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, 1996.
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 (IRS Employer Identification No.)
incorporation or organization)
3055 Triad Drive, Livermore, CA 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, 1996, the registrant had outstanding 17,683,000 shares of
common stock with $.001 par value.
Triad Systems Corporation
QUARTERLY REPORT FORM 10-Q
Index
Page
Part I. Financial Information
Item I. Financial Statements
Consolidated Balance Sheets at June 30, 1996 and
September 30, 1995 1
Consolidated Statements of Operations for the Three
and Nine Month Periods Ended June 30, 1996 and 1995 2
Consolidated Statements of Cash Flows for the
Nine Month Periods Ended June 30, 1996 and 1995 3
Notes to Consolidated Financial Statements 4-5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 6-10
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K 11-13
Signatures 14
Exhibit 11.1 Computation of Earnings Per Share 15
Exhibit 27 Financial Data Schedule 16
PART I FINANCIAL INFORMATION
Triad Systems Corporation
CONSOLIDATED BALANCE SHEETS
June 30, September 30,
(Amounts in thousands except share data) 1996 1995
---------- -------------
(Unaudited)
Assets
Current assets
Cash and equivalents $ 6,727 $ 7,263
Trade receivables 14,401 13,175
Investment in leases 1,492 2,001
Inventories 6,925 5,636
Prepaid expenses and other current
assets 7,746 6,702
--------- ---------
Current assets 37,291 34,777
Service parts 3,189 3,316
Property, plant and equipment, net 27,502 27,017
Long-term investment in leases 12,322 16,540
Land for resale 26,409 25,250
Capitalized software and intangible assets 18,929 16,222
Other assets 8,417 9,587
--------- ---------
Assets $134,059 $132,709
========= =========
Liabilities
Current liabilities
Notes payable and current portion
of long-term debt $ 7,575 $ 3,032
Accounts payable 8,831 9,373
Accrued employee compensation 7,526 7,908
Deferred income taxes 3,345 3,338
Other current liabilities and
accrued expenses 10,089 9,695
--------- ---------
Current liabilities 37,366 33,346
Long-term debt 50,806 52,577
Deferred income taxes 24,898 26,176
Other liabilities 6,463 6,389
--------- ---------
Liabilities 119,533 118,488
--------- ---------
Stockholders' Equity
Common stock
$.001 par value; authorized
50,000,000 shares; issued
18,328,000 shares at June 30, 1996
and 17,969,000 shares at
September 30, 1995 18 18
Treasury stock
645,000 shares at June 30, 1996
and 599,000 shares at
September 30, 1995 (3,478) (3,204)
Capital in excess of par 29,614 28,201
Accumulated deficit (11,628) (10,794)
--------- ---------
Stockholders' equity 14,526 14,221
--------- ---------
Liabilities and stockholders'
equity $134,059 $132,709
========= =========
The accompanying notes are an integral part of these financial statements.
Triad Systems Corporation
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
(Amounts in thousands except
per share data)
Revenues
Automotive $25,274 $25,975 $74,766 $82,750
Hardlines & lumber 15,991 13,458 47,047 39,561
Other 1,053 1,750 3,789 4,959
-------- -------- -------- --------
Total revenues 42,318 41,183 125,602 127,270
-------- -------- -------- --------
Cost of sales 22,601 21,048 66,813 64,479
-------- -------- -------- --------
Gross margin 19,717 20,135 58,789 62,791
-------- -------- -------- --------
Marketing 12,098 11,068 34,924 33,930
Product development 2,026 1,998 5,961 6,164
General & administrative
and other expenses 2,398 2,660 7,362 8,622
Restructuring Charge 9,000 - 9,000 -
-------- -------- -------- --------
Operating income (loss) (5,805) 4,409 1,542 14,075
-------- -------- -------- --------
Interest and other expenses (1,463) (1,838) (4,505) (5,256)
Other income 153 - 1,777 -
-------- -------- -------- --------
Income (loss) before income taxes and
extraordinary charge (7,115) 2,571 (1,186) 8,819
Provision for (benefit from)
income taxes (2,704) 977 (451) 3,351
Income (loss) before extraordinary
charge (4,411) 1,594 (735) 5,468
Extraordinary charge on repurchase
of debt, net of taxes - - - (153)
-------- -------- -------- --------
Net income (loss) $(4,411) $ 1,594 $ (735) $ 5,315
Earnings (loss) per share
Primary
Income (loss) before
extraordinary charge $ (0.25) $ 0.09 $ (0.04) $ 0.31
Net income (loss) $ (0.25) $ 0.09 $ (0.04) $ 0.30
Weighted average shares 17,676 17,842 17,517 17,943
Fully diluted
Income (loss) before
extraordinary charge $ (0.25) $ 0.09 $ (0.04) $ 0.31
Net income (loss) $ (0.25) $ 0.09 $ (0.04) $ 0.30
Weighted average shares 17,676 17,914 17,517 18,028
======== ======== ======== ========
The accompanying notes are an integral part of these financial statements.
Triad Systems Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Month Periods Ended June 30,
(Amounts in thousands) 1996 1995
-------- --------
Cash flows from operating activities
Income before extraordinary charge $ (765) $ 5,468
Adjustments to reconcile income before
extraordinary charge to net cash
provided by operating activities
Extraordinary charge on repurchase
of debt, net of taxes - (153)
Restructuring charge 9,000 -
Depreciation and amortization 6,214 6,240
Receivable and inventory loss
provisions 8,377 5,732
Gains from lease discounting (5,521) (5,761)
Gain from marketable securities
revaluation (1,779) -
Other (2,499) (1,064)
Changes in assets and liabilities
Trade accounts receivable (3,198) (2,140)
Investment in leases 8,204 16,729
Inventories (1,115) (1,704)
Deferred income taxes (1,469) 2,341
Prepaid expenses and other current
assets (1,177) (644)
Accounts payable (1,074) 916
Accrued employee compensation (622) (914)
Other current liabilities and
accrued expenses (1,564) (1,065)
-------- --------
Net cash provided by operating
activities 11,012 23,981
Cash flows from investing activities
Capitalized software and databases (6,449) (5,086)
Acquisition of net assets and business (2,737) -
Sale of marketable securities 2,321 -
Investment in property, plant and equipment (2,069) (2,091)
Investment in service parts (716) (1,688)
Other 148 (1,161)
-------- --------
Net cash used in investing
activities (9,502) (10,026)
Cash flows from financing activities
Repayment of debt (40,277) (39,420)
Issuance of debt 37,092 34,424
Redemption of preferred stock - (10,000)
Proceeds from sale of common stock 1,413 3,439
Purchase of treasury stock (274) (1,469)
Dividends paid - (400)
Other - (322)
-------- --------
Net cash used in financing
activities (2,046) (13,748)
Net decrease in cash and equivalents (536) 207
Beginning cash and equivalents 7,263 7,963
Ending cash and equivalents $ 6,727 $ 8,170
======== ========
Supplemental disclosures of cash flow
information
Cash paid during the period for
Interest $3,699 $4,407
Income taxes 1,193 461
Noncash investing and financing activities
Redemption of preferred stock - 11,195
Debt used to finance acquisition 5,300 -
Capital lease - 913
======== ========
The accompanying notes are an integral part of these financial statements.
Triad Systems Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1996 and 1995
(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, 1996 and the
results of operations and cash flows for the nine month periods ended June 30,
1996 and 1995. The results of operations for the three and nine month periods
ended June 30, 1996 and 1995 are not necessarily indicative of the results to
be expected for the full year. The Balance Sheet does not include all
disclosure requirements under GAAP and should be read in conjunction with the
September 30, 1995 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 Systems
Financial Corporation ("Triad Financial") and balance sheet of its new
acquisition Computer System Dynamics, Inc. (CSD), after elimination of
intercompany accounts and transactions. Financial information relating to the
Company's combined leasing operations is presented in Note 6.
3. Trade accounts receivable at June 30,1996 and September 30,1995 include
allowances for doubtful accounts of $2,278,000 and $1,420,000, respectively.
4. 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.
(Amounts in thousands) June 30, 1996 September 30, 1995
----------------- ------------------
Purchased Parts $2,491 $2,189
Work in process 296 391
Finished Goods 4,138 3,056
------ ------
Inventories $6,925 $5,636
------ ------
5. Property, plant and equipment at June 30, 1996 and September 30, 1995
includes accumulated depreciation and amortization of $35,268,000 and
$30,768,000, respectively.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
6. 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, included in the Consolidated
Financial Statements, is as follows:
CONDENSED COMBINED BALANCE SHEETS
June 30, September 30,
1996 1995
---------- -------------
(Unaudited)
(Amounts in thousands)
Assets
Cash $ - $ 5
Net investment in leases 13,814 18,541
Residual value retained on leases discounted 6,960 6,452
Receivable from parent company 57,447 50,262
Other assets 3,358 3,652
-------- --------
Assets $81,579 $78,912
======== ========
Liabilities and Stockholders' Equity
Other liabilities and accrued expenses $ 7,894 $ 8,367
Deferred income 2,547 2,337
Debt 11,558 13,033
Stockholders' equity 59,580 55,175
-------- --------
Liabilities and stockholders' equity $81,579 $78,912
======== ========
CONDENSED COMBINED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
June 30, June 30,
1996 1995 1996 1995
-------- -------- -------- --------
(Amounts in thousands)
Revenues $ 2,214 $ 2,993 $ 7,409 $ 8,772
Selling and administrative expenses 361 462 1,219 1,366
Provision for doubtful accounts 1,553 750 4,020 2,052
-------- -------- -------- --------
Operating income 300 1,781 2,170 5,354
Interest expense 214 30 714 107
Intercompany income 1,954 1,562 5,735 4,047
-------- -------- -------- --------
Income before income taxes 2,040 3,313 7,191 9,294
Provision for income taxes 797 1,229 2,721 3,598
-------- -------- -------- --------
Net Income $ 1,243 $ 2,084 $ 4,470 $ 5,696
======== ======== ======== ========
Triad Systems Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Third Quarter and Year to Date FY 1996 Compared to Third Quarter and
Year to Date FY 1995
Results of Operations
Summary
Revenues of $42.3 million for the third quarter increased 3% from $41.2
million in the third quarter of FY 1995. For the first nine months of
FY 1996, revenues declined 1% to $125.6 million from $127.3 million in
FY 1995. Sales and services growth in the Hardlines and Lumber market
was more than offset by the decline in the Automotive Aftermarket.
A restructuring charge of $9.0 million, related to an Automotive product
issue and realignment of the Automotive Aftermarket operations, resulted
in an operating loss of $5.8 million compared to $4.4 million in operating
income in the third quarter of FY 1995. Operating income of $1.5 million
for the first nine months of FY 1996, also resulting largely from the
restructuring charge, compares to operating income of $14.1 million for the
same period a year ago. The Company had not recorded an operating loss
since the third quarter of FY 1989.
There was a net loss after income taxes of $4.4 million in the third quarter
of FY 1996 compared to net income of $1.6 million for the third quarter of
FY 1995. For the first nine months of FY 1996, there was a net loss of
$.7 million compared to net income of $5.3 million for the same period a
year ago.
Third quarter earnings per share before the restructuring charge were
7 cents. A loss of 25 cents after the restructuring charge compared to a
positive 9 cents in the third quarter of FY 1995.
Automotive Aftermarket Revenues
The Automotive Aftermarket consists of manufacturers, warehouse distributors,
parts stores and independent and chain repair outlets. Revenues are
primarily derived from the sale and financing of systems and information
and support services related to those systems. Automotive Aftermarket
revenues were $25.3 million for the third quarter and $74.8 million for the
first nine months of FY 1996, 3% and 10%, respectively, below revenues for
the same periods a year ago.
Systems sales increased slightly from $7.9 million to $8.0 million in the
third quarter of FY 1996 and decreased $6.2 million to $22.5 million from
$28.7 million in the first nine months of FY 1996. The consolidation of
smaller jobber businesses and Triad Prism(R) product issues continued to be
reflected in the decline in revenues year to date. Recognizing slower than
anticipated automotive aftermarket acceptance of the Triad Prism system and
its product performance issues, management:
Reduced and repositioned the automotive product line to more closely match
the configuration of the automotive aftermarket while decreasing the
complexity associated with a broader product line. Triad Prism remains a
contributing member of the automotive product line, marketed to a specific
segment of the aftermarket.
Resized the automotive sales force and management structure to reflect these
changes and current sales.
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. (See Expenses and Other Income).
Customer support revenues were down $.7 million from $9.2 million to
$8.5 million for the quarter and $2.0 million from $27.8 million to
$25.8 million for nine months. The decline in both periods relates to lower
than planned new automotive systems sales and a reduction of the customer
base due to continuing consolidation within the aftermarket.
Information services revenues rose $.7 million in the third quarter of
FY 1995 to $7.5 million in the third quarter of FY 1996. For the first nine
months of FY 1996, revenues increased $1.9 million to $21.9 million compared
to the first nine months in FY 1995. This is due mainly to a price increase
in the beginning of the fiscal year and an increase in the number of
customers utilizing Triad's information products.
Triad Systems Financial Corporation ("Triad Financial", a wholly owned
subsidiary) revenues decreased to $1.4 million for the third quarter due in
part to lower discounting yields as external interest rates rose. During the
first nine months of FY 1996, revenue declined to $4.6 million due mainly to
a lower earning portfolio during the first half of FY 1996. Also
contributing were lower yields in the third quarter of FY 1996 as a result of
increased interest rates and reduced discounting in the second quarter
compared to FY 1995 when the Company funded the exchange of the preferred
stock.
Hardlines & Lumber Market Revenues
The Hardlines & Lumber Market consists of manufacturers, hardware stores,
home centers, lumber and building supply outlets and paint and decorating
retailers. Revenues grew 19%, respectively, to $16.0 million for the third
quarter and $47.0 million for the first nine months of FY 1996. Due to its
timing of the acquisition, there were no revenues from Computer System
Dynamics, Inc. during this quarter. (See the Liquidity and Capital
Resources).
Systems revenues increased $1.2 million to a record $7.8 million for the
quarter and $3.8 million to $23.4 million for the first nine months of FY
1996. Triad continues to become more closely affiliated with major co-ops
and wholesale distributors and this activity is reflected in the revenue
growth.
Customer support revenues recorded significant increases in the third
quarter, rising 18% to $6.7 million. Similarly, the first nine months of
FY 1996 generated revenues of $19.1 million, an increase of 15%. This
increase is a direct result of an increase in the customer base.
Information services revenues were $.6 million and $1.7 million for the third
quarter and first nine months, respectively. This reflected an increase of
93% and 103% for the third quarter and first nine months, respectively.
Triad's new Vista point of sale (POS) services continue to contribute to this
growth as the customer base expands.
Cost of Systems and Services
Gross margins for the Automotive Aftermarket of 47% for both the third quarter
and first nine months of FY 1996 reflected a decline of 5% compared to both
periods of FY 1995. This decline was due primarily to higher Prism returns
and the cost of shifting customers to lower margin products in the first half
of FY 1996. Also contributing was a change in the product mix, along with a
higher percentage of fixed costs in the third quarter of FY 1996. Gross
margins for the Hardlines and Lumber Market dropped slightly to 49% for the
third quarter and remained consistent at 50% for the first nine months.
Consolidated Expenses and Other Income
Marketing expenses were $12.1 million or 29%, as a percentage of revenue, for
the third quarter compared to $11.1 million or 27% for the third quarter of
FY 1995. For the first nine months of FY 1996, marketing expense was
$34.9 million or 28% compared to $33.9 million or 27% for the same period in
FY 1995. This slight increase in both periods was mainly due to an increase
in lease loss reserves in the automotive aftermarket.
Product development expenses, after capitalization of software development,
were $2.0 million for the quarter and $6.0 million for the first nine months
of FY 1996. As a percentage of revenue, product development expense remained
consistent at 5% with the prior year for both the quarter and first nine
months.
General, administrative and other operating expenses were $2.4 million for
the quarter and $7.4M for the first nine months of FY 1996. Compared to the
same periods a year ago, costs decreased by $.3 million for the quarter and
$1.3 million for the first nine months of FY 1995. The decrease in both
periods was due mainly to a reduction in compensation and litigation
expenses, along with containment of operating costs.
The restructuring charge of $9.0 million includes a $7.5 million write off
relating to the Triad Prism system software the Company had previously
capitalized, along with $1.0 million in reserves for related product issues.
Also included is $.5 million in costs associated with the realignment of
aftermarket sales and support personnel to address increasing consolidation of
the automotive aftermarket. It is anticipated that the reserves will be
consumed by the end of the second quarter of FY 1997. (See the Automotive
Aftermarket Revenues - Systems Revenues section.)
Interest expense was $1.5 million for the quarter compared to $1.8 million
for the third quarter of FY 1995. The first nine months of FY 1996 also
showed an $.8 million improvement at $4.5 million compared to $5.3 million
for the first nine months of FY 1995. This reduction is due primarily to
lower-cost debt.
In March 1996, the Company recognized $1.6 million in income related to the
revaluation of the Company's investment in AllData Corporation, an automotive
database marketeer that was purchased by Autozone in March. Triad sold a
majority of its Autozone Corporation stock in May 1996 and realized an
additional gain of $153,000 in the third quarter.
In October of FY 1995, $2.9 million of senior fixed-rate notes were retired
early. This generated an extraordinary charge of $153,000 ($.01 per share)
that included a premium of $198,000, unamortized debt costs of $49,000, less
taxes of $94,000.
Subsequent Event
In July 1996, $10.1 million of senior fixed-rate notes were retired early.
This will generate, in the fourth quarter of FY 1996, an extraordinary charge
of $377,000 that will include a premium of $379,000, unamortized debt costs
of $229,000, less taxes of $231,000.
Future Operating Results
Future operating results will depend upon conditions in its markets that may
affect demand for its products, and upon the Company's ability to introduce
products and enhancements on a timely basis. Results will also be affected
by seasonal changes in product demand, market acceptance of new products and
enhancements, the size and experience of the sales force and the mix of
products sold. All could cause operating results to fluctuate, especially on
a quarterly basis.
Liquidity and Capital Resources
Management believes available cash resources, primarily generated from
operations, marketable securities, lease discounting and credit lines, will
provide adequate funds to finance foreseeable operating needs. In June 1996,
the Company increased the availability of the bank line of credit to
$28.0 million in order to be able to bid on $10.1 million in senior notes.
There were outstanding borrowings of $5.3 million at June 30, 1996.
Triad Financial financed $29.6 million in Triad equipment during the nine
months of FY 1996 in addition to $12.0 million in non-Triad equipment through
client lease programs. Triad Financial received $56.2 million of proceeds
from discounting leases during the first nine months of FY 1996 compared to
$57.3 million during the same period in FY 1995.
Limited and full-recourse discounting agreements are maintained with banks
and lending institutions. Discounting agreements contain certain restrictive
covenants that 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 of the Company's lease
portfolio and prohibit further discounting under the available credit
facilities. Management believes that it will maintain compliance with such
covenants in the foreseeable future. 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 June 30, 1996, the portfolio available for discounting
was $13.8 million and commitments for $48.5 million in discounting lines were
available.
Capital equipment expenditures, excluding capitalized leases, were
$2.0 million during the first nine months of FY 1996.
On June 27, 1996, the Company acquired Computer System Dynamics, Inc. (CSD),
a Colorado supplier of systems and software products to the high end user in
the Hardlines and Lumber market. The acquisition expanded the Hardlines and
Lumber customer base to more than 4,900 customers with approximately 6,100
locations. The acquisition was accounted for using the purchase method. The
cash purchase includes contingent deferred payment obligations and
performance bonuses.
During fiscal 1994, the Company established a Stock Ownership By Management
policy to further align the executive officers' interests with those of the
Corporation's shareholders. The stock ownership equivalent is based upon
1993 compensation, ranging from 100% of base compensation to 200% of total
compensation, depending upon the position held within the Company. Each
officer must meet their respective stock ownership level within a three to
five year period. All six of the current executive officers required to meet
the stock ownership target by October 1, 1996 had achieved this target as of
June 30, 1996.
During March 1995, The Financial Accounting Standards Board issued Statement
No. 121, "Accounting for the Impairment of Long-Lived Assets and for Long-
Lived Assets to be Disposed Of," (SFAS No.121), which requires the review for
impairment of long-lived assets, certain identifiable intangibles, and
goodwill related to those assets whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be recoverable. In
certain situations, an impairment loss would be recognized. The Company does
not believe that adoption of SFAS No. 121, which will become effective for
the Company's fiscal year 1996, will have a material impact on its financial
condition or operating results.
During October 1995, The Financial Accounting Standards Board issued
Statement No. 123 (SFAS No. 123), "Accounting for Stock-Based Compensation."
This standard, which establishes a fair value-based method of accounting for
stock-based compensation plans also permits an election to continue,
following the requirements of APB Opinion No. 25, "Accounting for Stock Issued
to Employees" with disclosures of pro forma net income and earnings per share
under the new method. The Company is reviewing the alternatives under SFAS
No. 123 but does not expect there will be any effect on the financial
condition and results of operations of the Company. Disclosure requirements
of SFAS No. 123 will be effective for the Company's fiscal year 1997.
PART II OTHER INFORMATION
Item 1-5 Not applicable
Item 6 No reports on Form 8-K were filed during the quarter ended
June 30, 1996.
Sequentially
Exhibit numbered
Number pages
- ------- ------------
* 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 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").
* 10.5 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.
* 10.6 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.
* 10.7 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.
* 10.8 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 30, 1991.
10.9 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.
10.10 Unit Purchase Agreement dated as of July 2, 1992, between
the Company, Richard C. Blum & Associates, 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.
10.11 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.
10.12 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.
10.13 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.
10.14 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.
*10.15 Supplemental Deferred Compensation Plan between the
Company and a select group of Triad Key Employees and
their beneficiaries dated April 1, 1994, incorporated by
reference from Exhibit 10.18 to the Company's Form 10-Q
for the fiscal quarter ended June 30, 1994.
*10.16 Amendment to the Amended and Restated 1982 Stock Option
Plan dated April 25, 1994, incorporated by reference from
Exhibit 10.19 to the Company's Form 10-Q for the fiscal
quarter ended June 30, 1994.
10.17 Amendment No. Three to Revolving Credit Loan Agreement
and Consent (to Exchange Agreement) between Triad Systems
Corporation, Triad Systems Financial Corporation and
Comerica Bank-California dated March 31, 1995,
incorporated by reference from Exhibit 6 to the
May 11, 1995 Form 8-K.
10.18 Exchange Agreement and Second Amendment to Unit Purchase
Agreement by and among Triad Systems Corporation,
Richard C. Blum & Associates, L.P. and certain holders
dated March 31, 1995, incorporated by reference from
Exhibit 1 to the Company's Current Report on Form 8-K
filed May 11, 1995.
10.19 Warehousing Credit Agreement between Triad Systems
Financial Corporation and the First National Bank of
Boston dated August 29, 1995, incorporated by reference
from Exhibit 10.19 to the Company's Form 10-K for the
fiscal year ended September 30, 1995.
10.20 Amendment No. Four to Revolving Credit Loan Agreement
and Consent (to Exchange Agreement) between Triad
Systems Corporation, Triad Systems Financial Corporation
and Comerica Bank-California dated May 23, 1996. 17-19
10.21 Amendment No. Five to Revolving Credit Loan Agreement
and Consent (to Exchange Agreement) between Triad
Systems Corporation, Triad Systems Financial Corporation
and Comerica Bank-California dated June 28, 1996. 20-23
*10.22 Triad Systems Corporation Amendment to the Amended and
Restated 1982 Stock Option Plan dated February 8, 1996. 24
*10.23 Triad Systems Corporation Amended and Restated Outside
Directors Stock Option Plan dated April 30, 1996. 25
11.1 Computation of Earnings per share.
27 Financial Data Schedules.
* Compensation 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 9, 1996 /s/ STANLEY F. MARQUIS
-------------- -----------------------
Stanley F. Marquis
Vice President, Finance
(Principal Financial Officer)
Exhibit 11.1
Triad Systems Corporation
COMPUTATION OF EARNINGS PER SHARE
Three Months Ended Nine Months Ended
June 30 June 30
1996 1995 1996 1995
-------- -------- -------- --------
(Amounts in thousands except
per share data)
Calculation of number of shares
entering into computations
Weighted average shares outstanding 17,676 17,079 17,517 17,123
Assumed conversion of preferred
stock and exercise of warrants - - - -
-------- -------- -------- --------
17,676 17,079 17,517 17,123
Net effect of dilutive stock
options and warrants based
on the average stock price - 763 - 820
-------- -------- -------- --------
Average primary shares outstanding 17,676 17,842 17,517 17,943
Net effect of dilutive stock
options and warrants based
on the ending stock price - 72 - 85
-------- -------- -------- --------
Average fully diluted shares outstanding 17,676 17,914 17,517 18,028
======== ======== ======== ========
Income (loss) before extraordinary
charge $(4,411) $ 1,594 $ (735) $ 5,468
Extraordinary charge on repurchase
of debt, net of taxes - - - 153
-------- -------- -------- --------
Adjusted net income (loss) $(4,411) $ 1,594 $ (735) $ 5,315
======== ======== ======== ========
Earnings (loss) per share
Primary
Income (loss) before extraordinary
charge $ (0.25) $ 0.09 $ (0.04) $ 0.31
Net income (loss) $ (0.25) $ 0.09 $ (0.04) $ 0.30
Fully diluted
Income (loss) before extraordinary
charge $ (0.25) $ 0.09 $ (0.04) $ 0.31
Net income (loss) $ (0.25) $ 0.09 $ (0.04) $ 0.30
======== ======== ======== ========
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheets at June 30, 1996 and Consolidated Statement of
Income and Statement of Cash Flows for the nine months ended June 30, 1996, and
is qualified in its entirety by reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 6727
<SECURITIES> 0
<RECEIVABLES> 16679
<ALLOWANCES> 2278
<INVENTORY> 6925
<CURRENT-ASSETS> 37291
<PP&E> 62770
<DEPRECIATION> 35268
<TOTAL-ASSETS> 134059
<CURRENT-LIABILITIES> 37366
<BONDS> 50806
<COMMON> 18
0
0
<OTHER-SE> 14508
<TOTAL-LIABILITY-AND-EQUITY> 134059
<SALES> 45942
<TOTAL-REVENUES> 125602
<CGS> 25467
<TOTAL-COSTS> 66813
<OTHER-EXPENSES> 57247
<LOSS-PROVISION> 8377
<INTEREST-EXPENSE> 4505
<INCOME-PRETAX> (1186)
<INCOME-TAX> (451)
<INCOME-CONTINUING> (735)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (735)
<EPS-PRIMARY> (0.25)
<EPS-DILUTED> (0.25)
</TABLE>
Exhibit 10.20
AMENDMENT NUMBER FOUR TO
REVOLVING CREDIT LOAN AGREEMENT
THIS AMENDMENT NUMBER FOUR TO REVOLVING CREDIT LOAN AGREEMENT (this
"Amendment") dated as of May 23, 1996 is entered into by and among TRIAD
SYSTEMS CORPORATION, a Delaware corporation (the "Borrower"), TRIAD
SYSTEMS FINANCIAL CORPORATION, a California corporation ("TSFC"), and
COMERICA BANK-CALIFORNIA (formerly known as Plaza Bank of Commerce), a
California banking corporation (the "Bank").
WITNESSETH:
WHEREAS, the Borrower and the Bank entered into that certain
Revolving Credit Loan Agreement dated as of June 30, 1992, as amended by
Amendment Number One dated as of December 31, 1993, Amendment Number Two
dated as of September 30, 1994, and Amendment Number Three dated as of
March 31, 1995 (as the same may be further amended or modified, the
"Agreement");
WHEREAS, as a condition to entering into the Agreement, TSFC
guarantied the payment and performance of all of the Borrower's obligations
under the Agreement pursuant to that certain Guaranty dated as of June 30,
1992 (the "Guaranty"); and
WHEREAS, the Borrower has requested that the Bank amend the Agreement
as hereinafter provided, and the Bank is willing to so amend the Agreement
subject to the terms, provisions and conditions of this Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the Borrower, TSFC and the Bank agree as follows:
1. Capitalized terms used in this Amendment and not otherwise defined
shall have the respective meanings set forth in the Agreement.
2. The definition of "Commitment Amount" set forth in Section 1.1 of
the Agreement is hereby amended to read in its entirety as follows:
"Commitment Amount" shall mean, as of any applicable date of
determination, the amount as set forth below:
Increase/
(Decrease) in
Commitment Commitment
Amount Amount Determination Date
----------- ------------- --------------------------------
$15,000,000 Effective Date through 10/31/92
$14,875,000 ($125,000) 11/01/92 through 01/31/93
$14,750,000 ($125,000) 02/01/93 through 04/30/93
$14,625,000 ($125,000) 05/01/93 through 07/31/93
$14,500,000 ($125,000) 08/01/93 through 10/31/93
$14,291,667 ($208,333) 11/01/93 through 01/31/94
$14,083,334 ($208,333) 02/01/94 through 04/30/94
$13,875,000 ($208,334) 05/01/94 through 07/31/94
$13,666,667 ($208,333) 08/01/94 through 10/31/94
$13,375,000 ($291,667) 11/01/94 through 01/31/95
$13,083,334 ($291,666) 02/01/95 through 03/30/95
$17,500,000 $4,416,666 03/31/95 through 04/30/95
$16,750,000 ($750,000) 05/01/95 through 07/31/95
$16,000,000 ($750,000) 08/01/95 through 10/31/95
$15,250,000 ($750,000) 11/01/95 through 01/31/96
$14,500,000 ($750,000) 02/01/96 through 04/30/96
$13,750,000 ($750,000) 05/01/96 through 05/29/96
$17,500,000 $3,750,000 05/30/96 through 07/31/96
$17,031,250 ($468,750) 08/01/96 through 10/31/96
$16,562,500 ($468,750) 11/01/96 through 01/31/97
$16,093,750 ($468,750) 02/01/97 through 04/30/97
$15,625,000 ($468,750) 05/01/97 through 07/31/97
$0 ($15,625,000) 08/01/97
3. The definition of "Excess Line" set forth in Section 1.1 of the
Agreement is hereby amended to read in its entirety as follows:
"Excess Line" shall mean, as of any applicable date of
determination, the amount as set forth below:
Excess Line Determination Date
------------- --------------------
$5,000,000 Effective Date through 10/31/92
$4,875,000 11/01/92 through 01/31/93
$4,750,000 02/01/93 through 04/30/93
$4,625,000 05/01/93 through 07/31/93
$4,500,000 08/01/93 through 10/31/93
$4,291,667 11/01/93 through 01/31/94
$4,083,334 02/01/94 through 04/30/94
$3,875,000 05/01/94 through 07/31/94
$3,666,667 08/01/94 through 10/31/94
$3,375,000 11/01/94 through 01/31/95
$3,083,334 02/01/95 through 03/30/95
$7,500,000 03/31/95 through 04/30/95
$6,750,000 05/01/95 through 07/31/95
$6,000,000 08/01/95 through 10/31/95
$5,250,000 11/01/95 through 01/31/96
$4,500,000 02/01/96 through 04/30/96
$3,750,000 05/01/96 through 05/29/96
$7,500,000 05/30/96 through 07/31/96
$7,031,250 08/01/96 through 10/31/96
$6,562,500 11/01/96 through 01/31/97
$6,093,750 02/01/97 through 04/30/97
$5,625,000 05/01/97 through 07/31/97
$0 08/01/97
4. TSFC joins in executing this Amendment for the purpose of
consenting hereto and hereby ratifies, reaffirms and confirms the Guaranty.
5. The Borrower hereby represents and warrants to the Bank that
(a) the representations and warranties contained in the Agreement are true in
all material respects on and as of the date of this Amendment, and (b) no
Default or Event of Default has occurred and is continuing.
6. Except as specifically amended pursuant to the foregoing
paragraphs of this Amendment, all recitals, representations, warranties,
covenants, undertakings, promises, indemnities, terms, conditions and
provisions of the Agreement shall remain in full force and effect and shall
be and remain unaffected by this Amendment.
7. The Borrower agrees to reimburse the Bank for all reasonable costs
and expenses incurred by it in connection with this Amendment, including the
reasonable fees and expenses of the Bank's counsel with respect thereto.
8. This Amendment shall become effective when the Bank shall have
received all of the following:
(a) Counterparts of this Amendment signed by the Borrower, TSFC and
the Bank.
(b) A copy of the resolutions duly adopted by the Boards of Directors
of the Borrower and TSFC authorizing the execution, delivery and performance
of this Amendment, certified by the Secretary or Assistant Secretary of the
Borrower and TSFC, together with an incumbency certificate as to the
incumbency and genuine signatures of the officers of the Borrower and TSFC
signing this Amendment.
9. This Amendment may be executed in any number of counterparts and
any party hereto may execute any counterpart, each of which when executed and
delivered will be deemed to be but one and the same instrument. The execution
of this Amendment will not become effective until counterparts hereof have
been executed by all the parties hereto.
10. This Amendment shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of California without
regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers as of the day and year first
written above.
TRIAD SYSTEMS CORPORATION
By: /S/ STANLEY F. MARQUIS
Its: Vice President Finance
TRIAD SYSTEMS FINANCIAL CORPORATION
By: /S/ STANLEY F. MARQUIS
Its: President
COMERICA BANK-CALIFORNIA
(formerly known as Plaza Bank of Commerce)
By: /S/ LORI EDWARDS
Its: First Vice President
Exhibit 10.21
AMENDMENT NUMBER FIVE TO
REVOLVING CREDIT LOAN AGREEMENT
THIS AMENDMENT NUMBER FIVE TO REVOLVING CREDIT LOAN AGREEMENT (this
"Amendment") dated as of June 28, 1996 is entered into by andamong TRIAD
SYSTEMS CORPORATION, a Delaware corporation (the"Borrower"), TRIAD SYSTEMS
FINANCIAL CORPORATION, a Californiacorporation ("TSFC"), and COMERICA
BANK-CALIFORNIA (formerly knownas Plaza Bank of Commerce), a California
banking corporation (the"Bank").
WITNESSETH:
WHEREAS, the Borrower and the Bank entered into that certainRevolving
Credit Loan Agreement dated as of June 30, 1992, asamended by Amendment
Number One dated as of December 31, 1993, Amendment Number Two dated as of
September 30, 1994, Amendment Number Three dated as of March 31, 1995, and
Amendment Number Four dated as of May 23, 1996 (as the same may be further
amended or modified, the "Agreement");
WHEREAS, as a condition to entering into the Agreement, TSFC
guarantied the payment and performance of all of the Borrower's obligations
under the Agreement pursuant to that certain Guaranty dated as of June 30,
1992 (the "Guaranty"); and
WHEREAS, the Borrower has requested that the Bank amend the Agreement
as hereinafter provided, and the Bank is willing to so amend the Agreement
subject to the terms, provisions and conditions of this Amendment;
NOW, THEREFORE, in consideration of the premises and the mutual
promises herein contained, the Borrower, TSFC and the Bank agree as follows:
1. Capitalized terms used in this Amendment and not otherwise defined
shall have the respective meanings set forth in the Agreement.
2. The definition of "Commitment Amount" set forth in Section 1.1 of
the Agreement is hereby amended to read in its entirety as follows:
"Commitment Amount" shall mean, as of any applicable
date of determination, the amount as set forth below:
Increase/
(Decrease) in
Commitment Commitment
Amount Amount Determination Date
------------ ------------- ------------------
$15,000,000 Effective Date through 10/31/92
$14,875,000 ($125,000) 11/01/92 through 01/31/93
$14,750,000 ($125,000) 02/01/93 through 04/30/93
$14,625,000 ($125,000) 05/01/93 through 07/31/93
$14,500,000 ($125,000) 08/01/93 through 10/31/93
$14,291,667 ($208,333) 11/01/93 through 01/31/94
$14,083,334 ($208,333) 02/01/94 through 04/30/94
$13,875,000 ($208,334) 05/01/94 through 07/31/94
$13,666,667 ($208,333) 08/01/94 through 10/31/94
$13,375,000 ($291,667) 11/01/94 through 01/31/95
$13,083,334 ($291,666) 02/01/95 through 03/30/95
$17,500,000 $4,416,666 03/31/95 through 04/30/95
$16,750,000 ($750,000) 05/01/95 through 07/31/95
$16,000,000 ($750,000) 08/01/95 through 10/31/95
$15,250,000 ($750,000) 11/01/95 through 01/31/96
$14,500,000 ($750,000) 02/01/96 through 04/30/96
$13,750,000 ($750,000) 05/01/96 through 05/29/96
$17,500,000 $3,750,000 05/30/96 through 07/02/96
$28,000,000 $10,500,000 07/03/96 through 07/31/96
$26,875,000 ($1,125,000) 08/01/96 through 10/31/96
$25,750,000 ($1,125,000) 11/01/96 through 01/31/97
$24,625,000 ($1,125,000) 02/01/97 through 04/30/97
$23,500,000 ($1,125,000) 05/01/97 through 07/31/97
$0 ($23,500,000) 08/01/97
3. The definition of "Excess Line" set forth in Section 1.1 of the
Agreement is hereby amended to read in its entirety as follows:
"Excess Line" shall mean, as of any applicable date
of determination, the amount as set forth below:
Excess Line Determination Date
----------- ------------------
$5,000,000 Effective Date through 10/31/92
$4,875,000 11/01/92 through 01/31/93
$4,750,000 02/01/93 through 04/30/93
$4,625,000 05/01/93 through 07/31/93
$4,500,000 08/01/93 through 10/31/93
$4,291,667 11/01/93 through 01/31/94
$4,083,334 02/01/94 through 04/30/94
$3,875,000 05/01/94 through 07/31/94
$3,666,667 08/01/94 through 10/31/94
$3,375,000 11/01/94 through 01/31/95
$3,083,334 02/01/95 through 03/30/95
$7,500,000 03/31/95 through 04/30/95
$6,750,000 05/01/95 through 07/31/95
$6,000,000 08/01/95 through 10/31/95
$5,250,000 11/01/95 through 01/31/96
$4,500,000 02/01/96 through 04/30/96
$3,750,000 05/01/96 through 05/29/96
$7,500,000 05/30/96 through 07/02/96
$18,000,000 07/03/96 through 07/31/96
$16,875,000 08/01/96 through 10/31/96
$15,750,000 11/01/96 through 01/31/97
$14,625,000 02/01/97 through 04/30/97
$13,500,000 05/01/97 through 07/31/97
$0 08/01/97
4. TSFC joins in executing this Amendment for the purpose of
consenting hereto and hereby ratifies, reaffirms and confirms the Guaranty.
5. The Borrower hereby represents and warrants to the Bank that (a)
the representations and warranties contained in the Agreement are true in all
material respects on and as of the date of this Amendment, and (b) no Default
or Event of Default has occurred and is continuing.
6. Except as specifically amended pursuant to the foregoing
paragraphs of this Amendment, all recitals, representations, warranties,
covenants, undertakings, promises, indemnities, terms, conditions and
provisions of the Agreement shall remain in full force and effect and shall
be and remain unaffected by this Amendment.
7. The Borrower agrees to reimburse the Bank for all reasonable costs
and expenses incurred by it in connection with this Amendment, including the
reasonable fees and expenses of the Bank's counsel with respect thereto.
8. This Amendment shall become effective when the Bank shall have
received all of the following:
(a) Counterparts of this Amendment signed by the Borrower, TSFC and
the Bank.
(b) The Revolving Credit Note in the form attached hereto as Exhibit
A duly signed by an Authorized Officer of the Borrower. Such promissory note
shall constitute the Revolving Credit Note as defined in and for the purpose
of the Agreement and shall be deemed to have amended and restated the
Revolving Credit Note previously executed and delivered by the Borrower under
the Agreement.
(c) A copy of the resolutions duly adopted by the Board of Directors
of the Borrower and TSFC authorizing the execution, delivery and performance
of this Amendment and, in the case of the Borrower, of the new Revolving
Credit Note, certified by the Secretary or Assistant Secretary of the
Borrower and TSFC, together with an incumbency certificate as to the
incumbency and genuine signatures of the officers of the Borrower and TSFC
signing this Amendment.
(d) Evidence satisfactory to the Bank that the Borrower has
repurchased, or shall concurrently herewith repurchase, a principal amount of
at least Ten Million One Hundred Thousand Dollars ($10,100,000) of the Fixed
Rate Notes from U.S. Leasing International, Inc.
(e) Payment by the Borrower of a non-refundable amendment fee of
Thirty-Nine Thousand Three Hundred Seventy Five Dollars ($39,375).
If this Amendment has not become effective by July 15, 1996, then it shall be
null and void.
9. This Amendment may be executed in any number of counterparts and
any party hereto may execute any counterpart, each of which when executed and
delivered will be deemed to be but one and the same instrument. The execution
of this Amendment will not become effective until counterparts hereof have
been executed by all the parties hereto.
10. This Amendment shall be governed by, and construed and enforced
in accordance with, the internal laws of the State of California without
regard to principles of conflicts of laws.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be executed by their duly authorized officers as of the day and year first
written above.
TRIAD SYSTEMS CORPORATION
By: /S/ STANLEY F. MARQUIS
Its: Vice President Finance
TRIAD SYSTEMS FINANCIAL CORPORATION
By: /S/ STANLEY F. MARQUIS
Its: President
COMERICA BANK-CALIFORNIA
(formerly known as Plaza Bank of Commerce)
By: /S/ LORI EDWARDS
Its: First Vice President
Exhibit 10.22
AMENDMENT TO
TRIAD SYSTEMS CORPORATION
AMENDED AND RESTATED
1982 STOCK OPTION PLAN
1. Paragraph 4 of the Plan is amended and restated in its entirety to
read as follows:
"4. Shares Subject to Option. Options shall be for the purchase of
shares of the authorized but unissued common stock or treasury shares
of common stock of the Company, subject to adjustment as provided in
paragraph 6(f) below. The maximum number of shares of common stock
which may be issued under the Plan shall be seven million seven
hundred twenty-five thousand (7,725,000) shares (as previously
adjusted for the recapitalization of the Company in August 1989).
In the event that any outstanding Option or Merged Plan Option, as
defined in paragraph 8 below, for any reason expires or is terminated,
the shares of common stock allocable to the unexercised portion of
such Option or Merged Plan Option may again be subject to an
Option grant."
2. All other terms and conditions of the Plan shall remain in full force
and effect.
Exhibit 10.23
Amendment No. 1 to Triad Systems Corporation
Amended and Restated Outside Directors Stock Option Plan
Effective on and as of April 30, 1996 the Triad Systems Corporation
Amended and Restated Outside Directors Plan ("Plan") is hereby amended as
follows:
1. Section 5 of the Plan is amended and restated in its entirety
to read as follows:
"5. Time for Granting Options. All Options shall be granted, if
at all, by the end of the Company's business day at its principal
place of business on the fifth anniversary of the Effective Date."
2. All other terms and conditions of the Plan shall remain in
full force and effect.
