CIK: 0000313867
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(x) Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934 for the quarterly period
ended June 30, 1994
OR
( ) Transition report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
Commission File Number 0-9505
TRIAD SYSTEMS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware 94-2160013
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
3055 Triad Drive, Livermore, California 94550
(Address of principal executive offices)
Registrant's telephone number, including area code: (510) 449-0606
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes (X) No
As of June 30, 1994, the registrant had issued 13,516,000 shares
of common stock - $.001 par value, of which 245,000 shares were
held in treasury.
TRIAD SYSTEMS CORPORATION
QUARTERLY REPORT FORM 10-Q
INDEX
Page No.
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Balance Sheets at
June 30, 1994 and September 30, 1993 1
Condensed Consolidated Statements of Income for
the Three and Nine Month Periods Ended
June 30, 1994 and 1993 2
Condensed Consolidated Statements of Cash Flows for
the Nine Month Periods Ended June 30, 1994 and 1993 3
Notes to Condensed Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Results
of Operations and Financial Condition 6-11
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 12-13
Signatures 14
Exhibit 10.18 Supplemental Deferred Compensation Plan 15-25
Exhibit 10.19 Amendment to Amended and Restated 1982
Stock Option Plan 26-27
Exhibit 11.1 Computation of Earnings Per Share 28
PART I FINANCIAL INFORMATION
TRIAD SYSTEMS CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
At June 30, 1994 and September 30, 1993
June 30, September 30,
1994 1993
----------- -------------
(Unaudited) (as restated)
----------- -------------
ASSETS (Amounts in thousands)
Current assets
Cash and equivalents $ 5,912 $ 8,250
Receivables 12,838 10,081
Investment in leases 4,285 5,874
Inventories
Purchased parts 3,809 2,607
Work in process 733 617
Finished goods 2,958 3,343
-------- --------
Inventories 7,500 6,567
Prepaid expenses and other current
assets 6,326 5,097
-------- --------
Current assets 36,861 35,869
Service parts 2,399 2,104
Property, plant and equipment, net of
accumulated depreciation and
amortization of $27,844 at
June 30, 1994 and $25,331 at
September 30, 1993 26,602 26,389
Long-term investment in leases 17,696 24,306
Other assets 20,655 17,344
Land for resale 25,104 25,367
-------- --------
Total assets $129,317 $131,379
======== ========
LIABILITIES
Current liabilities
Notes payable and current portion
of long-term debt $ 2,933 $ 2,971
Accounts payable 8,588 9,210
Accrued employee compensation 7,579 7,348
Deferred income taxes 3,903 3,872
Other current liabilities and
accrued expenses 9,764 10,170
-------- --------
Current liabilities 32,767 33,571
Long-term debt 60,761 69,381
Other liabilities 5,033 4,421
Deferred income taxes 22,357 20,892
-------- --------
Total liabilities 120,918 128,265
-------- --------
STOCKHOLDERS' EQUITY
Cumulative convertible preferred stock
$.01 par value; authorized 1,000,000
shares; issued and outstanding
1,000,000 shares at June 30, 1994
and September 30, 1993;
liquidation value $20 million 10 10
Common stock
$.001 par value; authorized
50,000,000 shares; issued
13,516,000 at June 30, 1994 and
12,611,000 at September 30, 1993 14 13
Treasury stock
245,000 shares at June 30, 1994
and 127,000 shares
at September 30, 1993 (1,207) (592)
Capital in excess of par 30,314 27,626
Accumulated deficit (20,732) (23,943)
-------- --------
Stockholders' equity 8,399 3,114
-------- --------
Total liabilities and
stockholders' equity $129,317 $131,379
======== ========
The accompanying notes are an integral part of these
financial statements.
TRIAD SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three and Nine Month Periods Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
---------------- ----------------
1994 1993 1994 1993
------- ------- ------- -------
(Amounts in thousands except
per share data)
Revenues
Services $ 21,065 $ 19,976 $ 62,592 $ 59,439
Systems 17,264 15,920 48,912 43,126
Finance 3,062 1,731 7,924 6,195
------- ------- -------- --------
Total revenues 41,391 37,627 119,428 108,760
Costs and expenses
Services 12,518 11,498 37,583 34,967
Systems 7,718 7,393 22,437 20,561
Marketing and finance 11,141 9,947 31,749 28,715
Product development 1,937 2,027 6,125 6,062
General and administrative 2,658 2,348 8,025 7,239
Other operating expense 32 482 348 1,020
------- ------- -------- --------
Total costs and expenses 36,004 33,695 106,267 98,564
Operating income 5,387 3,932 13,161 10,196
Interest expense 1,844 2,071 5,612 5,976
Other (income) expense (8) 14 63 145
------- ------- -------- --------
Income before income
taxes and
extraordinary charge 3,551 1,847 7,486 4,075
Provision for income taxes 1,350 250 2,845 1,141
------- ------- -------- --------
Income before
extraordinary charge 2,201 1,597 4,641 2,934
Extraordinary charge on
repurchase of debt, net
of taxes 143 -- 143 --
------- ------- -------- --------
Net income $ 2,058 $ 1,597 $ 4,498 $ 2,934
======= ======= ======== ========
Earnings per share
Primary
Income before
extraordinary charge $ .13 $ .10 $ .27 $ .18
Net income .12 .10 .26 .18
Weighted average shares 17,422 17,035 17,423 16,991
Fully diluted
Income before
extraordinary charge $ .13 $ .10 $ .27 $ .18
Net income .12 .10 .26 .18
Weighted average shares 17,422 17,035 17,423 17,002
The accompanying notes are an integral part of these
financial statements.
TRIAD SYSTEMS CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Month Periods Ended June 30, 1994 and 1993
(Unaudited)
Nine Months Ended
June 30,
-------------------
1994 1993
-------- --------
(Amounts in thousands)
Cash flows from operating activities
Net income $ 4,498 $ 2,934
Adjustments to reconcile net income to
net cash provided by operating
activities
Depreciation and amortization 6,173 6,130
Receivable and inventory loss
provisions 5,717 4,906
Gains from lease discounting (4,544) (3,522)
Other 723 (319)
Changes in assets and liabilities
Trade accounts receivable (4,542) (974)
Investment in leases (3,106) (6,434)
Inventories (1,703) 76
Deferred income taxes 1,496 (180)
Prepaid expenses and other current
assets (2,299) 156
Accounts payable (622) (2,095)
Accrued employee compensation 231 (488)
Other current liabilities and accrued
expenses (406) 2,324
-------- --------
Net cash provided by operating
activities 1,616 2,514
Cash flows from investing activities
Investment in leases (35,603) (25,062)
Investment in property, plant and
equipment (2,256) (1,643)
Other (6,133) (5,504)
-------- --------
Net cash used in investing
activities (43,992) (32,209)
Cash flows from financing activities
Proceeds from issuance of debt 30,410 29,650
Proceeds from lease discounting 48,580 29,990
Proceeds from sale of common stock 2,037 1,626
Purchase of treasury stock (615) (237)
Repayment of debt (39,774) (31,860)
Dividends paid (600) (527)
Other -- (72)
-------- --------
Net cash provided by financing
activities 40,038 28,570
Net decrease in cash and equivalents (2,338) (1,125)
Beginning cash and equivalents 8,250 5,482
-------- --------
Ending cash and equivalents $ 5,912 $ 4,357
======== ========
Supplemental disclosures of cash flow
information
Cash paid during the period for
Interest $ 4,750 $ 4,982
Income Taxes 770 403
Noncash investing and financing
activities
Capital lease 294 --
The accompanying notes are an integral part of these
financial statements.
TRIAD SYSTEMS CORPORATION AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(June 30, 1994 and 1993 - Unaudited)
1. In the opinion of the Registrant, the consolidated financial
statements contain all adjustments (consisting of only normal
recurring adjustments) necessary to present fairly the
financial position as of June 30, 1994, and the results of
operations and cash flows, for the three and nine month periods
ended June 30, 1994 and 1993. The results of operations for
the three and nine month periods ended June 30, 1994, are not
necessarily indicative of the results to be expected for the
full year. The September 30, 1993 audited Balance Sheet was
restated to reflect the adoption of FAS 109 and the associated
change in accounting for income taxes. The current Balance
Sheet does not include all disclosure requirements under GAAP
and should be read in conjunction with the September 30, 1993
audited financial statements and notes thereto.
2. The consolidated financial statements include the accounts of
Triad Systems Corporation and its wholly-owned subsidiaries,
including Triad System Financial Corporation ("Triad
Financial") and its subsidiary after elimination of
intercompany accounts and transactions. Financial information
relating to the Company's combined leasing operations is
presented in Note 5.
3. Primary and fully diluted earnings per share are based on the
average common shares outstanding, the dilutive effect of the
stock options and the assumed conversion of the preferred stock
and exercise of warrants. Dilution from common equivalents has
been further adjusted under the modified treasury stock method.
4. The Company adopted Statement of Financial Accounting Standards
No 109 (FAS 109), Accounting for Income Taxes in the quarter
ended December 31, 1993, the effects of which were applied
retroactively October 1, 1992 (fiscal year 1993). The adoption
of FAS 109 changes the Company's method of accounting for
income taxes from the deferred method (APB11) to an asset and
liability approach. Previously the Company deferred the tax
effects of timing differences between financial reporting and
taxable income. The asset and liability approach requires the
recognition of deferred tax liabilities and assets for the
expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of other assets
and liabilities.
The financial statements for fiscal year 1993 have been
restated to reflect the change in accounting for income taxes.
The cumulative effect of the accounting change on deferred
taxes as of the beginning of fiscal year 1993 was not material.
The effect on the income tax provision for fiscal year ended
September 30, 1993 was an increase of $800,000 ($.04 per share)
as a result of the legislated corporate income tax rate change
in August 1993.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
5. Triad Financial is a wholly-owned subsidiary which purchases
Triad systems and other products and leases those products to
third parties under full-payout, direct financing leases.
Summarized financial information of the Company's combined
leasing operations at June 30, 1994 and September 30, 1993,
and for the three and nine month periods ended June 30, 1994
and 1993, follows:
TRIAD SYSTEMS FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEETS
At June 30, 1994 and September 30, 1993
June 30, September 30,
1994 1993
----------- -----------
(Unaudited)
-----------
(Amounts in thousands)
Assets
Cash $ 269 $ 171
Net Investment in leases 21,981 30,180
Residual value retained on leases
discounted 5,260 4,163
Receivable from parent company 27,299 17,179
Other assets 2,972 2,870
-------- --------
$ 57,781 $ 54,563
======== ========
Liabilities and Stockholder's Equity
Other liabilities and accrued expenses $ 7,069 $ 7,382
Deferred income 1,871 1,554
Term debt 2,487 3,249
Stockholder's equity 46,354 42,378
-------- --------
$ 57,781 $ 54,563
======== ========
TRIAD SYSTEMS FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three and Nine Month Periods Ended June 30, 1994 and 1993
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
---------------- ----------------
1994 1993 1994 1993
------- ------- ------- -------
(Amounts in thousands)
Revenues $ 3,062 $ 1,731 $ 7,924 $ 6,195
Selling and administrative
expenses 548 401 1,660 1,381
Provision for doubtful
accounts and revaluation
charges 700 832 1,804 2,057
------- ------- ------- -------
Operating income 1,814 498 4,460 2,757
Intercompany income 840 693 2,107 2,084
------- ------- ------- -------
Income before taxes 2,654 1,191 6,567 4,841
Provision for income taxes 1,084 (104) 2,571 1,356
------- ------- ------- -------
Net income $ 1,570 $ 1,295 $ 3,996 $ 3,485
======= ======= ======= =======
TRIAD SYSTEMS CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
RESULTS OF OPERATIONS
Summary
Revenues generated from the company's emerging businesses,
particularly its Information Services and Service Dealer
operations, are primarily responsible for the increases
attributable to record revenues for both the third quarter and
first nine months of 1994. Earnings per share were $.13 on record
third quarter net income of $2,201,000 before an extraordinary
charge of $143,000 relating to the early retirement of debt. Third
quarter 1993 comparable earnings per share were $.10 on net income
of $1,597,000. Nine month earnings before extraordinary charges
were $.27 on net income of $4,641,000, improving 50% from
comparable earnings per share of $.18 on net income of $2,934,000
during the same period last year.
The company repurchased $2.8 million of its 12.25% senior fixed
rate notes in the third quarter and effected an early $3.9 million
pay-down of a bank line, reducing the debt associated with its
successful 1989 hostile takeover defense to $37.7 million from a
high of $80 million.
Percentage of Revenues
Three Months Ended Nine Months Ended
June 30, June 30,
--------------- ---------------
1994 1993 1994 1993
Revenues 100.0% 100.0% 100.0% 100.0%
Costs and expenses
Costs of services and
systems 48.9 50.2 50.3 51.1
Marketing and financing 26.9 26.4 26.6 26.4
Product development 4.7 5.4 5.1 5.5
General and administrative 6.5 7.5 7.0 7.5
Other operating expenses -- 0.1 -- 0.1
Total costs and expenses 87.0 89.6 89.0 90.6
Operating income 13.0 10.4 11.0 9.4
Interest and other expense 4.4 5.5 4.7 5.7
Income before income taxes
and extraordinary charge 8.6 4.9 6.3 3.7
Provision for income taxes 3.3 0.7 2.4 1.0
Extraordinary charge on
repurchase of debt,
net of taxes -- -- -- --
Net income 5.3% 4.2% 3.9% 2.7%
Revenues
Revenues for the third quarter were a record $41.4 million, 10%
above those in the same period last year. Systems revenues showed
the largest dollar increase, $1.3 million, to $17.3 million
compared to $15.9 million in the prior year. Services revenues
rose $1.1 million to $21.1 million compared to the same period
last year. Increasing systems and services revenues reflect
continuing expansion of Triad's customer base, with its growing
market presence creating opportunities for further gains in
recurring services revenues. Finance revenues increased $1.3
million to $3.1 million for the quarter. The company, in
anticipation of higher interest rates, increased discounting
activity during the period to take advantage of current yields.
Revenues for the first nine months were a record $119.4 million,
or 10% higher than the same period last year. Revenue improvement
was achieved in all three primary areas of the business: services,
products and finance. Information Services and Service Dealer
sales showed the largest increase, a combined 29% improvement to
$23.6 million.
Services
Services revenues consist of revenues from Information and
Customer Support services and Business Products. Recurring
revenues from Information Services and Customer Support Services
improved to $20 million during the third quarter and to $59.7
million during the first nine months, both 5% increases compared
to the same periods last year. Business Products revenues, which
reached the $1 million level for the first time, were $1.1 million
in the third quarter and $2.9 million for the first nine months.
Information Services revenues for the third quarter increased to
$6.2 million, the seventh consecutive quarter of higher revenues,
primarily due to Electronic Catalog revenues improving 23% to $4.6
million in the third quarter and 24% to $13.3 million for the
first nine months compared to prior year periods. The Electronic
Catalog product revenue improvement was the result of increased
sales to new retail Service Dealer accounts and national chain
outlets. Telepricing Services revenues were $1.2 million in the
third quarter and $3.8 million for the first nine months, down
slightly from comparable periods in the prior year due to the
prior year periods reflecting more one-time service requests.
Customer Services revenues were $13.8 million and $41.7 million
for the third quarter and first nine months, respectively. As
anticipated, these revenues have decreased slightly from prior
periods principally due to a number of automotive jobbers choosing
to suspend support because of the jobbers' economic concerns.
Business Products revenues are generated by supplying computer
forms and supplies to Triad's customer base. When compared to
corresponding periods in prior years, these revenues have averaged
over 20% growth each quarter for the past two fiscal years due to
an expanding customer base and a broader selection of products.
Products
Product revenues, primarily from computer systems sold by the
Automotive and Retail Hardgoods divisions, were $17.3 million for
the quarter and $48.9 million for the first nine months. These
revenues are 8% and 13% higher than the $15.9 million and $43.1
million for the third quarter and the first nine months of the
prior year, respectively.
Automotive Division revenues in the third quarter were
$10.7 million, a 6% improvement over last year. Revenues for the
first nine months were $29.4 million, or 18% above prior year
levels. The improvements were primarily the result of increased
new system sales and the company's core jobber business upgrading
to the Triad PRISM platform. The company anticipates the increases
in revenue generated from Triad PRISM upgrades to continue as this
platform gains further market acceptance. Additionally, Service
Dealer revenues in the third quarter were a record $2.1 million,
slightly ahead of second quarter levels. Fourth quarter revenues
are expected to remain at that level due to Triad's strategy of
selling lower priced products to accelerate market penetration and
increase recurring database and support revenues.
Retail Hardgoods Division revenues increased 3% during the third
quarter to $5.9 million and 5% during the first nine months to
$18.8 million, as a result of increased new systems sales, when
compared to the same periods last year. The sales efforts have
been enhanced by Triad's marketing agreements with Distribution
America and Pro Hardware, two of the nation's leading product
buying groups. Each participates in Triad's Advantage marketing
program, which encourages joint efforts to automate retail
hardgoods stores and, since inception, has added several industry
leaders as participants. The company continues to market systems
to members of the national hardware wholesale operations,
including Cotter & Co. (True Value), ACE, Servistar and HWI.
Finance
Finance revenues generated by Triad Systems Financial Corporation
("Triad Financial") were $3.1 million in the third quarter and
$7.9 million in the first nine months of fiscal 1994. When
compared to the same periods in the prior year, revenues were up
77% for the third quarter, and were up 28% for the first nine
months. This reflects additional discounting in the third quarter
to take advantage of discounting spreads which were available
prior to rising interest rates. The additional discounting is
expected to decrease fourth quarter earnings approximately equal
to the two cents per share that was realized in the third quarter.
The nine month results were also attributed to increased lease
income, which resulted from a larger lease portfolio during the
first six months when compared to the same period last year.
Costs and Expenses
Services gross margins were 40.6% and 40.0% for the third quarter
and first nine months of fiscal 1994, respectively. The margins
are down slightly from comparable periods in the prior year due to
reduced prices of alternative customer support products. Further,
the company has increased head count in certain customer support
areas in anticipation of the Triad PRISM B product release later
this year. As revenues related to this increased support are
realized, margins are expected to return to levels achieved in the
first half of this year.
Product gross margins as a percent of system sales improved
slightly to 55.3% during the third quarter and improved slightly
to 54.1% in the first nine months of fiscal 1994. This improvement
is attributed to higher systems revenue levels in Automotive,
Hardgoods, and Service Dealer operations and from a more
profitable product mix.
Marketing and finance expenses increased $1.2 million to $11.1
million during the third quarter and $3 million to $31.7 million
during the first nine months of fiscal 1994 when compared to the
same periods last year. These expenses, as a percentage of
revenues, rose 1% to 27% when compared to prior periods. The
increase resulted from the company's effort to build its marketing
capacity through investments in the recruiting, training, and
education of new marketing representatives.
Product development expenditures before capitalization were $2.8
million during the third quarter and $8.6 million for the first
nine months. These expenditures were up $.1 million and $.3
million from the third quarter and first nine months of fiscal
1993, respectively. The increases in expenditures were the direct
result of Triad PRISM B development efforts incurred during the
quarter and throughout the fiscal year. Product development
expense of $1.9 million in the third quarter was 5% lower than
last year due to the increased capitalization of software costs
related to the Triad PRISM B project.
General and administrative expenses, including other operating
income and expenses, were $2.7 million during the third quarter
and $8.4 million for the first nine months. These expenses were
down 5% for the quarter due to the company's insurance carrier
absorbing the majority of litigation costs incurred as a result of
the ongoing effort to protect the company's intellectual property
rights. The company anticipates litigation costs to increase in
the fourth quarter as the intellectual property rights matter
nears the trial stage. The amount, if any, that will be reimbursed
by the company's insurance carrier is not known at this time.
General and administrative expense for the first nine months was
1% higher than last year, resulting from increased recruiting
costs related to hiring programs designed to grow the marketing
segment of the business, along with increased employee costs
through merit and bonus compensation.
Interest expense during the third quarter was $1.8 million or 11%
lower than last year due to the company's retirement of $6.7
million in debt ahead of schedule during the quarter.
Financial Condition
Cash provided by operations during the first nine months of fiscal
1994 was $1.6 million compared to $2.5 million in the same period
in the prior year.
Triad Financial financed 61% of domestic Triad systems sales
during the first nine months of fiscal 1994 compared to 60% in the
prior year due to enhanced marketing efforts. Triad Financial
received $48.6 million from discounting leases during the first
nine months. Limited and full-recourse discounting agreements are
maintained with banks and lending institutions. The discounting
agreements contain certain restrictive covenants which allow Triad
Financial to discount only while in compliance with such
covenants. The company is in compliance with the restrictive
covenants and management believes that it will maintain compliance
with such covenants in the foreseeable future. At June 30, 1994
the portfolio available for discounting was $22 million and
commitments for $48.4 million in discounting lines were available.
Under the discounting agreements, Triad Financial is contingently
liable for losses in the event of lessee nonpayment.
The company adopted Statement of Financial Accounting Standards
No. 109 (FAS 109), Accounting for Income Taxes, during the first
quarter with the effects being applied retroactively to October 1,
1992 (fiscal year 1993). The adoption of FAS 109 changes the
company's method of accounting for income taxes from the deferred
method (APB 11) to an asset and liability method. Previously the
company deferred the tax effects of timing differences between
financial reporting and taxable income. The asset and liability
approach requires the recognition of deferred tax liabilities and
assets for the expected future tax consequences of temporary
differences between the carrying amounts and the tax basis of
other assets and liabilities.
The company's debt agreement covenants automatically adjust to
offset the impact of accounting changes; therefore, the company's
adoption of FAS 109, which required significant balance
sheet reclassifications, has not affected the company's ability to
comply with these debt covenants. As of June 30, 1994, the company
was in compliance with all debt agreement covenants.
Capital equipment expenditures were $2.3 million during the first
nine months of fiscal 1994. There were no material capital
commitments at June 30, 1994.
Management believes that available cash resources, as well as the
company's borrowing capacity, are adequate to provide funds to
finance foreseeable needs.
Future Operating Results
The company's future results will depend upon economic conditions
in its markets that may affect demand for its products, as well as
the company's ability to introduce new products and enhancements.
As a result, the company's operating results may fluctuate,
especially when measured on a quarterly basis. Results will also
be affected by the seasonal changes in demand for its products,
the size and experience of the sales force and the mix of products
sold during a given period.
PART II OTHER INFORMATION
Items 1-5. Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit Index for June 30, 1994
Exhibit Sequentially
Number Numbered Page
* 10.1 Triad Systems Corporation Amended and
Restated 1982 Stock Option Plan as amended
on October 22, 1993, incorporated by
reference from Exhibit 10.1 to the Company's
Annual Report on Form 10-K for the fiscal
year ended September 30, 1993.
10.2 Form of Indemnification Agreement,
incorporated by reference from Exhibit 10.4
to the Company's Registration Statement on
Form S-2 (File No. 33-2966) filed
July 3, 1989 (the "1989 Form-2 Registration
Statement").
* 10.3 Nonqualified Stock Option Agreement between
the Company and James R. Porter dated
January 13, 1987, incorporated by reference
from Exhibit 10.5 to the 1987 Form S-2
Registration Statement, (File No. 33-13599)
(the "1987 Company's Form S-2 Registration
Statement").
10.4 Development Agreement between the Company
and the City of Livermore dated
December 2, 1985, incorporated by reference
from Exhibit 10.5 to the 1987 Form S-2
Registration Statement.
10.5 Subdivision Improvement Agreement between
the Company and the City of Livermore dated
December 2, 1985, incorporated by reference
from Exhibit 10.7 to the 1987 Form S-2
Registration Statement.
10.6 Mortgage between Variable Annuity Life
Insurance Company and 3055 Triad Drive dated
August 23, 1988, incorporated by reference
from Exhibit 10.6 to the Company's Annual
Report on Form 10-K for the fiscal year
ended September 30, 1988 (the "1988
Form 10-K").
* 10.7 Nonqualified Stock Option Agreement between
the Company and James R. Porter dated as of
February 17, 1987, incorporated by reference
from Exhibit 10.7 of the 1988 Form 10-K.
* 10.8 Nonqualified Stock Option Agreement between
the Company and James R. Porter dated
November 12, 1988, incorporated by reference
from Exhibit 10.8 of the 1988 Form 10-K.
* 10.9 Triad Systems Corporation 1990 Stock Option
Plan as amended on October 22, 1993,
incorporated by reference from Exhibit 10.9
to the Company's Annual Report on Form 10-K
for the fiscal year ended September 30, 1993.
* 10.10 Triad Systems Corporation Amended and
Restated Outside Directors Stock Option Plan,
incorporated by reference from Exhibit 10.10
to the Company's Annual Report on Form 10-K
for the fiscal year ended September 10, 1991.
10.11 Revolving Credit Loan Agreement dated as of
June 30, 1992, as amended, between the
Company and Plaza Bank of Commerce,
incorporated by reference from Exhibit 10.3
to the Company's Current Report on Form 8-K
filed August 17, 1992.
10.12 Unit Purchase Agreement dated as of
July 2, 1992, between the Company,
Richard C. Blum & Associaties, Inc. and
certain purchasers, together with the First
Amendment to Unit Purchase Agreement dated
as of August 3, 1992, and the form of
irrevocable Proxy, incorporated by reference
from Exhibit 10.4 to the Company's Current
Report on Form 8-K filed August 17, 1992.
10.13 Unit Certificate evidencing Units to
purchase Preferred Stock and Warrants,
together with Form of Warrant Certificate,
attached as Exhibit A thereto, incorporated
by reference from Exhibit 3.2 to the
Company's Current Report on Form 8-K filed
August 17, 1992.
10.14 Registration Rights Agreement between the
Company and certain purchasers under the
Unit Purchase Agreement dated as of
August 3, 1992, incorporated by reference
from Exhibit 10.5 to the Company's Current
Report on Form 8-K filed August 17, 1992.
10.15 Grant Agreement between the Industrial
Development Authority and Triad Systems
Ireland Limited, Triad Systems Corporation
and Tridex Systems Limited and related
agreements, incorporated by reference from
Exhibit 10.15 to the 1992 Form S-4
Registration Statement.
10.16 Cancellation of Development Agreement
between the Company and the City of
Livermore dated July 15, 1993, incorporated
by reference from Exhibit 10.16 to the
Company's Annual Report on Form 10-K for
the fiscal year ended September 30, 1993.
10.17 Amended and Restated Subdivision Improvement
Agreement between the Company and the City
of Livermore dated May 12, 1993, incorporated
by reference from Exhibit 10.17 to the
Company's Annual Report on Form 10-K for the
fiscal year ended September 30, 1993.
* 10.18 Supplemental Deferred Compensation Plan
between the Company and a select group of
Triad Key Employees and their beneficiaries
dated April 1, 1994. 15-25
* 10.19 Amendment to Amended and Restated Stock
Option Plan dated April 25, 1994. 26-27
11.1 Computation of Earnings Per Share. 28
(b) Reports on Form 8-K
No report on Form 8-K was filed during the quarter ended
June 30, 1994.
- --------------------
* Compensatory or employment agreement.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, a duly authorized officer
of the Registrant.
TRIAD SYSTEMS CORPORATION
-------------------------
(Registrant)
Date August 11, 1994 /s/ JEROME W. CARLSON
------------------- ----------------------------
Jerome W. Carlson,
Vice President, Finance
(Principal Financial Officer)
EXHIBIT 10.18
TRIAD SYSTEMS CORPORATION
SUPPLEMENTAL DEFERRED COMPENSATION PLAN
THIS SUPPLEMENTAL DEFERRED COMPENSATION PLAN (the "Plan") is
adopted by Triad Systems Corporation, a Delaware corporation
("Triad"), for the purpose of providing supplemental retirement
benefits and pre-retirement death benefits to a select group of
Triad Key Employees and their beneficiaries in consideration of
services rendered to Triad and as an inducement for their
continued services in the future.
ARTICLE I
DEFINITIONS
Whenever used herein, the masculine pronoun shall be deemed to
include the feminine, and the singular to include the plural,
unless the context clearly indicates otherwise, and the following
definitions shall govern the Plan:
1.1 "Account" means the separate account established on behalf
of each Key Employee to which all Deferred Amounts and Employer
Contributions are credited.
1.2 "Beneficiary" means one, some, or all (as the context
shall require) of those persons, trusts or other entities which a
Key Employee, in his most recent written form of beneficiary
designation filed with Triad, shall have designated as a
beneficiary to receive benefits payable under Articles VI and VII
following his death.
1.3 "Board of Directors" means the Board of Directors of Triad
Systems Corporation.
1.4 "Committee" means an independent Committee appointed by
the Board to administer this Plan and to take such other actions
as may be specified herein.
1.5 "Deferral Amount" means the amount which a Key Employee
elects to contribute for Supplemental Key Employee Benefits
pursuant to Article III.
1.6 "Death Benefit" means the death benefit payable under the
terms of the Policy if a Key Employee elects the split dollar
option pursuant to Article VI.
1.7 "Early Retirement Age" means age 55.
1.8 "Effective Date" means May 1, 1994.
1.9 "Election" means the form of Salary Deferral Election
attached hereto as Exhibit A, as it may be modified from time to
time.
1.10 "Employer Contribution" means the contribution made on
behalf of each Key Employee by Triad.
1.11 "Entry Date" shall mean the Effective Date and the first
day of each Plan Year thereafter.
1.12 "Key Employee" means any employee of Triad Systems
Corporation who is in the select group of highly compensated or
management employees that regularly earns more than $68,000 per
year, as adjusted annually for inflation by the Committee
pursuant to Article 2.1.
1.13 "Insurer" means the company which issued the Policy.
1.14 "Normal Retirement Age" means age 65.
1.15 "Policy" means each individual life insurance policy on
the life of each Key Employee who participates in the Plan. Each
Key Employee shall be informed of the Policy for such Key
Employee.
1.16 "Plan" shall mean the Triad Systems Corporation
Supplemental Deferred Compensation Plan.
1.17 "Plan Year" means the 12 month period commencing on April
1 and ending on March 31. Notwithstanding the foregoing, the
first Plan Year shall be eleven (11) months in length and shall
commence on May 1, 1994 and end on March 31, 1995.
1.18 "Supplemental Key Employee Benefits" means the benefits
payable to a Key Employee and/or his Beneficiary under Article
VII. The value of such benefits shall be measured by the cash
surrender value of the Policy in which Deferral Amounts and
Employer Contributions have been invested under Article V minus
any amounts that have previously been paid out or withdrawn and
forfeited pursuant to Section 7.5.
1.19 "Total Disability" means the inability of the Key
Employee to engage substantially in his or her normal duties for
Triad on account of physical or mental impairment provided that
such disability is determined to be long-term and/or indefinite
in duration. A Total Disability shall be determined in
accordance with the Triad long-term disability policy or plan
then in effect.
1.20 "Triad" means Triad Systems Corporation, a Delaware
corporation.
1.21 "Trust" means the legal entity created by the Trust
Agreement.
1.22 "Trust Agreement" means that trust agreement entered into
between Triad and the Trustee to hold the Policy, a copy of which
is attached hereto as Exhibit B.
1.23 "Trustee" means the original Trustee(s) named in the
Trust Agreement and any duly appointed successor to successors
thereto.
1.24 "Year of Service" means the twelve (12) consecutive month
period commencing on the Key Employee's Entry Date, as defined in
Article II, and successive anniversaries thereof during which the
Key Employee is on Triad's payroll, including leaves of absence
approved by Triad.
ARTICLE II
ELIGIBILITY
2.1 The Committee shall determine which Company employees are
in the select group of highly compensated and management
employees eligible to participate in the Plan. Eligibility for
initial Plan participation shall be limited to employees who
regularly earn more than $68,000 per year in base salary,
commissions, and bonus payments. The Committee shall adjust this
minimum earnings amount each Plan Year by the percentage change
in the Consumer Price Index for the San Jose Metropolitan
Statistical Area for the 12-month period ending on the preceding
December 31. Individuals who are within this select group shall
be notified by Triad as to their eligibility to participate in
this Plan.
2.2 A Key Employee who has commenced Plan participation shall
thereafter continue to be a Plan Participant even if such Key
Employee does not subsequently satisfy the minimum earnings
criteria for initial eligibility.
2.3 A Key Employee shall begin participation in the Plan upon
the first Entry Date following the date he is notified of
eligibility to participate and following submission of an
Election to make salary deferral contributions pursuant to
Article III.
2.4 Participation in the Plan shall end when a Key Employee's
employment terminates for any reason. No contributions to the
Plan shall be made with respect to compensation paid after such
termination date.
ARTICLE III
SALARY DEFERRAL CONTRIBUTION
3.1 (a) A Key Employee may elect to reduce his Compensation
by the amount set forth in an Election duly executed and filed
with Triad. Such Election may apply to (i) base salary and
commissions only or (ii) bonuses only or (iii) both base salary
plus commissions and bonuses earned on and after the Key
Employee's Entry Date. This Election shall continue in effect
until such time as the Key Employee amends the Deferral Amount or
ceases salary deferrals entirely in accordance with Section 3.2.
(b) The minimum Deferral Amount in any Plan Year shall
not be less than $3,000.
(c) For the purpose of determining a Key Employee's
Deferral Amount, "Compensation" shall mean the Key Employee's
base salary plus commissions and bonuses.
3.2 (a) Upon written notice to Triad, a Key Employee may at
any time cease entirely his salary deferral contributions. As
soon thereafter as administratively feasible, no further salary
deferrals shall be made for the Key Employee until such time as a
new Election may be filed pursuant to subparagraph (b) of this
Section 3.2.
(b) A Key Employee may amend his salary deferral Election
once a year upon written notice to Triad to increase or decrease
the amount of salary deferrals. Any amendment to decrease salary
deferrals shall be subject to the provisions of subparagraph (b)
of Section 3.1, above. Any such amendment shall be effective on
the first day of the next Plan Year.
3.3 Except as otherwise provided in Section 3.2 above, a Key
Employee's Election to defer salary shall continue in effect
until the earlier of the Key Employee's Normal Retirement Age,
Total Disability, or the date the Key Employee terminates
employment with Triad.
3.4 Except as provided in Section 7.5 below, Deferral Amounts
may not be withdrawn by a Key Employee and shall be paid only in
accordance with the provisions of this Plan.
ARTICLE IV
EMPLOYER CONTRIBUTIONS/POLICY ADMINISTRATION EXPENSES
4.1 Each Plan Year, Triad shall contribute an amount equal to
4.5% of the Key Employee's Deferral Amount for such Plan Year.
This amount is approximately the amount of the Plan
administration expense which will be charged to each
Participant's Accounts.
4.2 In the event the Policy administration expenses are more
than the amount of the Employer Contribution, the Employer shall
be under no obligation to make a greater contribution, and the
excess Policy administration expenses shall be offset against the
value of the Policy.
4.3 In the event the Policy administration expenses are less
than the Employer Contribution, any excess Employer Contribution
shall be invested in the Policy in the same manner as the Key
Employee's Deferral Amounts.
4.4 Except as provided in Section 7.5 below, Employer
Contributions may not be withdrawn by a Key Employee and shall be
paid only in accordance with the provisions of this Plan.
ARTICLE V
INVESTMENT OF CONTRIBUTIONS
5.1 Triad shall use a Key Employee's Deferral Amounts and any
Employer Contributions remaining after payment of the Policy
administrative expenses to purchase the Policy and to pay
premiums thereon. Triad shall have no obligation to pay any
amounts for the Policy in excess of these Deferral Amounts and
Employer Contributions (less any amounts which Triad may be
required to withhold under the Federal Insurance Contribution Act
with respect to such amounts).
5.2 Supplemental Key Employee Benefits payable under this Plan
are measured by the value of the Policy. Consequently, a Key
Employee's future benefits payable under this Plan may vary
upward and downward at any time to reflect changes in the value
of the Policy, whether due to increases or decreases in the rate
of return on the Policy, changes in the Key Employee's Deferral
Amount and the amount of Employer Contributions available for
investment after the payment of Policy administrative expenses,
or other factors affecting the value of the Policy.
5.3 Amounts paid into the Policy shall be invested in one or
more of the investment funds offered by the insurance company
maintaining the Policy in which Deferral Amounts are invested.
Key Employees may indicate their preferences for the investment
allocation of Deferral Amounts and Employer Contributions
invested on their behalf. Such preferences shall be on a form
provided by the Committee and shall be accepted at least one time
per month. Trustee shall, to the extent permitted by the Policy,
allocate amounts among the investment funds offered under the
policy in accordance with the Key Employee's preference
indications, but shall not be bound by such preferences.
5.4 The Policy shall be held by the Trustee in accordance with
the terms of the Trust Agreement and Article VII of this Plan to
provide the benefits promised in this Plan.
ARTICLE VI
SPLIT DOLLAR OPTION
6.1 A Key Employee may, at his option, elect to have a portion
of the premium paid by Triad for the Policy reported in Key
Employee's taxable income for the year in which such premium
payment is made. Such premium portion shall be limited to that
which is attributable to the Death Benefit. For the purposes of
this Article VI, the portion of the premium attributable to the
Death Benefit shall be the one year term insurance rate as set
forth in Revenue Policy 55-747 (otherwise known as the PS 58
costs) or the Insurer's current published premium rates for
$1,000 of insurance protection for individual initial issue one
year term life insurance available to all standard risks,
whichever is lower.
6.2 If a Key Employee makes the election provided for in
Section 6.1, above, Triad shall annually furnish a statement of
the amount of income reportable by such Key Employee for federal
and state income tax purposes, as a result of its payment of such
premium.
6.3 (a) If a Key Employee makes the election described in
Section 6.1, above, the Key Employee shall be the owner of the
Death Benefit payable under the Policy on the Key Employee's
death as defined in Section 6.3(b), below. As the owner of such
Death Benefit, the Key Employee may select the settlement option
of the Policy and may designate Beneficiaries to receive the
Death Benefit by specifying the same in a written notice to
Triad. Upon receipt of such notice, Triad shall cause the
Trustee, as owner of the Policy, to execute and deliver to the
Insurer the forms necessary to elect the requested settlement
option and to designate the requested persons as the
Beneficiaries to receive the Death Benefit under the Policy.
(b) For purposes of this Section 6.3, the Death Benefit
payable to a Key Employee's Beneficiary shall be the total
proceeds payable under the Policy on the death of the Key
Employee less "Triad's Portion." Triad's Portion shall equal the
greater of:
(i) the total amount of premiums paid by it under
this Agreement (less the amount includable in Key Employee's
income under Section 6.1), or
(ii) the cash surrender value of the Policy.
(c) Upon a Key Employee's death, the Death Benefit shall
be paid directly to the Key Employee's designated Beneficiary and
Triad's Portion shall be paid to the Trustee as the owner of the
Policy and shall be used to provide the Supplemental Key Employee
Benefits payable under Section 7.3 of this Agreement.
ARTICLE VII
BENEFITS
7.1 Upon the date the Key Employee reaches his Normal
Retirement Age or upon his Total Disability, the Policy cash
surrender value shall be used to purchase an insurance annuity
contract. Payments under such annuity contract shall then be made
to the Key Employee. Annuity benefits shall be paid over a period
of years in accordance with subparagraphs (b) and (c) below.
(a) A Key Employee may elect on his Entry Date to receive
benefits beginning on the date he reaches his Early Retirement
Age.
(b) If benefits are payable because the Key Employee is
totally disabled, the period of years over which installments
will be made shall be 10 years and installments shall be in
annual payments. A Key Employee may elect on his Entry Date to
defer payments on account of Total Disability until all payments
under the Triad long-term disability plan have been paid out.
Notwithstanding the foregoing, if the Policy cash surrender value
is less than Ten Thousand Dollars ($10,000) on the date the Key
Employee becomes eligible for benefits, the Policy cash surrender
value shall be paid out in a lump sum cash payment.
(c) If payments are made because the Key Employee has
reached Normal or Early Retirement Age, the period of years over
which installments will be made shall be 10 years and
installments shall be annual payments. Notwithstanding the
foregoing, if the Policy cash surrender value is less than Ten
Thousand Dollars ($10,000) on the date the Key Employee becomes
eligible for benefits, the Policy cash surrender value shall be
paid out in a lump sum cash payment instead of installments.
(d) In the event a Key Employee dies after installment
payments have begun but before all of the installments are paid,
the undistributed installments shall be paid to his Beneficiary.
7.2 In the event a Key Employee terminates employment with
Triad prior to his Normal Retirement Age for any reason except
death or Total Disability or early retirement upon reaching his
Early Retirement Age, the Policy cash surrender value less any
amounts paid by Triad for the Policy in the year of termination
that are in excess of the Key Employee's Deferral Amounts through
the date of the Key Employee's termination, if any, shall be
transferred to the Key Employee in a lump sum cash payment.
7.3 If a Key Employee dies prior to his Normal Retirement Age,
Total Disability or other termination of employment, all accrued
Supplemental Key Employee Benefits provided by the Policy shall
be paid to the Key Employee's Beneficiary. On the Key Employee's
Entry Date, he shall select the payment method for these benefits
from the following options:
(i) Annual payments over a period of years, as
determined by the Key Employee, not to exceed the Beneficiary's
life expectancy, to be provided by the purchase of an annuity
contract equal in value to the Policy cash surrender value; or
(ii) A lump sum cash payment equal in value to the
Policy cash surrender value.
7.4 (a) Notwithstanding any other provision of this Plan,
upon the request of a Key Employee, (or, in the case of a
deceased Key Employee, his Beneficiary) the Committee may direct
the Trustee to distribute Supplemental Key Employee Benefits to
the Key Employee or Beneficiary, as the case may be, if the
Committee, in its sole discretion, determines that (i) the Key
Employee or Beneficiary has suffered a financial emergency and
has a heavy and immediate financial requirement for funds to
cover medical expenses, tuition expenses or to avoid eviction,
foreclosure or personal bankruptcy and (ii) that the Key Employee
or Beneficiary cannot reasonably otherwise meet such financial
emergency.
(b) The amount distributed to the Key Employee or
Beneficiary for a financial hardship shall not exceed the lesser
of (i) the amount of the financial hardship, or (ii) the
surrender Policy cash surrender value.
7.5 Notwithstanding any other provision of this Plan, a Key
Employee may, upon thirty (30) days prior written notice,
withdraw ninety percent (90%) of the value of the Supplemental
Key Employee Benefits accrued under this Plan. Upon such
withdrawal, the remaining ten percent (10%) of the Supplemental
Key Employee Benefits which have accrued hereunder shall be
forfeited and the Key Employee shall have no further right
thereto. The Key Employee shall be prohibited from making any
further salary deferral contributions pursuant to this Plan or
any other supplemental key employee benefit plan for a period of
twelve (12) months from the date of the withdrawal. For purposes
of this Section 7.5, the Supplemental Key Employee Benefits
accrued under this Plan shall mean the Policy cash surrender
value reduced by any benefits which have been previously
withdrawn or distributed.
7.6 Once the Trustee has transferred to the Key Employee (i)
the Policy, (ii) all installment payments due under an insurance
annuity contract purchased with the Policy cash surrender value
or (iii) the entire Policy cash surrender value under this
Article VII, neither Triad nor the Trustee shall be liable to the
Key Employee for additional benefits under this Plan.
7.7 All payments under this Article VII, including the value
of the Policy transferred to the Key Employee pursuant to this
Article VII, shall be subject to all applicable withholding for
state and federal income tax. In the event the Policy is
transferred to the Key Employee, Triad and/or Trustee may require
the Key Employee to provide for any federal or state income tax
for which Triad may be obligated as a result of such transfer.
ARTICLE VIII
BENEFICIARIES
8.1 A Key Employee shall have the right to designate on the
form attached as Exhibit A a Beneficiary to receive any
Supplemental Key Employee Benefits under Article VII which may
remain unpaid at the Key Employee's death and/or any Death
Benefit due on the Key Employee's death pursuant to Article VI.
8.2 A Key Employee shall have the right at any time to revoke
a Beneficiary designation and to substitute another such
Beneficiary.
8.3 If, upon the death of a Key Employee, there is no valid
Beneficiary designation, the Beneficiary shall be the Key
Employee's estate.
ARTICLE IX
OBLIGATION TO PAY SUPPLEMENTAL KEY EMPLOYEE BENEFITS
9.1 All Key Employee Supplemental Benefits payable hereunder
shall be paid by the Trustee.
9.2 Notwithstanding the foregoing, the Trustee shall have no
obligation to pay benefits in excess of amounts held by the
Trustee with respect to the Policy, including amounts obtained by
withdrawals from the Policy, or from proceeds payable to the
Trustee under the Policy on the Key Employee's death.
9.3 Except as otherwise provided by the Trust Agreement, the
Policy shall be subject to the claims of creditors of Triad and
neither any Key Employee nor any Beneficiary shall have any legal
or equitable interest in the Policy, or any other asset of Triad.
The Key Employee is a general unsecured creditor of Triad with
respect to the promises of Triad made herein, except as otherwise
expressly provided by the Trust Agreement hereof.
ARTICLE X
MISCELLANEOUS
10.1 The right of any Key Employee, any Beneficiary, or any
other person to the payment of any benefits under this Plan shall
not be assigned, transferred, pledged or encumbered.
10.2 This Plan shall be binding upon and inure to the benefit
of Triad, its successors and assigns and the Key Employee and his
heirs, executors, administrators and legal representatives.
10.3 Nothing contained herein shall be construed as conferring
upon any Key Employee the right to continue in the employ of
Triad as an employee.
10.4 If Triad, any Key Employee, any Beneficiary, or a
successor in interest to any of the foregoing, brings legal
action to enforce any of the provisions of this Plan, the
prevailing party in such legal action shall be reimbursed by the
other party, the prevailing party's costs of such legal action
including, without limitation, reasonable fees of attorneys,
accountants and similar advisors and expert witnesses.
10.5 This Plan shall be construed in accordance with and
governed by the laws of the State of California.
10.6 This Plan constitutes the entire understanding and
agreement with respect to the subject matter contained herein,
and there are no agreements, understandings, restrictions,
representations or warranties among any Key Employee and Triad
other than those as set forth or provided for herein.
10.7 (a) This Plan may be amended by Triad in writing,
provided, however, that no amendment may be made which would
alter the irrevocable nature of the Election to defer
compensation.
(b) Notwithstanding the foregoing paragraph or any other
provision in this Plan to the contrary, Triad reserves the right
to terminate the Plan in its entirety at any time following
fifteen (15) days notice to any participating Key Employee. If
the Plan is terminated, all benefits shall be paid as if the Key
Employee had voluntarily terminated employment on the date of
Plan termination, pursuant to the provisions in Section 7.2. Any
amounts remaining in the Trust after all benefits have been paid
shall revert to Triad.
(c) Notwithstanding any other provision in the Plan to
the contrary, Triad reserves the right to discontinue this Plan
and provide for continued compensation deferral under the terms
of a successor plan. If this Plan is discontinued and if
compensation deferral continues under a successor plan, all
amounts contributed under the Plan shall continue to be held by
the Trustee and invested in the Policy with payouts in accordance
with Article VII.
10.8 Any notice to be given hereunder by either party to the
other shall be effective either by personal delivery in writing
or by mail, registered and certified, postage pre-paid, with
return receipt requested. Mailed notice shall be addressed to
the parties at the following addresses:
Triad: Triad Systems Corporation
3055 Triad Drive
Livermore, CA 94550-9559
Attn: Thomas J. O'Malley
Vice President, Administration
Trustee: Comerica Bank-California
555 Almaden Boulevard
San Jose, CA 95113
Attn: Mr. William Hodges
IN WITNESS WHEREOF, Triad has caused this Plan to be executed
by a duly authorized officer effective as of the Effective Date.
TRIAD:
TRIAD SYSTEMS CORPORATION
Dated: May 1, 1994 By: /s/ THOMAS J. O'MALLEY
------------------- ----------------------------
Thomas J. O'Malley,
Vice President,
Administration
EXHIBIT 10.19
AMENDMENT TO THE
TRIAD SYSTEMS CORPORATION
1982 STOCK OPTION PLAN
Effective as of April 25, 1994, the Triad Systems Corporation
Amended and Restated 1982 Stock Option Plan (the "Plan") is hereby
amended as follows:
1. Paragraph 6(e) of the Plan is amended and restated in its
entirety as follows:
"(e) Termination of Options. Unless otherwise provided by the
Board in the grant of an Option to, or by the amendment of an
Option held by, an Optionee who is not at the time of such Board
action an "Excluded Person" (as defined below), Options shall be
subject to the following:
(i) If an Optionee ceases to be an employee or director
of the Company for any reason except death or disability, any
Option, to the extent exercisable by the Optionee on the date on
which the Optionee ceased to be an employee or director, may be
exercised by the Optionee within three (3) months after the date
on which the Optionee ceased to be an employee or director, but in
any event no later than the date of expiration of the Option term.
(ii) If the Optionee's employment or directorship with
the Company is terminated because of the death of the Optionee or
the disability of the Optionee within the meaning of section
422(c) of the Code, any Option, to the extent exercisable by the
Optionee on the date the Optionee ceased to be employed by or a
director of the Company, may be exercised by the Optionee (or the
Optionee's legal representative) at any time prior to the
expiration of twelve (12) months from the date the Optionee ceased
to be an employee or director, but in any event no later than the
date of expiration of the Option term. An Optionee's employment
or directorship shall be deemed to have terminated on account of
death if the Optionee dies within three (3) months of such
termination.
(iii) Except as provided in this paragraph 6(e), an
Option shall terminate and may not be exercised after the Optionee
ceases to be an employee or director of the Company.
(iv) For purposes of this paragraph 6(e), the term
"Excluded Person" shall mean an executive officer or director of
the Company or a person who beneficially owns more than 10% of any
class of equity security of the Company which is registered under
Section 12 of the Securities Exchange Act of 1934, as amended.
2. All other terms and conditions of the Plan shall remain in
full force and effect.
IN WITNESS WHEREOF, the undersigned Secretary of Triad Systems
Corporation, a Delaware corporation (the "Company"), certifies
that this amendment to the Plan was duly adopted by the Board of
Directors of the Company on April 25, 1994.
/s/ JEROME W. CARLSON
----------------------------
Jerome W. Carlson
EXHIBIT 11.1
TRIAD SYSTEMS CORPORATION
COMPUTATION OF EARNINGS PER SHARE
For the Three and Nine Month Periods Ended June 30, 1994 and 1993
Three Months Ended Nine Months Ended
June 30, June 30,
------------- -------------
1994 1993 1994 1993
------- ------- ------- -------
(Amounts in thousands except
per share data)
Calculation of number
of shares entering into
computation
Weighted average shares
outstanding 13,167 12,322 12,838 12,069
Assumed conversion of the
preferred stock and
exercise of warrants 3,137 3,137 3,137 3,137
------- ------- ------- -------
16,304 15,459 15,975 15,206
Net effect of dilutive
stock options based on
the average stock prices 1,118 1,576 1,448 1,785
------- ------- ------- -------
Average primary shares
outstanding 17,422 17,035 17,423 16,991
Net effect of dilutive
stock options and rights
based on the ending
stock price -- -- -- 11
------- ------- ------- -------
Average fully diluted shares
outstanding 17,422 17,035 17,423 17,002
======= ======= ======= =======
Net income before
extraordinary charge $ 2,201 $ 1,597 $ 4,641 $ 2,934
Adjustment for full
dilution computation:
interest on debt and
amortization of debt
costs, net of income
taxes 7 26 63 97
------- ------- ------- -------
Income before extraordinary
charge available for
primary and fully diluted
shares $ 2,208 $ 1,623 $ 4,704 $ 3,031
======= ======= ======= =======
Extraordinary charge on
repurchase of debt, net of
taxes 143 -- 143 --
------- ------- ------- -------
Net income available for
primary and fully diluted
shares $ 2,065 $ 1,623 $ 4,561 $ 3,031
======= ======= ======= =======
Earnings per share
Primary
Income before
extraordinary charge $ .13 $ .10 $ .27 $ .18
Net Income $ .12 $ .10 $ .26 $ .18
Fully diluted
Income before
extraordinary charge $ .13 $ .10 $ .27 $ .18
Net Income $ .12 $ .10 $ .26 $ .18
