulting Initial Purchaser for damages caused by its default. If other
persons are obligated or agree to purchase the Notes of a defaulting Initial
Purchaser, either the non-defaulting Initial Purchaser or the Company may
postpone the Closing Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Initial Purchasers may be necessary in the Final Offering Memorandum or in any
other document or arrangement, and the Company agrees to reasonably promptly
prepare any amendment or supplement to the Final Offering Memorandum that
effects any such changes.

8. Reimbursement of Initial Purchasers' Expenses. If
(a) this Agreement shall have been terminated pursuant to Section 6 or 7, (b)
the Company shall fail to tender the Notes for delivery to the Initial
Purchasers for any reason permitted under this Agreement or (c) the Initial
Purchasers shall decline to purchase the Notes for any reason permitted under
this Agreement, the Company shall reimburse the Initial Purchasers for such
out-of- pocket expenses (including reasonable fees and disbursements of
counsel) as shall have been reasonably incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase and resale of the
Notes. If this Agreement is terminated pursuant to Section 7 by reason of the
default of one or more of the Initial Purchasers, the Company shall not be
obligated to reimburse any defaulting Initial Purchaser on account of such
expenses.

9. Indemnification. (a) The Company shall indemnify
and hold harmless each Initial Purchaser, its affiliates, any person
controlling such Initial Purchaser or such affiliates within the meaning of the
Securities Act or Exchange Act and each of their respective officers,
directors, partners, employees, representatives, affiliates and agents,
(collectively referred to for purposes of this Section 9(a) and Section 10 as
an "Initial Purchaser"), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of the Notes), to which such Initial Purchaser may become subject,
whether commenced or threatened, under the Securities Act, the Exchange Act,
any other federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action arises out
of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in the Preliminary Offering Memorandum or the Final
Offering Memorandum or in any amendment or supplement thereto or in any
information provided by the Company pursuant to Section 4(e) or (ii) the
omission or alleged omission to state therein a material fact necessary in
order to make the statements therein, in the light of
<PAGE> 24
-24-

the circumstances under which they were made, not misleading, and shall
reimburse each Initial Purchaser promptly upon demand for any legal or other
expenses reasonably incurred by such Initial Purchaser in connection with
investigating or defending or preparing to defend against or appearing as a
third party witness in connection with any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, an untrue
statement or alleged untrue statement in or omission or alleged omission from
any of such documents in reliance upon and in conformity with any Initial
Purchaser's Information; and provided, further, that with respect to any such
untrue statement in or omission from the Preliminary Offering Memorandum, the
indemnity agreement contained in this Section 9(a) shall not inure to the
benefit of an Initial Purchaser to the extent that the sale to the person
asserting any such loss, claim, damage, liability or action was an initial
resale by the Initial Purchaser and any such loss, claim, damage, liability or
action of or with respect to such Initial Purchaser results from the fact that
both (A) a copy of the Final Offering Memorandum was not sent or given to such
person at or prior to the written confirmation of the sale of such Notes to
such person and (B) the untrue statement in or omission from the Preliminary
Offering Memorandum was corrected in the Final Offering Memorandum unless, in
either case, such failure to deliver the Final Offering Memorandum was a result
of non-compliance by the Company with Section 4(b).

(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, any person controlling
the Company or such affiliates within the meaning of the Securities Act or
Exchange Act and each of their respective officers, directors, partners,
employees, representatives, affiliates and agents, (collectively referred to
for purposes of this Section 9(b) and Section 10 as the Company), from and
against any loss, claim, damage or liability, joint or several, or any action
in respect thereof, to which the Company may become subject, whether commenced
or threatened, under the Securities Act, the Exchange Act, any other federal or
state statutory law or regulation, at common law or otherwise, insofar as such
loss, claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact contained
in the Preliminary Offering Memorandum or the Final Offering Memorandum or in
any amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, but in each case only to the extent that the untrue statement or
alleged untrue statement or omission or alleged omission was made in reliance
upon and in conformity with any Initial Purchaser's Information, and shall
reimburse the Company promptly upon demand for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending or preparing to defend against or appearing as a third party witness
in connection with any such loss, claim, damage, liability or action as such
expenses are incurred.
<PAGE> 25
-25-

(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party pursuant to Section 9(a) or 9(b), notify the
indemnifying party in writing of such claim or the commencement of such action;
provided, however, that the failure to notify the indemnifying party shall not
relieve it from any liability which it may have under this Section 9 except to
the extent that it has been materially prejudiced (through the forfeiture of
substantive rights or defenses) by such failure; and provided, further, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 9. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 9 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that an indemnified party shall have the
right to employ its own counsel in any such action, but the fees, expenses and
other charges of such counsel for the indemnified party will be at the expense
of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
a conflict or potential conflict exists (based upon advice of counsel to the
indemnified party) between the indemnified party and the indemnifying party (in
which case the indemnifying party will not have the right to direct the defense
of such action on behalf of the indemnified party) or (3) the indemnifying
party has not in fact employed counsel reasonably satisfactory to the
indemnified party to assume the defense of such action within a reasonable time
after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be
at the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable
fees, disbursements and other charges of more than one separate firm of
attorneys (in addition to any local counsel) at any one time for all such
indemnified party or parties. Each indemnified party, as a condition of the
indemnity agreements contained in Sections 9(a) and 9(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the defense of
any such action or claim. No indemnifying party shall be liable for any
settlement of any such action effected without its written consent (which
consent shall not be unreasonably withheld), but if settled with its written
consent or if there be a final judgment for the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any indemnified
party from and against any loss or liability by reason of such settlement or
judgment. No indemnifying party shall, without the prior written consent of
the indemnified party (which consent shall not be unreasonably withheld),
effect any settlement of any pending or
<PAGE> 26
-26-

threatened proceeding in respect of which any indemnified party is a party and
indemnity could have been sought hereunder by such indemnified party unless
such settlement includes an unconditional release of such indemnified party in
form and substance satisfactory to such indemnified party from all liability on
claims that are the subject matter of such proceeding.

The obligations of the Company and the Initial Purchasers in
this Section 9 and in Section 10 are in addition to any other liability that
the Company or the Initial Purchasers, as the case may be, may otherwise have.

10. Contribution. If the indemnification provided for in
Section 9 is unavailable or insufficient to hold harmless an indemnified party
under Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable
by such indemnified party as a result of such loss, claim, damage or liability,
or action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company on the one hand and the
Initial Purchasers on the other from the offering of the Notes or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and the Initial Purchasers on the other with respect to the
statements or omissions that resulted in such loss, claim, damage or liability,
or action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Initial Purchasers on the other with respect to such offering shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Notes purchased under this Agreement (before deducting expenses)
received by or on behalf of the Company, on the one hand, and the total
discounts and commissions received by the Initial Purchasers with respect to
the Notes purchased under this Agreement, on the other, bear to the total gross
proceeds from the sale of the Notes under this Agreement, in each case as set
forth in the table on the cover page of the Final Offering Memorandum. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to the Company or information
supplied by the Company on the one hand or to any Initial Purchaser's
Information on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Initial Purchasers agree
that it would not be just and equitable if contributions pursuant to this
Section 10 were to be determined by pro rata allocation or by any other method
of allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a
result of the loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section 10 shall be deemed to include, for purposes
of this Section 10, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending or preparing to
defend any such action or claim. Notwithstanding the provisions of this
Section 10,
<PAGE> 27
-27-

no Initial Purchaser shall be required to contribute any amount in excess of
the amount by which the total discounts and commissions received by such
Initial Purchaser with respect to the Notes purchased by it under this
Agreement exceeds the amount of any damages which such Initial Purchaser has
otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Initial Purchasers'
obligations to contribute as provided in this Section 10 are several in
proportion to their respective purchase obligations and not joint.

11. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Initial
Purchasers and the Company and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except as provided in Sections 9 and 10 with respect to affiliates, controlling
persons, officers, directors, partners, employees, representatives and agents
as specified therein and in Section 4(e) with respect to holders and
prospective purchasers of the Notes. Nothing in this Agreement is intended or
shall be construed to give any person, other than the persons referred to in
this Section 11, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein.

12. Expenses. Whether or not the transactions
contemplated by this Agreement are consummated or this Agreement is terminated,
the Company agrees with the Initial Purchasers to pay (a) the costs incident to
the authorization, issuance, sale, preparation and delivery of the Notes and
any taxes payable in that connection; (b) the costs incident to the
preparation, printing and distribution of the Preliminary Offering Memorandum,
the Final Offering Memorandum and any amendments or supplements thereto; (c)
the costs of reproducing and distributing each of the Transaction Documents;
(d) the costs incident to the preparation, printing and delivery of the
certificates evidencing the Notes, including stamp duties and transfer taxes,
if any, payable upon issuance of the Notes; (e) the fees and expenses of the
Company's counsel and independent accountants; (f) the fees and expenses of
qualifying the Notes under the securities laws of the several jurisdictions as
provided in Section 4(g) and of preparing, printing and distributing Blue Sky
Memoranda (including related fees and expenses of counsel for the Initial
Purchasers in an amount up to $7,500); (g) any fees charged by rating agencies
for rating the Notes; (h) the fees and expenses of the Trustee and any paying
agent (including related fees and expenses of any counsel to such parties); (i)
all expenses and application fees incurred in connection with the application
for the inclusion of the Notes on the PORTAL Market and the approval of the
Notes for book-entry transfer by DTC; and (j) all other costs and expenses
incident to the performance of the obligations of the Company under this
Agreement which are not otherwise specifically provided for in this Section 12;
provided, however, that except as provided in this Section 12 and Section 8,
the Initial Purchasers shall pay their own costs and expenses (including the
costs and expenses of their legal counsel).
<PAGE> 28
-28-

13. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company and the
Initial Purchasers contained in this Agreement or made by or on behalf of the
Company or the Initial Purchasers pursuant to this Agreement shall survive the
delivery of and payment for the Notes and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them.

14. Notices, etc.. All statements, requests, notices and
agreements hereunder shall be in writing, and:

(a) if to the Initial Purchasers, shall be delivered or
sent by mail or telecopy transmission to Chase Securities Inc., 270
Park Avenue, New York, New York 10017, Attention: James Casey
(telecopier no.: (212) 270-0994); or

(b) if to the Company, shall be delivered or sent by mail
or telecopy transmission to the address of the Company set forth in
the Final Offering Memorandum, Attention: Glenn E. Staats (telecopier
no.: (512) 328-6461), with a copy to Hicks, Muse, Tate & Furst
Incorporated, 200 Crescent Court, Suite 1600, Dallas, Texas 75201,
Attention: Lawrence D. Stuart, Jr. (telecopier no.: (214) 740-7313).

provided that any notice to an Initial Purchaser pursuant to Section 9(c) shall
also be delivered or sent by mail to such Initial Purchaser at its address set
forth on the signature page hereof. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof. The Company shall
be entitled to act and rely upon any request, consent, notice or agreement
given or made on behalf of the Initial Purchasers by CSI.

15. Definition of Terms. For purposes of this Agreement,
(a) the term "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "subsidiary" has the meaning set forth
in Rule 405 under the Securities Act and (c) except where otherwise expressly
provided, the term "affiliate" has the meaning set forth in Rule 405 under the
Securities Act.

16. Initial Purchasers' Information. The parties hereto
acknowledge and agree that for all purposes of this Agreement (including, but
not limited to, Section 1(a), Section 9 and Section 10) the Initial Purchasers'
Information consists solely of the following information in the Preliminary
Offering Memorandum and the Final Offering Memorandum: (i) the last paragraph
on the front cover page concerning the terms of the offering by the Initial
Purchasers; (ii) the first paragraph on page "i" concerning stabilization,
over-allotment and trading activities by the Initial Purchasers; and (iii) the
statements concerning each of the Initial Purchasers (but only as to such
Initial Purchaser) contained in the third, fifth, ninth, eleventh and twelfth
paragraphs under the heading "Plan of Distribution."
<PAGE> 29
-29-

17. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
REGARD TO PRINCIPLES OF CONFLICTS OF LAWS THEREOF.

18. Counterparts. This Agreement may be executed in one
or more counterparts (which may include counterparts delivered by telecopier)
and, if executed in more than one counterpart, the executed counterparts shall
each be deemed to be an original, but all such counterparts shall together
constitute one and the same instrument.

19. Amendments. No amendment or waiver of any provision
of this Agreement, nor any consent or approval to any departure therefrom,
shall in any event be effective unless the same shall be in writing and signed
by the parties hereto.

20. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.

[Signature Pages Follow]
<PAGE> 30

If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between each of the Company and the
Initial Purchasers in accordance with its terms.

Very truly yours,

COOPERATIVE COMPUTING, INC.

By: /s/ MATTHEW HALE
--------------------------------
Name: Matthew Hale
Title: Chief Financial Officer
Accepted:

CHASE SECURITIES INC.

By: /s/ JAMES CASEY
-----------------------------------------
Authorized Signatory

Address for notices pursuant to Section 9(c):

270 Park Avenue
New York, New York 10017
Attention: Legal Department

NATIONSBANC MONTGOMERY
SECURITIES LLC

By: /s/ STUART B. GLEICHENHAUS
-----------------------------------------
Authorized Signatory

Address for notices pursuant to Section 9(c):

901 Main Street, 66th Floor
Dallas, Texas 75202
Attention: Legal Department

<PAGE> 1
EXHIBIT 12.1

COMPUTATION OF RATIO OF EARNINGS TO FIXED CHARGES

(DOLLARS IN THOUSANDS, EXCEPT NOTES AND STATISTICAL DATA)

<TABLE>
<CAPTION>
Pro Forma
Ten Months Three Months Twelve Months
Year Ended November 30, Ended Ended Ended
------------------------------------ September 30, December 31, September 30,
1993 1994 1995 1996 1997 1997 1997
------ ---- ------ ------ ------------- ------------- --------------
<S> <C> <C> <C> <C> <C> <C> <C>
EARNINGS:
Consolidated pretax income (loss) from
continuing operations $4,258 $300 $ 705 $5,731 $(35,188) $(9,688) $(49,039)
FIXED CHARGES:
Interest expensed and capitalized -- -- -- -- 8,403 3,547 14,163
Interest portion of rental expense 300 300 337 349 1,512 665 1,911
------ ---- ------ ------ -------- ------- --------
Earnings $4,558 $600 $1,042 $6,080 $(25,273) $(5,476) $(32,965)
====== ==== ====== ====== ======== ======= ========

FIXED CHARGES:
Interest expensed and capitalized $ -- $ -- $ -- $ -- $ 8,403 $ 3,547 $ 14,163
Interest portion of rental expense 300 300 337 349 1,512 665 1,911
------ ---- ------ ------ -------- ------- --------
Fixed Charges $ 300 $300 $ 337 $ 349 $ 9,915 $ 4,212 $ 16,074
====== ==== ====== ====== ======== ======= ========
Ratio of Earnings to Fixed Charges 15.2x 2.0x 3.1x 17.4x $(35,188) $(9,688) $(49,039)
====== ==== ====== ====== ======== ======= ========
</TABLE>

<PAGE> 1
EXHIBIT 21.1

LIST OF SUBSIDIARIES

<TABLE>
<CAPTION>
Subsidiary Jurisdiction of Incorporation
---------- -----------------------------
<S> <C>

Triad Systems Financial Corporation California
CCI/Triad Gem, Inc. Texas
TriFare, Inc. Delaware
CCI/Triad Financial Holding Corporation California
Triad Data Corporation California
Triad Systems Corporation Delaware
Triad Systems Ireland Limited Republic of Ireland
Tridex Systems Limited United Kingdom
Tridex Leasing Limited United Kingdom
Triad Systems France SARL France
Triad Systems Canada, Limited Canada

</TABLE>

<PAGE> 1
EXHIBIT 23.2

CONSENT OF INDEPENDENT AUDITORS

We consent to the reference to our firm under the caption "Experts" and to
the use of our report dated January 16, 1998 (except Note 19, as to which the
date is February 10, 1998), with respect to the consolidated financial
statements and schedule of Cooperative Computing Holding Company, Inc. and our
report dated January 16, 1998, with respect to the consolidated financial
statements of Triad Systems Corporation, in the Registration Statement on Form
S-1 and related Prospectus of Cooperative Computing, Inc. for the registration
of $100 million of 9% Senior Subordinated Notes due 2008.

/s/ ERNST & YOUNG LLP

Austin, Texas
March 30, 1998

<PAGE> 1
EXHIBIT 23.3

CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Registration Statement on Form S-1 and
related Prospectus of Cooperative Computing, Inc. of our report dated October
23, 1996 on our audits of the consolidated financial statements of Triad Systems
Corporation as of and for the years ended September 30, 1995 and 1996. We also
consent to the reference to our firm under the caption "Experts."

COOPERS & LYBRAND L.L.P.

San Jose, California
March 30, 1998

<ARTICLE> 5
<MULTIPLIER> 1,000

<S> <C> <C>
<PERIOD-TYPE> 10-MOS 3-MOS
<FISCAL-YEAR-END> SEP-30-1997 SEP-30-1998
<PERIOD-START> DEC-01-1996 OCT-01-1997
<PERIOD-END> SEP-30-1997 DEC-31-1997
<CASH> 1,633 1,514
<SECURITIES> 0 0
<RECEIVABLES> 31,287 29,363
<ALLOWANCES> 5,468 4,769
<INVENTORY> 4,031 5,925
<CURRENT-ASSETS> 48,334 49,769
<PP&E> 15,604 17,014
<DEPRECIATION> 5,249 6,904
<TOTAL-ASSETS> 307,940 302,400
<CURRENT-LIABILITIES> 47,731 40,491
<BONDS> 138,531 150,179
0 0
0 0
<COMMON> 4 4
<OTHER-SE> 53,695 46,894
<TOTAL-LIABILITY-AND-EQUITY> 307,940 302,400
<SALES> 55,085 17,486
<TOTAL-REVENUES> 140,316 51,915
<CGS> 35,169 11,132
<TOTAL-COSTS> 84,464 31,615
<OTHER-EXPENSES> (443) 78
<LOSS-PROVISION> 2,434 952
<INTEREST-EXPENSE> 8,403 3,547
<INCOME-PRETAX> (35,188) (9,688)
<INCOME-TAX> 1,001 (2,898)
<INCOME-CONTINUING> (34,187) (6,790)
<DISCONTINUED> 0 0
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> (34,187) (6,790)
<EPS-PRIMARY> 0 0
<EPS-DILUTED> 0 0

</TABLE>